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MD253/MK252 Electronic Commerce March 22, 2006 Strategy & the Internet

MD253/MK252 Electronic Commerce March 22, 2006 Strategy & the Internet. Topics Covered. E-Commerce & The Five Forces of Industry Competitiveness Operational Effectiveness & Strategic Positioning Resources for Competitive Advantage Characteristics Examples of key resources The Value Chain

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MD253/MK252 Electronic Commerce March 22, 2006 Strategy & the Internet

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  1. MD253/MK252Electronic CommerceMarch 22, 2006Strategy & the Internet

  2. Topics Covered • E-Commerce & The Five Forces of Industry Competitiveness • Operational Effectiveness & Strategic Positioning • Resources for Competitive Advantage • Characteristics • Examples of key resources • The Value Chain • Strategy & the Internet – a critical look

  3. ICA: Industry & Competitive Analysis(Porter’s Five Forces) Potential New Entrants Power of Suppliers Industry Competitors Power of Buyers Substitute products or services

  4. Critical Concepts in Understanding Competitive Advantage • Operational Effectiveness – performing the same tasks better than your rivals. • Strategic Positioning – performing different tasks than your rivals, or performing the same tasks in a different way.

  5. How Do We Know if Assets Yield Sustainable Advantage? • Rareness • Is the asset in limited supply or difficult to acquire? • Value • Does the asset yield value to the firm/customers? • Imperfectly Imitable • Is the asset impossible to imitate? • Non-Substitutable • Is the asset without comparable substitutes?

  6. 87% Decline in InternationalDS-3 Pricing in two years Source: BandXChange

  7. Key Resources for Competitive Advantage • Imitation-resistant Value Chain Organization • Brand • Scale Economies • Alliances (with complementary firms & competitors) • Network Effects • Data and Switching Costs • Distribution Channels • Differentiation – product or service • Patents?

  8. Value Chain Infrastructure: general mgmt, planning, finance, IS HRM: recruiting, hiring, training, and development Tech. Development: R&D Procurement Inbound Operations Outbound Marketing Service logistics logistics & Sales

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