Introduction to Business strategy

Part VI

Prepared By

P. K. Nakhate

Introduction

• Many or most organisations have a business strategy.

​

• The strategy can be a formal plan, be implied by the mission statement and/or be evident from the way the organisation goes about its business.

​

• Corporate strategy is the pattern of major objectives, purpose or goals and essential policies or plan for achieving those goals, stated in such a way as to define what business the company is in or is to be in and the kind of company is it or is to be.

​

​

​

Four stage process of strategy formulation:

​

​

• Consideration of environmental changes which bring about new opportunities and pose new threats

​

• Assessment of the internal strengths and weaknesses of the institution and in particular its ability to respond to those opportunities and threats.

​

• A decision-making process influenced by the values, preferences and power of interested parties.

​

• A strategy generating process concerned with generating options and evaluating them.

​

​

​

Strategic Implications of IT

​

• Each development in computer technology has presented new opportunities for business, opportunities that take many years to be fully evaluated and adopted.
• Information technology dramatically increases the amount and timeliness of information available to economic agents-and the productivity of processes to organize, process, communicate, store, and retrieve information.
• Information technology (IT or informatics) covers all activities and technologies that involve the handling of information by electronic means: that is, information acquisition, storage, retrieval, processing, transmission and control.
• The extension of network outside the compony gave birth to the inter-organizational system and the use of EDI.

​

​

​

Strategic Implications of IT (To be continue….)

​

• The experience of the most successful countries suggests that governments can influence the use of IT through its role as an investor and consumer, and as catalyst, strategist or regulator. As an investor, the government continues to have an important role in the development of information technology manpower, telecommunications infrastructure, specialized R&D institutions, software parks and teleports, and other lT-related infrastructures and institutions. Governments are dominant consumers of IT in all countries, and their procurement practices are influential in determining standards, domestic competition, common adoption practices, and in general, the pace and character of IT use.

​

• Taking advantage of the opportunities offered by new technology requires imagination and flair. Inter-organizational e-Commerce was, in the main, the domain of the large organization; it was for many organizations a way of automating and increasing the efficiency of existing trading arrangements.

Technology

​

​

• Technology, it is generally agreed, is not the place to start developing a systems strategy or a system design; methodologies usually start with the business requirements, ‘the problem’ and move through design onto the technology, ‘the solution’’.
• The business strategist intending to develop e-Commerce systems must know the technologies and what they can do.
• The three technologies are…
• EDI: A technology that helped streamline supply logistics and facilitated dramatic decreases in trade cycle times between businesses.
• Electronic Market: An opportunity to redefine the way that a market operates but a system that requires co-operation between rivals within a trade sector.
• Internet e-Commerce: The new technology of business to consumer direct trade but also applicable to numerous business to business applications. Internet e-Commerce has the capability to create a new trade sectors or to create a step change in the way business is done.

​

Business Environment

​

• All businesses operate within an external environment. They can influence that environment but their activities are also enabled or constrained by that environment.
• Needle (1994) identifies the environmental factors as the economy, the state, technology, labour and cultural factors. All these factors need consideration in developing a business strategy; some of the ways they might be relevant to an e-Commerce strategy are:

​

• The Economy in general and as it affects the relevant market sectors are obvious factors in strategy formulation; the view taken of the economy needs to focus on long-term trends as opposed to immediate problems.
• The state influences the economy and sets the regulatory framework within which businesses operate.
• Technology factor described in previous section.
• The Labour market will determine if an organization can get the people and skills it needs for its operations. For e-Commerce the availability of people with the requisite technical skills can be an issue.
• Culture varies in different countries and appropriate way to operate in one country would not necessarily be successful in another.

​

​

​

​

Business Capability

​

• A business idea, backed up by the imaginative use of technology, will only work if the business has the skills and infrastructure to operate it. Before any business goes into a new market, or massively expands in an existing market it needs to make sure it can do the job.

​

‘A knowledge of the resources and organization possesses, and what can be done with them, is a prerequisite for future plans and establishes whether a gap exists between what management would like to do and what they can do’

​

This analysis is often referred to as gap analysis. At the basic level the need is to check that existing capacity can cope with the expected demand or can be expanded to do so. Any requirement for expansion requires capital, people with appropriate skills and a management structure that can make a success of the larger organization; the expansion may force a change in the organizational culture.

The introduction of e-Commerce needs new skills and, in all probability, alters the way that business is done. The organization needs to be sure that it can make a success of the new sales channel and also that its administration and production capacity can respond in a timely manner to the demands of an electronic sales channel.

​

​

Existing Business Strategy

​

• Very possibly the organization already has a business strategy and this can and should be part of the evaluation of the e-Commerce.
• The adoption of e-Commerce by an organization may be in a marginal activity or may involve the automation of an existing process, part of the normal evolution of the business practice.
• Alternatively the adoption of e-Commerce may imply a major change in the infrastructure of a business or the way that it conducts business.

Examples of where e-Commerce strategy could radically affects business strategy might be :

​

• A decision to close down retail outlets and serve consumers online.
• Expansion into new geographical markets where the compony previously did not operate.
• A move from selling through local agents to selling directs.

​

• In all cases the corporate business strategy needs to be an input to the e-Commerce strategy. In cases where e-Commerce is seen as a strategic system the business strategy will be modified or reshaped by the adoption of the e-Commerce strategy making the business strategy an output from the process.

​

Strategy Formulation and Implementation Planning

​

​

• The inputs to the strategy formulation process are the results of evaluating e-Commerce technology, the business environment, the capabilities of the organization plus the existing business strategy.

​

​

• These inputs to the strategy formulation process, together with the subsequent steps of implementation and evaluation is shown figure below.

​

Strategy Formulation and Implementation Planning (to be continue….)

​

​

• The strategy formulation stage can be somewhat unstructured process with interest groups lobbying for their favoured options and alliances forming and reforming.

​

• There is no set pattern to the process as it is so dependent on the personalities involved.
• Some organizations will hire consultants to give advice or to gather evidence in an impartial manner.

​

• The process is liable to include stages of identifying options, evaluating options and then selecting the strategy that is to be adopted.

​

• The strategy once adopted then needs to be translated into a plan for implementation. This needs to include a timetable for jobs to be done and the commitment of resources to anable the jobs to be done.

e-Commerce Implementation

​

• The strategy once devised then needs to be implemented and the use of e-Commerce in business.
• e-Commerce divides implementation into technical and business aspects-
• Technical Implementation:-

The approach to technical implementation of e-Commerce system depends on the business objectives, business requirements and the technologies that have been selected. It is important that the design process considers:

• The ease of use of the system by the intended end users; always an important factor in system design but crucial if the end users are to be members of the public with perhaps limited computer literacy and the option to switch to an alternative web site if not satisfied.
• The functionality that the users need; this has to be what the users want rather than what the organisation thinks they need. Users of e-Commerce are not a captive audience that can be interviewed and evaluated like the users of a traditional IS development.

​

• The back office system: Costomers of an online service quite reasonably expect a rapid response and the back office systems need to be able to meet this requirement. For a volume e-Commerce system this requires that the customer front end integrates with the IS system.

The approach to design for n internet e-Commerce system would sensibly be based on a prototyping lifecycle as the design of the user interface is crucial to the success of the overall project. That said the use of prototyping is not intended to be an excuse for the absence of design. A through evaluation of each stage of the transaction lifecycle is a good starting point to make sure that the full requirements are included.

​

e-Commerce Implementation ( To be continue….)

• Business Implementation:-

As well as building its e-Shop (or other e-Commerce facility) the organisation needs to :

​

• Put in place the business infrastructure to support the new e-Commerce facility.
• Market the new e-Commerce facility to the intended users.

Business Implementation (to be continue……)

Most organisations moving into e-Commerce will take a staged approach. Initial implementations may have limited functionality and be offered to a limited audience. As already indicated, full implementation of e-Commerce can have a considerable effect on the shape of the business and the way it does business.

​

e-Commerce Evaluation

​

All new IS systems should be properly evaluated after implementation and this is particularly important for a system that is used by people outside the company. Evaluating an e-Commerce system will include the internal stakeholders but crucially the needs to be a way of assessing customer reaction to the system (and potential customers who gave up before completing a transaction are particularly inaccessible).

• Revise it : Business results from the use of e-Commerce may indicate the need to change the e-Commerce strategy and the implementation plan; the planning can be revised.

​

• Update it: Development in the competitive position, changes in the company or the emergence of new e-Commerce technologies may indicate the need to re-visit the strategic process; the strategy can be updated.

e-Commerce Evaluation (to be continued…..)

Loopback from the evaluation is shown at three levels:

​

• Improve it : Implementing an e-Commerce site remains an inexact science (if there is much science to it at all). Feedback from customers and testing using people not involved in the site development can indicate where changes are needed; the site can be improved.

Thank You