E-business Strategy

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.
 Management Issues

• How does e-business strategy differ from traditional

business strategy?

• How should we integrate e-business strategy with

existing business and information systems strategy?

• How should we evaluate our investment priorities

and returns from e-business?
 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

organization’.
E-business Strategy
“ Definition of future direction and actions of a company defined as
approaches to achieve specific objectives”
 H ow does e-business strategy differ from
traditional business strategy?

• In the one-to-many hierarchical information flow that

characterized the Industrial Age, information flowed one way,
from the producer to the consumers. The Internet has changed
this in three important ways.
– the Internet allows consumers to talk to consumers
– consumers can find and access information much easier
than before
– enables the information flow to be reversed so
customer-centric companies can pull
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.
 Different forms of organizational strategy

Figure 5.1 Different forms of organizational strategy

• Corporate Strategy – What business should you
be in? Looks at the whole range of business
opportunities
• Business Strategy – Battle plans, tactics used to
fight the competition in the industry that your
company currently participates in (see
Competitive Strategies and Competitive War
Games)
• Functional Strategy – Operational methods
and value adding activities that you choose for
your business (venture strategies, technology
strategies, diversification strategies, marketing
strategies, differentiation strategies
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
Relationship between e-business
strategy and other strategies

Figure 5.2 Relationship between e-business strategy and other strategies

© Marketing Insights Limited 2004
Introduction
• E-business strategy : “how to do business online , It defines how to do
business differently online”
Appropriate strategy process model is to follow for developing e-
business strategy:
I. Strategic evaluation
II. Strategic objectives
III. Strategy definition
IV. Strategy implementation
A generic strategy process model

Figure 5.3 A generic strategy process model

Elements of strategic situation analysis
for the e-business

Figure 5.5 Elements of strategic situation analysis for the e-business

1)Strategic analysis
Strategic analysis or situation analysis involves review of:
i. The internal resources and processes of the company to assess its e-
business.
ii. The immediate competitive environment (micro-environment), including
customer demand and behavior, competitor activity, marketplace structure
and relationships with suppliers, partners and intermediaries.
iii. The wider environment (macro-environment) in which Strategic a
company operates; this includes economic development and regulation by
governments in the form of law and taxes together with social and ethical
constraints such as the demand for privacy. These macro environment
factors, including the social, legal, economic, political and technological
factors.
Strategic Analysis
• Resource and process analysis: review of technological, financial ,
human resources of organization and how they are utilized in business
processes.
• Portfolio analysis: select the most appropriate future internet projects
, to define the services that will be delivered to external and internal
customers through deploying information systems.
Adoption steps of e-business services

Figure 5.6 Adoption steps of e-business services

Summary applications portfolio analysis
for the B2B Company

Figure 5.7 Summary applications portfolio analysis for The B2B Company
© Marketing Insights Limited 2004
SWOT analysis for the B2B company

Figure 5.8 SWOT analysis for The B2B Company

Customer demand for e-marketing
services for The B2B Company

Figure 5.9 Customer demand for e-marketing services for The B2B Company
© Marketing Insights Limited 2004
Competitive Environment Analysis
Porter’s five forces
Bargaining
powers of
customers

Power of Threat of
The business
suppliers subsitutes

Extent of rivalry
Threat of new
between
entrants
competitors
Competitive threats acting on the e-business

Figure 5.10 Competitive threats acting on the e-business

Exercise – 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