Chapter 05

Slide 5.
1
Chapter 5
E-business strategy
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.2
Learning outcomes
• Follow an appropriate strategy process model
for e-business;
• Apply tools to generate and select e-business
strategies;
• Outline alternative strategic approaches to
achieve e-business.
Slide 5.3
Management issues
• How does e-business strategy differ from
traditional business strategy?
• How should we integrate e-business strategy
with existing business and IS strategy?
• How should we evaluate our investment
priorities and returns from e-business?
Slide 5.4
Michael Porter on the Internet
‘The key question is not whether to deploy
Internet technology – companies have no
choice if they want to stay competitive – but
how to deploy it.’
Porter, M. (2001) Strategy and the Internet,
Harvard Business Review, March 2001, 62–78.
Slide 5.5
Alternative definitions of strategy
What is strategy?
– “Defines how we will meet our objectives”
– “Sets allocation of resources to meet goals”
– “Selects preferred strategic options to
compete within a market”
– “Provides a long-term plan for the development of
the organization”.
Slide 5.6
Figure 5.1 Different forms of organizational strategy
Slide 5.7
Sell-side E-commerce strategy (Chapters 8 & 9)
or E-marketing/E-CRM Strategy
• Sell-side e-commerce is a channel strategy
• Objectives for online contribution percentage
should drive our strategy
• Our e-commerce strategy defines how we should:
• Hit our channel leads & sales targets
– Acquisition, Conversion, Retention, Service, Profitability
• Communicate benefits of using this channel
• Prioritise products available through channel
• Prioritise audiences targeted through channel
• Select partners for this channel
• Channel strategy thrives on differentials
• BUT, need to manage channel integration.
Slide 5.8
Buy-side E-commerce strategy (Chapters 6 & 7)
or E-supply chain management strategy
• Buy-side e-commerce strategy is about maximizing
operational efficiencies while improving customer service
quality
• Operational efficiency KPIs should drive our strategy
• Our buy-side e-commerce strategy defines how we should:
• Automate internal processes
• Link internal resource management systems with external purchasing
systems
• Prioritize suppliers/partners collaborating using this channel
• Prioritize applications for E-SCM – create a roadmap
• Involves selection of appropriate strategic partners.
Slide 5.9
E-business strategy
• For me, an IS strategy or change management
strategy (Chapter 10) which ensures resources
are managed effectively to achieve
opportunities from Buy-side and Sell-side e-
commerce. Also involves deploying IS to
manage administrative internal process and
employee knowledge
• Involves management of information systems
resources (e-business applications,
infrastructure/hardware and people/change/
knowledge management).
Slide 5.10
Figure 5.2 Relationship between e-business strategy and other strategies
Slide 5.11
What happens where there is
no e-business strategy?
• Missed opportunities for additional sales on
the sell-side and more efficient purchasing on
the buy-side
• Fall-behind competitors in delivering online
services – may become difficult to catch-up,
e.g. Tesco, Dell
• Poor customer experience from poorly
integrated channels.
Slide 5.12
Figure 5.3 BA communicates their online value proposition (www.britishairways.com)
Source: Based on Revolution (2005)
Slide 5.13
Figure 5.4 A generic strategy process model
Slide 5.14
Figure 5.5 Dynamic e-business strategy model
Source: Adapted from description in Kalakota and Robinson (2000)
Slide 5.15
Figure 5.6 Elements of strategic situation analysis for the e-business
Slide 5.16
Figure 5.7 Summary applications of a portfolio analysis for The B2B Company
Slide 5.17
Figure 5.8 SWOT analysis for The B2B Company
Slide 5.18
Figure 5.9 Customer demand for e-marketing services for The B2B Company
Slide 5.19
Figure 5.10 Competitive threats acting on the e-business
Slide 5.20
Porter’s five forces
Bargaining
powers of
customers
Power of Threat of
The business
suppliers substitutes
Extent of rivalry
Threat of new
between
entrants
competitors
Slide 5.21
Activity – impact of Internet
• For one of the industries below, assess how the
Internet has changed the competitive forces,
e.g. has it increased or decreased power of
suppliers and customers
• Industries:
– Banking
– Supermarkets
– Oil industry
– Rail industry
Slide 5.22
Figure 5.11 Elements of strategic objective setting for the e-business
Slide 5.23
Figure 5.12 An evaluation tool relating information to business value. An
organization’s use of information on each axis can be assessed from 1 (low use
of information) to 10 (high use of information)
Source: Marchand et al. eds (1999)
Slide 5.24
Figure 5.13 Capital One web site (www.capitalone.co.uk)
Slide 5.25
Figure 5.14 Direct and indirect Internet contributions for fast-growth companies in
the USA
Source: PricewaterhouseCoopers (2000)
Slide 5.26
Figure 5.15 Grid of product suitability against market adoption for transactional
e-commerce (online purchases)
Slide 5.27
Table 5.5 Vision of online revenue contribution for The B2B Company
Slide 5.28
Figure 5.16 Elements of strategy definition for the e-business
Slide 5.29
Figure 5.17 Strategic options for a company in relation to the importance of the
Internet as a channel
Slide 5.30
Right Channelling
• Right channelling can be summarized as:
– Reaching the right customer
– Using the right channel
– With the right message or offering
– At the right time
• Examples:
– B2B serve SMEs through e-channels and larger clients
through personal service
– Encourage consumers to buy and serve through lower cost
electronic channels
– Encourage offline fulfillment/conversion as appropriate
– Different levels of service/promotion for different
customers.
Slide 5.31
Figure 5.18 Liveperson – an example of a service to assist with ‘right-channelling’
Source: www.liveperson.com
Slide 5.32
Figure 5.19 Using the Internet to support different growth strategies
Slide 5.33
Figure 5.20 smile (www.smile.co.uk)
Source: Reprinted by permission of The Co-operative Bank
Slide 5.34
Figure 5.21 Dabs.com (www.dabs.com)
Slide 5.35
Figure 5.22 Elements of strategy implementation for the e-business

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