Learning Objectives

1
Learning Objectives

• Describe what a business strategy and
  implementation plan are
• Understand the process of formulating EC
  strategies
• Explain the issues involved in EC implementation
  planning
• Experience the role of intelligent agents in the
  strategic perspective
• Characterize how the strategic planning evolves
  throughout the business cycle
• Describe the key management issues in the
  strategic planning

2
Strategic Planning for EC
Industry and competitive analysis
3
Competitive Intelligence on the Internet

• Review competitors Web sites
• Analyze related newsgroups
• Examine publicly available financial documents
• Give prizes
• Use an information delivery service
• Use research companies
• Solicit opinions in a chat room

4
Competitive Intelligence on the Internet

• Use Push Technology for Competitive Intelligence
• Allow users to request updates of topics and have
  the latest records automatically delivered to
  users e-mail address
• Provide corporate snoopers with lots of
  information, save search time and monitoring time
• Several ways push models can provide competitive
  intelligence information
• broadcast model
• selective pull model
• distributed push pull model
• interactive push model

5
Industry and Competitive Analysis
INTERNAL FACTORS
Strengths (S)
Weaknesses (W)
EXTERNAL FACTORS
SO Strategies Generate strategies here that use
strengths to take advantages of opportunities
WO Strategies Generate strategies here that take
advantage of opportunities by overcome weaknesses
Opportunities (O)
ST Strategies Generate strategies here that use
strengths to avoid threats
WT Strategies Generate strategies here that
minimize weaknesses and avoid threats
Threats (T)
6
Uncovering Specific ECOpportunities and
Application

• Understand
• How digital markets operate
• How Internet customers behave
• How competition is created and what
  infrastructure
• is needed
• What are the dynamics of EC
• Map opportunities that match current competencies
  and markets
• Many opportunities to create new products and
  services

7
Uncovering Specific ECOpportunities and
Application (cont.)

• Opportunities
• Matchmaking
• Aggregation of services
• Bid/ask engine
• Notification service
• Smart needs adviser
• Negotiation
• Upsell
• Consultative adviser

8
Uncovering Specific ECOpportunities and
Application (cont.)

• Finding IT applications
• Brainstorm with a group of employees
• Solicit the help of experts, such as consultants
• Review what the competitors are doing
• Ask the vendors to provide we with suggestions
• Read the literature to find out whats going on
• Use analogies from similar industries or business
  processes
• Use a conventional IS requirement analysis
  approach

9
Strategy Formulation

• Strategy formulation
• Development of long-range plans
• Organizations mission
• Purpose or reason for the organizations
  existence
• 3 main reasons for establishing Web site
• MARKETING, CUSTOMER SUPPORT, and SALES
• Products with good fit for EC
• Digital vs Physical Dichotomy
• Shipped easily or transmitted electronically
• Targets knowledgeable buyers
• Price falls within certain optimum ranges

10
EC Critical Success Factors

• Special products or services traded
• Top management support
• Project team reflecting various functional areas
• Technical infrastructure
• Customer acceptance
• User friendly Web interface
• Integration with the corporate legacy systems
• Security and control of the EC system
• Competition and market situation
• Pilot project and corporate knowledge
• Promotion and internal communication
• Cost of the EC project
• Level of trust between buyers and sellers

11
Value Analysis Approach

• Value chain
• a series of activities a company performs to
  achieve its goal(s)
• Value added
• contributes to profit and enhances the asset
  value as well as the competitive position of the
  company in the market
• to create additional value using EC channels, a
  company should consider the competitive market
  and rivalry in order to best leverage its EC
  assets

12
Value Analysis Questions

• Representative Questions for Clarifying Value
  Chain Statements
• Can I realize significant margins by
  consolidating parts of the value chain to my
  customers?
• Can I create significant value for customers by
  reducing the number of entities they have to deal
  with in the value chain?
• Representative Question for Creating New Values
• Can I offer additional information of transaction
  service to my existing customer base?
• Can I use my ability to attract customers to
  generate new sources of revenue, such as
  advertising or sales of complementary products?

13
Gartners Model of Customer Interaction
Relationship Marketing
14
Cost-Benefit Analysis

• Return on Investment and Risk Analysis
• A ratio of resources required and benefits
  generated by an EC project
• Includes both quantifiable items (cost of
  resources, computed monetary savings) and non
  quantifiable items
• Some intangible benefits
• effective marketing channel
• increased sales
• improved customer service

15
Return on Investment and Risk Analysis

• Values
• Financial values measurable to some degree
• Strategic values competitive advantage in the
  market and benefits generated by business
  procedures
• Stakeholder values reflections of organizational
  redesign, organizational learning, empowerment,
  information technology architecture of a company,
  etc.
• Risks
• Competitive strategy risk external, due to joint
  venture, alliances, or demographic changes among
  others
• Organizational risk and uncertainty internal to
  company

16
E-Commerce Competitive Strategy

• Offensive strategy
• Frontal Assault
• Flanking Maneuver
• Bypass Attack
• Encirclement
• Guerrilla Warfare

17
E-Commerce Competitive Strategy

• Defensive strategies
• Lower the probability of attack
• Divert attacks to less threatening avenues
• Lessen the intensity of an attack
• Make competitive advantage more sustainable

18
Cooperative Strategies

• Collusion
• Strategic Alliance
• Joint Venture
• Value-Chain Partnership

19
Implementation of EC Plan

• Starts with organizing a project team
• Undertake a few pilot projects (help discover
  problems early)
• Implementing EC
• Redesigning existing business processes
• Back-end processes must be automated as much as
  possible
• Company must set up workflow applications by
  integrating EC into existing accounting and
  financial back-ends

20
Organization and Staffing

• Define the roles and responsibilities of
• Senior management Gatekeepers
• Web team Web champion
• Webmaster

EC Project Team
21
Evaluating Outsourcing

• Factors to consider
• Ease of configuration and setup
• Database and scripting support
• Payment mechanism
• Sample storefronts
• Workflow management
• Documented database support
• Integration into existing accounting and
• financial back ends

22
Web Hosting

• Hosting Internally Vs. Hosting Using ISP
• System Cost
• bandwidth
• capabilities and specifications
• firewall system
• wireless delivery
• buy, rent, or lease
• maintenance, upgrade, and service of the equipment

23
Web Hosting

• Purchase a suite of software that claims to
  integrate storefront functions into a single box
• iCat Corp.s Electronic Commerce Suite and
  Commerce Publisher
• Open Markets Transact and LiveCommerce
• Microsoft Corp.s Site Server Commerce Edition
• IBM Corp.s Net. Commerce Pro
• Saqqara Systems StepSearch Professional
• ATT

24
Web Hosting

• Making a Web catalog into a multimedia
  extravaganza
• Not easy and expensive
• Lower end systems begin at 25,000
• High end systems 250,000 to 2 million

25
Web Content Design

• Content takes many shapes
• Will change dramatically
• More robust, comprehensive, and usable medium
• Challenges in developing a successful online
  storefront
• Choosing the right software solution for our site
• 3 options
• build our own software
• purchase a commercial software product
• rent from a Web host

26
Web Content Design Considerations

• The services wanted
• How much our company can contribute to the site,
  from manpower to electronic content
• The time to design our site
• The time to create and program our site
• Extra fees for software development
• Fees for off-the-shelf applications tools
• The size of the site
• The amount of traffic the site generates Vs. flat
  rate

• Training requirements
• Installation and server maintenance
• Programming
• On corporate site hosting Vs. off-site
• Secure Server for financial transactions
• bandwidth needs
• server capacity needs
• Location of our server at the Web company or ISP
  company location

27
Web Application Features

• Audio
• Video
• FTP
• Forms
• Chat rooms
• VRML
• Statistics
• Customer tracking
• E-mail response and forwarding
• Java applications
• Animation
• Security

• Electronic shopping mall
• Unique URL
• Electronic commerce/financial transactions
• Shopping cart software
• Online catalogs
• Direct order procedures
• Dynamic databases
• Static databases
• Multimedia
• Telephony

28
Security and Control in EC

• 80 of all computer crimes reported involve the
  use of the Internet to break into computer
  systems
• Effective guidelines would be needed to
• Address the Internet features that must be
  monitored for developing policy on access and use
• Disclosure of information through the Internet

29
Strategy Reassessment

• Webs grow in unexpected ways
• Reasons for a not having a worthwhile project
• The goals were unrealistic
• The web server was inadequate to handle traffic
• The actual cost savings were not as much as
  expected
• Important
• Develop a checklist
• Project Team compiles statistics that can be
  tracked
• CIOs and other executives are trying to extract
  the business value from their investment in
  information technologies

30

• Questions to Address in Order to Assess EC
  Project Effort and Outcome

What were the goals?
Did unanticipated problems occur? If so, how were
those handled?
What products and services did our company want
to offer?
What were the expectations?
What costs did we hope to reduce? Did other costs
increase unexpectedly?
Did we intend to reduce distribution costs?
What oure the sales objectives? Were those goals
realistic?
Were our expectations reasonable?
Did we intend to reduce travel expenses for
corporate staff?
Are Web and Internet communications reducing
traditional communication costs?
Did we intend to improve customer relations? If
we did not, what went wrong?
How can those errors be corrected?
31
Revisit Each Phase of EC Project

• Is each needed service performing as expected?
• Is each needed service still relevant?
• What, if any, additional services are needed?
• What do customers want that we are not providing?
• What impact will they have on the infrastructure,
  from bandwidth to software?
• What will the additional services cost?
• What specific changes have taken place among our
  competitors that might affect what we are trying
  to accomplish?
• Have our vendors provided adequate service?
• Has training of employees been adequate, or is
  more required?
• What new internal needs have arisen that need to
  be addressed?

32
Management Issues

• Considering the strategic value of EC
• Conducting strategic planning
• Considering the risks
• Integration
• Pilot project

33
EC Strategy in Action

• What questions should a strategic plan answer?

• How is Electronic Commerce going to change our
  business?
• How do we uncover new types of business
  opportunities?
• How can we take advantage of new electronic
  linkages with customers and trading partners?
• Will intermediaries be eliminated in the process?
  Or do we become intermediaries ourselves?
• How do we bring more buyers together
  electronically (and keep them there)?
• How do we change the nature of our products and
  services?
• Why is the Internet affecting other companies
  more than ours?
• How do we manage and measure the evolution of our
  strategy?

34
EC Strategy in Action

• The steps to Successful EC Programs
• Conduct necessary education training
• Review current distribution and supply chain
  models
• Understand what our customers and partners expect
  from the Web
• Reevaluate the nature of our products and
  services
• Give a new role to our human resources department
• Extend our current systems to the outside
• Track new competitors and market shares
• Develop a Web-centric marketing strategy
• Participate in the creation and development of
  virtual marketplaces
• Install electronic commerce management style