E-Commerce Strategy and Global EC

CHAPTER 14

Presented By:

Samar El-HaddadMenna Hatem

Dina El-HaddadRaghda Essam

Agenda Organizational strategy: concepts and

overview Business planning in E-commerce  E-Commerce strategy : concepts and overview  E-Strategy initiation  E-Strategy formulation E-Strategy implantation E-Strategy and project assessment Global E-Commerce  E-Commerce in small and medium - sized enterprises 

Organizational Strategy: Concepts and Overview

Strategy: A broad-based formula for how a business is going to accomplish its mission, what its goals should be, and what plans and policies will be needed to carry out those goals.

Strategy is also about making tough decisions about what not to do.

Organizational Strategy : Concepts and Overview

Products,Services

Customers,market,

competition

Vision

guide

Strategy

create

develop

Tactic

N

Organizational Strategy: Concepts and Overview Vision

Your vision is an idealized state for your life and/or business. It is the big picture of what you want for the future and encompasses your mission, values, goals and objectives.

MissionYour mission is the nuts and bolts of the vision. Mission is the who, what and why of your business (or personal) existence.

Organizational Strategy: Concepts and Overview E-commerce strategy (e-strategy)

The formulation and execution of a vision of how a new or existing company intends to do business electronically

Strategic information systems planning (SISP)

A process for developing a strategy and plans for aligning information systems (including e-commerce applications) with the business strategies of an organization

StrategyInitiation

StrategyAssessment

StrategyImplementation

StrategyFormulation

The Strategic planning Process

Strategic planning process

Strategy initiation: The initial phase of strategic planning in which the organization examines itself and its environment

• Value proposition: The benefit that a company’s products or services provide to customers, the consumer need that is being fulfilled

Strategic planning process (cont.)

Outcomes from strategy initiation phase Company analysis (including value proposition)

include the vision, purpose, value proposition, capabilities, constraints, strengths, and weaknesses of the company.

Core competencies it refers to the unique combination of the resources and

experiences of a particular firm. Forecasts

Identify business ,technological, political ,economical and other trends that are currently affecting the business or might affect it in the future.

Competitor (industry) analysis Scanning business environment to collect information about

direct , indirect and potential competitors.

Strategic planning process (cont.)

Strategy formulation: The development of strategies to exploit opportunities and manage threats in the business environment in light of corporate strengths and weaknesses

Specific activities and outcomes from strategy formulation phase: Business opportunities

It depend if the initiation has been done well several scenarios will be observes .

Cost-benefit analysis any opportunity must be assessed in terms of cost and benefit to

the company, it could be financial or non financial or short-term or long-term.

Risk analysis, assessment, and management Any initiative EC project have a risk, this risk should be analyzed,

assessed and managed.

Strategic planning process (cont.)

Strategy implementation: The development of detailed, short-term plans for carrying out the projects agreed on in strategy formulation

Specific activities and outcomes from strategy implementation phase: Business planning

Setting specific project objects creating project schedule and setting measurable performance targets

Resource allocation Determined what are organizational recourses including

humans ,financial, etc… Project management

Putting life to the EC project through hiring stuff purchasing equipment licensing and so on

Strategic planning process (cont.)

Strategy assessment: The continuous evaluation of progress toward the organization’s strategic goals, resulting in corrective action and, if necessary, strategy reformulation

The Strategic Planning Process

Strategic Planning ToolsSWOT analysis

A methodology that surveys external opportunities and threats and relates them to internal strengths and weaknesses

competitor analysis gridA strategic planning tool that highlights points of differentiation between competitors and the target firm

scenario planningA strategic planning methodology that generates plausible alternative futures to help decision makers identify actions that can be taken today to ensure success in the future

Balanced scorecard a management tool that assesses organizational progress toward strategic goals by measuring performance in a number of different areas.

Business Planning in E-Commerce

Business planA written document that identifies the company’s goals and outlines how the company intends to achieve those goals

Outline of a business plan Executive Summary Business Description Operations Plan Financial Plan Marketing Plan Competitor Analysis

Business Planning in E-Commerce

Business Plan Fundamentals Purposes for business plan

To acquire funding To acquire nonfinancial resources To obtain a realistic approach to the business

business caseA business plan for a new initiative or large, new project inside an existing organization

E-Commerce Strategy : Concepts and Overview

E-Strategy Initiation

The organization prepares the initial steps needed for starting the cycle.Initial steps: Renew the organization’s vision and

mission. Analyze organization’s industry,

company Consider initiation issues.

Issues in E-Strategy Initiation

Be a first Mover not a FollowerOpportunities Risks

Make first and lasting impression on customers

High cost of pioneering EC initiation

Make Strong brand recognition

Make mistakes

SuccessThe size of opportunity

The nature of the product

Whether the company can be the best in the market

Determining Scope

When determining scope, the organization considers:

The number of products it sells.

The most efficient way to expand the scope to introduce new products into existing market without increase production facilities or staff.

Have a separate online company?Separating company’s online operations into new company.

Advantage Disadvantage

Reduction/Elimination of internal conflicts.

Very costly, risky or both

More freedom for online company’s management in pricing

New company will not benefit from expensive & spare capacity

Ability to create new brand quickly

Have a separate online brand?

A company faces a similar decision when deciding whether to create a separate brand for its online offering.Example

E-Strategy Formulation

In strategy formulation, the firm must decide which initiative to implement & in what order.Activities:Selecting EC opportunities, productive strategy selection approach can be used.o Problem-driven Strategy: may be best when an

organization has specific problem that an EC application can solve.

o Technology-driven Strategy: occur when a company owns technology that it needs to use.

o Market-driven Strategy: can occur when company waits to see what competition in the industry do.

Determining an Appropriate EC Application Portfolio

1. The BCG Model (Boston Consulting Groups)

The model used to show the growth-share matrix.2. An Internet Portfolio Map for Selecting ApplicationsThe Internet portfolio map is based on company fit and project viability.

Cont’d

Sellproject

Rejectproject

Adoptproject

Redesignproject

Company Fit

Viab

ility

of P

roje

ct

Internet Portfolio Map

Low

High

High

Risk Analysis and Management

• e-commerce (EC) riskThe likelihood that a negative outcome will occur in the course of developing and operating an electronic commerce strategy

E-Strategy Implementation

The execution of the strategic plane takes place in the Strategy Implementation phase, in which detailed, short-term plans are developed for carrying out the projects agreed on in the strategy formulation.

Decision makers evaluate options, establish specific milestones, allocate resources, and manage the projects

Cont’d

Create a Web Team

Carefully define the roles and the responsibilities of the team leader, team members, webmaster, and technical staff

project champion :The person who ensures the EC project gets the time, attention, and resources required and defends the project from detractors at all times

Cont’d

Start with a Pilot Project

Pilot projects help uncover problems early, when the plan can easily be modified before significant investments are made

Cont’d

Allocate Resources Resources depend on the information

requirements and the capabilities of each project.

Some resources will be new and unique to the EC project

Manage the ProjectVariety of tools , Microsoft project

determining project tasks, milestones, and resource requirements

DFD can help

Strategy Implementation Issues

Application developmentNumber of decisions of whether to build, buy,

or outsource various construction aspects of the application implementation process face the company

Partners’ strategy outsourcing

The use of an external vendor to provide all or part of the products and services that could be provided internally

Cont’d

Business alliances and virtual corporations- B2B e-marketplace- Virtual corporation (VC)

An organization composed of several business partners sharing costs and resources for the production or utilization of a product or service

o Permanent,temporary- co-opetition

Two or more companies cooperate together on some activities for their mutual benefit, even while competing against each other in the marketplace

Cont’d

Redesigning business processes business process reengineering (BPR)

A methodology for conducting a comprehensive redesign of an enterprise’s processes

 Is the analysis and design of workflows and processes within an organization

Business process management (BPM)Method for business restructuring that combines workflow systems and redesign methods; covers three process categories

people-to-people, systems-to-systems, and systems-to-people interactions

E-Strategy and Project Assessment

The Last phase of e-strategy begins as soon as the implementation of EC application or project is complete

The Objectives of Assessment Measure the extent to which the EC strategy and ensuing

projects are delivering what they were supposed to deliver Determine if the EC strategy and projects are still viable in

the current environment Reassess the initial strategy in order to learn from mistakes

and improve future planning Identify failing projects as soon as possible and determine

why they failed

Cont’d

Each company measures success or failure by different set of standards

One way to measure a project's performance is to use metrics

Measuring Results and Using Metrics Metric

A specific, measurable standard against which actual performance is compared

Corporate (business) performance management (CPM, BPM)Advanced performance measuring and analysis approach that embraces planning and strategy

 Is a set of management and analytic processes that enable the management of an organization's performance to achieve one or more pre-selected goals.

Cont’d

The Major steps of the process:

1. Setting goals and objectives2. Establishing initiatives and plans to

achieve those goals3. Monitoring actual performance against

the goals 4. Taking corrective action

Cont’d

Web analyticsThe analysis of clickstream data to understand visitor behavior on a Web site

  It is often done without the permission or knowledge of the user, in which case it becomes a breach of web browser security.

Global E-Commerce

Benefits and Extent of Operations

The major advantage anywhere of the global EC are the ability to do business at any time, from anywhere, and at a reasonable cost

Barriers to Global EC

Despite the benefits and opportunities offered by globalization, there are many barriers to global EC.

We will use (CAGE) framework to identify areas in which barriers hinder global EC.

Cultural Issues Administrative Issues Geographic Issues Economic Issues

Culture Issues

Doing business globally requires cultural marketing to meet the needs of a culturally diverse population. Language Information formatting Time standards Currency

Administrative Issues One of the most contentious area of global

EC is the resolution of legal issues. International trade organizations attempt to

reduce EC trade barrier in areas Pricing regulation Customs Import/Export restrictions Tax issues Product specification regulations

Geographic Issues

The geographic issues of shipping goods and services across international borders are well known.

Barriers posed by geography differ based on the transportation infrastructure between and within countries and the type of product and services being delivered. ( geographic distance is almost irrelevant with online software sales )

Economic Issues

Economic and financial issues in global EC include government tariffs, customs and taxation. EC electronic payment system Pricing is another economic issue

Global E-Commerce

Breaking Down the Barriers to Global EC Be strategic Know your audience Localize Think globally, act consistently Value the human touch Clarify, document, explain Offer services that reduce barriers

EC in Small and Medium-Sized Enterprises

Critical Success Factors for SMES Product is critical Payment methods must be flexible Electronic payments must be secure Capital investment should be kept to a minimum Inventory control is crucial Logistics services must be quick and reliable High visibility on the Internet Join an online community A Web site should provide all of the services needed by

consumers

Key Points

Questions

Thank you