eb strategies internet

7/31/2019 EB Strategies Internet

1/87

E-Business Strategies

Bob SmithAssociate Professor/Extension Specialist

Dept. of Wood Science and Forest Products

Virginia Tech

E-Commerce: Impacting the Way We do Business

October 1-2, 2001, Nashville TN


2/87


3/87

Why the Internet?


4/87


5/87


6/87

Printed Material

Mass reproductionUnknownaudienceWider

geographical areaOne-waycommunication


7/87

Telephone

Immediatecommunication

Interactive two-waycommunicationCustomerprospectingWidergeographical area


8/87

Planes, Trains &

AutomobilesPersonalcommunication

Widergeographical base

Two-waycommunicationPerception of above- averageservice


9/87

Television

Wide, massaudience

One-waycommunication60 second soundbiteFirst visualelectronicmedium


10/87

Over-night DeliveryProvide immediate service

Create perception of customer care JIT management systems

Federal ExpressFederal Express


11/87

FAX - iT

Immediate transferof written

informationAbove averageserviceOne-way promotionCloser to thecustomer


12/87

Cellular Phone

MobilityInstant access tocustomersAbove averageservice

24 hour contact


13/87

Personal Computer

Faster serviceCustomer

informationData basesInstant

communication


14/87

What do they have in Common?

Wider distribution of informationUniform informationAssist in marketingfunction of companyMany were interactive

Allow for impression of above average service They all have becomestandards in theindustry


15/87

InternetInternet


16/87

Definitions

Electronic Commerce (EC) is where businesstransactions take place viatelecommunications networks, especially the

Internet. Electronic commerce describes the buying and

selling of products, services, and information viacomputer networks including the Internet.

The infrastructure for EC is a networkedcomputing environment in business, home, andgovernment.

E-Business describes the broadest definition of EC. Itincludes customer service and intrabusiness tasks.

It is frequently used interchangeably with EC. Electronic Commerce, 2000


17/87

What is an Intranet? When internet

technology is usedto create a private

network within acompany anintranet is formed.

Allows forimmediate transferof technology

between locations. Provides

information suchas product pricing,inventory lists,productionschedules, anddata bases forremote employees.


18/87


19/87

Whats Needed

Designated computerSoftware to communicate withInternetA connection into a network thataccesses the InternetOrOr

* Hire a commercial service and* Hire a commercial service andhave a connection to the networkhave a connection to the network


20/87

Cost$1500 computer

$300 SoftwareHome page design - $100/hr - ?Commercial Internet access -

>$100/month


21/87


22/87

Whats Being SoldComputer softwareComputer hardwareBooks

MusicGifts

TravelClothes

>$100 billion sold in1999


23/87

Whats Being Sold?

Source: Forester Research Inc. 1998Source: Forester Research Inc. 1998


24/87

Technology Update(It took this many years to reach 50

million users)

Radio - 38 years Television - 13 years Internet - 4 years


25/87

Why an E-Commerce

Strategy


26/87

The Benefits of Electronic Commerce

Expands the marketplace to nationaland international markets

Decreases the cost of creating,processing, distributing, storing andretrieving paper-based information

Allows reduced inventories andoverhead by facilitating pull typesupply chain management

The pull type processing allows forcustomization of products and serviceswhich provides competitive advantage

Benefits to Organizations

Electronic Commerce, 2000


27/87

Benefits to Organizations Reduces the time between the outlay

of capital and the receipt of productsand services Supports business processes

reengineering (BPR) efforts Lowers telecommunications cost - the

Internet is much cheaper than value-added networks (VANs)



28/87

Benefits to Customers Enables customers to shop or do other

transactions 24 hours a day, all yearround from almost any location

Provides customers with more choices Provides customers with less expensiveproducts and services by allowing themto shop in many places and conduct

quick comparisons Allows quick delivery of products andservices in some cases, especially withdigitized products



29/87

Benefits to Customers Customers can receive relevant and

detailed information in seconds, ratherthan in days or weeks

Makes it possible to participate in virtualauctions

Allows customers to interact with othercustomers in electronic communitiesand exchange ideas as well as compareexperiences

Electronic commerce facilitates

competition, which results in substantialElectronic Commerce, 2000


30/87

Benefits to Society Enables more individuals to work at home, and

to do less traveling for shopping, resulting inless traffic on the roads, and lower air pollution

Allows some merchandise to be sold at lowerprices benefiting the poor ones

Enables people in Third World countries andrural areas to enjoy products and services whichotherwise are not available to them

Facilitates delivery of public services at areduced cost, increases effectiveness, and/orimproves quality



31/87

Why?

Works 24 hours a day Offers 2 way communication Unlimited access Interactive advertising Supports current business efforts


32/87

A market is a network of interactionsand relationships where information,products, services, and payments areexchanged. The market handles all thenecessary transactions.

An electronic market is a place where

shoppers and sellers meetelectronically.

In electronic markets, sellers andbuyers negotiate, submit bids, agree onan order, and finish the execution on- or

Electronic Markets



33/87


34/87

Major Business PressuresMarket and

economic pressures

Strong competition

Global economyRegional trade agreements (e.g. NAFTA)Extremely low labor cost in some countriesFrequent and significant changes in marketsIncreased power of consumers

Societal andenvironmental pressures

Changing nature of workforceGovernment deregulation of banking and other servicesShrinking government budgets subsidesIncreased importance of ethical and legal issuesIncreased social responsibility of organizations

Rapid political changes

Technological pressures Rapid technological obsolescenceIncrease innovations and new technologiesInformation overloadRapid decline in technology cost vs. performance ratio



35/87

Competition in Electronic

Commerce Impacts on competition

Lower buyers search cost Speedy comparisons Differentiation Lower price Customer service Digital products lack normal

wear and tear



36/87

Competition in ElectronicCommerce

Perfect competition Enable many buyers and sellers to enter the

market at little or no cost (no barriers to entry)

Not allowing any buyers and sellers toindividually influence the market Make certain products homogeneous (no

product differentiation)

Supply buyers and sellers with perfectinformation about the products and the marketparticipants and conditions



37/87

Competition in ElectronicCommerce

Observations regardingcompetitiveness

There will be many new entrants The bargaining power of buyers is likely to

increase

There will be more substitute products andservices The bargaining power of suppliers may

decrease The number of industry competitors in oneElectronic Commerce, 2000


38/87

What is Strategy


39/87

Strategy is the roadmap tosuccess. Strategy answers the question

what business are you in? Strategy determines how you

compete within the market you arein.

Strategy focuses the company in aunified direction.


40/87

The goal is to develop asustainable competitiveadvantage. There are generallytwo forms of competition,Operating effectiveness

(production) or Competitive position (marketing)


41/87

Competitive Advantage CanBe Achieved By: Concentrating on particular market

segments (niche markets) Offering products which differ from

the competition (productdifferentiation)

Using alternative distribution

channels and manufacturingprocesses Employing selective pricing and

fundamentally different coststructures


42/87

Generic Strategies

Porter gives us a little more help in strategyformulation by providing three generic

strategies which, if successfully implemented,can allow a firm to stake out a defended position in the marketplace. These strategiesare:

Overall cost leadership Differentiation Focus


43/87

Overall Cost Leadership

Efficient scale facilities

Vigorous cost reductions

Cost control Overhead control Avoid marginal

accounts Minimize R&D Minimize service Minimize

advertisin

Differentiation


44/87

Differentiation

Key idea: Create something about yourproduct that is perceived industry wide asbeing unique

Bases for Differentiation: Quality Delivery Credit and Terms Service Training

Reputation /Brand Image

Tech. Information The Actual

Product Price

Etc.


45/87

Differentiation can provideinsulation against competitors

because of brand loyalty bycustomers and a resulting lower

sensitivity to price


46/87

Focus

Key Idea: Focus on aparticular buyer group,segment of the product line,or geographic market


47/87

This strategy is built around serving a particular target market very well. The premise is that a firm is able to serve itsnarrow strategic target more effectively or efficiently than competitors who are

competing more broadly

By effectively implementing this strategy a

firm can achieve differentiation by better meeting the market needs or lower coststhrough specialization, or both


48/87

Focus your message

Pick your theme to say something special/uniqueabout your firm, and stick to it.

Unique product Speedy Delivery Super Service ? ? Stay Committed!


49/87

Generic Strategies

Summary


50/87


51/87

For Successful StrategicCompetition, Select Arenas That Are:

Sheltered fromchanges in thebusinessenvironment

Advantaged to

provide protectionfrom intenseglobalcompetition



52/87

Determining Competitive

Advantage


53/87

Strategic PlanningIndustry andcompetitive

analysis

Strategyformulation

Strategyreassessment

Implement-ationplan



54/87

Company and Competitive Analysis Monitoring, evaluating, disseminating

of information from the external andinternal environments

SWOT Analysis

Strengths Weaknesses

OpportunitiesThreats



55/87

SWOT Strengths those factors of the company that

provide for its success. A good reputation,quality products or low cost producer.

Weaknesses those factors that are a

disadvantage for the company. A high costproducer, a high employee turnover, or muchcompetition.

Opportunities those factors that are outsidethe companys control, but are areas in whichthey could capitalize. A changing demographicprofile, competition closing plants or e-businessallowing for wider distribution of products.

Threats those items outside the control of the

company and that may hinder it. Items such asnew laws, a recession or increased com etition.


56/87

Strengths (S) Weaknesses (W)INTERNALFACTORS

Company Analysis

Production

Marketing



57/87

Opportunities (O)

Threats (T)

EXTERNALFACTORS

Competitive Analysis

Production Marketing



58/87

Strengths (S) Weaknesses (W)

Opportunities (O)

Threats (T)

INTERNALFACTORSEXTERNAL

FACTORSSO Strategies

Generate strategieshere that use

strengths to takeadvantages of opportunities

WO Strategies

Generate strategieshere that takeadvantage of

opportunities byovercomingweaknesses

ST StrategiesGenerate strategies

here that usestrengths to avoid

threats

WT StrategiesGenerate strategieshere that minimize

weaknesses and avoidthreats

Company and Competitive Analysis



59/87

Strategic Questions The Company

What is your uniqueness? Where are you vulnerable? Why are you losing existing customers? Where is the greatest value created in

the company? What are the most common objections

you hear from customers?



60/87

Strategic Questions The competition

Who are the top 3competitors?

What are theirstrengths?

Where are theyvulnerable?

Where can you

attack? How do you

compare on price,service, quality, etc?

The market What are 3

important trends? How is the industry

changing? How many market

segments do youserve?

Where is thegreatest growthpotential?

Which of yourcustomers are doingwell and why?Electronic Commerce, 2000


61/87


62/87

Competitive Strategies

Defensive strategies takes place inthe firms own current market positionas a defense against possible attack by

a rival Lower the probability of attack Divert attacks to less threatening

avenues Lessen the intensity of an attack Make competitive advantage more

sustainable Electronic Commerce, 2000


63/87


64/87

Strategic Summary Focus your efforts! Define your competitive advantage! Have a clear strategy! Do it!


65/87


66/87

Questions

Objectives

Benefits tocustomersCurrent business

SavingsCompetitiveadvantagePresentation


67/87

Questions What are you producing and selling? How are you unique? Why should the customer buy from

you? How are you going to reach the

customer? Whats success?


68/87


69/87

Current Customers

BenefitsEasier access toinformationShippingschedulesDiscounts

InvoicingInventories


70/87

Marketing Mix

Promotional ToolAds, publicity,sales tool

PricingProductInformation

Distribution


71/87


72/87

Home Page

KISS Keep it simple, stupid

1. Decide what information you want to share1. Decide what information you want to share

2. Grab their attention quickly2. Grab their attention quickly3. Present information in simple, logical fashion3. Present information in simple, logical fashion

4. Do not put lots of graphics on first page4. Do not put lots of graphics on first page

5. Should be pleasant to the eye5. Should be pleasant to the eye6. Each page should have company name, logo, e-6. Each page should have company name, logo, e-

mail address and toll-free phone number mail address and toll-free phone number


73/87

Promoting Your E-business


74/87

Why Do You Need

Promotion? Just because you build it, doesntmean they will come.

You are competing against not onlyyour market area, but the entireworld.

Your current and future customersneed to be able to find you.


75/87

HOW? List homepage

address on allcurrentadvertising.

Put on all publicity newsletters letterhead business cards billing statements fax cover sheets

Register withsearch engines.

Link to other sites

and yourassociation sites. Advertise on the

web.


76/87

Link to?

Your trade associations Suppliers Customers Complementary

products


77/87

Advertising on the Web To build

awareness

Developprospects Meet customer

needs Generate orders Build customer

relations

Test market


78/87

Good Internet AdvertisingIncludes:

Clear message and identificationon 1st page.

Facilitates easy access to furtherinformation. The advertisement downloads

quickly. Provides the right information.

Product description, payment options,and contact information.


79/87

Common Search Engines Submit it - www.submit-it.com Yahoo - www.yahoo.com Webcrawler - www.webcrawler.com Infoseek - www.infoseek.go.com Lycos - www.lycos.com

Google - http://www.google.com/
http://www.lycos.com/http://www.lycos.com/


80/87

The Advantage for Small

BusinessesInexpensive source of informationInexpensive way of advertising

Inexpensive way of conducting marketresearchInexpensive way to build (or rent) a

storefrontLower transaction cost


The Advantage for Small


81/87

The Advantage for SmallBusinesses

Niche market, specialty products(cigars, wines, sauces) are the bestImage and public recognition can beaccumulated fastInexpensive way of providingcatalogsInexpensive way to reach worldwidecustomers



82/87


83/87

The Risks and Disadvantages

for Small Businesses

$ Lack of expertise in legal issues,advertisement$ Lack of resources to fully exploit the

Web$ Less risk tolerance than a largecompany


S f S ll


84/87

Success Factors for SmallBusinesses

Niche products Small volume Capital investment must be small Inventory should be minimal or non-

existent Electronic payments schema exist Payment methods must be flexible


Success Factors for Small


85/87

Success Factors for SmallBusinesses

Logistical services must be quick andreliable

The Web site should be submitted todirectory-based search engineservices like Yahoo in a correct way

Join an online service or mall and dobanner exchange Design a Web site that is functional

and provides all needed services to Electronic Commerce, 2000


86/87

Summary Successful firms will integrate the E-

business into their companysstrategy.

Used properly, E-business will be onemore method of increasing incomeand profits.

It is just a matter of time before itwill be as common as the fax, cell-phone and digital camera.

f


87/87

References Electronic Commerce: A Managerial

Perspective. 2000. By Efraim Turban, JaeLee, David King, and H. Michael Chung.Prentice Hall, Upper Saddle Rivern New

Jersey. (slides are marketed). E-Business Revolution. 2000. By Daniel

Amor. Prentice Hall,Upper Saddle RivernNew Jersey.

Strategic Internet Marketing. 1996. TomVassos. MacMillan Computer Publishing,Indianapolis, IN.

eb strategies internet

Documents