Strategy

1. Scope of e-commerce

2. Learning objectives
• What is e-commerce?
• What are the e-challenges?
• What are the strategies for e-commerce?

3. Learning objectives
• What is e-commerce?
• What are the e-challenges?
• What are the strategies for e-commerce?

4. E-commerce definition
Technology-enabled transactions and technology-mediated
exchanges of digitized information
between parties (individuals or organizations) as
well as the electronically based intra-organizational
or inter-organizational activities that facilitate such
exchanges

5. E-commerce definition
Scope of e-commerce:
1. Exchange of digitized information
2. Technology-enabled transactions
3. Technology-mediated relationships
4. Intra- & inter-organizational activities

6. E-commerce definition
Business originating from . . .
Business Consumers
B2B C2B
B2C P2P
Consumers Business
And selling to . . .

7. E-commerce categories
Business originating from . . .
Business Consumers
Publishers order paper
supplies from paper
Publishers order paper
supplies from paper
companies
companies
Amazon orders from
Amazon orders from
publishers
publishers
Consumers aggregate to
bulk purchase from Amazon
Consumers aggregate to
bulk purchase from Amazon
Consumers buy thousands
of Harry Potter books from
Consumers buy thousands
of Harry Potter books from
Amazon
Amazon
Consumers Business
And selling to . . .
Consumers resell
copies on eBay
Single chain (or converging categories) of e-commerce

9. E-commerce definition
E-COMMERCE vs TRADITIONAL COMMERCE
Key elements E-commerce Traditional commerce
Value Creation Information Product/Service
Strategy Sense and respond
Simple rules
Classical
Competitive edge Speed Quality/Cost
Competitive force Low barriers of entry
Power of customers
Power of suppliers
Product substitution
Resource focus Demand side Supply side
Customer interface Screen-to-face Face-to-face
Communication Technology-mediated channels Personal
Accessibility 24 x 7 Limited time
Customer
interaction
Self-service Seller influenced
Consumer behavior Personalization
One-to-one marketing
Standardization
Mass/one-way marketing
Promotion Word of mouth Merchandising
Product Commodity Perishables, feel & touch

10. E-commerce definition
1995-2000
Innovation
2001-2006
Consolidation
2006-future
Reinvention
Technology-driven Business-driven Audience, customer,
community-driven
Revenue growth focus Earnings & profits focus Audience & social
network growth focus
Venture capital financing Traditional financing Merger & acquisition
Entrepreneurial Traditional/old economy Large pure Web-based
firms
Disintermediation Strengthening
intermediaries
Proliferation of small
online intermediaries
Perfect markets Imperfect markets,
brands, network effects
Online market
imperfections
Pure-play Bricks & clicks New market (pure play);
Retail (bricks & clicks)
First-mover advantages Strategic follower New market (1st mover)

11. Learning objectives
• What is e-commerce?
• What are the e-challenges?
• What are the strategies for e-commerce?

12. Role of e-commerce managers
Strategic
Management
Strategic
Management
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Operations
and Logistics
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and Logistics

13. Role of e-commerce managers
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Formulate
Strategy
Formulate
Strategy
Drive
Drive
Implementation
Implementation
Be Accountable
for Performance
Be Accountable
for Performance

14. Role of e-commerce managers
Vision: higher-order societal effects
Goals: performance targets that are measurable
and in line with the company’s strategy &
business life cycle (process vs outcome)
Strategy: tradeoffs
Implementation: technology & media knowledge
Accountability: performance & results

15. E-commerce challenges
Understanding customer evolution
– Invest ahead of customer needs
Charting changing technology
– Match technology choices to consumer tastes
Weathering the storm
– Reassure stakeholders with clear vision, sensible business
model, and profitable venture
Integrating offline & online activities
– Align offline & online business activities, esp. advertising,
branding, retail & online store design, service, warranties,
returns (customer-facing activities)
Identifying key levers of competitive advantage
– Reallocate resources as competitive advantage levers evolve
Expanding globally
– Deal with complex internationalization issues

17. Learning objectives
• What is e-commerce?
• What are the e-challenges?
• What are the strategies for e-commerce?

18. E-commerce strategies
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OObbjjeeccttiivveess
Strategy
Strategy
Formulation
Formulation
 Corporate
 Business Unit
 Functional
 Operating
IImmpplleemmeennttaattiioonn
Internal
(Company)
Analysis
Internal
(Company)
Analysis
External
Analysis
External
Analysis
Control
and
Monitoring
Control
and
Monitoring
Classical Strategic Planning

19. E-commerce strategies
Sense and respond
• Experimenting with intuitive, actionable,
easy to implement ideas
• Proactively soliciting feedback from
customers

20. Type Purpose Example
How-to rules They spell out key features of
how a process is executed -
"What makes our process
unique?"
Akamai's rules for the customer service
process: staff must consist of technical
gurus, every question must be answered on
the first call or e-mail, and R&D staff must
rotate through customer service.
Boundary rules They focus managers on which
opportunities can be pursued and
which are outside the pale.
Cisco's early acquisitions rule: companies to
be acquired must have no more than 75
employees, 75% of whom are engineers.
Priority rules They help managers rank the
accepted opportunities.
Intel's rule for allocating manufacturing
capacity: allocation is based on a product's
gross margin.
Timing rules They synchronize managers with
the pace of emerging
opportunities and other parts of
the company.
Nortel's rules for product development:
project teams must know when a product
has to be delivered to the leading customer
to win, and product development time must
be less than 18 months.
Exit rules They help managers decide when
to pull out of yesterday’s
opportunities.
Oticon's rule for pulling the plug on projects
in development: if a key team member-manager
chooses to leave the project for
another within the company, the project is
killed.
Simple rules

21. E-commerce strategies
Position approach
Where should we be?
Resources approach
What should we be?
Simple rules approach
How to get there?

22. E-commerce strategies
Position Resources Simple Rules
Strategic Logic Establish position Leverage resources Pursue opportunities
Strategic Steps
Identify an attractive
market
Locate a defensible
position
Fortify and defend
Establish a vision
Build resources
Leverage across markets
Jump into the confusion
Keep moving
Seize opportunities
Finish strong
Strategic Question Where should we be? What should we be? How should we proceed?
Source of Advantage
Unique, valuable position
with tightly integrated
activity system
Unique, valuable,
inimitable resources
Key processes and unique
simple rules
Works Best In Slowly changing, well-structured
markets
Moderately changing, well-structured
markets
Rapidly changing,
ambiguous markets
Duration of Advantage Sustained Sustained Unpredictable
Risk
It will be too difficult to
alter position as conditions
change
Company will be too slow
to build new resources as
conditions change
Managers will be too
tentative in executing on
promising opportunities
Performance Goal Profitability Long-term dominance Growth

23. E-commerce strategies
Framing the
Market
Opportunity
Framing the
Market
Opportunity
Business
Model
Business
Model
Customer
Interface
Customer
Interface
Market
Market
Communication
and Branding
Communication
and Branding
Implementation Implementation Metrics Metrics
E-commerce strategy formulation process