chapters 5-8 - viva university

PowerPoint PresentationLecturer:
Richard Boateng, PhD. • Senior Lecturer in Information Systems, University of Ghana Business School
• Executive Director, PearlRichards Foundation, Ghana
Email:
[email protected]
Class Website
• Primary Text: E-business and E-commerce Management, 4th Edition,
© Marketing Insights Limited 2009
Management Information Systems: Managing the Digital
Firm. 12th/13th/14th Edition, Pearson Education Inc.,
Upper Saddle River, NJ 07458.
4 www.vivaafrica.net | Dr. Richard Boateng ([email protected]) |
E-business strategy
Chapter 5
Learning outcomes
• Apply tools to generate and select e- business strategies
• Outline alternative strategic approaches to achieve 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.
Alternative definitions of strategy
• What is strategy? – ‘Defines how we will meet our objectives’
– ‘Sets allocation of resources to meet goals’
– ‘Selects preferred strategic option to compete within a market’
– ‘Provides a long-term plan for the development of the organization’
Figure 5.1 Different forms of organizational strategy
Sell-side e-commerce strategy (Chapters 8 & 9) or e- marketing / E-CRM Strategy
• Sell-side e-commerce is a channel strategy
• Objectives for online contribution percentage should drive our strategy
• Our e-commerce strategy defines how we should • Hit our channel leads and sales targets
– Acquisition, Conversion, Retention, Service, Profitability
• Communicate benefits of using this channel
• Prioritize products available through channel
• Prioritize audiences targeted through channel
• Select partners for this channel
• Channel strategy thrives on differentials
• BUT, need to manage channel integration
Buy-side e-commerce strategy (Chapters 6 & 7) or e- supply chain management strategy
• Buy-side e-commerce strategy is about maximizing operational efficiencies while improving customer service quality
• Operational efficiency KPIs should drive our strategy
• Our buy-side e-commerce strategy defines how we should
• Automate internal processes
• Prioritize suppliers / partners collaborating using this channel
• Prioritize applications for E-SCM – create a roadmap
• Involves selection of appropriate strategic partners
Figure 5.2 Relationship between e-business strategy and other strategies
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, for example, Tesco, Dell
• Poor customer experience from poorly integrated channels
Emirates communicates their strategy online (http://www.emirates.com/gh/English/)
Figure 5.4 A generic strategy process model
Strategic analysis
Strategic objectives
Strategic definition
Strategic implementation
Figure 5.6 Elements of strategic situation analysis for the e-business
Figure 5.7 Summary applications of a portfolio analysis for an example B2B
company
Figure 5.8 SWOT analysis
Porter’s five forces
The business
Source: adapted with the permission of The Free Press, a Division of Simon & Schuster, Inc., from COMPETITIVE STRATEGY: Techniques for Analyzing Industries and Competitors
by Michael E. Porter. Copyright © 1980, 1998 by The Free Press. All rights reserved
Activity – Impact of Internet
• For one of the industries below, assess how the Internet has changed the competitive forces, for example, has it increased or decreased power of suppliers and customers?
• Industries: – Banking
Figure 5.9 Matrix for evaluation of external capability against internal capability Source: Perrott (2005)
Information Systems and Business Strategy
Porter’s Model
• Traditional competitors
are continuously devising new products, services,
efficiencies, switching costs
• New market entrants
mobile network operators – in telecom industry
• New companies have new equipment, younger
workers, but little brand recognition
Using Information Systems to Achieve Competitive Advantage
Porter’s Competitive Forces Model
• Substitute products
and services
• Substitutes customers
become too high, e.g.
• Customers
• Can customers easily switch to competitor’s products? Can they
force businesses to compete on price alone in transparent
marketplace?
• Suppliers
• Market power of suppliers when firm cannot raise prices as fast as
suppliers
monopolistic power of operating system
supplier. Microsoft has abused its power a
number of times.
from many, weak small and medium farmers.
• Rivalry between Competitors
new products to protect themselves.
• Four generic strategies for dealing with
competitive forces, enabled by using IT
• Low-cost leadership
• Product differentiation
Competitive Advantage
• Low-cost leadership
competitors while enhancing quality and level of
service
customer convenience and experience
Using Information Systems to Achieve
• Focus on market niche
• Example: Hilton Hotels, Funerals in Ghana
• Strengthen customer and supplier intimacy
• Use information systems to develop strong ties and
loyalty with customers and suppliers; increase
switching costs
1. Reduces barriers to entry
2. Enables new substitute products and services
3. Shifts bargaining power to customer
4. Raises firm’s bargaining power over suppliers
5. Suppliers benefit from reduced barriers to entry and from elimination of intermediaries
6. Widens geographic market, increases number of competitors, reduces differentiation among competitors
Using Information Systems to Achieve
Supply chain management
Learning outcomes
• Identify the main elements of supply chain management and their relationship to the value chain and value networks
• Assess the potential of information systems to support supply chain management and the value chain.
Figure 6.1 (a) Benefits of supply chain management, (b) realization of benefits.
Note respondents could select all benefits that apply Source: PMP (2008)
Figure 6.1 (a) Benefits of supply chain management, (b) realization of benefits.
Note respondents could select all benefits that apply (Continued) Source: PMP (2008)
Figure 6.2 Members of the supply chain: (a) simplified view, (b) including
intermediaries
SCM – some definitions
• Supply chain management (SCM) The coordination of all supply activities of an organization from its suppliers and partners to its customers
• Upstream supply chain Transactions between an organization and its suppliers and intermediaries, equivalent to buy-side e-commerce
• Downstream supply chain Transactions between an organization and its customers and intermediaries, equivalent to sell-side e-commerce
Table 6.2 Objectives and strategies for effective consumer response (ECR)
Figure 6.7 Push and pull approaches to supply chain management
Figure 6.7 Push and pull approaches to supply chain management (Continued)
Figure 6.8 Two alternative models of the value chain: (a) traditional value chain model, (b) revised value chain model Source: Figure 6.4(b) adapted from Deise et al. (2000)
Figure 6.9 Members of the value network of an organization (adapted from Deise
et al. 2000)
Restructuring the supply chain
manufacturing industry where traditionally car plants
would be located near to a steelworks so that the
input to the car plant would be raw materials, with
finished cars produced as the output. Other
components of the car such as the engine and
passenger equipment would also be manufactured
by the company. In addition, other value chain
activities such as marketing would also largely be
performed in-house. There has been a gradual move
to sourcing more and more components such as
lights, upholstery and trim and even engines to third
parties.
Figure 6.10 The characteristics of vertical integration, vertical disintegration and
virtual integration
Supply chains and value chains can be revised by
disaggregation or re-aggregation. Disaggregation may
involve outsourcing core supply chain activities to external
parties. As more activities are outsourced a company moves
towards becoming a virtual organization.
E-procurement
Learning outcomes
• Assess different options for integration of organizations’ information systems with e-procurement suppliers.
E-procurement Defined
Every business in one way or another needs and uses some raw materials in order to produce its products and/or services. In order to secure such raw materials, it prospects for, and finally chooses supplier(s) for those materials. Choosing a supplier and finally receiving the raw materials could be referred to as procurement.
E-procurement is the use of information technologies to
facilitate business-to-business (B2B) purchase transactions for
materials and services.
E-procurement and Traditional Procurement
Traditional purchasing processes are characterised by long purchasing cycle time;
a) the end-users identifying their need, b) filling paper requisition forms, c) which are sent to an approver, d) then to the buyer to make purchase orders and
transmitted to suppliers. e) After items are delivered, orders are checked with
invoice and receipts before payment is made.
time consuming mostly manual process is also coupled with
inefficiencies in processing orders, keeping records and
increasing difficulty in monitoring purchases, as such
purchasing becomes very costly
E-procurement and Traditional Procurement
Information obtained from this traditional process can be considered to be less timely, less accurate and relatively incomplete.
Source : Heywood et al. (2002)
Heywood, J. B., Barton, M. and Heywood, C. (2002) e-Procurement:
Managing Successful e-Procurement Implementation, Pearson Educated
Limited, Financial Times, Prentice Hall, Great Britain.
Figure 7.1 Key procurement activities within an organization
Figure 7.7 The three main e-procurement model alternatives for buyers
E-procurement systems
E-procurement systems are expected to: 1. Allow users to search for products, place and track orders,
receive and pay for purchases. 2. Allow suppliers to provide catalogues of their products or
gather information from various supplier websites 3. Host online bidding events where interested buyers send
an offer to a chosen supplier who may keep reducing the bids to win the contract.
4. Allow buyers to analyse supplier markets and the suppliers. It could also have tools for searching, rating and scoring suppliers, bidding and evaluating. Generally it is to help buyers make buying decisions.
E-procurement systems
The 5 rights of e-procurement
• at the right price
• of the right quantity
• from the right source.
Baily et al., 1994
E-procurement - Benefits
rework and errors. Since human intervention in the generation of
documentation (requests for information (RFI), requests for
proposal (RFP) and requests for quotation (RFQ)) is reduced,
errors are also reduced. The tracking ability of E-procurement
allows managers to confirm pricing, cutting down on unnecessary
purchases/costs.
Visibility of spend E-procurement systems also have a feature to perform
centralized tracking of transactions. This feature enables
detailed and accurate reporting to be made on requisitions,
items purchased, orders processes and payments made. There
is little room to breach contracts agreed on with an
organization’s suppliers.
Productivity E-procurement also saves buyer time because it reduces or even
eliminates phone calls and trips away from the office, since all
purchases are made online right from their desk. The people in that
department thus have enough time to concentrate on strategic
sourcing, managing and improving supplier relationships. With
instant order placement, shipping time is also reduced.
Decision-making e-Procurement helps with decision-making by keeping important and
relevant information neatly organized showing their respective time
and dates. Tracking information in terms of who sent what to whom,
becomes quite easy. Keeping track of all bids means having
information which an organization could rely on to make better pricing
decisions.
Improved Controls Compliance to policy is improved as users can quickly locate
products and services from preferred suppliers and are unable to
create informed purchases. Compliance ensures a reduction in
"rogue buying"; buying either substandard goods or goods from
outside the approved list of suppliers.
Seller Benefit Suppliers have the ability to be more proactive in the way that they do
business. They can access the stock systems of buying companies in
order to see the renewal dates of contracts so they may prepare new
or renewal contracts. This would be an improvement over the mere
display of their products in a catalogue and waiting for buying firms to
approach them.
E-procurement - Challenges
In developing countries - legislation delays, poor change management and socio-cultural barriers.
Poor change management occurs from lack of stakeholder involvement,
lack of support from senior management, or even lack of organizational support. Most transitional economies are struck with problems of unemployment and since e-procurement decentralises all purchasing activities, the threat of redundancy, redeployment or loss of power is likely to lead to resistance to the implementation of the system.
Legislation delays arise when there is a need for new legislation and rules to support this form of procurement. Most transitional economies lack these laws; hence there is reduction of interest of organizations to participate in it. Legality of Electronic Documents and Legality of Electronic Transactions
Ghana’s Electronic Transactions Act 772 (2008) seeks to provide for and facilitate electronic communications and related transactions in the public interest, and to remove and prevent barriers to electronic communications and transactions; promote legal certainty and confidence and provide legal safe environment for the conduct of transactions with public and private bodies, institutions and citizens.
The Act covers electronic records, digital signature, electronic signatures, consumer protection, cyber offences etc.
Obtaining electronic payment medium falsely 119. A person who makes or causes to be made either directly or indirectly, a
false representation to procure the issue of an electronic payment medium personally or to another person commits an offence and is liable on summary conviction to a fine of not more than five thousand penalty units or to a term of imprisonment of not more than ten years or to both.
General provision for cyber offences
123. Except as provided for in this Act, any offence under a law which is committed in whole or in part by use of an electronic medium or in electronic form is deemed to have been committed under that Act and the provisions of that Act shall apply.
Ghana’s Electronic Transactions Act 772 (2008)
Socio-cultural barriers to e-buying include language preferences, income and literacy levels, attitudes toward distance buying, methods of payment. High existence of these barriers could lead to poor adoption of the system.
For instance consumers in Mexico and Egypt are generally accustomed to touching merchandise before buying. Other issues relating methods of payment are prominent where credit card usage is low and the tradition of cash payment exists, like Egypt and Ghana.
E-marketing
Learning outcomes
• Create an outline e-marketing plan intended to implement the e-marketing strategy
• Distinguish between marketing communication characteristics of traditional and new media.
E-marketing
• The definition of marketing by the Chartered Institute of Marketing (http://www.cim.co.uk/) is:
Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitability
• Which e-marketing tools can assist? – Web, e-mail, databases, wireless and digital
television
How do e-tools support marketing?
• Identifying –
Figure 8.1 The operational and management processes of e-marketing Source: Econsultancy (2008)
Figure 8.1 The operational and management processes of e-marketing (Continued) Source: Econsultancy (2008)
Figure 8.2 The e-marketing plan in the context of other plans
To be continued when we
discuss social media
Assignment
Group 2: Chapter 11 – Analysis and Design
Use the real business world experiences or case
study in the chapters to explain or illustrate the
concepts in the chapters
Go to the Class website:
www.vivaafrica.info
on E-commerce in Ghana