Pearson BTEC Level 5 Higher National Diploma in Business

Unit 14: Digital Business in Practice

Modified by: Martin Ortega Azurduy

Based on : TMC Academy v1 – July 2021
LO3 Develop a transformational digital strategy plan to support the
implementation of digital technologies within an organisation

LEARNING OUTCOME 3
 Learning objectives
• Follow an appropriate strategy process model
for digital business
• Apply tools to generate and select digital
business strategies
• Outline alternative strategic approaches to
achieve digital business

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 Management issues
• How does digital business strategy differ from
traditional business strategy?
• How should we integrate digital business strategy
with existing business and information systems
strategy?
• How should we evaluate our investment priorities
and returns from digital business?

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September 2021
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 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.

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 Alternative definitions of strategy
• What is strategy?
– ‘Defines how we will meet our objectives’
– ‘Sets allocation of resources to meet goals’
– ‘Selects preferred strategic option to
compete within a market’
– ‘Provides a long-term plan for the development
of the organisation’.

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September 2021
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 What is digital business
strategy?

Figure 5.2 Different forms of organisational strategy

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 Sell-side e-commerce strategy (Chapters 7 and 8)
or digital marketing/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 and 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
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 Buy-side e-commerce strategy (Chapter 6) or
supply chain management strategy

• Buy-side e-commerce strategy is about maximising

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
– Prioritise suppliers/partners collaborating using this channel
– Prioritise applications for SCM – create a roadmap
• Involves selection of appropriate strategic partners

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 OVERVIEW 1

Strategy is the definition of the future direction and actions of a

company defined as approaches to achieve specific objectives
Typical forms of organizational strategy are business unit,
regional and functional level strategies

Sell side e-commerce (SSEC) is a channel strategy.

A strategy driven by online contribution percentage

Buy side e-commerce (BSEC) is about maximising operational

efficiencies while improving customer service quality
A strategy driven by operational efficiency KPIs

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 Digital business strategy

Figure 5.3 Relationship between digital business strategy and other strategies

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 What happens where there is
no digital 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,
for example, Tesco, Dell
• Poor customer experience from poorly integrated
channels

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 Figure 5.4 The Onedox revenue model

Source: https://www.crowdcube.com/companies/onedox/pitches/b9nE7q#categorise

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 Examples of platform types
• Aggregation platforms – MoneySupermarket,
the App store, Ebay, Innocentive and Kaggle

• Social platforms – Facebook and Twitter

• Mobilisation platforms – Crowdfunder and

Kickstarter

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 Strategy process models for
digital business (1/2)

Figure 5.5 A generic strategy process model

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 Strategy process models for
digital business (1/2)

Figure 5.6 Dynamic digital business strategy model

Source: Adapted from description in Kalakota and Robinson (2000).

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 Resources and process analysis

Figure 5.7 Elements of strategic situation analysis for the digital business

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 Stage models of digital business
development

Table 5.3 A stage model for digital business development

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 OVERVIEW 2

Digital business strategy should conside existing SCM/CRM/IS strategies

Platforms bring together multiple players into one place, eg. aggregation,
social and mobilisation platforms

A generic strategy process is composed by 4 phases: (1) strategic analysis, (2)

strategic objectives, (3) strategic definition, (4) strategic implementation

S1 Analysis : Techniques for external environment (STEEPLED), for internal

resources (portfolio, SWOT, etc) AND DB specific tecniques (stage model,
SSEC&BSEC opportunities and threats)

The stage model for digital business development has 4 stages: (1) web
presence, (2) e-commerce, (3) integrated e-com, (4) digital business)

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 Application portfolio analysis
Analysis of the current
portfolio of business
applications within a
business is used to
assess current
information systems
capability and also to
inform future strategies.

Figure 5.8 Summary applications of a portfolio analysis for a sample B2B company

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 Organisational and IS SWOT analysis

Figure 5.9 SWOT/TOWS analysis

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 Activity
Impact of Internet
• For one of the industries below, assess how the
Internet has changed the competitive forces, for
example, has it increased or decreased power
of suppliers and customers?
• Industries:
– Banking
– Supermarkets
– Oil industry
– Rail industry

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 OVERVIEW 3

Strategic portfolio analysis and SWOT/TOWS analysis are techniques useful

for analysing the internal resources

Portfolio analysis is used to assess CURRENT IS CAPABILITY and inform

FUTURE STRATEGIES.

It has CURRENT strategic importance systems on the x-axis and FUTURE on

the y-axis.

The 4 quadrants are: (1) HIGH-HIGH Strategic (2) HIGH-LOW High

Potential (3) LOW-HIGH Key operational (4) LOW-LOW Support.

The TOWS/SWOT analysis allow us to device potential strategies by pairing

them as follows: SO strengths-opportunities, S-T strengths-threats, WT
weakenesses-threats, WO weaknesses-opportunities

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 Evaluation of internal resources (1/2)

Figure 5.10 Matrix for evaluation of external capability against internal capability
Source: Perrott (2005), with permission

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 Evaluation of internal resources (2/2)

Table 5.4 Capability maturity model of the adoption of e-business

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 Figure 5.11 Competitive threats
acting on the digital business

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 Porter’s 5 forces
Porter’s Five Forces
analysis is a frame-
work that helps
analyzing the level of
competition within a
certain industry.

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 Strategic objectives (1/2)

Figure 5.12 Elements of strategic objective setting for the digital business

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 Strategic objectives (1/2)

Figure 5.13 VMOST analysis

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 Table 5.6 Goals, strategies and objectives (key
performance indicators) for a sample B2B
company (in order of priority)

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 Figure 5.14 Arriva Bus app

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 The online revenue contribution (1/2)

Figure 5.15 An example of conversion modelling for an online retailer

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 The online revenue contribution (2/2)

Figure 5.16 Research Online Purchase Offline example

Source: Google
Figure 5.16 Research Online Purchase Offline example
Source: Google.
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 Assessing the significance of digital channels

Figure 5.17 Grid of product suitability against market adoption for

transactional e-commerce (online purchase)

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 Selection of digital business strategy options

Figure 5.18 Elements of strategy definition for the digital business

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 Decision 1: Digital business channel priorities (1/2)

Figure 5.19 Matrix for evaluating digital business strategy alternatives

Source: ‘Econsultancy’ (2008a)

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 Decision 1: Digital business channel priorities (2/2)

Figure 5.20 Strategic options for a company in relation to the importance of the Internet as a channel

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 Decision 2: Market and
product development strategies

Figure 5.21 Using the Internet to support different growth strategies

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 Strategy implementation

Figure 5.23 Elements of strategy implementation for digital business

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 Summary

• You should be able to follow an appropriate

strategy process model for digital business
• You should be able to apply tools to
generate and select digital business
strategies
• You should be able to outline alternative
strategic approaches to achieve digital
business

Martin Ortega Azurduy

September 2021
Modified from © 2019, 2015, 2011. All Rights Reserved
Thank you!
Any questions?