The document discusses e-business strategy and implementation planning. It defines strategy and outlines the key steps: propose a future situation, assess the current internal and external environment, and choose a strategy. Implementation planning involves refining scope, identifying activities and resources, developing a schedule, planning procurement and budgets, and managing risks. The outputs should be a project plan to guide effective implementation.

1. Chapter 5
E-business strategy

2. Learning outcomes
• Follow an appropriate strategy process model
for e-business;
• Apply tools to generate and select e-business
strategies;
• Outline alternative strategic approaches to
achieve e-business.

3. Strategy
• Strategy
Definition of the future direction and actions of a company defined
as approaches to achieve specific objectives
The direction and scope of an organization over the long term
– “Defines how we will meet our objectives”
– “Sets allocation of resources to meet goals”
– “Selects preferred strategic options to
compete within a market”
– “Provides a long-term plan for the development of the organization”.

4. Agenda
• E-business development step-by-step
• E-business strategy
• Implementation Planning

5. E-business development step-by-step
Planning Implementation Operation
1. Research and Strategy
2. . Planning
3. Information Architecture

6. E-business development step-by-step
What are the steps to success ?
STEP 4 - Operation Operation
STEP 3 - Implementation Implementation
STEP 2 – Implementation plan
Planning
STEP 1 – e-Business strategy

7. E-Business Strategy
Fundamental
questions ….. ….and answers.
How to
develop e- Implementation
business ? plan
What type of e-
business? E-business
strategy
Why you want to develop
that type of e-business ?

8. Why you want to develop that type of e-business ?

9. What type of e-business?
• B2B , B2C , B2B/C
•Brokerage Brokers can facilitate consumer-to-consumer,
consumer-to-business or business-to-business markets
•Infomediary entails capturing and sharing information
• Advertising works in the same way as the convention
media broadcast version
• Merchant / Affiliate offers products or services
whenever people may surf on the Web

10. Brokerage
• Bringing together buyers and sellers
– Market Exchange (charge seller a fee; e.g., Metalsite)
– Business Trading Community (vertical web community)
– Buyer aggregator (buying group; Mobshop)
– Distibutor (multi-vendor catalog; NECX)
– Virtual Mall (hosts merchants via portal; Yahoo! Stores)
– Auction Broker (conducts auctions for sellers; eBay)
– Reverse auction (broker can earn spread; Priceline)
– Classifieds (price may or may not be specified)
– Search Agent (seeks goods/prices; MySimon)

11. Infomediary
• Collect and sell information
– Recommender System (users exchange
information about products/services; Deja.com;
ePinions)
– Content site, free to viewers; NYTimes.com)

12. Advertising
• Extension of traditional broadcasting model
– Generalized Portal (high-volume;) Yahoo! , google
– Attention/Incentive Marketing (pay for viewing;
CyberGold, IWon)

13. Merchant Model
• Classic wholesalers & retailers (auction or
fixed price)
– Virtual Merchant (Amazon; OnSale)
– Catalog Merchant (Mail order migrated to the
web; Levenger)
– Click and Mortar (traditional + Web; Gap, Lands
End; B&N)

14. How to develop e-business
Now Future
$$$
Environment
1. Propose you future situation
2. Assess your current situation
(internal/external)
3. Choose your strategy

15. E-Business strategy
Propose you future situation
• Should be specific (time and figures)
• Profit oriented
“Increase revenue by 30% in 2 years” Market
“Increase market share by 50% in 1 year”
• Cost oriented
“Reduce cost by 20% in 1 year” Efficiency
• Client oriented
“Increase client satisfaction by 50% in 2
years” Improve customer services

16. E-Business strategy
Assess your current situation
• Internal factors
Strengths
Weaknesses
• External factors
Opportunities
Threats

17. E-Business strategy
To conduct the SWOT Analysis you should
consider:
• What is your business sector?
• Who are the customers?
• What are the current practices of selling and
buying?
• Who are the major competitors? (How intense is
the competition?)
• What e-strategies are used, by whom?
• What are the major opportunities and threats?
• What are the existing and potential partnerships
for developing e-Business?

18. E-Business strategy
SWOT Analysis
• Internal factors
Strengths • External factors
Original product Opportunities
Popular product External market
High quality New trend
Weaknesses B2B market places
Lack of IT expertise Threats
Competitors

19. SWOT Diagram
INTERNAL Strengths (S)
FACTORS Weaknesses (W)
Original product
Lack of IT expertise
EXTERNAL Popular product
No WEB presence
FACTORS High quality
Opportunities (O) SO Strategies
WO Strategies
Generate strategies
External market here that use
Generate strategies here
that take advantage of
New trend strengths to take
opportunities by
advantages of
B2B market places overcoming weaknesses
opportunities
ST Strategies WT Strategies
Generate strategies Generate strategies
Threats (T) here that use here that minimize
Competitors strengths to avoid weaknesses and
threats avoid threats

20. Issues in e-Business Strategy
To be a first mover or a follower?
• Disadvantages
• Advantages – Cost of developing initiative is
– Chance to capture usually very high
large markets – Chance of failure is high
– Establishing a brand – System may be obsolete as
name compared to second wave
– Exclusive strategic arrivals
alliances – No support services are available
at the beginning

21. Issues in e-Business Strategy
Should you join an e-Business Portal?
– Several benefits
– Costs and limitations
– E-Marketing
– sell-side and buy-side infrastructure

22. Cost and Fee on Alibaba
• Currently, we provide • Alibaba.com only
both free membership charges for annual fee
and Gold Supplier of our Gold Supplier. If
Membership. you are our free
• As for free membership, member outside China
there is no membership (mainland), you can sell
fee. your product free of
• As for Gold Supplier, charge.
the membership fee is
USD2,999.

23. E-Business strategy
How to know if the strategy will achieve the
proposed result?
“Increase revenue by 30% in 2 years”

24. Business Case
• Business case is used to:
– Provide justification for investments
– Provides bridge between plan and the execution
– Clarifies how the organization will use resources
to accomplish the e-strategy

25. Cost-Benefit and Risk Analysis
• Revenue model
– Properly planned revenue model is a critical success
factor
– Revenues from sales depend on customer acquisition
cost and advertisement
– Must be figured into the analysis
• Costs
– Implementation and operation costs
• Recover the investment
– Should be able to recover the investment in up to 3
years

26. E-Business Strategy
• Outputs:
– Where you want to be in the future
– Business case
• Estimated Time
• Estimated Cost

27. 27
Implementation planning
• End
• Start
• Planned Activities
– Estimated scope
• Planned schedule
– Estimated time • Human resources
– Estimated cost • Planned
procurement
• Planned budget
How to implement
• Manage Risks
e-business
Regional Training Workshop for Enterprise Support Agencies to Promote E-business for
SMEs in the Greater Mekong Subregion (GMS), 26-28 June 2006, Bangkok

28. Implementation planning
Break the
Refine outputs in Identify
Scope small pieces Activities
Identify Develop Plan
Resources Schedule procurement
Plan Budget Manage Project Plan
Risks

29. Refining Scope
• Example:
– One initial page with the basic information regarding the
company and links to other pages with further information on
its products, the company itself, and contact information.
• Try to get the details
– Building an Order: shopping cart size, history
– Tax and Shipping: calculated before purchase?
– Payment options: credit cards, purchase orders
• Priorities
1. Must have
2. Nice to have
3. Maybe in the future
• These priorities are also influenced by budget, development time, etc

30. Work Breakdown Structure (WBS)
e-business
e-business Off-line
web site infrastructure
Web site Web site Web service Internal capacity Internal capacity on
layout Content infrastructure on e-business communications with
operation foreign clients
Intermal capacity
Web site Network Web server on maintenance
text ready ready ready of web content
Product ‘s Intermal capacity
images ready on maintenance
Hardware Webserver of web service
installed installed

31. 31
Identify Activities
Outcomes Activities
Web site layout - Develop web site layout
Web site text ready - Develop content of web site
Product’s images ready - Obtain images of green cooperative’s products
- Process the images to post in the web site
Network ready - Install Internet access
Hardware installed - Install web server (Hardware)
Web server installed - Install web server software
Internal capacity on - Install software for content management
maintenance of web content - Develop internal capacity on maintenance of web content
Internal capacity on - Develop internal capacity on maintenance of web service
maintenance of web service
Internal capacity on - Develop procedures for communications with foreign clients
communications with foreign - Develop templates for communications with foreign clients
clients - Develop internal capacity to deal with foreign clients
Regional Training Workshop for Enterprise Support Agencies to Promote E-business for
SMEs in the Greater Mekong Subregion (GMS), 26-28 June 2006, Bangkok

32. Identify Resources
Tasks Resources Required skills
- Develop web site layout - External - Web design
- Develop content of web site - 1 Internal staff – - English language,
2 hours per day, cooperative’s history,
for up to 3 months products and services.
- Obtain images of green - 1 Internal staff - Photo shooting
cooperative’s products
- Process the images to post in - External - Web design
the web site
- Install Internet access - External - Data Network
- Install web server (Hardware) - External - Hardware installation
- Install web server software - External - Web server installation
and configuration
- Install software for content - External - Content management
management configuration

33. Develop Schedule
# Activity Predeces Months
sor
1 2 3 4 5 6 7 8 9 10 11 12
1 Develop content of web site
2 Obtain images of green
cooperative’s products
3 Process the images to post 2
in the web site
4 Develop web site layout
5 Install Internet access
6 Install web server
7 Install web server software 6
8 Install software for content 6
management

34. Procurement Plan
• Conduct your own research to be prepared to
purchase. It includes things such as current
technologies and possible companies to
contract.
• To plan the procurement you should know
basically what to purchase and when to
purchase

35. Budget Plan
• Add costs of internal and
external resources
• Estimate the monthly
expenditure

36. Manage Risk
• Identify risks
– ISP, e-market Portal, Web developers
– Financial
• What to do?
– Avoid
• Revise planning (scope, activities, schedule, budget)
– Mitigate
• Reduce impact
• Reduce probability

37. Project Plan
• The project plan is the compilation of all planning
documents developed. It describes how the project
will be implemented and it should be used is a
guidding tool.
• Should not be considered a static document. Make
sure that the project is implemented according to the
plan but also conduct the on-going planning and
update the project plan to reflect the changes.
• It is a good practice to keep the baselines regarding
time (initial schedule), cost (Budget plan), and scope
(Scope statement). They will be useful tools to
monitoring the implementation of the project.

38. Cost Benefit Analysis
• Identify & evaluate all costs & benefits
• Discount
• Assess project(s) by calculating
– Benefit/Cost Ratio (B/C)
– Net Present Value (NPV)
– Internal Rate of Return (IRR)
38

39. Discounting
• Policies & projects last a long time
• Frequently costs & benefits occur at different
times
• Money has a time value, i.e. ceteris paribus,
current dollars are more valuable than future
dollars
• Thus, we need to place current & future costs
& benefits on an equal basis for comparison
39

40. Discount Rate v. Interest Rate
• $100,000 invested at a 3% interest rate today
will be worth roughly $115,927 in five years
• $100,000 in anticipated benefits five years
from now is worth roughly $86,260 today,
when discounted by 3%
40

41. The Discount Rate Matters
• $100,000 in anticipated benefits five years
from now is worth roughly $86,260 today,
when discounted by 3%
• $100,000 in anticipated benefits five years
from now is worth roughly $78,352 today,
when discounted by 5%
• The difference grows larger as
– Multiple years are accounted for
– Benefits accrue further into the future
41

42. What To Use As A Discount Rate?
• There are various approaches to selecting one
– “Givens” (i.e. some authority imposes one)
– Bank interest rates
– Rates of return on certain investments (e.g.
government bonds)
– “Social” discount rates
42

43. Net Present Value
• The difference between total discounted
benefits and total discounted costs
• NPV = (PVB ‑ PVc)
• NPV: decision criteria
– For a single project, a positive NPV indicates
acceptability
– For multiple (competing) projects, the project(s)
with the highest NPVs should receive highest
priority
43

44. Benefit/Cost Ratio
• B/C = (PVB / PVC)
• Benefit/Cost ratio: decision criteria
– For a single project, a B/C ratio which is greater than 1 indicates
acceptability
– For multiple (competing) projects, the project(s) with the
highest B/C ratios (greater than 1) should receive highest
priority
44

45. Internal Rate of Return
• The discount rate at which the present value
of benefits is equal to the present value of
costs
• Internal Rate of Return: decision criteria
– For a single project, an IRR which is greater than
the selected (for B/C and/or NPV analysis)
discount rate indicates acceptability
– For multiple (competing) projects, the one with
the largest IRR is the most desirable
45

46. Summary
• Planning, implementing and operating
• Planning = strategy + implementation plan
• Strategy = Future, now (internal/external), choices
• Strategy will reach the target? Business case
• Implementation plan
– Scope
– Activities
– Resources
– Schedule
– Procurement
– Risks
– Project Plan