Digitization of Business

1. Case Study- Presentation
HOW A FIRM’S COMPETITIVE ENVIRONMENT AND
DIGITAL STRATEGIC POSTURE INFLUENCE
DIGITAL BUSINESS STRATEGY
GROUP 3
ROLL NO: 17 – 24

2. Introduction
THE BUSINESS INFRASTRUCTURE HAS BECOME DIGITAL WITH INCREASED
INTERCONNECTIONS AMONG PRODUCTS, PROCESSES, AND SERVICES.
THE TIME IS RIGHT TO RETHINK THE ROLE OF IT STRATEGY, FROM A FUNCTIONAL
PERSPECTIVE

3. Emergence of Digital Business Strategy

Digital technologies are fundamentally reshaping traditional business strategy as modular,
distributed, cross-functional, and global business processes.

It also enable different forms of dynamic capabilities suitable for turbulent environment.

It is also transforming the structure of social relationships in both the consumer and the
enterprise space with social media and social networking.

Their working definition of digital business strategy is simply that of organizational strategy
formulated and executed by leveraging digital resources to create differential value.

Going beyond the traditional view

Going beyond systems and technologies

Explicitly linking digital business strategy to creating differential business value

4. Scope/Focus

Understanding the scope helps to conceive its relationship to firms,
industries, IT infrastructures, the external environment, and how digital
business strategy can be more effective in a variety of settings.

IT investment

IT outsourcing investment.

6. Include Digitization of Products and
Services

Many firms are beginning to see the power of digital resources to create
new IT capabilities and craft new strategies around new products and
services. ▫ Amazon’s Web Services on the cloud

The importance of scope under digital conditions is relevant even beyond
technology companies

GE seeks to find technology-based extensions in areas such as aircraft
engines, medical devices…

Digital resources around digital business strategy should be viewed
relatively broadly.

7. Three Key Elements of the
Industry Environment

Industry turbulence : (dynamism) Turbulent industries are characterized by
competitive opportunities arising from an ongoing stream of innovations and
competitive actions by industry players.

Industry Concentration: (competition) In economics, market concentration is
a function of the number of firms and their respective shares of the
total production (alternatively, total capacity or total reserves) in a market.
Alternative terms are Industry concentration

Industry growth : (munificence)A sector of the economy experiencing a higherthan-average growth rate. Growth industries are often associated with new or
pioneer industries that did not exist in the past and their growth is related to
consumer demand for the new products or services offered by the firms within
the industry

10. Extend the Scope Beyond Traditional
Industry Boundaries

The use of digital platforms enables firms to break traditional industry
boundaries and to operate in new spaces and niches

Apple has redefined the mobile entertainment ecosystem

Amazon has redefined the book-selling ecosystem

11. Scale

Scale confers benefits of lower unit cost of products and helps enhance
profitability.

They have identified at least four ways that scale of digital business
strategy is distinct and qualitatively different.

12. (1)Rapid Digital Scale Up/Down as
Strategic Dynamic Capability

When the digital infrastructure and business strategy are fused, this rapid
scaling ability becomes a strategic dynamic capability for the firm to
adapt to the dynamic requirements of the digital marketplace.

Service provider allow their customers to dynamically adjust their digital
resources as competitive pressures may demand.

Amazon Web Services, SalesForce.com, Vmware…

13. (2)Network Effects Create Rapid Scale
Potential

As more products and services become digital and connected, network
effects become the key differentiator and driver of value creation.

Supply side with digitally interconnected partnerships

Google and Android-powered devices

Demand side with interconnections among web pages

Facebook and Open Graph

These ideas can be extended broadly as digital connections extend to
other areas such as automobiles, retailing through mobile apps, and
healthcare…

14. (3)Scale Will Increasingly Take Place under
Information Abundance

We are in a world of amplified networks with an abundance of data,
information, and knowledge.

Scale will require understanding how to develop the organizational
capabilities to harness the huge quantities of heterogeneous data,
information, and knowledge.

15. (4)Scale Through Alliances and
Partnerships

When digital intensity increases and digital business strategy takes hold,
scaling options are more likely to be based on alliances and partnerships
through shared digital assets with other firms in the business ecosystem
across different traditional industry boundaries.

16. Sources of Value Creation and
Capture


Increased value from information
Business models rely on accurate, timely information


Google, Facebook, and eBay
Value creation from multisided business models

Google’s entry into mobile phones is based on giving away the software (Android) free and monetizing it through its
ability to influence and control advertising

Value capture through coordinated business models in networks

Involve complex and dynamic coordination across multiple companies

The business model are intersect and interoperate across these different players


app developers, the mobile OS, hardware manufactures, telecom operators, and service providers (FB, YouTube…)
Value appropriation through control of digital industry architecture

Apple earns its profits not only its products but receives a share of the follow-on revenue

17. Special issue

The expanded scope and scale of digital business strategy as well as to
the novel use of digital resources to rapidly formulate and execute it to
create differential business value.

Focus on digital business strategy within and outside the enterprise,
including

(1)the firm’s competitive industry environment

(2)its customer connections as determinants of digital business strategy.

18. Main Findings & Implications

This study set out to investigate how digital strategic posture influences a firm’s
digital business strategy.

Strategic posture has a convergent effect for general IT investment and a
divergent effect for IT outsourcing investment at the mean value of industry
factors.

it is helpful to recognize how variations in the competitive environment explain
the difference in how digital strategic posture of an organization.

We provide evidence for how managers view IT as a platform for undertaking
strategic actions in response to actions of industry peers.

In turn, the results can help managers understand how competitors are likely to
respond to their actions in different industry contexts.

19. The platform forward

Some firms have embarked on social media as part of their marketing operations, but
without necessarily linking them back to their core IT infrastructure.

Other firms have focused on streamlining supply chains without necessarily taking an endto-end look at the coordination challenges and rapid scale-up necessary to buffer
against uncertainties in the environment.

The time is right to shift our thinking about IT, not as a functional-level response, but as a
fundamental driver of business value creation and capture.

(1)Shape the new business infrastructure and (2)influence the new organizational logic
and patterns of coordination within and across firms.

Urge researchers examining the impacts of digital business strategy to theorize and
develop metrics reflecting the four themes introduced here.

They hope that this collection of paper will provoke IS researchers and strategic
management researchers to step up their collaborative efforts and will provide an
energizing platform to help produce the next generation of insights.

20. THANKS