Semester A 2022/23 : Lecture 2:

E-business opportunities & Strategy

 Electronic Commerce (e-commerce):
◦ The online exchange of goods, services, and money
among firms, between firms and their customers,
and between customers

 Electronic Business (e-business):

◦ Any process that an organization (for-profit,
governmental, or nonprofit entity) conducts over a
computer network
1. Ubiquity
2. Global reach
3. Universal standards
4. Richness
5. Interactivity
6. Personalization/Customization
7. Social Technology
 Traditional stores
◦ Focus on mainstream
needs
◦ Target the average
customer

 E-commerce
◦ Can focus on niche
markets
 Sellers
Business Consumer

B2B C2B
Business

(alibaba) (shutterstock)
Buyers

B2C C2C
Consumer

(TMall, (ebay,
parknshop.com) Taobao)
 Mobile commerce (m-commerce)
◦ Electronic transactions conducted using a wireless,
mobile device and mobile networks
 that lead to the transfer of real or perceived value in
exchange for information, services, or goods
◦ Location-based services
 highly personalized mobile services based on a user’s
location
 Social Commerce (social business)
◦ Use of social network(s) and or Web2.0 software in
the context of e-commerce transactions

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 Social Commerce
 Web 2.0
 Social Computing
 Social Networks

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◦ Electronic market (e-marketplace)
An online marketplace where buyers and sellers
meet to exchange goods, services, money, or
information

 Intranet/extranet

◦ E-government

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 Web 2.0
◦ The second generation of Internet-based services
that lets people collaborate and share information
online in new ways, such as social networking sites,
wikis, communication tools, and folksonomies

 Social Computing
◦ An approach aimed at making the human–computer
interface more natural

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 Social Networks
◦ A category of Internet applications that help
connect friends, business partners, or individuals
with specific interests by providing free services
such as photo presentation, e-mail, blogging, and
so on using a variety of tools

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 How to analyze the internal and external
environment an organization faces
 PEST Analysis, SWOT, Porter’s 5 Forces,
Business Model Canvas
 Organizational Strategy
 Macro-
environment

Micro-
environment

Internal
environment
 PEST

5 forces
Macro-
environment

Micro-
Business
environment SWOT
model canvas

Internal
environment
 PEST

Macro-
environment

Micro-
environment

Internal
environment
 PEST—the “big picture”
◦ Macro-environment

 Forces of change a business is exposed to

◦ Political
◦ Economic
◦ Socio-cultural
◦ Technological
 Directly impact the way business operates

 Policies and legislation

◦ Often affect all companies

 International political factors can also have an

impact on businesses
 Governmental approaches to corporate policy,
corporate social responsibility, environmental
issues, and customer protection legislation?
 Change in local, state/provincial, or national
government?
◦ When?
◦ How could this change policies?
◦ Who’s most likely to win?
 Property rights and the rule of law?
 Corruption and organized crime?
◦ How likely are these situations to change?
 Pending legislation or taxation changes?
 All businesses are affected by economic
factors nationally and globally
 Climate of the economy → consumer
confidence & behavior
 Booming economy vs. Recession
 Effects of global economies
◦ Availability of labor, climate of economy, etc. in
other countries affects competitiveness and
demand for products
 State and stability of current economy?
 Stability of key exchange rates?
 Customers' levels of disposable income?
 Unemployment rate?
 Access to credit (businesses & consumers)?
 Effect of globalization on economic
environment?
 Factors within society affect attitudes,
interests, and opinions
 Socio-cultural factors influence
◦ who we are as people
◦ the way we behave
◦ what we ultimately purchase
 Population changes → direct impact on all
organizations
◦ Supply and demand of goods and services
◦ Supply of labor
 Population's growth rate and age profile?
 Generational shifts in attitude?
 Society's levels of health, education, and
social mobility?
 Employment patterns, job market trends, and
attitudes toward work can you observe?
 Social attitudes and social taboos?
 Religious beliefs and lifestyle choices?
 Changes in technology → how businesses
operate
 Impact of Internet
◦ Challenges and opportunities
 New technologies that you could be using?
 New technologies that could radically affect
your work or your industry?
 Competitors’ access to new technologies that
could redefine their products?
 Research focus of governments and
educational institutions?
 PESTL, PESTEL, STEEPL,….
◦ Legal factors
◦ Environmental factors
 Factors typically influence PEST in some way
 PEST

5 forces
Macro-
environment

Micro-
environment

Internal
environment
 Analyze the competitive landscape
◦ Micro-environment
 How attractive is an industry?
http://www.youtube.com/watch_popup?v=mYF2_FBCvXw
 The Five Forces Model helps business people
understand the relative attractiveness of an
industry and the industry’s competitive
pressures in terms of
1. Buyer power
2. Supplier power
3. Threat of substitute products or services
4. Threat of new entrants
5. Rivalry among existing competitors
 Buyer power – high when buyers have many
choices and low when their choices are few

 Competitive advantages are created to get

buyers to stay with a given company
◦ NetFlix – set up and maintain your movie list
◦ United Airlines – frequent flyer program
◦ Apple iTunes – buy/manage your music
◦ Dell – customize a computer purchase
 Supplier power – high when buyers have few
choices and low when choices are many
 The opposite of buyer power
 Threat of substitute products and services –
high when there are many alternatives for
buyers and low when there are few
alternatives

 Switching costs of services can reduce this

threat

 Switching cost – a cost that makes buyers

reluctant to switch to another service
 Threat of new entrants – high when it is easy
for competitors to enter the market and low
when entry barriers are significant

 Entry barrier –service feature that customers

have come to expect and that must be
offered by an entering organization
◦ Banking – ATMs, online bill pay,
 Rivalry among existing competitors – high
when competition is fierce and low when
competition is more complacent
 How can an organization gain a sustained
competitive advantage?
◦ Need to develop a strategy of performing activities
differently than a competitor
 Cost leadership strategy Low cost
◦ Produce products and/or services at the lowest cost in
the industry
 Differentiation strategy Product uniqueness
◦ Offer different products, services, or product features
 Niche strategy
◦ Select a narrow-scope segment (niche market) and be
the best in quality, speed, or cost in that market

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 Growth strategy
◦ Increase market share, acquire more customers, or
sell more products
 Alliance strategy
◦ Partnerships, alliances, joint ventures, or virtual
companies.
 Innovation strategy
◦ Introduce new products and services, put new
features in existing products and services, or
develop new ways to produce them.
 Entry-barriers strategy
◦ Create barriers to entry
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 PEST

5 forces
Macro-
environment

Micro-
environment SWOT

Internal
environment
 Focuses on a business unit, a proposition or
idea
 Bridges internal and external analyses

+ -

Internal Strengths Weaknesses

External Opportunities Threats

 Internal factors
◦ products, pricing, costs, profitability, performance,
quality, people, skills, adaptability, brands, services,
reputation, processes, infrastructure, etc.

 External factors
◦ markets, sectors, audience, fashion, seasonality,
trends, competition, economics, politics, society,
culture, technology, environmental, media, law, etc.
 What advantages does your organization
have?
 What do you do better than anyone else?
 What unique or lowest-cost resources can
you draw upon that others can't?
 What do people in your market see as your
strengths?
 What is your value proposition?
 What could you improve?
◦ Morale, leadership…
 What are people in your market likely to see
as weaknesses?
◦ Reputation, accreditation,…
 What factors lose you sales?
◦ Supply chain, capabilities,…
 Are your competitors doing any better than
you?
 What good opportunities can you spot?
 What interesting trends are you aware of?

◦ Changes in technology and markets

◦ Changes in government policy
◦ Changes in social patterns, population profiles,
lifestyle changes,…
 What obstacles do you face?
◦ Political, legislative, employment market,
economy…
 What are your competitors doing?
 Is changing technology threatening your
position?
 How are you vital partners doing,…
 PEST

5 forces
Macro-
environment

Micro- Business
environment SWOT
model canvas

Internal
environment
 Describing, analyzing, and designing
business models
 Business model: how an organization creates,
delivers, and captures value
◦ What does a company do?
◦ How does a company uniquely do it?
◦ In what way (or ways) does the company get paid
for doing it?
◦ What are the key resources and activities needed?
◦ What are the costs involved?
 Strategy
A broad-based formula for how a business is
going to accomplish its mission, what its
goals should be, and what plans and policies
will be needed to carry out those goals
 Strategy Initiation
The initial phase of strategic planning in which the
organization examines itself and its environment

 Strategy Initiation
◦ Company Analysis and value proposition
◦ Core competencies
◦ Forecasts
◦ Competitor Analysis
 Strategy Formulation
The development of strategies to exploit
opportunities and manage threats in the business
environment in light of corporate strengths and
weaknesses

 Strategy Formulation
◦ Business Opportunities
◦ Cost – Benefit Analysis
◦ Risk Analysis, assessment and management
◦ Business Plan
 Strategy Implementation
The development of detailed, short-term plans for
carrying out the projects agreed on in strategy
formulation

 Strategy Implementation
◦ Project Planning
◦ Resource Allocation
◦ Project Management
 Strategy Assessment
The continuous evaluation of progress toward the
organization’s strategic goals, resulting in
corrective action and, if necessary, strategy
reformulation
 Strategic Planning Tools

 Strategy map
 SWOT analysis
 Competitor analysis grid
 Scenario planning
 Balanced scorecard
 Business plan
 Business case
 Organizational Environment
◦ PEST Analysis
◦ SWOT
◦ Porter’s 5 Forces
◦ Business Model Canvas
 Organizational Strategy
◦ Strategy Initiation
◦ Strategy Formulation
◦ Strategy Implementation
◦ Strategy Assessment
 Read the WMG case study and answer the
following questions:

1. Why did WMG change their distribution strategy?

2. Why did it develop a deal with YouTube? Is this a
strategic alliance?
3. Why did WMG start its digital-oriented strategy?
4. Explore the ad arrangement with Outrigger. Does it
make sense?
 Assignment Due : Two-Page Project Proposal