Week 1 E-Business Strategies (PDF)

Chapter 1 The World of E-Business  Definitions  Electronic-Commerce The buying and selling of information, products, and services via computer networks and distributed media, usually the World Wide Web. www.wiley.com/go/ebusiness 2 ...

Chapter 1 The World of E-Business  Definitions  Electronic-Commerce The buying and selling of information, products, and services via computer networks and distributed media, usually the World Wide Web. www.wiley.com/go/ebusiness 2  Complex Definitions  There are a number of definitions of electronic commerce dependent on different perspectives: – From a business process perspective it is the application of IT and communications toward the support and automation of business transactions and workflows – From a service perspective it is a tool to address the need for cutting service costs while improving service quality and speed of delivery – From an online perspective EC provides the capability of buying and selling information, goods and services over the Internet and other online services. www.wiley.com/go/ebusiness 3  Types of e-Commerce  Business-to-Consumer – E-commerce between organizations and individual consumers  Business-to-business (e-Business) – E-commerce between businesses – accounts for a much larger portion of e-commerce than business-to-consumer – EDI  Business-to-administration (e.g. BAS)  Consumer-to-administration (e.g. Tax returns) www.wiley.com/go/ebusiness 4  Electronic Business: definition  Electronic-Business:  The conduct of transactions by means of electronic communications networks end-to-end  e.g., via the Internet and/or  possibly private networks www.wiley.com/go/ebusiness 5  e-Commerce vs. e-Business  Compared with e-Commerce – e-Business is a more generic term it refers not only to information exchanges related to buying and selling – but also to servicing customers and collaborating with business partners, distributors and suppliers – encompasses sophisticated business-to-business interactions – and collaboration activities at a level of enterprise applications and business processes  e-Business processes are integrated end-to-end across the company, with key partners, suppliers and customers & can respond with flexibility and speed to customer demands and market opportunities. – Companies: link their internal and external processes more efficiently & flexibly work more closely with suppliers to satisfy the needs & expectations of their customers – Internal or back-office processes: distribution, manufacturing and accounting – External or front-office processes: processes that connect an organization to its customers and suppliers www.wiley.com/go/ebusiness 6  Internet-based e-Business  Why the Internet? – Internet is a publicly accessible network with few geographical constraints Its largest attribute, large-scale connectivity – (without the need to have special company networking architecture) is a seedbed for growth of a vast range of business applications – Internet global inter-network connections offers the potential to reach the widest possible number of trading partners of any viable alternative currently available  WWW is fastest growing activity on the Internet – companies advertising their presence – companies searching for information and products – companies buying and selling intellectual property physical goods professional services www.wiley.com/go/ebusiness 7  Characteristics of e-Business  e-Business – is about integrating external company processes with an organization’s internal business processes: collaborative product development collaborative – planning – forecasting – replenishment procurement and order management operations and logistics 8 www.wiley.com/go/ebusiness Ingredients of an e-Business Solution Customers Customers Finance/ Finance/ CRM Web Accounting/Auditing Stake- CRM Webselling selling Accounting/Auditing Management holders ManagementControl Control Knowledge Ordering Ordering Management Order Purchasing Purchasing Production Delivery Delivery Fulfillment Production (ERP) Distributors Distributors Supply SupplyChain Chain E-Markets, E-Markets, Suppliers Suppliers Auctions, Auctions, Intermediaries Intermediaries Partners Partners www.wiley.com/go/ebusiness 9  Customer Relationship Management (CRM) systems (http://en.wikipedia.org/wiki/Customer_relationship_management) – front-office systems help the enterprise deal directly with their customers – integrates & automates customer-serving processes within a company personal information gathering & processing self-service throughout the supplying company in order to create value for the customer www.wiley.com/go/ebusiness 10  Enterprise Resource Planning (ERP) systems (http://en.wikipedia.org/wiki/Enterprise_resource_planning) – management information systems – integrate & automate many of the business practices associated with the operations or production aspects of a company  includes: – production materials requirement planning/manufacturing resource planning and execution process – buying a product procurement process – sales of products/services customer order management process – costing, paying bills and collecting financial/management accounting reporting process www.wiley.com/go/ebusiness Source: http://erp.manufacturer-supplier.com/erp_modules.GIF  Supply Chain Management (SCM) (http://en.wikipedia.org/wiki/Supply_Chain) – http://www.youtube.com/watch?v=6rmV__Yrk7Q – http://www.youtube.com/watch?v=qyO9QSo0FjU&feature=related – supply chain network of facilities and distribution options that performs the functions of procurement of materials transformation of these material into intermediate and finished products distribution of these finished products to customers – supply chain essentially has three main parts supply manufacturing distribution  Knowledge management (week 5) – (http://en.wikipedia.org/wiki/Knowledge_management) – knowledge regarding – Markets – Products Source: http://www.cirko-mes.com/images/SCM-shema.jpg – Processes – Technologies – Organizations that a business owns – that enable its business processes » to generate profits – Includes » subsequent planning » control of actions www.wiley.com/go/ebusiness 12 Source: http://www.mitre.org/news/the_edge/april_00/images/km_conceptfinal.jpg  e-Market – an electronic gathering place brings multiple buyers & sellers together provides to its participants a unified view of sets of goods & services enables them to transact via automated means consider Aalsmeer (Dutch Flower Auction) – http://www.youtube.com/watch?v=g0mViWsiTWg www.wiley.com/go/ebusiness 13 e-Business Roles and their Challenges  e-Business applications have two sides: – Buy side organizations that use e-Business facilities for their buying needs – spot purchasing and/or – enterprise-wide procurement – Sell side businesses that sell their products via the transaction mechanisms offered in e-Business applications – manage multiple selling channels – ability to take multiple types of orders from customers – ability to differentiate and customise products and services from other suppliers – ability to adapt and grow the e-Business without dramatic technology changes, organizational restructurings, business processes or radical new investments – empower suppliers and buyers & enable suppliers of all sizes! www.wiley.com/go/ebusiness 14  e-Business Requirements  Identify/measure quantifiable business objectives – sustainable long term  Ensure organizational/operational flexibility  Re-think entire company supply chains – backward/forward chaining agreements/arrangements  Transform the company to a process-centric one – not department centric  Define business processes – Assg 2 – rework business processes in a company – make it ‘tick’ better …  Understand security requirements – PICT -> now DSSC https://www.mq.edu.au/faculty-of-arts/departments-and-schools/department-of-security-studies-and-criminology) is about this too – think of all the internet based security issues – eCash/ePayments etc.  Align business organizations with a flexible IT architecture – Think of the company strategically, then think of its IT infrastructure.. what is the ‘fit’?  Establish ubiquity within standards – efficient process management – efficient enterprise integration technology www.wiley.com/go/ebusiness 15  Advantages of Electronic Business  Improved operational efficiency and productivity  Reduction in operating costs and costs of goods and services  Improved competitive position  Penetration into new markets through new channels  Improved communications, information and knowledge sharing  Harmonisation and standardisation of processes  Improved – internal information access – relationships with suppliers – customer service www.wiley.com/go/ebusiness 16 Inhibitors of Electronic Business  Management/Strategy Issues – lack of a clearly defined e-Business strategy – organisational changes required by e-Business – management attitudes and organizational inflexibility  Cost/Financing – costs of implementation of e-Business – calculating the Return on Investment (ROI)  Insufficient security & trust  Legal issues  Technology Concerns – limited interoperability most existing applications – depend on proprietary solutions which do not interoperate www.wiley.com/go/ebusiness 17  Chapter 2 e-Business Strategy  Program  What is an e-business strategy?  Strategic positioning  Three levels of e-business strategy  The changing competitive agenda  The strategic planning process  Strategic alignment  Consequences: theoretical foundations  Implementation www.wiley.com/go/ebusiness 19 What is e-business strategy? “The set of plans and objectives by which applications of internal and external electronically mediated communication contribute to the corporate strategy” www.wiley.com/go/ebusiness 20  Two Forms of Strategy (1) Achieving higher-level goals A strategy is developed in order to achieve a goal like implementing an organizational change of a large software package (2) A strategy related to plans concerning the long-term position of the firm, e.g. – external positioning of the firm in its competitive environment – http://www.australianuniversities.com.au/rankings/#arwurankings – https://www.universityrankings.com.au/world-rankings/ www.wiley.com/go/ebusiness 21 Relationship between e-business and other organization strategies Corporate strategy E-business strategy Functional IS strategies strategy www.wiley.com/go/ebusiness 22  Corporate strategy Source: http://www.red-scientific.co.uk/programme-and-project-management www.wiley.com/go/ebusiness 23 Strategic positioning  Company must start with the right goals  Company’s strategy must enable it to deliver – a value proposition, or set of benefits different from those that its competitors offer – e.g. think of car parking at Macquarie  Company strategy – needs to be reflected in a distinctive value chain  Robust company strategies – involve trade-offs  Company strategy defines – how all the elements of what a company fits together  Company strategy involves continuity of direction www.wiley.com/go/ebusiness 24 Three Levels of e-Business Strategy 1. Supply chain or industry value chain level 2. Line of business/SBU level 3. Corporate or enterprise level for each firm - encompasses a collection of business units www.wiley.com/go/ebusiness 25 1. The supply chain or industry value chain level  This analyses gives an – insight into upstream and downstream data and information flows  Important issues – who are the direct customers? – what is the value proposal to those customers? – who are the suppliers? – how does the firm add value to those suppliers? – etc….. VW example.. Mexico … beyond JIT www.wiley.com/go/ebusiness 26  2. The line of business or (Strategic) Business Unit level This is the level of competitive strategy in a particular market for a particular product so the strategic positioning is developed Four generic strategies for achieving a profitable business  Differentiation – a strategy that refers to all the ways producers can make their products Unique distinguish them from those of competitors  Cost – this strategy that means that a company primarily competes with low costs  Scope – a strategy to compete in market world-wide (e.g. COMP3780 business plans) rather than merely in local, regional or national markets  Focus – a strategy to compete within a narrow market segment or product segment – focus on specialisation – think of (School of) Engineering here at Macquarie … www.wiley.com/go/ebusiness 27 3. The corporate or enterprise level for each firm that encompasses a collection of business units This level addresses the problem of synergy through a firm wide available common IT infrastructure Commonality of E-business is basically needed for two reasons (e.g. Tasmania Health) – From an efficiency point of view having different applications for the same functionality in different lines of business is needlessly costly - platforms – From an effectiveness point of view there is a need for cross line of Business communication and share-ability of data – standards (HL7) www.wiley.com/go/ebusiness 28 Changing competitive agenda  In every business agenda, change is a top-level priority – from a supplier driven economy to a consumer driven economy think of socialist vs. capitalist economies – Extreme examples even determine what you will study and where (universities in former socialist economies) – from mass production and mass distribution to customisation and customer-driven planning Mass Customisation Management (MCM) – from a producer focus to a consumer focus think of variety today … internet etc. www.wiley.com/go/ebusiness 29 Source: http://www.speedace.info/automotive_directory/car_images/ford_model_t_henry.jpg Types of Strategic Systems (EIS?/ESS?)  Systems that … – link company with customers and suppliers and change the nature of the relationship VW example – lead to more effective integration of internal processes – of the organization again JIT business – enable organizations to bring new or improved information based products and services to the market – brokerage services – provide executives with high quality information to – support the development and – implementation of strategy – ESS systems etc. www.wiley.com/go/ebusiness 30  GDSS Source: http://dssresources.com/history/gdss.html www.wiley.com/go/ebusiness 31 The strategic planning process  Most strategic planning methodologies are based on: – Situation where a company is right now and how did it get there; – Target where does a company want to be; – Path how can it get there. – Take Macquarie University for example …. www.wiley.com/go/ebusiness 32 A model of strategic management Figure 2.2 A model of strategic management Source: Gordon Greenley, Strategic Management, Prentice Hall, 1989 Good example is Macquarie University www.wiley.com/go/ebusiness 33 A SWOT matrix Figure 2.3 A SWOT matrix www.wiley.com/go/ebusiness 34 The strategic planning process (Johnson 1999) Management statement of organization Analysis of external & internal information Planning strategies & objectives of organization Implementation & control of plans www.wiley.com/go/ebusiness 35 Strategic alignment (IT) Alignment between business and IT is not only feasible to design and build a technically sophisticated (inter-organizational) infrastructure for e- Business but also to formulate business strategies that complement and support this infrastructure Typical sort of (group) assignment 3 question … E.g. working in a group consider how you will web enable your business … www.wiley.com/go/ebusiness 36 IT supporting e-business strategic objectives (or COMP3760/6760 in a nutshell) … Enterprise strategy Business functions Peter Application architecture e-Business infrastructure Yang Sourcing / staffing Financing COMP3760/6760 www.wiley.com/go/ebusiness 37 The Consequences of e-Business  When analyzing the business effects of E-business consider the next approaches ….. 1. theory of competitive strategy 2. resource based view 3. theory of transaction costs www.wiley.com/go/ebusiness 38 1. Theory of competitive strategy (Porter) http://www.youtube.com/watch?v=mYF2_FBCvXw Porter’s five forces model of competition: The barriers to entry The bargaining for new competitors power of customers The competition among existing firms in industry The bargaining The threat of new substitute power of suppliers products or services www.wiley.com/go/ebusiness 39 2. The resource-based view (RBV) The resource-based view considers internal resources and competencies and sources of potential competitive advantage instead of looking at the environment and making strategic plans accordingly look at internal resources first then plan from there … www.wiley.com/go/ebusiness 40 3. Transaction Cost Economics (TCE)  Transaction cost economics theory provides a theoretical framework for – discussion of market structures and addresses the question why necessary resources are obtained either through the market or through internal production.  Two key issues concerning firms are – which activities should a firm keep within its boundaries and which activities should it outsource? – In which should a firm manage its relationship with its customers, suppliers and other business partners? www.wiley.com/go/ebusiness 41 Implementation of e-Business Strategies  Top down and bottom up (TQM/BPR)  Program Management – Organization – Policies – Plans – Communication – Alignment  Change Agent rather like consultants here at MQ … www.wiley.com/go/ebusiness 42  TQM Versus Reengineering TQM Reengineering Continuous Change Radical Change Fixing and Improving Redesigning Mostly “As Is” Mostly “What Can Be” From the Bottom Up From the Top Down www.wiley.com/go/ebusiness 43