Dickson K.W. Chiu PhD, SMIEEE, SMACM, Life MHKCS Jelassi & Enders : Chapter 7

1. COMP7880: E-Business Strategies Exploring new market spaces Dickson K.W. Chiu PhD, SMIEEE, SMACM, Life MHKCS Jelassi & Enders: Chapter 7

2. Our Roadmap Mobile e-commerce strategy 12 E-business strategy Strategic analysis Strategy formulation Strategy implementation 3 Externalanalysis 9 5 Strategyoptions Internal organisation Opportunities/ threats 6 10 7 13 Interaction with suppliers Implementation Sustaining competitive advantage Exploring new market spaces Strengths/ weaknesses 4 Internalanalysis 11 8 Creating and capturing value Interaction with users/customers

3. Value curve provides insights into new market spaces High Low Value curve of traditional bookstores Performance Value curve of Amazon.com Price Selection range Speed Face-to-face interaction Convenience Dimensions of benefit Source: Adapted from C. Kim and R. Mauborgne, (1999).

4. Objective Draw the value curve of a specific offering and compare it with competitors The first step leading to value innovations is the ‘visual awakening’ • Assignment for team exercise Activities • Pick a specific company offering • Each team member writes down what he/she considers to be the key product/service elements • As a group discuss and reach consensus on the key elements • Rate the offering's level on each key element against the main competitors • Do you see other competitors with radically different value curves?

5. Display the current situation of the offering selected • Value curve of . . . . . . . . . . . Very high High Offering level Average Low Very low Non existent Key elements

6. Value innovations focus on customers rather than competitors Characteristics of conventional and value innovation logic Conventional logic Value innovation logic Assumption Strategic focus Customers Resources Offerings An industry's value curvesfollow one basic shape. Build a competitive advantageand beat the competition. Retain and expand customerbase through segmentation andcustomization. Focus on thedifferences. Utilize existing assets andcapabilities. Offer the products and servicesof your industry. New value curves can be shapedthat solve traditional trade-offs. Pursue a quantum leap in customervalue. Competition is no benchmark. Target the mass of buyers. Letsome existing customers willinglygo. Focus on key commonalities in what customers value. Ask what we would do if we werestarting anew? Offer the total customer solutionexceeding industry boundaries.

7. Objective Create a new value curve for a specific offering The second step leading to value innovations is the ‘visual exploration’ • Assignment for team exercise Activities • Adopt the perspective of a new industry entrant and reconsider the existing value curves • Use one or two of the paths to experiment with the creations of a new value curve • Industry: Ask which elements of substitute industries are un/important to target buyers? • Strategic groups: Ask which key elements of the offer compel buyers to buy up or buy down? • Buyers: Ask who are the decision makers and how would changing buyer focus affect the key elements? • Scope: Ask how is the offer currently used and what activities/services might be valuably incorporated? • Appeal: Ask how we can change the polarity of appeal? • Time: Ask what trends are impacting our industry and how do the key elements match • Plot a new value curve. Indicate which key elements are eliminated, reduced, raised or created

8. Display possible changes to the existing value curves • Value curve of . . . . . . . . . . . Very high High Offering level Average Low Very low Non existent Key elements

9. Six paths framework: creating value innovations in e-business 1 6 Looking across substitutive industries Looking across time/trends Factors to bereduced? 2 5 Looking across functional or emotional appeal Looking across strategic groups Factorsto be eliminated? Factors to be created? Factors to beraised? 4 3 Looking across comple-mentary offerings Looking across the chain of buyers Source: Based on C. Kim and R. Mauborgne (1999), pp. 83–93.

10. Pinpointing possibilities for new value creation Where can we reduce our range of offerings? What costs us a lot of money but does not create benefit? Does what we do really create consumer benefit? If not, which components or features of our product or service should we eliminate? 2 1 Reduce Eliminate 4 3 Create Raise Where should we raise the standard of products or services? Where can we increase benefit by expanding our existing offering? What can we do that has not been done so far? Source: See also W. C. Kim and R. Mauborgne (1997), pp. 103–112, and (1999), pp. 83–93.

11. Value innovation shifts from head-to-head competition to creating new market Six path framework to create value innovations Head-to-head competition Creating new market space Looks across substitute industries Looks across strategic groupswithin its industry Redefines the buyer group Looks across complementaryofferings beyond the boundsof its industry Rethinks the functional/emo-tional orientation Adopts the results of futuretrends today Industry Strategicgroup Buyer group Product scope Appeal Time/trends Focuses on rivals in its industry Focuses on competitive posi-tion within strategic group Focuses on better serving theown buyer group Focuses on maximising valueof the industry's products/services Focuses on improving thegiven appeal Focuses on adapting to trendsas they occur

12. Finding the right timing for market entry in e-business is critical Early-mover disadvantages Early-mover advantages • Learning effects • Brand and reputation • Switching costs • Network effects • Market uncertainty • Technological uncertainty • Free-rider effects

13. Entrepreneurship process • Entrepreneurship and creativity is a process! • Identify an Opportunity • Develop a Concept • Determine the Required Resources • Acquire the Necessary Resources • Implement and Manage • Harvest the Venture The Environment Entrepreneurial Process The OrganizationalContext The Entrepreneur The Concept The Resources Source: Morris et al. Entrepreneurship & Innovation

14. Entrepreneurship –How to find opportunities Source: Morris et al. Entrepreneurship & Innovation

15. Entrepreneurship: Types of Innovations • New to the world products or services • New to the market products or services • New product or service line that at least one competitor is offering • Addition to existing products or service lines • Product/service improvement, revision, including addition of new features or options • New application of existing products or services, including application to a new market segment • Repositioning of an existing product or service Source: Morris et al. Entrepreneurship & Innovation

16. Entrepreneurship - Entry Wedges Source: Morris et al. Entrepreneurship & Innovation