Chapter 5

E-business Strategy

Learning objectives

• 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.

Issues for managers

• How does e-business strategy differ from

traditional business strategy?

• How should we integrate e-business strategy

with existing business and IS strategy?

• How should we evaluate our investment

priorities and returns from e-business?

Michael Porter on the Internet

• ‘The key question is not whether to deploy

Internet technology – companies have no

choice if they want to stay competitive – but

how to deploy it.’

Porter, M. (2001) Strategy and the Internet,

Harvard Business Review, March 2001, 62–78.

Different forms of organizational strategy

Figure 5.1 Different forms of organizational strategy

Relationship between e-business

strategy and other strategies

Figure 5.2 Relationship between e-business strategy and other strategies

A generic strategy process

model

Figure 5.3 A generic strategy process model

Dynamic e-business strategy

model

Figure 5.4 Dynamic e-business strategy model

Source: Adapted from description in Kalakota and Robinson (2000)

Elements of strategic situation

analysis for the e-business

Figure 5.5 Elements of strategic situation analysis for the e-business

What happens where there is

no e-business strategy?

• Missed opportunities for additional sales on

the sell-side and more efficient purchasing on

the buy-side

• Fall behind competitors in delivering online

services – may become difficult to catch up,

e.g. Tesco, Dell

• Poor customer experience from poorly

integrated channels

Adoption steps of e-business

services

Figure 5.6 Adoption steps of e-business services

Summary applications portfolio

analysis for the B2B Company

Figure 5.7 Summary applications portfolio analysis for The B2B Company

SWOT analysis for the B2B

company

Figure 5.8 SWOT analysis for The B2B Company

Customer demand for e-marketing

services for The B2B Company

Figure 5.9 Customer demand for e-marketing services for The B2B Company

Competitive threats acting on

the e-business

Figure 5.10 Competitive threats acting on the e-business

Porter’s five forces

Power of

suppliers

Bargaining

powers of

customers

Extent of rivalry

between

competitors

Threat of

subsitutes

Threat of new

entrants

The businessThreat of

substitutes

Activity – Impact of Internet

• For one of the industries below, assess how the Internet has changed the competitive forces, e.g. has it increased or decreased power of suppliers and customers?

• Industries:

– Banking

– Supermarkets

– Oil industry

– Rail industry

Elements of strategic objective

setting for the e-business

Figure 5.11 Elements of strategic objective setting for the e-business

Direct and indirect Internet

contributions for fast growth companies in the US

Figure 5.12 Direct and indirect Internet contributions for fast-growth companies

in the USA

Source: PricewaterhouseCoopers (2000)

Grid of product suitability against

market adoption for transactional

e-commerce (online purchases)

Figure 5.13 Grid of product suitability against market adoption for transactional

e-commerce (online purchases)

Elements of strategy definition for

the e-business

Figure 5.14 Elements of strategy definition for the e-business

Strategic options for a company in

relation to the importance of the

Internet as a channel

Figure 5.15 Strategic options for a company in relation to the importance of the

Internet as a channel

Assessment of risk for market and

product development for the B2B company

Figure 5.16 Assessment of risk for market and product development for The

B2B Company

New product development – Smile online banking

(www.smile.co.uk)

Dabs.com (www.dabs.com)

Figure 5.18 Dabs.com (www.dabs.com)

Elements of strategy

implementation for the e-business

Figure 5.19 Elements of strategy implementation for the e-business