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Dien D. Phan
Nicole Maria Stata Professor of MIS, University of Vermont, Burlington,
Vermont, USA
Electronic business (e-business) thanks to the rapid advance in information organizational theorists use the ecological
today plays a major role in the world technology (IT). As ITs develop, novel ways of theory to explain the formation and growth of
economic growth, thanks to the
rapid advance in information
business process redesign emerged, creating organizations in the environment. Although
technology. Recent estimates from turmoil in the industry. Organizations today they do not agree on a specific approach to use
Forester Research show that by frequently redesigned their processes in in studying organization life-cycle, major
2003 the value of e-commerce of US ways that provide new competitive ecological studies on organizations in the past
and Europe will reach US$3 trillion,
advantages. Success breeds imitation, and decade have been centered around three basic
the number of households in the
USA that have PCs will reach 64 invites more entries to e-business. There are approaches: developmental approach,
million, those that have access to many spectacular successes, but there are selection approach, and macroevolutionary
the Internet will reach 60 million, also many failures. As technology continues approach (Carroll, 1984). The developmental
and the number of mobile phones
to develop, organizations are in constant approach theorists argued that organization
will reach 69 million. There are
many spectacular successful search for new e-business technology and structures change over time, the form of
e-businesses but there are also available resources to gain competitive change being shaped by structural pressures
numerous failures. Presents a study advantages. Even the well-established and constraints. They also argued that
of e-business success at Intel Corp. software giant Microsoft is aware of that. organizations are highly adaptive. The
Intel reached $1 billion value in
e-business in its first month of
Chairman of Microsoft, Bill Gates, has a fear selection approach theorists argued that
deployment in July 1998. For the that Microsoft is about two years away from organizations were primarily not adaptive,
year of 2000, Intel's profits climbed failure, and that somewhere out there is a but largely inertial. Theorists using this
to $10.5 billion to become the fifth formidable competitor, unborn and approach believe that only the best
most profitable company in the USA,
unknown, who will use better business organizations will survive. Finally,
up from the eighth rank last year.
Concludes with lessons learned and models to put companies like Microsoft into macroevolutionary approach theorists
success factors. obsolescence. Turban et al. (2000) believe that focused on the change over time in a
the hottest and most dangerous new business community of organizations or industry
models out there are using e-business. rather than individual organizations. By
In 1998, Intel approached e-business as a focusing on large-scale changes in a
new way of doing business, and management community of organizations, they tried to
The author would like to wanted customers to know that Intel was describe the rise and fall of organizations
thank Mr Than Trong Phuc, serious with e-business. Intel created a self- within an industry.
General Manager of Intel service extranet called E-Business Program Because organizations are not internally
Corp., Vietnam for the which focused on procurement and customer
precious information on self-sufficient, they require resources from the
supports for its products. Access to the site environment, and thus become
Intel's success.
was restricted to Intel's authorized business interdependent with those elements of the
partners and customers. environment with which they transact.
Pfeffer (1982), and Pfeffer and Salancik (1978)
argued that organizations develop internal
Literature review and external strategies which seek to
Studying the effects of environment on minimize the uncertainty arising from
organizations in organizations has received a dependence on the environment for resources.
Industrial Management & To minimize transaction costs
Data Systems great deal of attention in organization theory
102/4 [2002] 211±217 (Williamson, 1981), organizations will seek
# MCB UP Limited low-cost strategies where feasible. In order
The current issue and full text archive of this journal is available at
[ISSN 0263-5577] for the USA to compete effectively against
[DOI 10.1108/02635570210423253] http://www.emeraldinsight.com/0263-5577.htm
Japanese firms in the Keiretsu system in the
[ 211 ]
Dien D. Phan 1990s, Ferguson (1990) suggested that the US 3 Multimedia content and network
E-business success at Intel: computer industry be networked into a high- publishing (i.e. WWW, HTML, XML, Java,
an organization ecology and CGI, etc.).
resource dependence tech chain industry.
perspective As the technology advances and the 4 Network information superhighway
Industrial Management & computer industry develops and grows, (i.e. Cable TV, Internet, telephone,
Data Systems market niches open and close frequently, wireless media, etc.).
102/4 [2002] 211±217
creating rapid changes in the industry. The
prevalence of technical innovations may be E-business success factors and challenges
regular, sporadic, or only once; these Evolution in e-business processes has
patterns of change have different established a new value chain that links the
implications for organizational populations. core business with sales and distribution
When they occur often, a niche may open up channels and supply chains. The new value
and organization competes to take the chains, in turn, created tremendous demands
advantage of cost savings and market on high-speed data communications. Studies
penetration that often results in better profits have shown that, by applying new network
and market shares. technologies, companies can operate more
Porter (1985) developed the value chain efficiently, extend traditional to electronic
model which highlights interdependence markets, and create larger inter-
activities in the business where competitive organizational virtual structures that are
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strategies can be best applied and where composed of the company and its customers,
information systems are most likely to have distributors, and suppliers. To succeed,
strategic impacts. As IT developed, novel companies will need to evaluate innovative
ways of business process redesign emerged. strategies that capitalize on both the power of
Organizations today frequently redesigned the Internet and the change in consumer
their processes in ways that provide new demands from both traditional and electronic
competitive advantages in which e-business markets. In order to manage resource inter-
is viewed as the most attractive solution. dependence, e-commerce companies are
Andy Grove, chairman of Intel, boldly stated required to develop more responsive, and
in 1998: ``Within five years, all companies will deeper and broader relationships with
be Internet companies or they won't be customers, suppliers, and distributors
companies'' (Intel Corp., 2000). (Scarborough and Spatarella, 1998).
There are basically six categories of Furthermore, the supply chains within
e-business: Business to Business (B2B), e-commerce companies also continue to
Business to Consumer (B2C), Consumer change. The changes include the conversion
to Business (C2B), Consumer to Consumer of information systems from the legacy
(C2C), Non-business, and Intra-business. vendor centric model to the Web-based
Without face-to-face, all e-business customer centric model and how delivery
transactions are done electronically by using channels are operated. Businesses need to be
computer and communication networks. sure that customers and suppliers can gain
Applications of e-business are classified into access to their Web sites to gain important
three categories: product information for decision making.
1 Electronic markets: Buying and selling Information also will give customers and
goods and services or electronic markets. suppliers the ability to receive and ship
2 Inter-organizational systems: Facilitating products or services at the right price, time,
inter- and intra-organization flow of place, and speed. The major barriers to
information, communication, and customers' and suppliers' access to the Web
collaboration. is ease and speed of access. Other barriers
3 Customer service: Provide customer include risk, privacy, confidentiality, and
service, help, handling complaints, security. Customer expectations about
tracking orders, etc. (Senn, 1996). convenience, speed, competitive price, and
service are also key factors in the success of
The infrastructure of e-commerce can be e-business (Hammel and Sampler, 1999).
built on the existing information technology. Studies by Mougayar (1998) and Raisch
Kalakota and Whinston (1997) suggest that (2001) suggested the following success factors
four infrastructures are necessary in for e-business:
implementing electronic commerce . Cater to buyer e-business behavior and
applications: customer personalization.
1 Common business service (i.e. security, . Maintain first-mover advantage, ensure
authentication, electronic payment, and quick time to market.
electronic catalog, portals, etc.). . Create right digital infrastructure.
2 Messaging and information distribution . Reduce operational cost and leverage
(i.e. EDI, e-mail and HTTP, etc.). outside innovation.
[ 212 ]
Dien D. Phan . Control risk while allowing innovation. service extranet called E-Business Program,
E-business success at Intel: . Conduct necessary education and training which focused on procurement and customer
an organization ecology and support for its products. Access to the site
resource dependence to employees, management and customers.
perspective . Review current distribution and supply was restricted to Intel's authorized business
Industrial Management & chain model to maximize company's gain. partners and customers.
Data Systems . Understand customers' and partners' As illustrated in Figure 1, the roles and
102/4 [2002] 211±217 responsibilities of teams that participated in
expectations from the Web.
. Improve products and services offered by the early development of the e-business
e-business. system at Intel were:
. Extend current systems to expand business. . A project planning team, which consisted
. Track new competitors and market shares. of customer, technical and logistical
. Develop new Web-centric marketing perspectives was created to define the
strategy. scope and objective of the project.
. Help to create company's own virtual . Business analysts were brought in during
market place. the early stages to help define the business
workflow and assess how information is
given to customers.
Intel's e-business development . Intel's sales and marketing staff were
assigned to define how best to work with
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Intel Corp., located in Santa Clara, customers via the e-business system.
California, is the world's largest producer of . Intel's planning and logistics group was
integrated circuits chips in the world today. also included on the planning team to help
Founded in 1968 to build semiconductor the IT department build a solution that
chips, Intel invented the microprocessor integrated with existing business systems.
more than 25 years ago. Today, the company . The IT department was positioned as an
has evolved from a processor manufacturer ``enabler'' of business. Its role was to
into a supplier of network and server integrate e-business technologies and to
hardware, Internet hosting services, and prepare for implementation.
other e-business components. Its
technological leadership ranges from Intel's mission and goals
microprocessor design to advanced Intel's early mission was to design and
manufacturing and packaging, and it deploy a worldwide e-business solution to
maintains production and research facilities strengthen its current business. The mission
around the world. was accomplished by deploying an
Most of its business is in the PC market. infrastructure that worked with existing
Intel is under intense competition from other business processes rather than requiring
chip makers such as Advanced Micro widespread change. The intent was to use
Devices (AMD), Cyrix, Texas Instruments, the Internet to expand existing business,
Motorola, and IBM. In the past, Intel market current products and exploit sales
customized catalogs and sent them to its channels.
potential customers along with product With over 50 percent of its revenues and
availability information. Until summer 1998, many customers coming from outside of the
this process was done entirely on paper. USA, the benefits of a global e-business
However, when large customers such as Dell system for Intel was too great to be ignored.
Computers and Cisco Systems started to use With over $25 billion annual sales in 1998
the Web to do their business in 1996, they and a world wide network of business
pressured Intel to do the same. partners, resellers, and original equipment
In 1997, Intel began to investigate the manufacturers (OEM), Intel needed to
feasibility of building the e-business system. improve its efficiency by automating its B2B
The project started with the virtual processes. Traditional business processes at
worldwide e-business team. Because of the Intel at that time was too slow and thus the
project emphasis on customer market needs, decision was to deploy a Web-based order
the team gave Intel's sales and marketing management system.
the responsibility to drive the project
forward. Strategies
Rather than attempt to build the entire
E-business project organizational structure business infrastructure from ground zero,
In 1998, Intel approached e-business as a new Intel was conservative and focused on a
way of doing business and management relationship with direct customers, including
wanted customers to know that Intel was OEMs and distributors online. ``We picked
serious with e-business. To better manage the one thing we could build very quickly and
resource dependence, Intel created a self- deploy to our customers'', said Sandra
[ 213 ]
Dien D. Phan Morris, Vice President of Marketing Group toward more efficient and productive tasks.
E-business success at Intel: at Intel. These conservative strategies Additionally, sales people seldom needed to
an organization ecology and include broaden and deepened sales hand-deliver confidential product
resource dependence
perspective outreach, targeted middle-tier companies, information as they had done in the past. The
Industrial Management & and customized Web sites to personalize stakes for the success of the pilot program
Data Systems information delivery. were great. With this customer segment, Intel
102/4 [2002] 211±217
was dealing with at least one billion dollars
Broaden and deepen sales outreach
per quarter of order processing right from
The first goal of e-business solution was to
the start.
extend the reach of Intel's sales force. To do
this, Intel automated its order management Improve customer service by delivering
and information delivery system. The personalized information
greatest opportunity for efficiency gains in Intel took great efforts to convert its system
1997 was with the customers who were not and data from the old vendor-centric model to
already electronically connected to Intel. By the new customer-centric model. The goal
converting the ``unwired'' to ``wired'', Intel was to improve customer service by
replaced the traditional phone and fax as a personalizing information delivery and then
means of communication with PC-based on- automating information delivery and routine
line communication tools. sales tasks.
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[ 216 ]
Dien D. Phan commerce'', Journal of Cash Management, Intel Corp. (2001), available at: www.intel.com/
E-business success at Intel: Vol. 18 No. 4, pp. 42-6. eBusiness/casestudies/snapshots/
an organization ecology and Senn, J.A. (1996), ``Capitalization on electronic
resource dependence intel_p.htm, 10 January.
perspective commerce'', Information Systems Rosen, M. (2000), ``Software portals'', Software
Management, Summer. Magazine, October-November, p. 22.
Industrial Management &
Data Systems Turban, E., Lee, J., King, D. and Chung, H. (2000), Schadler, T. (2000), ``The future of e-trade'',
102/4 [2002] 211±217 Electronic Commerce: A Managerial Forester Research, January.
Perspective, Prentice-Hall, Upper Saddle Tarn, J.M., Wen, H.J, Tang, H. and Han, B. (2000),
River, NJ.
``E-commerce: rationales for business
Williamson, O. (1981), ``The economics of
adoption and adaptation'', Proceedings of the
organization: the transaction cost approach'',
American Journal of Sociology, No. 87, 2000 International Conference of Pacific Rim
pp. 548-77. Management, 4-6 August, pp. 140-5.
Than, P.T. (2000), ``Intel Corporation: the
Further reading e-business payoff'', Proceedings of the
Business Week (2001), ``Corporate scoreboard'', IT@Edu2000 Conference, Ho Chi Minh City,
Business Week, 26 February, p. 60. Vietnam, 6-7 January, p. 202.
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