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Chapter-4
Business Strategy

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Introduction to Business Strategy

Business
Environment

Business
Strategy

Technology
Evaluation

update

Business
Capability

Strategy
Formulation

e-Commerce
Strategy

Business
Strategy

revise

e-Commerce
Plan

Business
Implementation

Technical
Implementation

Evaluation

improve

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Introduction to Business Strategy

Corporate strategy
Corporate strategy is the pattern of major objectives, purpose or
goals and essential policies or plans for achieving those goals, stated
in such a way as to define what business the company is in or is to
be in and the kind of company it is or is to be.

Andrews (1971)

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Introduction to Business Strategy (cont...)

Strategy Formulation
Four Stages of Strategy Formulation:
Consideration

of

environmental changes

that bring

about

new

opportunities and pose new threats.

Assessment of the internal strengths and weaknesses of the institution
and in particular its ability to respond to those opportunities and threats.
A decision-making process influenced by the values, preferences and
power of interested parties.
A strategy generating process concerned with generating options and
evaluating them.
Needle (1994)

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Introduction to Business Strategy (cont...)

Alternative strategies
Strategy formulation is both rational and intuitive organisations faced with
the same environmental circumstances and with similar business capabilities
may well develop entirely opposite strategies.
Car assemblers may go for:
Volume production that competes on price, or
Higher margins in quality and niche markets.
Retailers may choose to:
Switch strategy to online selling.
Develop their agent network.
Enhance traditional retail outlets.
Whatever the selected strategy:
Strategy formation is an ongoing process.
The strategy needs to become part of the fabric of the organisation.

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Strategic Implications of IT
IT initially used for administrative automation.
ICT (information and communications technology) used for:
Intra-organisational systems
Inter-organisational systems
Public access networks (Internet)
Mobile data communications
The use of ICTs can have strategic implications for small and large
organisations.

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e-Commerce strategy inputs

Traditionally an IT Strategy would be subservient to the Business
Strategy.
For e-Commerce the IT Strategy becomes a central component (or
the determinant factor) in Business Strategy.
Inputs to an e-Commerce Business Strategy are:
Technology
Business Environment
Business Capability
Existing Business Strategy

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Technology
e-Commerce technologies:
EDI:
Streamline supply logistics.
Facilitate decreases in trade cycle times.
Electronic Markets:
Redefine the operation of a market sector.

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Internet e-Commerce:
New direct sales opportunities
Novel business to business and business to consumer
applications

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Technology (cont)
The organisation

Source of business value

Improve it

product promotion
new direct sales channel
direct savings
time to market
customer service
brand image

Transform it

technological and organisational

learning
customer relations

Redefine it

new product capabilities

new business models

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Business Environment
All businesses operate within an external environment.
Environmental factors that interact with business include:
The Economy:
The State:
Sets the regulatory framework (For e-Commerce, with a global
spread, the effect of state regulation can be ambiguous).
Technology: (the topic of the previous section)
The Labour Market:
e-Commerce - need special skills.
e-Commerce can result in downsizing.
Culture:
e-Commerce varies across countries.

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Business capability
Gap analysis:
A knowledge of the resources and an organisation possesses, and
what can be done with them, is a prerequisite for future plans and
establishes whether a gap exists between what management would
like to do and what they can do.
(Needle, 1994)
e-Commerce needs new skills and, in all probability, alters the ways in
which business is done.
Existing Business Strategy:
Very possibly the organisation already has a business strategy and
this can and should be part of the evaluation of the e-Commerce
strategy.

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Strategy Formulation & Implementation Planning

The Strategy Formulation is based on the inputs:
Technology
Business Environment
Business Capability
Existing Business Strategy
Strategy Formulation then involves discussion and negotiation
stages can include:
Identifying Options
Evaluating Options
Selecting Strategy
The outputs are:
The New Business Strategy
An e-Commerce Strategy

Strategy Formulation & Implementation Planning (cont..)

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Business
Environment

Business
Strategy

Technology
Evaluation

update
Business
Capability

Strategy
Formulation

e-Commerce
Strategy

Business
Strategy

revise

e-Commerce
Plan

Business
Implementation

Technical
Implementation

improve

Evaluation

Fig.: e-Commerce Strategy Formulation

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e-Commerce Implementation
The approach to technical implementation of an e-commerce
system depends on the business objectives, business requirements
and the technologies that have been selected.
Technical implementation:
Ease of Use
Functionality
Back Office Systems
Business Implementation:
Business Infrastructure
Marketing

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e-Commerce Implementation (cont)

Technical Implementation
The ease of use of the system by the intended end users:
It is always an important factor in system design but crucial if the end
users are to be members of the public with perhaps limited computer
literacy and the option to switch to an alternative website if not satisfied.
Functionality:
This has to be what the users want rather than what the organisation
think they need. Users of e-commerce are not a captive audience that
can be interviewed and evaluated like the users of a traditional IS
development.

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e-Commerce Implementation (cont)

Back Office Systems:
Customers of an online service quite reasonably except a rapid
response and the back office systems need to be able to meet this
requirement. For a volume e-commerce system this requires that
the customer front end integrates with the IS systems.
Business Implementation
Put in place the business infrastructure to support the new ecommerce facility.
Market the new e-commerce facility to the intended users.

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e-Commerce Evaluation
Evaluate:
Feedback from Users
Feedback from those who gave up?!

Loopback from the evaluation is shown in three levels

Improve it
Revise it
Update it

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e-Commerce Evaluation (cont)

Loopback from the evaluation is shown in three levels

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Improve it:
Implementing an e-commerce site remains an inexact science. Feedback from
customers and testing using people not involved in the site development can
indicate where changes are needed; the site can be improved.
Revise it:
Business results from the use of e-commerce may indicate the need to change the
e-commerce strategy & the implementation plan; the planning can be revised.
Update it:
Developments in the competitive position, changes in the company or the
emergence of new e-commerce technologies may indicate the need to revisit the
strategic process; the strategy can be updated.