chapter 13 planning for electronic commerce. learning objectives in this chapter, you will learn...
TRANSCRIPT
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Chapter 13
Planning for Electronic Commerce
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Learning Objectives
In this chapter, you will learn about:• Planning electronic commerce initiatives• Strategies for developing electronic commerce
Web sites• Managing electronic commerce implementations
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Planning the Electronic Commerce Initiative
A successful business plan for an electronic commerce initiative should include activities that will:– Identify the initiative’s specific objectives
– Link those objectives to business strategies
– Manage the implementation of those business strategies
– Oversee the continuing operations of the initiative after it is launched
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Identifying Objectives
• Common objectives include:– Increasing sales in existing markets– Opening new markets– Serving existing customers better– Identifying new vendors– Coordinating more efficiently with existing
vendors– Recruiting employees more effectively
• Resource decisions should consider the expected benefits and costs of meeting the objectives.
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Linking Objectives to Business Strategies
• Businesses can use downstream strategies, which are tactics that improve the value that the business provides to its customers.
• Businesses can pursue upstream strategies that focus on reducing costs or generating value by working with suppliers or inbound logistics.
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Linking Objectives to Business Strategies
• More companies are taking a closer look at the benefits and costs of their electronic commerce projects.
• A good business plan will set specific objectives for the benefits to be achieved and costs to be incurred.
• Companies use pilot Web sites to test an electronic commerce idea, and then release a production version when it works well.
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Measuring Benefit Objectives
• Many companies create Web sites to build their brands or enhance existing marketing programs.
• These companies can set goals in terms of increased brand awareness, as measured by market research surveys.
• Companies that sell goods or services on their sites can measure sales volumes in units or dollars.
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Measuring Cost Objectives
• Based on data collected in separate recent surveys, International Data Corporation and the GartnerGroup both estimated that the cost for a large company to build and implement an adequate entry-level electronic commerce site was about $1 million.
– About 79% of that cost was labour related
– 10% was the cost of software
– 11% was the cost of hardware
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Measuring Cost Objectives
• The McKinsey study estimated costs for two types of magazine sites: a full portal site that would serve as a destination in itself and a more limited magazine companion site.
• The full portal site cost estimate was $2.4 million to build and $4.3 million per year to maintain, with a staff of 35 people.
• The companion site cost estimate was $150,000 to build and $270,000 per year to maintain, with a staff of two people.
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Measuring Cost Objectives
• Kmart’s Web store, BlueLight.com, cost more than $140 million to create.
• The site is certainly well-designed and highly functional, but the typical visitor would never guess how much this site cost.
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Comparing Benefits to Costs
• If the benefits exceed the cost of a project by a comfortable margin, the company invests in the project.
• Companies should evaluate each element of their electronic commerce strategies using this cost/benefit approach.
• Managers often use return on investment (ROI) to evaluate any capital investment.
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Strategies for Web Site Development
• The transformation of Web site functions occurred rapidly, taking only a year or two in most companies.
• Few businesses have caught up with the changes in terms of how they develop Web sites.
• The purposes and scope of Web sites have increased greatly, but few businesses today manage them as the dynamic business applications they have become.
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Internal Development vs. Outsourcing
• The key to success is finding the right balance between outside and inside support for the project.
• Hiring another company to provide the outside support for the project is called outsourcing.
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Managing Electronic Commerce Implementations
• The best way to manage any complex business software implementation is to use formal project management techniques.
• Individual projects can become so large that it becomes impossible for managers to maintain control without some kind of assistance.
• Microsoft Project and Primavera Project Planner are tools for managing resources and schedules.
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Post-Implementation Audits
• A post-implementation audit is a formal review of a project after it is up and running.
• The post-implementation audit gives managers a chance to examine the objectives, performance specifications, and cost estimates, to schedule delivery dates that were established in its planning stage, and to compare them to what actually happened.
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Summary
In this chapter, we have looked at:• Planning electronic commerce initiatives• Strategies for developing electronic commerce
Web sites• Managing electronic commerce implementations