This document discusses strategies for implementing electronic commerce. It begins by distinguishing different types of electronic commerce strategies companies may employ. It then discusses essential elements of a business strategy, including strategic planning, formulation, implementation and assessment. The document outlines factors to consider in strategic planning, formulation, implementation and assessment of an electronic commerce strategy. It discusses issues companies may face, such as whether to be a first or second mover, addressing channel conflicts, and balancing online and offline businesses. The document provides lessons for avoiding electronic commerce failures.

1. ELECTRONIC COMMERCE STRATEGY AND
IMPLEMENTATION
Dr. Wisnu S. Dewobroto. MSc (wisnu.s@gmail.com)

2. THE NEED FOR STRATEGY
Ò We distinguish several cases of EC Strategy :
É Click and Mortar companies that use several EC
Application. Ex : IBM, Qantas Airways
É Click and mortar companies that use only one or
two EC application
É Click and mortar companies that use one EC
application that fundamentally changes all their
business
É Pure Play EC

3. ESSENTIALS OF A BUSINESS STRATEGY
Ò Strategy : a broad based formula for how a business is going
to compete, what its goals should be, and what plans and
policies will be needed to carry out those goals.
Ò Level of strategy :
É Corporate strategy
É IT strategy
É EC Strategy
É EC Functional strategy
Ò Types of strategy
É Strategic planning
É Strategic Response
É Strategic Innovation

4. THE ELEMENTS OF A STRATEGY
Ò Strategy involves several elements or activities.
Some of the most important ones are :
É Forecasting
É Resource Allocation
É Core competency
É Strategy formulation
É Environmental analysis
É Company analysis

5. STRATEGIC PLANNING
Ò Strategic planning is a formal process designed to interpret
the organizations environment for the purpose of identifying
its adaptive challenges and guiding its responses so as to
optimize longer term competitive advantage.
Ò There some major activities in strategic plans :
É Strategy initiation. Here one prepares information about the
organizations vision, mission, purpose and the contribution of EC.
É Strategy formulation. This includes all the activities necessary to
formulate a strategy, notably, identification of EC application etc.
É Strategy Implementation. Here the organizations resource are
analyzed and a plan is developed for attaining the goals of
strategy
É Strategy assessment. Periodically the progress toward the
strategy’s goal is assessed.

6. STRATEGY INITIATION
Ò The first step in any strategy creation is to review
of the organizations business and IT vision and
mission.
Ò Sample of EC mission statement :
É eBay : We help people trade practically anything on
earth. eBay was founded with the belief that people are
basically good. We believe each of our customers,
whether a buyer or a seller, is an individual who
deserve to be treated with respect..
É …………….
É …………..

7. INDUSTRY, COMPANY AND COMPETITIVE
ANALYSIS
Ò Strategy initiation usually begin with an industry and competitive analysis.
É The purpose of this step is to analyze the position of the company in its industry and with respect
to the competition.
Ò Industry assessment :
É What industry is the EC initiative is related to?
É Who are the customers?
É What are the current practices of selling and buying?
É Who are the major competitor?
É What e strategies are used and by whom?
É How is value added throughout the value chain?
É What are the major opportunities and threats?
É Are there any metrics or best practices in place?
É What are existing and potential partnership for EC?
É Who are the major EC vendors in the Industy?
Ò Company Assessment : investigation to business strategy, performance, customers
etc.
É SWOT Analysis
É Competitive intelligence on the INTERNET

8. ISSUES IN STRATEGY INITIATION
Ò To be a first mover or follower?
É Advantages to be a first mover :
Ð Chance to capture large market share
Ð Establishing a brand name
Ð Establishing exclusive strategic alliances
É Disadvantages
Ð The cost of developing the EC initiative is usually high
Ð The chance of failure is high
Ð The system may be obsolete as compared to the second wave
of arrivals
Ð No Support services are available at the beginning

9. ISSUES IN STRATEGY INITIATION (2)
Ò What do you need an EC for?
É Enhancing the sell channel by advertisement and sales
É Enhancing the buy
É Enhancing the customer service channel
É Facilitating value chain integration
É Providing for new products and services
É Going into highly specialized markets
É Going into mass customization
Ò Going Global? Should you have a separate online company or not?
É The advantages or creating a separate company are :
Ð Reducing or eliminating internal conflicts
Ð Providing more freedom for online company deciding pricing, advertising etc
Ð You may create a new brand quickly
É The disadvantages of creating an independent division are :
Ð It may be very costly and risky
Ð Collaboration with the off line business may be difficult
Ð You lose the expertise of the business function

10. STRATEGIC FORMULATION
Ò Critical success factors for EC :
É Specific products or services traded
É Top management support
É Project team reflection various functional areas
É Technical infrastructure
É Customer Acceptance
É User friendly web interface
É Integration with corporate legacy system
É Security and control of the EC system
É Competition and market situation
É Pilot project and corporate knowledge
É Promotion and internal communication
É Cost of the EC project
É Level of trust between buyers and sellers.

11. STRATEGIC FORMULATION (2)
Ò Discovering EC opportunities and deciding on a
portfolio. Finding appropriate EC opportunities
may not be an easy task. There are dozens of
possible initiatives, and companies must decide
on which ones to adopt and in what order.
Ò Cost benefit and risk analysis. Executive need to
be sure that EC initiatives can truly enhance their
company’s ability to generate revenues and
reduce cost, thereby increasing competitiveness
and profits.

12. ISSUES IN STRATEGY FORMULATION
Ò EC Strategy in small business: Formulating strategies in small businesses is usually
much less sophisticated than it is in large corporation.
Ò How to handle the channel conflicts :
É Let the established old economy type dealers handle e business fulfillment, as the auto industy
is doing, even for customized cars. The ordering can be done online, or directions to dealers can
be provided
É Sell some products only online, other product are advertised online, but sold off line
É Help your intermediaries (building portal but do not sell online )
É Sell online and offline.
Ò How to handle the conflict between the off line and online business in a click and
mortar situation
É Corporate culture, ability of top management to introduce the change properly, and the use of
innovative process that support collaboration will all determine the degree of collaboration.
Ò Price Strategy.
É Setting prices lower that the offline business may lead to internal conflict, whereas same level
will hurt competitiveness. Dewan et al (2000), have developed quantitative economic models for
making pricing decision.
Ò Where to compete
É The web opens several new alternatives for competition

13. STRATEGY IMPLEMENTATION AND PROJECT
MANAGEMENT
Ò Creating a web team and assigning functional
skills to subprojects.
Ò Pilot project
Ò Planning for resources
Ò Project management.

14. ISSUES IN STRATEGY IMPLEMENTATION
Ò Evaluating outsourcing
Ò Partners strategy
Ò How to coordinate B2B and B2C

15. STRATEGY AND PROJECT ASSESMENT
Ò The last phase of e strategy
É Need for assesment
Ð Find out if the EC project delivers what it was supposed to deliver
Ð Determine if the EC project is still viable in an ever changing
environment
Ð Reassess the initial strategy in order to learn from mistakes and
improve future planning
Ð Identify failing projects as soon as possible and determine the
reasons for failures to avoid the same problems on subsequent
system.
É Measuring result.
Ð Each company measure success or failure by different sets of
standard.
É Finalization and adjustment

16. EC FAILURES AND LESSONS LEARNED
Ò EC initiatives and EC companies are likely to
fail.
Ò The reasons why they fail vary and depend on
the circumstances.
Ò In this step we will look at some failures and
attempt to identify the common reasons.
Ò Then i887we will try to derive lessons for
avoiding such failures