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The General Manager and the Internet

Francis Stevens George Krooman Consulting

fsg: 8/2004/GMI

The Role of the General Manager

To guide his or her organisation to meet its performance goals and mission To attain and maintain a competitive advantage To use the internet [and related technologies] to reinforce an existing competitive advantage or to gain a new one
fsg: 8/2004/GMI

Important Factors
Incumbent or pure-play Internet new entrant Formulation and execution of a good strategy The characteristics of the general manager

fsg: 8/2004/GMI

Implementing an Internet Strategy-Key Questions

Where is the company as far as the internet is concerned? Where does the company go next? How does it get there? How does it implement the decisions to get there?

fsg: 8/2004/GMI

Types of Companies
Incumbent: Bricks and Motar or lrgacy companies. They were in existence prior to the adoption of the internet by their industries. New Entrants: Pure-play companies. Those that enter markets that rest on the Internet and were nonexistent prior to the Internet, and those that use the Internet to enter existing markets.
fsg: 8/2004/GMI

Incumbent: Advantages
Complementary Assets: brand name, distribution channels, client relations, supplier relations etc Technology Is Easy to Imitate: parts or even the whole of an Internet business model is easy to imitate or outdo

fsg: 8/2004/GMI

Incumbent: Disadvantages
Dominant Managerial Logic: framework is which information is scan and decisions are made Competency Trap: the inability to shed old successful ways of doing things and embrace new ones Fear of Cannibalization and Loss of Revenue
fsg: 8/2004/GMI

Incumbent: Disadvantages-cont
Channel Conflict: existing sales forces and distributors fight against the new channels rather than see their revenues to new channels Political Power Co-opetitor Power: customers, suppliers with whom the firm has to compete will affect the company in its adoption of the internet Emotional Attachment Fear of the New Technology
fsg: 8/2004/GMI

New Entrants: Advantages

Less Inertia: no dominant managerial logic, no competency traps, no channel conflicts, no emotional attachment and so forth Equity Capital: (at least in the late 1990s and early 2000) Attraction for Talent
fsg: 8/2004/GMI

New Entrants: Disadvantages

Lack Complementary Assets Technology Easy to Imitate

fsg: 8/2004/GMI

Formulating and Implementing Strategy

Where is the company?
-Appraise business model -Strenghts and Weaknesses -Sources of competive advantage -Are sources sustainable?

Where does the company go next?

-Strategic intent?

How does the company get there?

-Acquiring capabilities

fsg: 8/2004/GMI

Personal Role of GM
Champions Sponsors(Mentor, Coach)

fsg: 8/2004/GMI

GM should understand important differences between legacy firms in the industries prior to internet-and the new entrants Where incumbent or new entrant, it must formulate and execute an internet strategy Guiding the firm through this strategy process requires certain characteristics: champion or sponsor.
fsg: 8/2004/GMI

G.M. Hamel and C.K. Prahalad, Competiting for the Future Afua and Tucci, Internet Business Models and Strategies

fsg: 8/2004/GMI