E-Business Strategy

SOCAR Sports Limited is an independent sports goods retailer owned and operated by two partners,
Alam and Rob in Bangladesh. The sport retailing business has undergone a major change over past ten
years. First of all the supply side has been transformed by the emergence of a few global manufacturers
of the core sports products such as training shoes and cricket gears. This consolidation has made them
increasingly unwilling to provide good service to the independent sportswear retailers too small to buy
in sufficient large quantities. These independent retailers can stock popular global brands but have to
order using the internet and no opportunity to meet the manufacturer’s sales representatives. Secondly
Bangladesh sportswear retaining has undergone significant structural change with the rapid growth of a
small number of national retail chains with the buying power to offset the power of global
manufacturers. The retail chains stock a limited range of high volume branded products and charge low
prices the independent retailer cannot cope to match.

SOCAR Sports has survived by becoming a specialist niche retailer catering for less popular sports like
football, hockey and basketball. They are able to offer the specialist advice and stock the goods that
their customers want. In recent years SOCAR Sports has become aware of the growing impact of e-
business in general and e-retailing in particular. They employed a specialist website designer and
created on-line purchasing facilities for the customers. The results were less than impressive, with the
internet search engines not picking up the company website. The seasonal nature of SOCAR Sports
business, together with the variations in sizes and colours needed to meet the individual customers’
needs, meant that sales volume were insufficient to justify the cost of running the site.

Rob however, convinced that developing an e-business strategy suited to the needs of the independent
sports retailer such as SOCAR Sports will be key to business survival. He has been encouraged by the
growing interest of customers in other countries to the service and product range they offer. He is also
aware of the need to integrate an e- business strategy with their current marketing, which to date has
been limited to the sponsorship of local sports teams and advertisement taken in specialist sports
magazines. Above all he wants to avoid head-on competition with the national retailers and their
emphasis on popular branded sportswear sold at retail prices that are below the cost price at with
SOCAR Sports can buy the goods.

Required: (i) Provide the partners a short report on the advantages and disadvantages to SOCAR Sports
of developing an e-business strategy and the processes most likely to be affected by such a strategy. (ii)
SOCAR Sports Limited has successfully followed a niche strategy to date. Assess the extent to which an
appropriate e-business strategy could help support such a niche.

Solution

Report
To: Alam and Rob, Best Sports Limited
From: Strategic Consultant
Date:
Subject: E-Business strategy

Introduction
Very few businesses can afford to ignore the potential of the internet for driving forward strategy and
activity. The markets that Best Sports operates are being affected by the development of e-business.
 Small enterprises such as this one gain access to customers on a global scale, which only relatively
recently would have been viewed as impossible. In many ways advantages and disadvantages of e-
business can be viewed from the perspective of customers.

Advantages on an e-business strategy

 E business allows the business to do B to C business. By delivering products to customers directly, the
company is able to drive significant cuts in costs to use intermediaries in outbound supply chain that
enables it to reduce costs and gain competitive advantage. The world is now rapidly moving towards e
business in a scale we could never have fathomed thanks to the internet and sophisticated IT tools using
AI and robotics. In future, drones will take over human functions in deliveries further cutting costs and
increasing productivity.
 Though the integration and acceleration of standard business processes via highly sophisticated IT
systems (order placing, stock control, dispatch and so on), attention to customer needs and
communication with them, can be much quicker. On time deliveries to customers can only be ensured if
the company has a robust IT system that can track deliveries till delivery to the end customer. This
enhances the company’s brand image.
 Although the internet has a global reach, its benefits are not confined to large organizations. Best Sports
can move into global market place.
 Websites can provide new channel of communication, linked with customer databases which can be
analyzed to provide much greater insights into consumer buying behavior.
 Increased quantities of data and more sophisticated methods of analyzing it mean that greater attention
can be paid to customizing product offerings to more precisely defined target customers.

Disadvantages of an e-business strategy

 E-commerce presents completely new problems of management and organization, not least because it
needs the involvement specialists. There may be lack of in-house expertise.
 A detailed cost/benefit should be undertaken. It may even be decided that costs exceed the benefits of
setting up the e-business operation.
 New technology installed by Best Sports will need to link up with existing business systems. So the
resource needed should not be underestimated.
 The risks facing IT systems can hardly be overemphasized. IT systems are compromised leading to major
losses in companies.

SWOT Analysis

BTV is the Bangladesh’s public service television channel with more than 200 transmitters covering 90%
of the country’s population across an estimated 20 million homes. It has more than 5000 employees
managing the metro and regional stations. Recent years have seen growing competition from many
private channels numbering more than 20, and the cable and satellite operations (C&S). C&S network
reaches nearly 1 million homes and is growing very fast rate.

BTV’s business model is based on selling half-hour slots of commercial time to the programme
producers and charging them a minimum guarantee. For instance, the present tariff for the first 20
episodes of a programme is Taka 20 lacs plus the cost of production of the programme. In exchange the
producers get 780 seconds of commercial time that he can sell to advertisers and can generate revenue.
Break-even point for producers, at the present rates, thus is Taka 50000 for a 10 second advertising
spot. Beyond 20 episodes, the minimum guarantee is Taka 35 lacs for which the producer has to charge
Taka 85,000 for a ten second spot in order to break-even. It is at this point the advertisers face a
problem – the competitive rate for a 10 second spot is Taka 30,000. Producers are possessive about
buying commercial time on BTV. As a result the BTV’s growth is only 5-10% as against 50-60% for the
private sector channels. Software suppliers’, advertisers and audiences are deserting BTV owing to its
unrealistic pricing policy.

BTV has three options before it. First, it should privatize, secondly, it should remain purely public service
broadcaster and third, a middle path.

The challenge seems to be to exploit BTV’s immense potential and emerge as a formidable player in the
mass media.

Required: (i) What is best option, in your view, for BTV? Why? (ii) Analyse the SWOT factors the BTV
has.

Solution

a. For several years BTV was the only broadcaster of television programme in Bangladesh. After
opening the sector to private entrepreneur (cable and satellite channels), the market has
witnessed major changes. The number of channels have increased and so has the quality of
programmers, opportunity to advertise, outreach activities. Broadcasting has become a popular
business. Broadcasters too have realized the great business potential in the market. But for this,
policies need to be rationalized not only in term of quality of programmes but open the scope
for innovation in all. This would not come simply by going to more areas or by allowing
bureaucratic set up to continue in the organisation.
b.
Strategically, BTV needs to undergo a policy overhaul. BTV out of three options namely
privatization, public service broadcaster or a middle path, can choose the third one, i.e.
combination of both. The whole privatization is not possible under diversified political scenario.
Nor it would be desirable to hand over the broadcasting emotively in the private hand as it
proves to be a great means of communication of many socially desirable public programmes.
However, at the same breadth, BTV would need to be more objective and independent in airing
its views otherwise the viewers would continue to be attracted towards private channels. The
government could also think in term of creating a corporate structure and provide reasonable
autonomy to BTV. There has to be far more innovativeness in terms of program development in
terms of retaining only popular programs, discarding the hackneyed ones and bring new and
exciting programs that viewers are interested in by regularly rating the programs. The
advertising tariff needs to be highly competitive. However, at the same time, the higher viewers
and reach of BTV may justify a higher advertisement tariff.

c. The SWOT analysis involves study of strengths, weaknesses, opportunities and threats of an
organisation. SWOT factors that evidently available to the BTV are as follows:

Strength
a. More than 500 transmitters
b. Covering 90% of population across 30 million homes against only 2 million homes by C& S
 c. More than 5000 employees

Weakness

a. Rigid pricing strategy

b. Low credibility with certain section of society
c. Quality of programmes are in most cases poor and lack creativity
d. Lack of objectivity and independence in airing its views

Opportunities

a. Infrastructure can be leased out to cable and satellite channels

b. Digital terrestrial transmission
c. Regional focused channels
d. Allotment of time, slots to other broadcasters

Threats

a. Desertion of advertisers and producers may result in loss of revenue

b. Due to quality/popularity of program the reach of C&S is continuously expanding
c. As the C&S need the trained staff, BTV employees may switchover and take new jobs
d. Losing viewers due to poor programme quality
e. Best of the market technology is being used by the private channels

It is suggested that BTV should adopt a middle path. It should have mix of both the options. It should
economise on its operational aspects and ensure more productivity in term of revenue generation and
optimisation of use of its infrastructure.

Wherever capacities are under utlised, these may be leased out to the private operators. At the same
time quality and viewership programmes should be improved.

Bureaucracy may reduce the new strategic initiatives or make the organisation less transparent.
Complete privatization may fetch a good sum and solve many of the managerial and operational
problems. However, complete control with private sector is not advisable because that denies the
government to fully exploit the avenues of social and public use. BTV should see the models operating in
developed countries where the channels are operated as private channels but focuses a lot on
government development initiatives.