BUSINESS STRATEGIES OVER WEB

The World Wide Web has literally burst upon the businesses
in recent times. With the Web doubling in size every 53 days
or so, the growth is biological. With a technology as recent
and fast proliferating as this one, paradigms often lag behind
action, and the hype.

Value chain analysis helps businesses identify specific areas

where the Internet can add value and the transaction cost
analysis provides a basis for why value is added as
transactions move across boundaries in value chains.

Introduction

The advent of the Internet as a viable business tool is likely

to have the same impact on businesses and their information
systems as the spread of personal computers during the
early 1980s. The two important aspects of this technology
are strategies and economics of doing business on the
Internet.

From Strategic Thinking to Strategic

Planning

Even before the businesses realized the potentials of the

Web to attain competitive advantage, they realized the
strategic importance of information systems and planning for
such systems. Strategic Information Systems Planning
(SISP), is the analysis of a corporation's information and
processes using business information models together with
the evaluation of risk, current needs and requirements
Characteristics of strategic IS planning which help in
providing a framework for doing business on the Web are:

• Main task: strategic/competitive advantage, linkage to

business strategy.
• Key objective: pursuing opportunities, integrating IS and
business strategies
• Direction from: executives/senior management and
users, coalition of users/management and information
systems.
• Main approach: entrepreneurial (user innovation),
multiple (bottom-up development, top down analysis,
etc.) at the same time.

Strategic Information Systems Planning

SISP with or without the web, is not an easy task because

such a process is deeply embedded in business processes.
These systems need to cater to the strategic demands of
organizations, i.e., serving the business goals and creating
competitive advantage as well as meeting their data
processing and MIS needs

.
Two Frameworks for Strategic Systems
Planning

SISP methodologies are classified into two categories:

impact and alignment. Impact methodologies help create
and justify new uses of IT, while the methodologies in the
"alignment" category align IS objectives with organizational
goals.

Benefits of doing business over the Web

• Electronic alternative to the real marketplace

• Viable and more efficient
• Low entry barriers
• Fast and innovating
Value Chain - A Framework For Internet
Strategy Formulation

• Value chain analysis allows the managers to separate

the underlying activities a firm performs in designing,
producing, marketing and distributing its product or
service.

• Value Chain Analysis provides an appropriate

framework for planning Web based businesses
because it deals with the value added aspect of a
system

• The concept of value chain is to treat every firm as a

collection of activities that are performed to design,
produce, market, deliver, and support its product with
information technology being one major support activity
for the value chain.

• Information systems technology is particularly pervasive

in the value chain.A firm that can discover a better
technology for performing an activity than its
competitors gains competitive advantage
 A Typical Value Chain

Internet positively affects all parts of the value chain of a firm

• Inbound logistics -- fast, inexpensive, reliable

connection to suppliers.
• Operations – Intra-firm connectivity-- Lotus Notes like
connectivity through the Web -- customer participation,
quicker response to changing needs.
• Outbound logistics -- fast, inexpensive, reliable
connection to suppliers.
• Marketing and sales -- greatest value added in this area
at present. Cost of advertising a product on the Web is
just a fraction of the cost of a newspaper advertising.
 • Service -- high impact, similar to that on marketing and
sales

The Internet also affects the Support activities like Corporate

structure, Human resources, Technological development and
Purchasing positively. Some examples of such positive
impact of the Internet are:
• Corporate structure -- flatter organizations,
disappearing middle layer, whole organization becomes
externally oriented.
• Human resources -- Internet as a vast training and
recruiting tool kit.
• Technological development -- faster, richer interaction
with the rest of the world, sharing of information,
software. Collaborative advantage.
• Purchasing -- similar advantages as in marketing.

Conclusion
The Web offers unprecedented and unique opportunities in
supporting existing businesses as well as in transforming
them. Since this technology is new, and evolving at a fast
pace, as yet there are no stable models for understanding
the business uses of the We The issue of economics of the
Web-based businesses is intimately related to the issue of
information being a factor of production, and increasingly
gaining prominence over other factors of production as
computing costs go down, networks become wider and more
stable and users become more computer friendly.