Week 2:

Electronic Commerce Business Strategy for Competitive Advantage

V.F. Kleist, Ph.D.

Why have an electronic commerce strategy?

Electronic Commerce Business Strategy for

Competitive Advantage Review of Last week, What is Electronic

Commerce, business models for success (Rappa)

Notes from text Chapter 2, (Amor) Forces that drive use of Electronic Commerce Changes that Electronic Commerce might yield

for a business, + and – Impacts of Electronic Commerce on Firm Electronic Commerce Strategy and

Implementation (Turban, et al, 2000)

Business issues of EC (Turban, et al, 2002, Chpt.

1)

New way of doing business Different if selling to customer v. corporations Has economic impact on competition New role of intermediaries Using EC in supply chain management Can improve customer service Can use EDI via the internet Can change methods of marketing

Electronic Markets (Turban, et al. Chpt. 1)

New vehicle for business Not a building, but a network location where

business interactions occur Where shoppers and sellers meet Requires transfer of payments Participants are brokers, buyers, sellers Participants may never even meet Means of interconnection varies between parties,

can change by event or transaction Trace flow of how an electronic market works.

Wal Mart example of IOS (Turban, et al.

Chpt. 1)

World’s largest retailer, $100 B in salesCoordinates production, marketing,

finance via computer networksProvides each supplier a monthly profit

and loss statement on their productsUses Collaborative Forecasting and

Replenishment Ecommerce Model (CFAR)

Preparing the Online Business, Chpt. 2, Amor Preparing the Online Business Competitor Analysis on the Internet The Fourth Channel Paradigms in the New Economy Return on Investment Driving Business Process Reengineering Designing, Developing and Deploying the

System

Benefits to Electronic Commerce (Greenstein and Feinman 2000, p. 3, direct quote)

Internet and web-based electronic commerce is more affordable than traditional EDI

Internet and web-based electronic commerce allows more business partners to be reached than with traditional EDI

Internet and web-based electronic commerce can reach a more geographically dispersed customer base

Procurement processing costs can be lowered reductions in inventories lower cycle times better customer service lower sales and marketing costs

Reasons to Move to EC (Amor, 2002)

Expand market reachVisibilityResponsivenessNew ServicesStrengthen business relationshipsCost- ReductionChannel Conflicts

EC Benefits to Organizations (Turban, et al. chpt. 1)

Expands markets Decreases cost of paper based info Reductions in inventories Pull supply chain management Customization of products Reduces time between outlay of capital and receipt of

products and services Supports BPR Reduces telecommunications costs Improves image, improved customer service, newfound

business partners

EC Benefits to Consumers (Turban, et

al, Chpt. 1)

Shop 24 hours a day More choices More products Less expensive products Quick delivery Electronic communities Facilitates competition Virtual auctions Work at home Lower prices Access to public services

Negatives to EC (Turban, et al., 2002, Chpt. 1)

Lack of security, reliability, standards, protocols Insufficient bandwidth Software development tools still evolving Difficult to integrate EC software with back office

platform Vendors need more hardware and software, and

these products need to be supported Cost to develop is high, hard to see payback Lack of trust, privacy, security cause resistance Legal issues unclear

Ecommerce Business Strategies

Ecommerce Business StrategiesHow much business on web in next 12

months, two years?Fully digital, web based business, or

just fourth channel for your firm (e.g., face to face, telephone or mail)?

How fast is the company going to grow?What are your expectations for return

on investment? Cost reduction?

Planning for Ecommerce (Amor, 2002)

Find a champion Plan for change Define a pilot project Estimate the costs Measure productivity Re-engineer business processes Learn as you go Prepare for resistance Prepare for disaster Create a dark site

Issues of Web Marketing (Amor, 2002)

Brands Change Conciseness Dynamic Sites Finances Free Givaways Global Village Color schema File size

Live Events Niche Markets Promotion Syndication Technology Feedback FAQ Navigation Aids

Why is the web so compelling in a marketing sense? (Bruner 1998,

Chapter 2)

Interactive Personal Infocentric Instantaneous Measurable Flexible Interlinked Economical Resources

Enterprise.com: Market Leadership in the Information Age (Papows 1998)

The Network Centric Era and the Changing Workplace

The Web: Forger of the New IT Economics The Web/Virtual Office Based Era The Market Facing Enterprise Knowledge Management: The Sustainable

Competitive Advantage Converging and Transforming Industries The Great American Economic Surprise The Race For Global Leadership

New Rules for the New Economy(Kelly, 1998) Embrace the swarm Increasing returns Plentitude, not

scarcity Follow the free Feed the web first

Let go at the top From places to

spaces No harmony. All flux Relationship tech Opportunities before

efficiencies

Outlook for the Future (based on Amor)

Consumer devicesPrivacy and SecurityNext Generation InternetBrokersTotal automation of businessSocial impactsElectronic commerce vs. .coms

Discussion: How can electronic commerce reduce inventory costs? How can electronic commerce reduce production cycle

time? How can electronic commerce enhance customer

service? How can electronic commerce help a firm reach its

customers in a very low-cost fashion? Does Internet access make employees more or less

productive? Give an example of electronic commerce in the

supplier’s value chain.

Internet Building Blocks (PriceWaterhouseCoopers, 2001 Technology Forecast)

Applications Programming Interfaces Server side programming languages and

environments Web Server Products Improving Web server performance Client side technologies Schemas, frameworks and vocabularies Internet related products and services