Strategies for e-Business

1. Strategies for e-Business Creating Value through Electronic and Mobile Commerce Teaching Slides for the Conceptual Part of the Book • Thinking strategically • Thinking technology • Thinking strategically about byproducts of technology • It’s not (only) e-commerce – It’s e-business • Almost all business has some component of e-business now….

2. Strategies for e-business: creating value through electronic and mobile commerce Table of contents (I) • Key terminology and evolution of e-business • The e-business strategy framework • External analysis: the impact of the Internet on the macro-environment and on the industry structure of e-business companies • Internal analysis: e-business competencies as sources of strengths and weaknesses • Strategy options in e-business markets • Sustaining a competitive advantage over time • Exploiting opportunities of new market spaces in e-business • Creating and capturing value through e-business strategies — the value process framework

3. Strategies for e-business: creating value through electronic and mobile commerce Table of contents (II) • Choosing the appropriate strategy for the internal organisation of e-business activities • Choosing the appropriate strategy for interaction with suppliers • Choosing the appropriate e-business strategy for interacting with users • Moving from wired e-commerce to mobile e-commerce • A roadmap for e-business strategy implementation • Building e-business competence through concepts and cases • Synopses of case studies

4. Chapter 1: Key terminology and evolution of e-business After this session you should be able to: • Understand what the terms of ‘e-business’, ‘electronic commerce’ and ‘mobile e-commerce’ mean; • Define the concept of strategy and recognise the different levels of strategy development; • Describe the life cycle of technological revolutions and illustrate it through different examples; and • Recognise the four main periods of the e-business evolution over the past decade and explain the peculiar characteristics of each period.

5. Exhibit 1.1 Electronic business includes electronic commerce and mobile electronic commerce e-business Electronic commerce Mobile e-commerce Source: Adapted from D. Chaffey, 2002, p. 9.

6. Exhibit 1.2 The focus of the cases is on corporate level and business unit strategy Corporate- level strategy Corporation Business unit strategy Business unit A Business unit B Business unit C Operational strategy R&D Production Etc.

7. Long-term direction of the firm (corporate-level strategy) • Plan development (business-level strategy) • Plan deployment (operational strategy) • To achieve… • Unique positioning vis-à-vis competitors • Achieving sustainable competitive advantage

8. Exhibit 1.3 Technological revolutions move through different stages as their diffusion increases INSTALLATION PERIOD DEPLOYMENT PERIOD Previous great surge 5 Maturity 4 Synergy (‘golden age') Crash Degree of diffusion of the technological revolution 3 2 Frenzy (‘gilded age') Next great surge Irruption 1 Time Big bang Next big bang Source: Adapted from C. Perez, 2002, p. 48.

9. Exhibit 1.4 Major technological revolutions during the past two centuries show similar patterns of evolution INSTALLATION PERIOD DEPLOYMENT PERIOD 1 2 3 4 5 'Crash' Technological revolution (core country) 'Irruption' 'Frenzy' 'Synergy' 'Maturity' The Industrial Revolution (Britain) Age of steam and railways (Britain, then spreading to Continental Europe and the USA Age of steel, electricity, and heavy engineering (USA and Germany overtaking Britain) Age of oil, automobiles and mass-production (US, then spreading to Europe) 1770s and early 1780s 1830s 1875–1884 1908–1920 late 1780s and early 1790s 1840s 1884–1893 1920–1929 crash in 1797 crash in 1847 crash in 1893 crash in 1929 1798–1812 1850–1857 1895–1907 1943–1959 1813–1829 1857–1873 1908–1918 1960–1974 Timeline Source: Adapted from C. Perez, 2002, p. 57.

10. Exhibit 1.5 During the past decade, e-business companies have passed through four distinct periods, as is reflected in the evolution of the NASDAQ 1 2 3 4 'Grassroots of e-business' 'Rise of the Internet' 'Stock market crash' 'Synergy' – 45% Points 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Launch of Amazon.com Source: NASDAQ quotes taken from Factiva.com.

11. There are various definitions of strategy Strategy is: … the direction and scope of an organization over the long-term, which achieves advantage for the organization through its configuration of resources within a changing environment to the needs of markets and fulfill stakeholder expectations. Gerry Johnson and Kevan Scholes … the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. Alfred Chandler … the deliberate search for a plan of action that will develop a business’s competitive advantage and compound it. Bruce Henderson … the strong focus on profitability not just growth, an ability to define a unique value proposition, and a willingness to make tough trade-offs in what not to do. Michael Porter

12. Stage 1: Pre-internet Other information and communication technologies such as EDI (Electronic data interchange), IOS (inter-organizational systems) High-cost of set-up Proprietary infrastructures Highly customized to companies Number of companies using them was low Not compatible with other infrastructures “Islands of technology”

13. Stage 2: Rise of the internet Post 1995 Internet ventures – stock market bubble Connectivity Database capabilities Data mining CRM, SCM First mover advantages Amazon.com

14. Why did the Internet gain prevalence in business? Among other things… Open Standards Cross Platforms Ease of Use = minimal training of users Low Cost = reduction in software costs Ease of installation and maintenance

15. Stage 3: the crash March, 2000 Reason: Artificial inflation Novelty wore off in consumer buying Excessive subsidies for consumer buy-in Inflated revenues from stock market Unrealistic cost estimates

16. Stage 4: synergy Knowledge of industry structure Knowledge of value creation Business models Strategy formulation

17. Throughout this book, we focus on the following key characteristics of strategy Strategy is concerned with the long-term direction of the firm. Strategy deals with the overall plan for deploying the resources that a firm possesses. Strategy entails the willingness to make trade-offs, to choose between different directions and between different ways of deploying resources. Strategy is about achieving unique positioning vis-à-vis competitors. The central goal of strategy is to achieve sustainable competitive advantage over rivals and thereby to ensure lasting profitability. Source: See also G. Johnson and K. Scholes (2002), pp. 39-46.

18. Takeaways… Strategy and the use of technology go hand-in-hand New/modified strategies needed for e-business