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Chapter 11

E-Commerce Strategy
As you read the textbook and go through this lesson, think about the following
questions:

What are some key questions a company should ask when formulating an estrategy?
What forces can endanger a company's position in a given industry?
What are the key steps of the strategic planning process?
What is a business plan and why is it important?
What is cost benefit analysis? What is return on investment (ROI)?
What are metrics?
Why might it be difficult to measure e-commerce success?
What or who are the key players in e-commerce success?
What are the benefits and barriers to global e-commerce?
How can an e-commerce enterprise ensure that it is in compliance with legal
regulations?
What is intellectual property and how has the Internet impacted this area of
the law?
What are some typical ethical issues that have arisen as a result of the
Internet?
How has the Internet impacted our rights to privacy and freedom of speech?

Upon completion of this chapter, you will be able to:


1. Describe the strategic planning process.
2. Describe the purpose and content of a business plan and a business case.
3. Understand how e-commerce impacts the strategic planning process.
4. Understand how to formulate, justify, and prioritize EC applications.
5. Describe strategy implementation and assessment, including the use of metrics.
6. Evaluate the issues involved in global EC.
7. Analyze the impact of EC on small and medium-sized business.

Answers to Pause/Break Section Review Questions


Section 11.1 Review Questions
1. What is strategy?
A strategy is a broad-based formula for how a business is going to compete, what
its goal should be, and what plans and policies will be needed to carry out those
goals. The elements of a strategy include forecasting, resource allocation, core

Copyright 2012 Pearson Education, Inc., Publishing as Prentice Hall

competency, environmental analysis, company analysis, and business planning.


2. Describe the strategic planning process.
Strategic planning is used to direct a companys long term goals. The process is a
cycle of assessment, initiation, formulation, and implementation.
3. Describe the four phases of strategic planning.
The four phases include strategy initiation, strategy formulation, strategy
implementation, and strategy assessment. Strategy initiation is the decision to
implement at goal, while strategy formulation provides the high-level steps to reach
it. Strategy implementation is the operational actions that execute the plan, and
assessment evaluates how closely the end product matches the goal, and how well
it was executed.

Strategy initiation - The initial phase of strategic planning in which the


organization examines itself and its environment.
Specific outcomes:
Value proposition - The benefit that a companys products or
services are provided to a company and its customers.
Core competencies
Forecasts
Competitor (industry) analysis

Strategy formulation - The development of strategies to exploit


opportunities and manage threats in the business environment in light of
corporate strengths and weaknesses.
Specific activities and outcomes:
Business opportunities
Cost-benefit analysis
Risk analysis, assessment, and management
Business plan

Strategy implementation -The development of detailed, short-term plans


for carrying out the projects agreed on in strategy formulation.
Specific activities and outcomes:
Project planning
Resource allocation
Project management

Strategy assessment - The continuous evaluation of progress toward the


organizations strategic goals, resulting in corrective action and, if
necessary, strategy reformulation.

4. Why is a cyclic approach to strategic planning required?

It allows business decision makers to evaluate and react to the success of past
decisions.
5. Describe four tools that can be used for strategic planning.

SWOT analysis
Competitor analysis grid
Scenario planning
Return on investment
Balanced scorecard

6. What is a strategy map and how does it help in the strategic planning
process?
A tool that delineates the relationships among the key organizational objectives
for all four BSC perspectives.
7. What is a business case and how is it different from a business plan?
Business plan - A written document that identifies a companys goals and
outlines how the company intends to achieve the goals and at what cost.
Business case A business plan for a new initiative or large, new project inside
an existing organization.
A business case is different from a business plan in that it does not contain all of
the operational specifics.
Section 11.2 Review Questions
1. What is an E-Commerce strategy? (EC strategy)
The formulation and execution of a vision of how a new or existing company
intends to do business electronically.
2. Describe the process of deriving an EC strategy.
The process begins with a business strategy which gives way to an IS strategy
which includes the ICT strategy. The EC strategy is formed from both the IS and
ICT Strategies.
3. Describe the role of the Internet in setting EC strategy.
The internet can be used in multiple ways as strategy is created. Most notably, it
can be used for competitive/market research as well as for analysis of potential
solutions and plans.

4. How should the Internet and EC be considered by business strategic planners?


By IS strategists? By ICT planners?
Strategic planners need to understand the evolving and disruptive nature of the
Internet and EC in ways that can help or hinder a company. Information systems
strategists need to consider the Internet as a tool for collecting and distributing
information to where it is required. ICT planners will need to plan the integration of
the Internet-based technologies into the existing ICT infrastructure. Thinking about
and planning for the Internet should be subsumed into each of the three strategy
levels (McKay and Marshall 2004).

Section 11.3 Review Questions


1. Describe the advantages, risks, and success factors that first movers face.
First movers have the advantage of being the first to a market and being able to
define it. At the same time, first movers may spend a great deal of time and money
advertising and defining the market, to be beaten by a later entrant. Successful first
movers must understand their segment and its possibilities in advance, and then
have the ability to defend their position.
2. What are the advantages and disadvantages of creating a separate online
company?
Companies may benefit from separate online firms if they need to create separation
or discipline within the online group. Additionally, this may allow them to
establish a separate, more appealing brand. Conversely, creating a separate
company isolates the new firm from the benefits of the existing firm.
3. Why would an existing company want to create a new brand for its ecommerce initiative?
It will depend on the relative strength and positioning of the existing brand versus
the possibilities and costs of a new brand. A new brand may not have the
connotations of the old brand, or can protect the old brand by not associating it with
the new entrant.
4. What strategic benefits are associated with using social networks?
They allow a business to better access customers for sales, feedback and research.

Section 11.4 Review Questions


1. Describe how a company should not select EC applications.
EC applications should not be decided without the benefit of analysis and planning.
Selecting applications based on whims or individual options is not suggested.
2. Explain Tjans Internet portfolio map.
Tjan (2001) adapted the Boston Consulting Groups approach to create what he
calls an Internet portfolio map. Instead of trading off market potential and market
share, different EC projects are rated on both their applicability for the company
(fit) and their potential for success (viability), both of which can be either low or
high.
3. List four sources of business risk in EC. What questions exemplify each source
of risk?
Risk is inherent in all business activities, and especially when organizations are
moving into new territory, as an e-commerce strategy inevitably implies. Managing
that risk is a process of analyzing the risk factors and then taking the steps
necessary to reduce the threat to the business from that risk. Examples of risks
include:
Partner risk Can I succeed without my partner?
HR risk How dependant am I on personnel?
Security Can I protect my intellectual property?
Exchange rate Will changes in exchange rates hurt my margins?

4. Discuss three strategies for smarter pricing online.


Traditional methods for determining price are the cost-plus and competitor models.
Cost plus means adding up all the costs involvedmaterial, labor, rent, overheads,
and so forthand adding a percentage mark-up as profit. The competitor model
determines price based on what competitors are charging for similar products in the
marketplace. Another strategy is to create multiple versions of a product, and vary
the pricing by channel (as opposed to product attributes).
INTELLECTUAL PROPERTY AND OTHER REGULATORY ISSUES
LAWS ARE SUBJECT TO INTERPRETATION

PERSONAL AND PROPERTY RIGHTS

Civil litigation - An adversarial proceeding in which a party (the plaintiff)


sues another party (the defendant) to get compensation for a wrong
committed by the defendant.
Regulatory compliance - Systems or departments in an organization
whose job is to ensure that personnel are aware of and take steps to comply
with relevant laws, standards, policies, and regulations.
Compliance data - All data belonging or pertaining to an enterprise
included in the law, which can be used for the purpose of implementing or
validating compliance.

INTELLECTUAL PROPERTY - Creations of the mind, such as


inventions, literary and artistic works, and symbols, names, images, and
designs, used in commerce.

Copyright - An exclusive right of the author or creator of a book, movie,


musical composition, or other artistic property to print, copy, sell, license,
distribute, transform to another medium, translate, record, perform, or otherwise
use.
Infringement - Use of the work without permission or contracting for payment
of a royalty.

Digital rights management (DRM)- An umbrella term for any of several


arrangements that allow a vendor of content in electronic form to control the
material and restrict its usage.
Fair use - The use of copyrighted material for noncommercial purposes.
Patent - A document that grants the holder exclusive rights to an invention for a
fixed number of years.
Trademark - A symbol used by businesses to identify their goods and services;
government registration of the trademark confers exclusive legal right to its use.
Ethics - The branch of philosophy that deals with what is considered to be right
and wrong.
Business ethics - A form of applied ethics that examines ethical principles and
moral or ethical problems that arise in a business environment.
EC ETHICAL ISSUES
Nonwork-Related Use of the Internet
Codes of Ethics
Privacy - The right to be left alone and free of unreasonable personal intrusions
PRIVACY RIGHTS AND PROTECTION
opt-out - Business practice that gives consumers the copportunity to refuse
sharing information about themselves.
opt-in - Agreement that requires computer users to take specific steps to allow
the collection of personal information.
FREE SPEECH ONLINE VERSUS PRIVACY PROTECTION
Free Speech Online Versus Child Protection Debate
Childrens Internet Protection Act (CIPA) - U.S. law that mandates the use of
filtering technologies in schools and libraries that receive certain types of federal

funding.
Section 11.5 Review Questions
1. Describe a Web (project) team and its purpose.
A web team is a formal or informal interdisciplinary group that is charged with the
execution of an EC project or role-out. The team is usually lead by a defined team
lead, but also requires a project champion who can ensure that the team receives the
organizational support necessary to succeed. In creating a Web (project) team, the
organization should carefully define the roles and responsibilities of the team
leader, team members, Web master, and technical staff. The purpose of the Web
team is to align business goals and technology goals to implement a sound EC plan
with available resources.
2. What is the role of a project champion?
The project champion is the person who ensures that the project gets the time,
attention, and resources required and defends the project from detractors at all
times. The project champion may be the Web team leader or a senior executive.
3. What is the purpose of a pilot project?
Pilot projects help uncover problems early, when the plan can easily be modified
before significant investments are made.
4. Discuss the major strategy implementation issues of application development,
partners strategy, business alliances, and BPR.
Implementation of an EC application requires access to the Web, construction of
the Web site, and integration of the site with the existing corporate information
systems (e.g., front end for order taking, back end for order processing).
Another important issue is that many EC applications involve business partners
ASPs, ERP vendors and consultants, and ISPswith different organizational
cultures and their own EC strategies and profit motives.
At a higher level of cooperation and trust than a partnership is a business alliance.
Specifically, the EC strategic planning process may identify a strategic opportunity
that is larger than the organization itself.
Business process reengineering (BPR) is a methodology for conducting a
comprehensive redesign of an enterprises processes. Generally, BPR can help to
create efficiencies to increase productivity and/or save costs, but this is generally
coupled with changes and reorganizations that may be met with hostility.

5. Describe BPM and the need for it in EC development.


Business Process Management refers to management activities that help improve
business processes. It is important to EC because more effective processes help
make EC more efficient.

Section 11.6 Review Questions


1. Describe the need for assessment.
Strategy assessment includes both the continual assessment of EC metrics and the
periodic formal evaluation of progress toward the organizations strategic goals.
Assessment is critical to understand the effectiveness of operations so that future
planning can be more accurate.
2. Define metrics and their contribution to strategic planning.
Each company measures success or failure by a different set of standards. A metric
is a specific, measurable standard against which actual performance is compared.
By identifying and using metrics in planning, the firm can clearly identify and track
goals to be achieved.
3. Describe the corporate performance dashboard approach to strategy
assessment.
This method seeks to identify and categorize several significant metrics across a
variety of operational areas. By monitoring these metrics consistently (in a
dashboard) upper management is able to evaluate the overall health and progress
within an organization quickly and frequently.
4. What is a balanced scorecard?
The balanced scorecard is both a performance measurement and a management
methodology that helps an organization translate its financial, customer, internal
process, learning, and growth objectives and targets into a set of actionable
initiatives.
5. Define Web analytics.
The analysis of click-stream data to understand visitor behavior on a Web site.

Section 11.7 Review Questions


1. Describe globalization in EC and the advantages it presents.

Globalization provides the opportunity for EC businesses to serve not only their
traditional geographic markets, but potentially the entire world.
2. Describe the major barriers to global EC in each dimension of the CAGE
framework.

Cultural language and cultural differences, preferences


Administrative legal issues, trade barriers, privacy protection
Geographical logistics, bandwidth
Economic taxation, regulation, payment systems

3. What can companies practicing global EC do to overcome the barriers to


global EC?
There are several possible ways to remove barriers to global EC some of them
include: valuing human touch, being strategic, knowing your audience, using Web
advantages, proper integration, flexible site design, and synchronized content.
4. Discuss the pros and cons of a company offering its Web site in more than
one language.
The company will be able to address a larger market, but will have to maintain
several Web site versions and may confuse the primary market.
GLOBAL EC
BENEFITS AND EXTENT OF OPERATIONS
The major advantage of EC is the ability to do business at any time, from
anywhere, and at a reasonable cost.
BARRIERS TO GLOBAL EC
Cultural Issues and Language Translation
Machine Translation of Web Pages
Administrative and Legal Issues
Geographic Issues and Localization
Economic and Financial Issues
BREAKING DOWN THE BARRIERS TO GLOBAL EC
Be strategic
Know your audience
Localize
Think globally, act consistently
Value the human touch
Clarify, document, explain
Offer services that reduce barriers

Section 11.8 Review Questions


1. What are the advantages/benefits of EC for small businesses?
There are several potential advantages, the largest being flexibility and mobility.
2. What are the disadvantages or risks of EC for small businesses?
There are several potential disadvantages, the largest being the inability to compete
at a large scale and potential high entry costs.
3. What are the advantages and disadvantages for small businesses online?
Some of the critical success factors include appropriate capital investment, low
inventory levels, secure electronic payments, flexible payment methods,
appropriate logistical services, search engine placement, membership in online
mall, and proper Web site design.
4. How can social networks help SMEs become more competitive?
Social networking sites are a particularly good fit for smaller businesses because
SMEs often do not have a peer group nearby with which to discuss relevant
topics. On the Internet, SMEs would turn to a community site catering to small
businesses that provides them with access to peers, information on starting up,
and advice.
Small-Medium Sized Business Enterprises
Some of the first companies to take advantage of Web-based electronic
commerce were SMEs
SMEs consider the Internet to be a valuable business tool
STRATEGY AND THE WEB ENVIRONMENT
Porters Competitive Forces Model and Strategies
1. Threat of entry of new competitors
2. Bargaining power of suppliers
3. Bargaining power of customers or buyers
4. Threat of substitute products or services
5. Rivalry among existing firms in the industry
JUSTIFICATION AND COST-BENEFIT ANALYSIS
Companies need to justify their EC investments as part of strategy formulation
in order to achieve the optimal level of investment

OTHER REASONS WHY EC JUSTIFICATION IS NEEDED


EC is not necessarily the solution to all problems

Formal evaluation of requests for funding mandated


Need to assess the success of EC projects after completion
Success of EC projects assessed in order to pay bonuses
Pressure from top management
Large amount of money
Weak business conditions exist
EC INVESTMENT CATEGORIES AND BENEFITS
HOW IS AN EC INVESTMENT JUSTIFIED?
cost-benefit analysis - A comparison of the costs of a project against
the benefits.
WHAT NEEDS TO BE JUSTIFIED? WHEN SHOULD
JUSTIFICATION TAKE PLACE?
USING METRICS IN EC JUSTIFICATION
Metric - A specific, measurable standard against which actual performance is
compared.
Key performance indicators (KPIs) - The quantitative expression of critically
important metrics.
DIFFICULTIES IN MEASURING PRODUCTIVITY AND
PERFORMANCE GAINS
Data and Analysis Issues
EC Productivity Gains May Be Offset by Losses in Other Areas
Incorrectly Defining What Is Measured
Other Difficulties
DETERMINING E-COMMERCE SUCCESS
Product Characteristics
Industry Characteristics
Seller Characteristics
Consumer Characteristics

EC Application Case 11.1: FOCUSING ON QUALITY


OVER QUANTITY AT WARNER MUSIC GROUP
Questions
1. Why did WMGs strategy shift to quality?
It allows for greater control over partners and the types of arrangements
implemented.
2. Why did it develop a deal with YouTube? Is this a strategic alliance?

It is a strategic alliance. WMG benefits from YouTubes userbase, and YouTube


gains access to additional content.
3. Why did WMG start its digital-oriented strategy?
The company needed to adapt to changes in technology.
4. Explore the ad arrangement with Outrigger. Does it make sense? Why?
Student research will vary. Currently internal ads at http://www.outrigger.com/
are arranged vertically on the right of the homepage. It seems to make sense and
is part of the overall site design.

EC Application Case 11.2: Measuring Profit on the Web


Questions
1. List four areas in which Axon is demonstrating increased profitability through
the use of the Web.

Selling costs were reduced by 40 percent for each dollar of margin


generated
Call volume to sales support increased at less than 50 percent of the
traditional rate
Warehouse space was reduced by 40 percent, while volume
increased by 40 percent
Obsolete stock write-offs as percentage of revenue were reduced by 93
percent

2. Describe the characteristics of the metrics listed here (e.g., financial, customer
service, quantitative, time based).
Of the metrics listed, all seem to show progress in each tangible area. For example:

Cost Avoidance selling costs were reduced by 40 percent for each dollar
of margin generated
Customer Service Average days to delivery were reduced by 20
percent over 2 years
New Markets Product revenue increased over 40 percent in first 12
months of full operation
New Media Cost per item for e-mail is less than 1 percent of the cost per
item for postal mail

3. What other metrics might apply (Hint: Consult Chapter 14)?


Student responses will vary.

Answers to Discussion Questions


1. How would you identify competitors for a small business that wants to launch
an EC project?
The business would have to define the industry it is currently in and then begin to
evaluate other firms that are part of that industry.
2. How would you apply Porters five forces and Internet impacts in Exhibit 12.3
to the Internet search industry, as described in the opening case?
Student answers will vary. Students will have different opinions on the relative
strengths in the industry.
3. Why must e-businesses consider strategic planning to be a cyclical process?
Because the plan must be continually revisited during the business cycle.
4. How would you apply the SWOT approach to a small, local bank evaluating its
e-banking services?
The bank would have to examine the four points of the model including its
strengths, weaknesses, opportunities, and threats in the e-banking area.
5. Offer some practical suggestions as to how a company can include the impact
of the Internet in all levels of planning.
Student responses will vary. Students will have different opinions based on their
experiences.
6. Amazon.com decided not to open physical stores, whereas First Network
Security Bank (FNSB), which was the first online bank, opened its first physical
bank in 1999. Compare and discuss the two strategies.
Student answers will vary. Answers may center on the benefits of pure electronic
commerce and the benefits of click-and-mortar operations. Additionally, the
expectations of these two different industries may be considered.
7. Discuss the pros and cons of going global with a physical product.
The major advantage of global sales is the expanded potential market. The
disadvantages include global logistics and potential localization of the product.

8. For each part of the CAGE framework, briefly discuss one barrier that may
negatively impact e-commerce companies doing business globally.
Student responses will vary based on their opinions of the barriers.
9. Find some SME EC success stories and identify the common elements in them.
Students answers will vary based on the story selected.
10. Submit three questions regarding EC strategy for small business to the
Small Business Expert (free) at
smallbusinessanswers.yahoo.com/?fr=bps737888. Summarize your experience.
Student research and results will vary.
11. After viewing the video FiftyOne Global Ecommerce Demo
(youtube.com/watch?v=2YazivwAm2o&feature=related) consider the following:
Fifty-One claims to address all the issues associated with currency
conversion, fraud screening, payment processing, customer brokering,
international freight forwarding, destination country delivery, and in-country
returns management.
a. Discuss how a company embarking on global e-commerce would
approach each of these challenges without the assistance of a company
like Fifty-One.
b. Would these challenges be insurmountable? For each challenge,
explain why or why not.
c. Would the type or size of a business affect whether it could successfully
navigate these challenges to global e-commerce? Explain your
conclusions.
Student research and results will vary. This is an interesting video with details that
students will respond to differently.

Topics for Class Discussion and Debates


1. Has the availability of EC affected the way we assess industry attractiveness?
Consider whether Porters five forces still apply in an EC setting and develop
new criteria for assessing the attractiveness of online industries.
Student research and opinions will vary. Students opinions on the strength of
companies will be addressed.
2. Consider the challenges of a brick-and-mortar company manager who wants
to create an integrated (online/offline) business. Discuss the challenges that he
or she will face.

Student research and opinions will vary. The discussion will focus on the
advantages of a larger operation versus the operations needed to sustain it.
3. As the principles in a small business that already has an effective Web
presence, you are considering taking your company global. Discuss the main
issues that you will have to consider in making this strategic decision.
Student research and opinions will vary. The discussion will focus on issues such
as localization and logistics.
4. Examine the seven strategies of Facebook and Twitter at
socialmediatoday.com/christinegallagher/165536/top-7-facebook-and-twitterstrategies and comment on them.
Student research and opinions will vary. The seven listed strategies are:
1. Find your peeps.
2. Concentrate on conversing and building relationships, instead of broadcasting
and selling.
3. Use a Facebook personal profile AND a Facebook business page TOGETHER.
4. Cross-post and cross promote.
5. Use a social media dashboard like Hootsuite and other productivity tools to
accomplish more in less time.
6. Get them on the list..
7. Measure and track your social media results.
5. Debate: Is Google Translate good for the translation of Web sites?
Student research and opinions will vary based on their experiences with the
software. Perceived effectiveness will depend on the language (Spanish is good,
Japanese is poor) and the accurately desired by the user.
6. Is Amazon eBays biggest challenge? (See Ackerman 2008.) What about
Walmart.com?
Student research and opinions will vary based on personal perceptions.
7. Debate whether you think that the Internet has changed (or will change) the
strategy of organizations that deliver distance education. Discuss the new value
that is created for them by EC. How can organizations offering e-learning
opportunities capture this value? Develop a list of examples.
Student research and opinions will vary based on personal perceptions.
8. Debate whether group members think that the customer gains more value
from EC than the company. Discuss both sides of the issue of whether

companies profit by the use of EC to the same extent that customers do. Support
your side of the debate by providing some examples.
Student research and opinions will vary. The debate will focus on the relative
benefits to consumers and businesses. Consumers benefit from selection and
possibly deals, companies access larger markets and are not tied to geographic
locations.
9. Debate: Will Facebook Places crush Foursquare in the location-based
competition? Why or why not?
Student research and opinions will vary. The debate will focus on current and
possible future features, and how the market will respond to them.

Internet Exercises
(Note: URLs may change over time; please check the Internet Exercises on
the Turban Web site for possible updates:
www.pearsonhighered.com/turban.)
1. Survey several online travel agencies (e.g., travelocity. com, orbitz.com,
cheaptickets.com, priceline.com, expedia.com, bestfares.com, and so on) and
compare their business strategies. How do they compete against physical travel
agencies? (See Chapter 18.)
Student reports will vary based on the sites selected. Generally these sites can
provide self-service at a lower cost, but cannot match the service and possibly
knowledge of agents.
2. Enter digitalenterprise.org and find Web metrics. Read the material on metrics
and prepare a report on the use of metrics for measuring advertising success.
Student reports will vary based on the types of metrics selected. In general,
different metrics can be used to track the success of marketing. Some metrics may
include views, click-throughs and sales.
3. Check the music CD companies on the Internet (e.g., cduniverse.com,
musica.co.uk). Do any companies focus on specialized niche markets as a
strategy?
Student reports will vary based on the time of report and sites selected.
4. Enter ibm.com/procurement and go to the e-procurement section. Prepare a
report on how IBMs Supplier Integration Strategy can assist companies in
implementing an EC strategy.

Student reports will vary based on the time of report.


5. Compare the following search engines: google.com, search.yahoo.com,
search.ask.com, and mooter.com. Conduct a comparative search (i.e., search for
the same term at each site), learn more about how each search engine works
(e.g., click on about us or similar link), and look for comparative articles at
Web sites such as searchenginewatch.com. Consider the strengths and
weaknesses of each site, when would one be more useful than another, and what
special features distinguish it in the search engine marketspace. Prepare a report
based on your findings.
Student reports will vary based on the services evaluated.
6. One of the most global companies is Amazon (amazon.com). Find stories
about its global strategies and activities (try google.com and forbes.com). What
are the most important lessons you learned?
Student reports will vary based on the content researched.
7. Visit business.com/guides/startup and find some of the EC opportunities
available to small businesses. Also, visit the Web site of the Small Business
Administration (SBA) office in your area. Summarize recent EC-related topics
for SMEs.
Student reports will vary based on the time of report.
8. Enter alloy.com and bolt.com. Compare the sites on functionality, ease of use,
message boards, homepage layout, and so on. Prepare a report based on your
findings.
Student reports will vary based on the services evaluated. Alloy.com is teen
fashion and gossip site with a variety of content, as well as social interaction. As of
November 2011, bolt.com was inactive.
9. Find out how Web sites such as tradecard.com facilitate the conduct of
international trade over the Internet. Prepare a report on your findings.
Student reports will vary based on the time of report. In general this service can be
used to rate the integrity of a business, and facilitate a transfer (and conversion) of
funds.
10. Conduct research on small businesses and their use of the Internet for EC.
Visit sites such as microsoft.com/smallbusiness/hub.mspx and uschamber.org.
Also, enter google.com or yahoo.com and type small businesses + electronic
commerce. Use your findings to write a report on current small business EC
issues.

Student reports will vary based on the time of the report and companies used.
11. Enter businesscase.com and review their products. What are the benefits of
CaseBuilder to people conducting e-commerce strategy development?
Student reports will vary based on their perception of the product.
12. Enter languageweaver.com and find the product they have for language
translation.
Student reports will vary based on the services evaluated.
13. Enter compete.com and identify all the services it provides, all lists, ranking,
marketing performance, and competitive intelligence reports it provides. Prepare
a list of the services and comment on their value to the merchants.
Student reports will vary based on the time of the report.

Team Assignments and Role Playing


1. Assignment for the Opening Case
Read the opening case and answer the following questions.
a. List and discuss the factors that are driving Travelocity to change its estrategy.

C
ommissions as airlines reduce commissions it affects revenues
Competition other entrants competing for customers

b. Considering the 14 dashboards that Travelocity has already created, come up


with two or three other dashboards that would be useful.
Student opinions will vary based on individual preference.
c. Share your experiences of using Travelocity with the group and discuss the
extent to which its e-strategy meets your personal needs.
Student opinions will vary based on the students experience.
2. Have three teams represent the following units of one click-and-mortar
company: (1) an off-line division, (2) an online division, and (3) top
management. Each team member represents a different functional area within
the division. The teams will develop a strategy in a specific industry (a group of

three teams will represent a company in one industry). Teams will present their
strategies to the class.
Student reports will vary based on the companies used.
3. The relationship between manufacturers and their distributors regarding sales
on the Web can be very strained. Direct sales may cut into the distributors
business. Review some of the strategies available to handle such channel
conflicts. Each team member should be assigned to a company in a different
industry. Study the strategies, compare and contrast them, and derive a proposed
generic strategy.
Student reports will vary based on research and opinions.
4. Each team must find the latest information on one global EC issue (e.g.,
cultural, administrative, geographical, economical). Each team will offer a report
based on their findings.
Student reports will vary by the issue selected.

5. Enter stassmann.com and find 10 entries related to e-strategy (including


videos). Prepare summaries of them relating to this chapter.
Student reports will vary based on the issues used.
6. Compare the services provided by Yahoo!, Microsoft, and Web site Pros Inc. to
SMEs in the e-commerce area. Each team should take one company and make a
presentation.
Student reports will vary based on the time of the report.
7. Enter buzzle.com/editorials/9-21-2004-59556.asp and execute the three
exercises related to strategic e-commerce.
Student opinions and answers will vary based on the exercises used.

End-of-Chapter Real-World Case Questions: Pierre Lang Expands


Into Eastern Europe
1. What were the drivers for Jorgendens e-strategy?
Reduced business and a smaller supply of goods
2. What makes the e-commerce strategy at Portland Fish Exchange effective?

It increases efficiency through automation, and allows more customers to


participate.
3. Which strategic tools might have been used when formulating his e-business
solution?
He may have used a strategy map, business case and business plan.
4. In implementing the e-strategy, what issues needed to be considered?
Some examples include the needs of the stakeholders, the abilities of technology,
the preferences of buyers and relationships with sellers.
5. What risks might have been involved in setting up the online auctions at
Portland Fish Exchange?
Some examples include technical risks and market adoption risks.

Glossary
Balanced scorecard: A management tool that assesses organizational progress
toward strategic goals by measuring performance in a number of different areas
Business case: A business plan for a new initiative or large, new project inside an
existing organization
Business plan: A written document that identifies a company's goals and outlines
how the company intends to achieve the goals and at what cost
Business process management (BPM): Method for business restructuring that
combines workflow systems and redesign methods; covers three process
categoriespeople-to-people, systems-to-systems, and systems-to-people
interactions
Business process reengineering (BPR): methodology for conducting a
comprehensive redesign of an enterprise's processes
Competitor analysis grid: A strategic planning tool that highlights points of
differentiation between competitors and the target firm
Corporate performance management: advanced performance measuring and
analysis approach that embraces planning and strategy, balanced Scorecards
Cost-plus: Adding up all the costs involved, such as material, labor, rent, overhead,
etc., and adding a percentage mark-up as profit

Disintermediation: The process by which the consumer bypasses the services of


an intermediary or intermediaries in the chain of distribution to purchase products
directly from those who supply or produce them
Key performance indicator (KPI): quantifiable measurement, agreed to
beforehand, that reflects the critical success factors of a company, department or
project
Metric: A specific, measurable standard against which actual performance is
compared
Project champion: person who ensures the EC project gets the time, attention, and
resources required and defends the project from detractors at all times
Scenario planning: A strategic planning methodology that generates plausible
alternative futures to help decision makers identify actions that can be taken today
to ensure success in the future
Strategy assessment: #4 monitor performance, compare, assess, improve, or adjust
Strategy formulation: #2 planning, cost-benefit, budget, risk analysis, business
plan
Strategy implementation: #3 project plan, resource allocation, scheduling teams
(what, who, when, where)
Strategy initiation: #1 company analysis, value proposition, competition, mission,
objectives, opportunities
Strategy map: A tool that delineates the relationships among the key
organizational objectives for all four BSC perspectives
Versioning: Selling the same good, but with different selection and delivery
characteristics
Web analytics: analysis of clickstream data to understand visitor behavior on a
website