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Strategy and E-Business


     Dr. Ronan McIvor
          2007.
The Internet and Corporate Strategy

Essential questions:

      Who will capture the economic benefits that the Internet
      creates?;

      Will all the value end up going to customers?

      Will companies be able to share the value?

      How will the Internet impact industry structure?

      Will it increase or reduce the profitability?

      How will it impact business strategy?

      Will the Internet support or erode the ability of companies to gain
      sustainable competitive advantage?

                                                              Adapted from Porter,
                                                              2001
Three Levels of E-Business
                             Experimentation                      Integration                  Transformation
E-Business Strategy   No E-business strategy           E-business strategy supports     E-business strategy supports
                                                       current corporate strategy       breakout corporate strategy
Corporate Strategy    E-business strategy not linked   E-business strategy              E-business strategy is a driver
                      to corporate strategy            subservient to corporate         of corporate strategy
                                                       strategy
Scope                 Department/Functional            Cross-functional participation   Cross enterprise involvement
                      orientation                                                       (interconnected customers,
                                                                                        suppliers & partners)
Payoffs               Unclear                          Cost reduction, business         New revenue streams, new
                                                       support & enhancement of         business lines, improvements
                                                       existing business process        in customer service and
                                                       practices, revenue               satisfaction
                                                       enhancement
Levers                Technological infrastructure &   Business processes               People, intellectual capital &
                      software applications                                             relationships, co-operation
Role of information   Secondary to technology          Supports process efficiency      Information asymmetries used
                                                       and effectiveness                to create business
                                                                                        opportunities




                                                                             Adapted from Hackbarth and Kettinger, 2000
E-Business Strategy Stages

 Major Stages          Initiate                            Diagnose                            Breakout                Transition
                                              Assess Current Environment                 Establish Strategic
                                                                                                 Target
                                              Industry                 Company
                •   Outline project    •   Industry             •     Identify current   •   Match current       •   Analyse difference
                    scope                  Competitive                business               business                between breakout
                •   Identify project       Assessment                 strategies             strategies with         and current
                    stakeholders       •   Benchmark E-         •     Assess customer        SWOT;                   strategy;
                •   Determine              business                   relationships      •   Evaluate            •   Assess change mgt.
                    project schedule       technology           •     Assess supplier        alternative E-          & cost/benefit/risk
                                       •   Assess industry            relationships          business breakout       analysis;
                                           business             •     Assess e-              strategies          •   Consider industry
                                           partnerships               business                                       responses
                                                                      technology                                 •   Plot out milestones
                                                                •     Assess business                                for strategy
                                                                      partnerships
Outputs         Project Work Plan      Opportunities and        Strengths and            E-business breakout     E-business transition
                                       Threats                  Weaknesses               strategy                strategy




                                                                                               Hackbarth and Kettinger, 2000
Stage I - Initiate


  Outline project scope;

  Identify stakeholders;

  Determine schedule;

  Project workplan.




                           Adapted Hackbarth and Kettinger, 2000
Stage II - Diagnose - Industry Analysis



  Industry definition;

  Identify major customers;

  Identify major competitors and their capabilities;

  Benchmark E-business technology;

  Apply Porter’s 5 Forces.




                                                       Adapted Hackbarth and Kettinger, 2000
How the Internet Influences Industry Structure
                                                    Threat of Substitutes
                                                                               (+) By making the overall industry more efficient, the
                                                                               Internet can expand the size of the market
                                                                               (-) The proliferation of Internet approaches creates
                                                                               new substitution threats


                                                     Rivalry amongst
                                                  exisiting Competitors
                                                                                                               Buyers
          Bargaining Power                (-) Reduces difference among
                                          competitors as offerings are difficult to         Bargaining Power          Bargaining Power
           over Suppliers                                                                     of Channels               of End-users
                                          keep proprietary
                                          (-) Migrates competition to price
   (+/-) Procurement using the            (-) Widens the geographic market,               (+) Eliminates powerful   (-) Shifts bargaining
   Internet tends to raise bargaining     increasing the number of competitors            channels or improves      power to end
   power over suppliers, though it can                                                    bargaining power over     consumers
   also give suppliers access to more                                                     traditional channels      (-) Reduces switching
   customers                                                                                                        costs
   (-) The Internet provides a channel
   for suppliers to reach end users,
   reducing the leverage of intervening                   Barriers to
   companies                                                Entry
   (-) Internet procurement and digital
   markets tend to give all companies
   equal access to suppliers, and                                       (-) Reduces barriers to entry such as the need for a sales
   gravitate procurement to standard                                    force, access to channels, and physical assets - anything that
   products that reduce differentiation                                 Internet technology eliminates or makes easier to reduce
   (-) Reduced barriers to entry and                                    barriers to entry
   proliferation of competitors                                         (-) Internet applications are difficult to keep proprietary from
   downstream shifts power to                                           new entrants
   suppliers                                                            (-) A flood of new entrants has come into many industries




                                                                                                                                            Porter, 2001
Stage II - Diagnose - Company Analysis


  Identify current business strategies;

  Assess company Customers;

  Assess company Suppliers;

  Assess company E-business technologies;

  Use Value Chain to identify areas where IT can add value.

  Output - SWOT Analysis.




                                                 Adapted Hackbarth and Kettinger, 2000
Internet Applications in the Value Chain

          Firm Infrastructure           Web-based, distributed financial and ERP systems
                                        Self-service personnel and benefits administration
        Human Resource
                                        Web-based training
           Management
                                        Internet-based sharing and dissemination of company information
                                        Electronic time and expense reporting

                      Technology        Collaborative product design across locations and among value systems participants
                     Development        Knowledge directories accessible from all parts of the organisation
                                        Real-time access by R&D to on-line sales and service information
                                        Internet-enabled demand planning; fulfilment
                     Procurement        Other linkage of purchase, inventory, and forecasting systems with suppliers
                                        Automated 'requisition to pay'
                                        Direct and indirect procurement via marketplaces, exchanges, auctions, and buyer-seller matching
             Inbound Logistics                              Operations                                         Outbound Logistics                       Marketing                After-Sales Service
       Real time integrated               Integrated information                                            Transaction of orders whether    Online sales channels inc.   Customer service
       scheduling, shipping,              exchange, scheduling and                                          initiated by consumer, a sales   web sites and marketplaces   through email,
       warehouse management,              decision making in in-house                                       person, or channel partner       Inside and outside access    electronic billing
       demand management and              plants, contract assemblers,                                      Automated customer-specific      to customer information,     etc.
       planning, and advanced             and components suppliers                                          agreements and contract terms    product catalogs etc.        Customer self
       planning and scheduling                                                                              Customer and channel access      Online product               service via web sites
       across the company and its                                                                           to product development and       configurators                and customer
       suppliers                                                                                            delivery status                  Push advertising             profiling
       Dissemination throughout the                                                                         Collaborative integration with   Customer feedback through    Field servie access
       company of real-time inbound                                                                         customer forecasting systems     web surveys and promotion    to customer account
       and in-progress inventory data                                                                       Integrated channel               response tracking.           review, parts
                                                                                                            management including                                          availability and
                                                                                                            information exchange,                                         ordering etc.
                                                                                                            warranty claims and contract
                                                                                                            management




                                                                                                                                                                                                       Porter, 2001
Stage III - E-Business Strategy



                               Strategic Priorities
                                    Ranking


       Company Opportunity/         SWOT               Industry Strength/
         Threat Rankings          Assessment          Weakness Rankings



                              Evaluate E-Business
                                   Strategies



                                  E-business
                                   Strategy




                                                           Adapted Hackbarth and Kettinger, 2000
Stage IV - Transition

            E-Business     Minus      Status Quo    Equals         Gap
             Strategy                  Strategy




          Factor in Change                              Factor in Cost/Benefit/
        Readiness Assessment                                Risk Analysis




         Analyse Gap Difference between E-business strategy & current strategy
                         Consider potential industry responses



         Plot E-Business Transition Strategy including Recommended courses of
                                   Action & Milestones



                            E-Business Transition Strategy


                                                                 Adapted Hackbarth and Kettinger, 2000
Steps in e-Business Implementation




                                                                                                                                   Optimisation
                                                                                                            Next
                                Full e-Business                                                         generation e-
                                                                                                          Business
Stepwise IT Implementation




                                                                                           Retail
                                                                                        Transactions




                                                                                                                                 Launch & Growth
                                                                   Integration with                    Web-enabled
                                                                Production Systems &                    Business
                                                                 Business Customers                    Operations

                                                   Order Entry:
                                                  Sales & Service
                                                    via the ‘Net



                                         Searchable




                                                                                                                                Pre-Launch
                                        Dynamic Web
                                            Site
                                                                                       Providing web-presence and
                                                                                       informational services
                                   Static
                                  Web-site



                                             Stepwise Launch of Business Propositions
                                                                                                                 Morath, 2000
Change Readiness Assessment

                  Factor                                                          Question
  Senior Management Commitment       Is senior management support visibly removed or actively involved in EC implementation?
  Manager's Willingness to Impact    Are only modest impacts on people tolerable or is management willing to deal with the
  People                             consequences of extreme impacts?
  IT Resource Availability           Are only minimal IT resources available to support EC projects or are they abundant?
  In-house Expertise Availability    Are personal skills complete unrelated to EC or are they easily related to new
                                     technologies?
  Structural Flexibility             Is the organisational structure rigid or is it flexible to change and learning?
  Acceptance of Radical Change       Is the firm historically reactive or proactive?
  Comfort level with New             Is the firm slow to respond or quick to implement new technology?
  Technologies
  Cultural Capacity for Change       Does the firm culture support the status quo or actively seek participatory change?
  Cross-functional decision making   Does the firm historically make a decision inter-departmentally or cross-functionally?
  Value Chain Target                 Is the EC implication effort targeted at internal support processes or core processes?




                                                                                                Adapted Hackbarth and Kettinger, 2000
Evolution of Strategy Thinking

 ‘70s & early ’80s - industry structure considered to be primary

 determinant of profit e.g. Porter (1980);

 Late ‘80s & ‘90s - emphasis on resources internal to firm as principal

 driver of profit and strategic advantage e.g. Barney (1986) & Prahalad &

 Hamel (1990);

 Recently - shift from focus on tangible resources to intangible resources

 as a source of strategic advantage e.g. ‘knowledge’, ‘core competence’

 and ‘learning’.
Implications of the Internet

 Rapid change in technology;

 More powerful and sophisticated customer;

 Blurring of industry boundaries - i.e. industry convergence;

 Reaction to change a source of strategic advantage;

 Worst case - impact of Internet challenges the value of strategy thinking

 such as industry analysis etc.
Sources of Value Creation in E-Business
                                                                        Novelty
                                                                                  - New transaction structures
                                                                                  - New transactional content
                                                                                  - New participants etc.



       Efficiency                                                                                                                       Lock-in
      - Search costs
      - Selection range                                                 Value
      - Symmetric information
      - Simplicity                                                                                               - Switching costs
      - Speed                                                                                                                    - Loyalty programmes
      - Scale economies etc.                                                                                                     - Dominant design
                                                                                                                                 - Trust
                                                                                                                                 - Customisation etc.
                                                                                                                 - Positive network
                                                                                                                 externalities
                                                       Complementarities                                                         - Direct
                                                                                                                                 - Indirect
                                - Between products and services for
                                customers (vertical and horizontal)
                                - Between on-line and off-line assets
                                - Between technologies
                                - Between activities




                                                                                                                                                        Amit and Zott, 2001
Value Creation in the Air Transport Offering
            Source of Value (Amit and Zott, 2001)         Key Findings in Aviation Context
            Efficiency:                                   1. Real-time decision-making
                                                             mechanisms
            (e.g. Search costs; Selection range;          2. Up-to-date information for buyers and
            Symmetric information; Simplicity; Speed;        sellers
            Scale economies)                              3. Reductions in customers' s search and
                                                             transaction costs
                                                          4. Reductions in the communication and
                                                             transaction costs of the seller

            Complementarities:                            1. Bundling products and services through
                                                             vertical and horizontal collaboration/
            (e.g. Between products and services for          /partnerships/alliances to form more
            customers; Between on and off-line assets;       valuable holistic travel package
            Between technologies; Between activities)     2. Offering additional services not directly
                                                             related to the core travel offering (e.g.
                                                             financial services)
                                                          3. Reducing communication and
                                                             promotion costs
                                                          4. Taking equity stakes in on-line
                                                             agencies

            Lock-in:                                      1. Offering low(er) prices/discounted
                                                             fares (e.g. for on-line bookings only, or
            (e.g. Switching costs - loyalty programmes,      relationship-based pricing)
            dominant design, trust, customisation;        2. Customising offerings to suit individual
            Positive network externalities- direct and       customer needs
            indirect)                                     3. Amalgamating rewards/bonuses for
                                                             loyal customers within business
                                                             networks
                                                          4. Building consumer trust

            Novelty:                                      1. New transaction structures play integral
                                                             role in lowering transaction costs for
            (e.g. New transaction structures; New            airlines and customers
            transactional content; New participants)      2. Disintermediation and re-
                                                             intermediation of the travel agent
                                                          3. Emergence of novel retail partners (e.g.    McIvor et al., 2002
                                                             internet cafés)
Implications of the Internet for the Business Network

Value chains will fragment into multiple businesses;

Some businesses will benefit from network economies of scale;

New opportunities will arise for purely physical businesses;

Value proposition underlying brand identity will change;

New branding opportunities for third parties that neither produce
a product or deliver a primary service;

Shifts in bargaining power;

Customer switching costs will be reduced;

Incumbents - ‘victims of their obsolete physical infrastructures
and their own psychology’.

                                                       Evans and Wurster, 1997
Misconceptions associated with the Internet


     Overestimating first-mover advantage;

     Unintentionally diluting fit in the pursuit of reach;

     Unintentionally sacrificing focus in the desire to offer ‘customer
     solutions’;

     Ignoring Internet-sector differences;

     Relying unguardedly on partner leverage;

     Going global prematurely; and

     Treating technology as strategy.




                                                             Rangan and Adner, 2001
Advantages and Challenges for Clicks-and-Bricks Firms

 Advantages:

      Brand recognition, reputation and credibility;

      Can offer product returns via physical storefronts;

      Higher performance via combining online and offline activities;

      Cost reduction e.g. online order processing and bulk deliveries
      to local inventory locations; and

      In many cases, the Internet is a source of product and service
      information.

 Challenges:

      Difficulties of integrating online and physical activities; and

      ‘Old economy’ firms have difficulties with Internet strategies.
                                                                    Kim et al., 2004

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E business strategy

  • 1. Strategy and E-Business Dr. Ronan McIvor 2007.
  • 2. The Internet and Corporate Strategy Essential questions: Who will capture the economic benefits that the Internet creates?; Will all the value end up going to customers? Will companies be able to share the value? How will the Internet impact industry structure? Will it increase or reduce the profitability? How will it impact business strategy? Will the Internet support or erode the ability of companies to gain sustainable competitive advantage? Adapted from Porter, 2001
  • 3. Three Levels of E-Business Experimentation Integration Transformation E-Business Strategy No E-business strategy E-business strategy supports E-business strategy supports current corporate strategy breakout corporate strategy Corporate Strategy E-business strategy not linked E-business strategy E-business strategy is a driver to corporate strategy subservient to corporate of corporate strategy strategy Scope Department/Functional Cross-functional participation Cross enterprise involvement orientation (interconnected customers, suppliers & partners) Payoffs Unclear Cost reduction, business New revenue streams, new support & enhancement of business lines, improvements existing business process in customer service and practices, revenue satisfaction enhancement Levers Technological infrastructure & Business processes People, intellectual capital & software applications relationships, co-operation Role of information Secondary to technology Supports process efficiency Information asymmetries used and effectiveness to create business opportunities Adapted from Hackbarth and Kettinger, 2000
  • 4. E-Business Strategy Stages Major Stages Initiate Diagnose Breakout Transition Assess Current Environment Establish Strategic Target Industry Company • Outline project • Industry • Identify current • Match current • Analyse difference scope Competitive business business between breakout • Identify project Assessment strategies strategies with and current stakeholders • Benchmark E- • Assess customer SWOT; strategy; • Determine business relationships • Evaluate • Assess change mgt. project schedule technology • Assess supplier alternative E- & cost/benefit/risk • Assess industry relationships business breakout analysis; business • Assess e- strategies • Consider industry partnerships business responses technology • Plot out milestones • Assess business for strategy partnerships Outputs Project Work Plan Opportunities and Strengths and E-business breakout E-business transition Threats Weaknesses strategy strategy Hackbarth and Kettinger, 2000
  • 5. Stage I - Initiate Outline project scope; Identify stakeholders; Determine schedule; Project workplan. Adapted Hackbarth and Kettinger, 2000
  • 6. Stage II - Diagnose - Industry Analysis Industry definition; Identify major customers; Identify major competitors and their capabilities; Benchmark E-business technology; Apply Porter’s 5 Forces. Adapted Hackbarth and Kettinger, 2000
  • 7. How the Internet Influences Industry Structure Threat of Substitutes (+) By making the overall industry more efficient, the Internet can expand the size of the market (-) The proliferation of Internet approaches creates new substitution threats Rivalry amongst exisiting Competitors Buyers Bargaining Power (-) Reduces difference among competitors as offerings are difficult to Bargaining Power Bargaining Power over Suppliers of Channels of End-users keep proprietary (-) Migrates competition to price (+/-) Procurement using the (-) Widens the geographic market, (+) Eliminates powerful (-) Shifts bargaining Internet tends to raise bargaining increasing the number of competitors channels or improves power to end power over suppliers, though it can bargaining power over consumers also give suppliers access to more traditional channels (-) Reduces switching customers costs (-) The Internet provides a channel for suppliers to reach end users, reducing the leverage of intervening Barriers to companies Entry (-) Internet procurement and digital markets tend to give all companies equal access to suppliers, and (-) Reduces barriers to entry such as the need for a sales gravitate procurement to standard force, access to channels, and physical assets - anything that products that reduce differentiation Internet technology eliminates or makes easier to reduce (-) Reduced barriers to entry and barriers to entry proliferation of competitors (-) Internet applications are difficult to keep proprietary from downstream shifts power to new entrants suppliers (-) A flood of new entrants has come into many industries Porter, 2001
  • 8. Stage II - Diagnose - Company Analysis Identify current business strategies; Assess company Customers; Assess company Suppliers; Assess company E-business technologies; Use Value Chain to identify areas where IT can add value. Output - SWOT Analysis. Adapted Hackbarth and Kettinger, 2000
  • 9. Internet Applications in the Value Chain Firm Infrastructure Web-based, distributed financial and ERP systems Self-service personnel and benefits administration Human Resource Web-based training Management Internet-based sharing and dissemination of company information Electronic time and expense reporting Technology Collaborative product design across locations and among value systems participants Development Knowledge directories accessible from all parts of the organisation Real-time access by R&D to on-line sales and service information Internet-enabled demand planning; fulfilment Procurement Other linkage of purchase, inventory, and forecasting systems with suppliers Automated 'requisition to pay' Direct and indirect procurement via marketplaces, exchanges, auctions, and buyer-seller matching Inbound Logistics Operations Outbound Logistics Marketing After-Sales Service Real time integrated Integrated information Transaction of orders whether Online sales channels inc. Customer service scheduling, shipping, exchange, scheduling and initiated by consumer, a sales web sites and marketplaces through email, warehouse management, decision making in in-house person, or channel partner Inside and outside access electronic billing demand management and plants, contract assemblers, Automated customer-specific to customer information, etc. planning, and advanced and components suppliers agreements and contract terms product catalogs etc. Customer self planning and scheduling Customer and channel access Online product service via web sites across the company and its to product development and configurators and customer suppliers delivery status Push advertising profiling Dissemination throughout the Collaborative integration with Customer feedback through Field servie access company of real-time inbound customer forecasting systems web surveys and promotion to customer account and in-progress inventory data Integrated channel response tracking. review, parts management including availability and information exchange, ordering etc. warranty claims and contract management Porter, 2001
  • 10. Stage III - E-Business Strategy Strategic Priorities Ranking Company Opportunity/ SWOT Industry Strength/ Threat Rankings Assessment Weakness Rankings Evaluate E-Business Strategies E-business Strategy Adapted Hackbarth and Kettinger, 2000
  • 11. Stage IV - Transition E-Business Minus Status Quo Equals Gap Strategy Strategy Factor in Change Factor in Cost/Benefit/ Readiness Assessment Risk Analysis Analyse Gap Difference between E-business strategy & current strategy Consider potential industry responses Plot E-Business Transition Strategy including Recommended courses of Action & Milestones E-Business Transition Strategy Adapted Hackbarth and Kettinger, 2000
  • 12. Steps in e-Business Implementation Optimisation Next Full e-Business generation e- Business Stepwise IT Implementation Retail Transactions Launch & Growth Integration with Web-enabled Production Systems & Business Business Customers Operations Order Entry: Sales & Service via the ‘Net Searchable Pre-Launch Dynamic Web Site Providing web-presence and informational services Static Web-site Stepwise Launch of Business Propositions Morath, 2000
  • 13. Change Readiness Assessment Factor Question Senior Management Commitment Is senior management support visibly removed or actively involved in EC implementation? Manager's Willingness to Impact Are only modest impacts on people tolerable or is management willing to deal with the People consequences of extreme impacts? IT Resource Availability Are only minimal IT resources available to support EC projects or are they abundant? In-house Expertise Availability Are personal skills complete unrelated to EC or are they easily related to new technologies? Structural Flexibility Is the organisational structure rigid or is it flexible to change and learning? Acceptance of Radical Change Is the firm historically reactive or proactive? Comfort level with New Is the firm slow to respond or quick to implement new technology? Technologies Cultural Capacity for Change Does the firm culture support the status quo or actively seek participatory change? Cross-functional decision making Does the firm historically make a decision inter-departmentally or cross-functionally? Value Chain Target Is the EC implication effort targeted at internal support processes or core processes? Adapted Hackbarth and Kettinger, 2000
  • 14. Evolution of Strategy Thinking ‘70s & early ’80s - industry structure considered to be primary determinant of profit e.g. Porter (1980); Late ‘80s & ‘90s - emphasis on resources internal to firm as principal driver of profit and strategic advantage e.g. Barney (1986) & Prahalad & Hamel (1990); Recently - shift from focus on tangible resources to intangible resources as a source of strategic advantage e.g. ‘knowledge’, ‘core competence’ and ‘learning’.
  • 15. Implications of the Internet Rapid change in technology; More powerful and sophisticated customer; Blurring of industry boundaries - i.e. industry convergence; Reaction to change a source of strategic advantage; Worst case - impact of Internet challenges the value of strategy thinking such as industry analysis etc.
  • 16. Sources of Value Creation in E-Business Novelty - New transaction structures - New transactional content - New participants etc. Efficiency Lock-in - Search costs - Selection range Value - Symmetric information - Simplicity - Switching costs - Speed - Loyalty programmes - Scale economies etc. - Dominant design - Trust - Customisation etc. - Positive network externalities Complementarities - Direct - Indirect - Between products and services for customers (vertical and horizontal) - Between on-line and off-line assets - Between technologies - Between activities Amit and Zott, 2001
  • 17. Value Creation in the Air Transport Offering Source of Value (Amit and Zott, 2001) Key Findings in Aviation Context Efficiency: 1. Real-time decision-making mechanisms (e.g. Search costs; Selection range; 2. Up-to-date information for buyers and Symmetric information; Simplicity; Speed; sellers Scale economies) 3. Reductions in customers' s search and transaction costs 4. Reductions in the communication and transaction costs of the seller Complementarities: 1. Bundling products and services through vertical and horizontal collaboration/ (e.g. Between products and services for /partnerships/alliances to form more customers; Between on and off-line assets; valuable holistic travel package Between technologies; Between activities) 2. Offering additional services not directly related to the core travel offering (e.g. financial services) 3. Reducing communication and promotion costs 4. Taking equity stakes in on-line agencies Lock-in: 1. Offering low(er) prices/discounted fares (e.g. for on-line bookings only, or (e.g. Switching costs - loyalty programmes, relationship-based pricing) dominant design, trust, customisation; 2. Customising offerings to suit individual Positive network externalities- direct and customer needs indirect) 3. Amalgamating rewards/bonuses for loyal customers within business networks 4. Building consumer trust Novelty: 1. New transaction structures play integral role in lowering transaction costs for (e.g. New transaction structures; New airlines and customers transactional content; New participants) 2. Disintermediation and re- intermediation of the travel agent 3. Emergence of novel retail partners (e.g. McIvor et al., 2002 internet cafés)
  • 18. Implications of the Internet for the Business Network Value chains will fragment into multiple businesses; Some businesses will benefit from network economies of scale; New opportunities will arise for purely physical businesses; Value proposition underlying brand identity will change; New branding opportunities for third parties that neither produce a product or deliver a primary service; Shifts in bargaining power; Customer switching costs will be reduced; Incumbents - ‘victims of their obsolete physical infrastructures and their own psychology’. Evans and Wurster, 1997
  • 19. Misconceptions associated with the Internet Overestimating first-mover advantage; Unintentionally diluting fit in the pursuit of reach; Unintentionally sacrificing focus in the desire to offer ‘customer solutions’; Ignoring Internet-sector differences; Relying unguardedly on partner leverage; Going global prematurely; and Treating technology as strategy. Rangan and Adner, 2001
  • 20. Advantages and Challenges for Clicks-and-Bricks Firms Advantages: Brand recognition, reputation and credibility; Can offer product returns via physical storefronts; Higher performance via combining online and offline activities; Cost reduction e.g. online order processing and bulk deliveries to local inventory locations; and In many cases, the Internet is a source of product and service information. Challenges: Difficulties of integrating online and physical activities; and ‘Old economy’ firms have difficulties with Internet strategies. Kim et al., 2004