Assignment 2

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Part 2

Strategy and applications

Chapter 5

Digital business strategy

Digital Business and E-Commerce Management Seventh Edition

Learning outcomes

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

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?

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.

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’.

Digital channel strategies

Need strategies that are comprehensive across all areas.

Needs to be a multichannel strategy

Mobile commerce strategy

Social media strategy

CRM strategy

Supply chain or ERP strategy

E-procurement strategy (buy side)

Sell side e-strategy

Information, transaction focus

Products (maybe redefined) and market segments by channel

Figure 5.2 Different forms of organisational strategy

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

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

Figure 5.3 Relationship between digital business strategy and other strategies

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

Examples of platform types

Aggregation platforms – MoneySupermarket, the App store, Ebay, Innocentive and Kaggle

Social platforms – Facebook and Twitter

Mobilisation platforms – Crowdfunder and Kickstarter

Figure 5.5 A generic strategy process model

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

Figure 5.6 Dynamic digital business strategy model

Figure 5.7 Elements of strategic situation analysis for the digital business

A stage model for digital business development

A stage model for digital business development,more advanced as move to right.

How advanced is the organisation in taking advantage of ‘e’ opportunities?

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

Figure 5.9 SWOT/TOWS analysis

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

Other?

Source: Perrott (2005), with permission

Figure 5.10 Matrix for evaluation of external capability against internal capability

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

Figure 5.11 Competitive threats acting on the digital business

Figure 5.12 Elements of strategic objective setting for the digital business

Figure 5.13 VMOST analysis

Arriva Bus app

(AT transport very similar) Figure 5.14

Figure 5.16 Research Online Purchase Offline example Source: Google.

Figure 5.16 Research Online Purchase Offline example

Source: Google

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

Figure 5.17 Grid of product suitability against market adoption for transactional e-commerce (online purchase)

Figure 5.18 Elements of strategy definition for the digital business

Figure 5.19 Matrix for evaluating digital business strategy alternatives

Source: ‘Econsultancy’ (2008a)

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

Internet as a channel

Figure 5.21 Using the Internet to support different growth strategies

Figure 5.23 Elements of strategy implementation for digital business

Questions

Choose an organisation you know a little about and assess (identify pros and cons) different strategic options for adopting and developing digital business.

Start by writing what the mission and goals may be for the business.

Do a brief SWOT analysis.

Consider the following channels:

Mobile

Social media

CRM

Supply chain / procurement or ERP

Sell side

Transactions

Product variations / new products

Self-service / Kiosks

Other?

How might these strategies vary by; region, division, market segment?

How do your recommendations affect marketing, operational or other functional areas of the business?

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