CH 05

Slide 5.
Chapter 5
E-business strategy
‫لللللااللللكترونية‬
‫للل عم‬
‫ا‬ ‫استراتيجية‬
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 5.2
Learning outcomes
• Follow an appropriate strategy process model

for e-business
• Apply tools to generate and select e-business
strategies
• Outline alternative strategic approaches to
achieve e-business.
Slide 5.3
Management issues
• How does e-business strategy differ from

traditional business strategy?
• How should we integrate e-business strategy
with existing business and IS strategy?
• How should we evaluate our investment
priorities and returns from e-business?
Slide 5.4
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.
• ‫رررر‬
‫ش‬‫ررارر إذا كان لنررر‬
‫ررورر لرريسرر م‬
‫سرررر ه‬
‫ررررال الرئيرري‬‫س‬‫والررؤ‬
‫رري خيار اذا‬
‫ررارر أ‬
‫ الشركات لدي ه‬- ‫ررت‬ ‫تكنولوجررايرر النتر ن‬
‫ ولكن‬- ‫كانوا يريدون الحفاظ على قدرتها التنافسية‬
‫كيفية نشرها‬.
Porter, M. (2001) Strategy and the Internet,
Harvard Business Review, March 2001, 62–78.
Slide 5.5
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’
Slide 5.6
Introduction
• Developing an e-business strategy requires a fusion of existing
approaches to business, marketing, supply chain management
and information systems strategy development.
• In addition to traditional strategy approaches, commentators have
exhorted companies to apply innovative techniques to achieve
competitive advantage.
• Around the start of the new millennium, many articles, fuelled by
the dot-com hype of the time, urged CEOs to ‘innovate or die’.
• For many existing companies this was neither desirable nor
necessary and they have made a more gradual approach to e-
business practice. Those companies that have successfully
managed the transformation to e-business such as Cisco, Dell,
General Motors, HSBC and IBM, and, in Europe, easyJet and
British Telecom, have done so by applying traditional strategy
approaches.
• At the same time there have been many start-ups featured as
cases in previous chapters such as eBay, Lastminute.com and
Zopa.com that have succeeded through innovative business
models. But these companies also have succeeded through
applying established principles of business strategy, planning and
risk management. Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 5.7
• In this chapter we seek to show how an e-business strategy can be

created through following these established principles, but also
through careful consideration of how to best identify and exploit the
differences introduced by new electronic channels.
• In a nutshell,e-business isn’t just about defining ‘how to do business
online’, it defines ‘how to do business differently online’.
• The e-business strategy defines how.
• We start the chapter by introducing e-business strategy and then
discuss appropriate strategy process model to follow as a framework
for developing e-business strategy.
• The chapter is structured around this four-stage strategy process
model:
• 1 Strategic evaluation.
• 2 Strategic objectives.
• 3 Strategy definition.
• 4 Strategy implementation.
• For each of these components of strategy, management actions are
reviewed with the emphasis on development of e-business strategy.
Slide 5.8
What is e-business strategy?

• Strategy defines the future direction and actions of an organization or
part of an organization.
• Johnson and Scholes (2006) define corporate strategy as:
• The direction and scope of an organization over the long-term: which
achieves advantage for the organization through its configuration of
resources within a changing environment to meet the needs of
markets and to fulfil stakeholder expectations.
• E-business strategy:
• Definition of the approach by which applications of internal
and external electronic communications can support and
influence corporate strategy.
Slide 5.9
• Lynch (2000) describes strategy as an organization’s sense of

purpose. However, he notes that purpose alone is not strategy; plans
or actions are also needed.
• E-business strategies share much in common with corporate,
business and marketing strategies.
• These quotes summarizing the essence of strategy could equally
apply to each strategy:
• ‘Is based on current performance in marketplace.’
• ‘Defines how we will meet our objectives.’
• ‘Sets allocation of resources to meet goals.’
• ‘Selects preferred strategic options to compete within a market.’
• ‘Provides a long-term plan for the development of the organization.’
• ‘Identifies competitive advantage through developing an appropriate
positioning defining a value proposition delivered to customer
segments.’
Slide 5.10
Figure 5.1 Different forms of organizational strategy
Slide 5.11
Figure 5.1 Different forms of organizational strategy
• Johnson and Scholes (2006) note that organizations have different

levels of strategy, particularly for larger or global organizations.
These are summarized within Figure 5.1.
• They identify corporate strategy which is concerned with the overall
purpose and scope of the organization, business unit strategy
which defines how to compete successfully in a particular
market and operational strategies which are concerned with
achieving corporate and business unit strategies.
• Additionally, there are what can be described as functional
strategies that describe how the corporate and business unit
strategies will be operationalized in different functional areas or
business processes. Functional or process strategies refer to
marketing, supply chain management, human resources, finance
and information systems strategies.
• Where does e-business strategy fit? Figure 5.1 does not show at
which level e-business strategy should be defined, since for different
organizations this must be discussed and agreed.
Slide 5.12
• We can observe that there is a tendency for e-business

strategy to be incorporated within the functional strategies,
for example within a marketing plan or logistics plan, or as
part of information systems (IS) strategy. A danger with this
approach is that e-business strategy may not be recognized
at a higher level within organizational planning.
• A distinguishing feature of organizations that are leaders in
e-business, such as Cisco, Dell, HSBC, easyJet and
General Electric, is that e-business is an element of
corporate strategy development.
Slide 5.13
The imperative for e-business strategy

‫لللللااللللكترونية‬
‫للل عم‬
‫ا‬ ‫سلللتراتيجية‬
‫حتمية للل‬
• Think about the implications if e-business strategy is not clearly
defined. The following may result:
‫• التفكير في الثار المترتبة إذا لم يتم تعريف استراتيجية العمال‬
‫ قد ينتج ما يلي‬.‫اللكترونية بشكل واضح‬
• Missed opportunities from lack of evaluation of opportunities
or insufficient resourcing of e-business initiatives. These will result
in more savvy competitors gaining a competitive advantage;
• Inappropriate direction of e-business strategy (poorly defined
objectives, for example, with the wrong emphasis on buy-side,
sell-side or internal process support);
• Limited integration of e-business at a technical level
resulting in silos (separate organizational team with distinct
responsibilities which does not work in an integrated manner with
other teams) of information in different systems;
• Resource wastage through duplication of e-business
development in different functions and limited sharing of best
practice. For instance, each business unit or region may develop a
separate web site with different suppliers without achieving
economies of scale. Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 5.14
Continue
• To help avoid these typical problems of implementing e-
business in traditional organizations, organizations will
want e-business strategy to be based on corporate
objectives such as which markets to target and targets
for revenue generation from electronic channels .
Slide 5.15
E-channel strategies
• An important aspect of e-business strategies is that they create new
‘e-channel strategies’ for organizations.
• E-channel strategies define specific goals and approaches for using
electronic channels.
• This is to prevent simply replicating existing processes through e-
channels, which will create efficiencies but will not exploit the full
potential for making an organization more effective through e-
business. Without specific goals and strategies to communicate the
benefit of e-channels for customers and partners, adoption of the new
channels will be slow relative to a structured approach.
• E-channel strategies also need to define how electronic channels are
used in conjunction with other channels as part of a multi-channel e-
business strategy.
• This multi-channel e-business strategy defines how different
marketing and supply chain channels should integrate and support
each other in terms of their proposition development and
communications based on their relative merits for the customer and
the company. Dave Chaffey, E-Business and E-Commerce Management, 4 Edition, © Marketing Insights Limited 2009
th
Slide 5.16
Strategy process models for e-business

‫نااماذج عأملية لاساتراتيجية ااالعأمااالاااللإكترونية‬
Before developing any type of strategy, a
management team needs to agree the process
they will follow for generating and then
implementing the strategy.
A strategy process model: provides a
framework that gives a logical sequence to
follow to ensure inclusion of all key activities of
e-business strategy development. It also
ensures that e-business strategy can be
evolved as part of a process of continuous
improvement.
Slide 5.17
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.
Slide 5.18
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 Kips should drive our strategy
• Our buy-side e-commerce strategy defines how we
should
• Automate internal processes
• Link internal resource management systems with
external purchasing systems
• Prioritize suppliers / partners collaborating using this
channel
• Prioritize applications for E-SCM – create a roadmap
• Involves selection of appropriate strategic partners
Slide 5.19
Figure 5.2 Relationship between e-business strategy and other strategies
Slide 5.20
Figure 5.2 Relationship between e-business

strategy and other strategies
• Figure 5.2 explains how e-business strategy
should relate to corporate and functional
strategies. It also shows where these topics
are covered in this book.
Slide 5.21
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
Slide 5.22
Figure 5.3 BA communicates its online value proposition (www.britishairways.com)

Source: Based on Revolution (2005)
Slide 5.23
Figure 5.3
BA communicates its online value proposition
(www.britishairways.com)
• The web site used in the campaign is shown in Figure 5.3.
• In 2004, British Airways, launched online services which allowed
customers to take control of the booking process, so combining
new services with reduced costs. BA decided to develop a specific
online ad campaign to create awareness and encourage usage of
its Online Value Proposition (OVP). BA’s UK marketing manager
said about the objective:
• British Airways is leading the way in innovating technology to
simplify our customers’ journey through the airport. The role of this
campaign was to give a strong message about what is now
available online, over and above booking tickets.
• ‫الخطوط الجوية البريطانية تقود الطريق في مجال التكنولوجيا والبتكار لتبسيط‬
‫ وكان دور هذه الحملة لعطاء رسالة قوية‬.‫رحلة عملئنا من خلل المطار‬
‫ وفوق كل حجز التذاكر‬،‫حول ما هو الن متاحة على شبكة النترنت‬.
Slide 5.24
Figure 5.4 A generic strategy process model
Slide 5.25
Figure 5.4 A generic strategy process model

• The use of two-way arrows in Figure 5.4 to indicate that
each stage is not discrete, but rather it involves referring
backwards or forwards to other strategy elements.
• Each strategy element will have several iterations. The
arrows in Figure 5.4 highlight an important distinction in
the way in which strategy process models are applied.
Referring to the work of Mintzberg and Quinn (1991),
Lynch (2000) distinguishes between prescriptive and
emergent strategy approaches.
• In the prescriptive strategy approach he identifies three
elements of strategy – strategic analysis, strategic
development and strategy implementation, and these are
linked together sequentially. Strategic analysis is used
to develop a strategy, and it is then implemented.
Slide 5.26
Figure 5.5 Dynamic e-business strategy model

Source: Adapted from Kalakota/Robinson, EBUSINESS 2.0 © 2001, 1999 Pearson Education, Inc. Reproduced by permission of Pearson Education,
Inc.
Slide 5.27
Figure 5.5 Dynamic e-business strategy model

‫نااموذج استراتيجية ااالعمااالاااللكترونية ااالديناميكية‬
• Kolkata and Robinson (2000) recommend a
dynamic emergent strategy process specific to
e-business.
• The elements of this approach are shown in
Figure 5.5. It essentially shares similar
features to Figure 5.4, but with an emphasis
on responsiveness with continuous review and
prioritization of investment in new applications.
Slide 5.28
Figure 5.6 Elements of strategic situation analysis for the e-business
Slide 5.29
Figure 5.6 Elements of strategic situation analysis for the

e-business
‫عناصر تاااحليلااالوضع ااالستراتيجيلااالعمااالاااللكترونية‬
• Strategic analysis: Collection and review of
information about an organization’s internal
processes and resources and external marketplace
factors in order to inform strategy definition.
• The elements of situation analysis for an e-business
are summarized in Figure 5.6.
• For the effective, responsive e-business, as
explained earlier, it is essential that situation analysis
or environmental scanning be a continuous process
with clearly identified responsibilities for performing
the scanning and acting on the knowledge acquired.
Slide 5.30
Summary applications of a portfolio analysis for an

Figure 5.7
example B2B company
Slide 5.31
Figure 5.7 Summary applications of a portfolio

analysis for an example B2B
company
• Figure 5.7 illustrates the results of a portfolio analysis for
a B2B company applied within an e-business context.
• It can be seen that current applications such as human
resources, financial management and production-line
management systems will continue to support the
operations of the business and will not be a priority
for future investment. In contrast, to achieve competitive
advantage, applications for maintaining a dynamic
customer catalogue online, online sales and collecting
marketing intelligence about customer buying behavior will
become more important. Applications such as
procurement and logistics will continue to be of
importance in an e-business context.
Slide 5.32
Figure 5.8 SWOT analysis
Slide 5.33
Figure 5.8 SWOT analysis

• SWOT analysis: Strengths, weaknesses, opportunities
and threats.
• SWOT analysis is a relatively simple yet powerful tool that can help
organizations analyses their internal resources in terms of strengths
and weaknesses and match them against the external environment in
terms of opportunities and threats.
• In an e-business context, a SWOT analysis of e-business-specific
issues can combine SWOT related to corporate, marketing, supply
chain and information systems, or a separate SWOT can be
performed for each.
• SWOT analysis is of greatest value when it is used not only to
analyses the current situation, but also as a tool to formulate
strategies. To achieve this it is useful once the strengths, weaknesses,
opportunities and threats have been listed to combine them as shown
in Figure 5.8.
• This format of SWOT is recommended over a typical four-box SWOT
since it can be used to develop strategies to counter the threats and
take advantage of the opportunities and can then be built into the e-
business strategy.
• Figure 8.6 gives an example of an e-marketing SWOT using the
approach shown in Figure 5.8.
Slide 5.34
Porter’s five forces

‫ااالإقوىااالإتنافساية ااالإخمساة لإاامايكل بااورتر‬
Bargaining
powers of
customers
Power of Threat of
The business
suppliers subsitutes
Extent of rivalry
Threat of new
between
entrants
competitors
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.
‫‪Slide 5.35‬‬
‫‪Porter’s five forces‬‬

‫ااالإقوىااالإتنافساية ااالإخمساة لإاامايكل بااورتر‬
‫•‬ ‫هي اطار تحليلى يستخدم في تقييم استراجيات العماللإبورترالقوى التنافسية الخمسة‬
‫والسواق‪ .‬ويمكن استخدام هذا الطار كأداة تحليل للمميزات التنافسية والعلقة المتبادلة مع‬
‫‪ .‬وهذه الداة تقارن محيط العمل أو بيئة العمل الداخلية مع البيئة الخارجية على نطاقهاالسوق‬
‫‪.‬الوسع‬
‫ويعتمد هذا التحليل على أنه إذا تغيرت إحدى هذة القوى فلبد من اعادة تقييم المؤسسة وسوق •‬
‫ضا استخدمها في محاكاة تغيير هذة القوى الخمسة وما‬ ‫العمل المرتبط بأداءها‪ .‬ليس فقط ولكن أي ض‬
‫قد يترتب عليها في محيط العمل والسواق المحيطة‪ .‬وتعد هذه الطريقة إحدى الطريق الذكية‬
‫للتخطيط ضد مخاطر سوق العمل والتغيير المفاجئ في مجريات العمل والقوى الخمسة هي‬
‫•‬
‫•‬
‫‪• A graphical representation of Porter's Five Forces‬‬
‫المنتجات البديلة •‬
‫المنافسون الجدد •‬
‫مدخلت جديدة على السوق •‬
‫قدرة المشترون على المساومة •‬
‫قدرة الموردون على المساومة •‬ ‫‪Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009‬‬
Slide 5.36
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
– Supermarkets
– Oil industry
– Rail industry
Slide 5.37
Figure 5.9 Matrix for evaluation of external capability against internal capability
Source: Perrott (2005)
Slide 5.38
Figure 5.9 Matrix for evaluation of external

capability against internal capability
• Evaluation of internal resources should be balanced against
external resources.
• Perrott (2005) provides a simple framework for this analysis (Figure
5.9). He suggests that adoption of e-business will be determined by
the balance between internal capability and incentives and external
forces and capabilities. Figure 5.9 defines a matrix where there are
four quadrants which businesses within a market may occupy
according to the development of their e-business strategy:
• Market driving strategy (high internal capabilities/incentives and low
external forces/incentives). This is often the situation for the early
adopters. Perrott gives the examples of Amazon, Dell, Cisco andWells
Fargo Bank in this category.
• Capability building (low internal capabilities/incentives and high
external forces/incentives). A later adopter.
• Market driven strategy. Internal capabilities/incentives and external
forces/incentives are both high. Perrott gives the examples of Dun and
Bradstreet, First Direct, Quicken and Reuters in this category.
• Status quo. This is the situation where there isn’t an imperative to
change within the marketplace since both internal
apabilities/incentives and external forces/incentives are low.
Slide 5.39
Figure 5.11 Elements of strategic objective setting for the e-business
Slide 5.40
Figure 5.11 Elements of strategic objective

setting for the e-business
• Defining and communicating an organization’s
strategic objectives is a key element of any strategy
process model since (1) the strategy definition and
implementation elements of strategy must be directed
at how best to achieve the objectives, (2) the overall
success of e-business strategy will be assessed by
comparing actual results against objectives and
taking action to improve strategy and (3) clear,
realistic objectives help communicate the goals and
significance of an e-business initiative to employees
and partners.
• Note that objective setting typically takes place in
parallel with strategic analysis, defining a vision and
strategy for e-business as part of an iterative process.
• Figure 5.11 highlights some of the key aspects of
strategic objective setting that will be covered in this
section. Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 5.41
Defining vision and mission

• Vision or mission statements for e-businesses are a
concise summary defining the scope and broad aims of
digital channels in the future, explaining how they will
contribute to the organization and support customers and
interactions with partners. Jelassi and Enders (2008)
explain that developing a mission statement should
provide definition of:
• Business scope (where?). Markets including products,
customer segments and geographies where the company
wants to compete online.
• Unique competencies (how?). A high-level view of how
the company will position and differentiate itself in terms of
e-business products or services.
• Values (why?). Less commonly included, this is an
emotional element of the mission statement which can
indicate what inspires the organization or its e-business
initiative.
Slide 5.42
Example vision or mission statements from e-

businesses
• Here are some examples from well-known e-businesses featured
in the case studies in this book. Assess how well they meet the
criteria we have discussed for an effective vision statement.
• Amazon.com Our vision is to be earth’s most customer-centric
company, to build a place where people can come to find and discover
anything they might want to buy online.
• Dell Dell listens to customers and delivers innovative technology and
services they trust and value.
• eBay eBay pioneers communities built on commerce, sustained by
trust, and inspired by opportunity. eBay brings together millions of
people every day on a local, national and international basis through
an array of web sites that focus on commerce, payments and
communications.
• Facebook Facebook is a social utility that helps people communicate
more efficiently with their friends, family and co-workers.The company
develops technologies that facilitate the sharing of information through
the social graph, the digital mapping of people’s real-world social
connections. Anyone can sign up for Facebook and interact with the
people they know in a trusted environment.
• Google Google’s mission is to organize the world’s information and
make it universally accessible and useful.
Slide 5.43
An evaluation tool relating information to business value. An

Figure 5.12
organization’s use of information on each axis can be assessed from 1(low use of
information) to 10 (high use of information) Source: Marchand et al. (2002)
Slide 5.44
Figure 5.12 An evaluation tool relating information to business

value. An organization’s use of information on each axis can be
assessed from 1(low use of information) to 10 (high use of
information)
• As Chaffey and Wood (2004) have emphasized, much of
the organizational value created by e-business is due to
more effective use of information.
• The strategic importance of business information
management in an organization can be reviewed and
communicated as part of vision using Figure 5.12.
• This analytic tool, devised by Professor Don Marchand,
shows different ways in which information can create
value for organizations. The main methods are:
1. Adding value. Value is added through providing better-
quality products and services to an organization’s
customers.
2. Reduce costs. Cost reduction through information is
achieved through making the business processes shown
in Figure 10.2 more efficient.
Slide 5.45
contiue
• ‫لإلمخاطرإدارة الإمخاطر هي عأملية قياس وتقييم‬ ‫وتطوير إساتراتيجيات‬
‫ تتضمن هذه الساتراتيجيات نقل الإمخاطر إلإى جهة أخرى وتجنبها‬.‫لدارتها‬
‫وتقليل آثارها الإسالبية وقبول بعض أو كل تبعاتها‬..
3. Manage risks.(‫ ) إدارة ااالمخاطر‬Risk management is a well-established
use of information within organizations. Marchand (1999) notes how
risk management within organizations has created different functions
and professions such as finance, accounting, auditing and corporate
performance management. For example, Capital One uses
information to manage its financial risks and promotions through
extensive modeling and analysis of customer behavior.
4. Create new reality. Marchand uses the expression ‘create new reality’
to refer to how information and new technologies can be used to
innovate, to create new ways in which products or services can be
developed.
Slide 5.46
Figure 5.13 Arena Flowers (www.arenaflowers.com)

Slide 5.47
Figure 5.13 Arena Flowers

• Arena Flowers (Figure 5.13) is an online florist based in London.
The business was incorporated in July 2006 and we went live with a
transactional website in September 2006. The company delivered £2
million net sales in year one and broke even within the first 12 months
of trading. At the time of the interview they are forecasting sales of
£4m in year two and to make a healthy profit.
• The essence of the Arena Flowers proposition is to cut out all
middlemen and buy direct from growers, so they can get great
prices and the flowers are exceedingly fresh.
• There are no ‘relay’ fees with us and, because of our high stock
turnover, we get fresh flowers in daily and they go straight to the
customer, rather than sitting in a hot shop window.
• Arena Flowers offer free delivery on all of our products and we were
the first online florist in the UK to offer FFP-accredited, ethically
sourced flowers. That has been a good ‘unique selling point’ and
enables Arena to offer something from other suppliers such as
supermarkets.
Slide 5.48
Figure 5.14 An example of conversion modeling for an online retailer
Slide 5.49
Figure 5.14 An example of conversion

modeling for an online retailer
• So, to assess the potential impact of digital channels it is
useful to put in place tracking or research which assesses
the cross-channel conversions at different stages in the
buying process.
• For example, phone numbers which are unique to the
web site can be used as an indication of the volume of
callers to a contact centre influenced by the web site. This
insight can then be built into budget models of sales levels
such as that shown in Figure 5.14.
• This shows that of the 100,000 unique visitors in a period
we can determine that 5,000 (5%) may actually become
offline leads.
Slide 5.50
Grid of product suitability against market adoption for

Figure 5.15
transactional e-commerce (online purchases)
Slide 5.51
Figure 5.15 Grid of product suitability against market adoption for

transactional e-commerce online purchases)
• Activity 5.2 Assessing the significance of digital channels.

• Purpose:
• To illustrate the issues involved with assessing the
suitability of the Internet for e-commerce.
• Activity
• For each of the following products and services assess
the suitability of the Internet for delivery of the product or
service and position it on the grid in Figure 5.15 with
justification and make estimates in Table 5.7 for the direct
and indirect online revenue contribution in five and ten
years’ time for different products in your country. Choose
• specific products within each category.
Slide 5.52
Figure 5.16 Elements of strategy definition for the e-business
Slide 5.53
Figure 5.16 Elements of strategy

definition for the e-business
• Strategy definition: Formulation, review and selection
of strategies to achieve strategic objectives .
• The definition of strategy is driven by the objectives and
vision referred to in the previous sections. As strategy is
formulated based on vision and objectives, so it is
necessary to frequently revisit and revise them.
• In this section the key strategic decisions faced by a
management team developing e-business strategy are
reviewed. For each of the areas of strategy definition that
we cover, managers will want to generate different
options, review them and select them as shown in Figure
5.16. We start by considering the sell-side-related aspects
of e-business and then review the buy-side related
aspects.
Slide 5.54
Figure 5.17 Matrix for evaluating e-business strategy alternatives

Source: Econsultancy (2008a)
Slide 5.55
Figure 5.17 Matrix for evaluating e-business

strategy alternatives
• Econsultancy (2008a) also recommends a form of portfolio analysis
(Figure 5.17) as the basis for benchmarking current e-commerce
capabilities and identifying strategic priorities.
• The five criteria used for organizational value and fit (together
with a score or rating for their relative effectiveness) are:
• Business value generated (0–50). These should be based on
incremental financial benefits of the project. These can be based on
conversion models showing estimated changes in number of visitors
attracted (new and repeat customers), conversion rates and results
produced. Consideration of lifetime value should occur here.
• Customer value generated (0–20). This is a ‘softer’ measure which
assesses the impact of the delivered project on customer sentiment,
for example, would they be more or less likely to recommend a site,
would it increase their likelihood to visit or buy again?
• Alignment with business strategy (0–10). Projects which directly
support current business goals should be given additional weighting.
• Alignment with digital strategy (0–10). Likewise for digital strategy.
• Alignment with brand values (0–10). And for brand values.
Slide 5.56
Figure 5.18Strategic options for a company in relation to the importance of the

Internet as a channel.
Slide 5.57
Figure 5.18 Strategic options for a company in relation

to the importance of the Internet as a channel.
• E-business channel strategy priorities can be summarized
in the words of Gulati and Garino (2000) ‘Getting the right
mix of bricks and clicks’.
• This expression usually refers to sell-side e-commerce.
The general options for the mix of ‘bricks and clicks’ are
shown in Figure 5.18.
• This summarizes an organization’s commitment to e-
commerce and its implication for traditional channels.
• The other strategy elements that follow define the
strategies for how the target online revenue contribution
will be achieved.
Slide 5.58
Figure 5.19 Using the Internet to support different growth strategies
Slide 5.59
Figure 5.19 Using the Internet to

support different growth strategies
• The market and product development matrix (Figure 5.19)
can help identify strategies to grow sales volume through
varying what is sold (the product dimension on the
horizontal axis of Figure 5.19) and who it is sold to (the
market dimension on the y-axis).
• Specific objectives need to be set for sales generated via
these strategies, so this decision relates closely to that of
objective setting. Let’s now review these strategies in
more detail.
1. Market penetration. This strategy involves using
digital channels to sell more existing products into
existing markets. The Internet has great potential for
achieving sales growth or maintaining sales by the
market penetration strategy.
Slide 5.60
Figure 5.19 Using the Internet to support different

growth strategies
• Figure 5.19 indicates some of the main ways in which the Internet
can be used for market penetration:
• Market share growth
• Customer loyalty improvement
• Customer value improvement
2. Market development. Here online channels are used to sell into new
markets, taking advantage of the low cost of advertising internationally
without the necessity for a supporting sales infrastructure in the
customer’s country. The Internet has helped low-cost airlines such as
easyJet and Ryanair to enter new markets served by their routes cost-
effectively.
3. Product development. The web can be used to add value to or
extend existing products for many companies. For example, a car
manufacture can potentially provide car performance and service
information via a web site.
4. Diversification. In this sector, new products are developed which are
sold into new markets. The Internet alone cannot facilitate these high-
risk business strategies, but it can facilitate them at lower costs than
have previously been possible. Dave Chaffey, E-Business and E-Commerce Management, 4 Edition, © Marketing Insights Limited 2009
th
Slide 5.61
Figure 5.20 Elements of strategy implementation for the e-business
Figure 5.20 Elements of strategy implementation
Slide 5.62
for the e-business

• Strategy implementation includes all tactics used to
achieve strategic objectives.
• The main tactics and actions required are summarized in
Figure 5.20. These actions are described in more detail in
the remainder of Part 2 and in Part 3 as indicated in the
figure.
• Chapter 10 focuses on approaches to managing the
change associated with change management.
• Figure 10.2 summarizes different implementation
marketing activities that need to be completed by an
online retailer structured according to customer
acquisition, conversion and retention activities.
Slide 5.63
Information systems strategy and

e-business strategy
• An essential part of any e-business strategy is consideration of
how information systems strategy supports change. The
importance to e-business success of utilizing information
systems to manage information is highlighted by Willcocks and
Plant (2000) who found in a study of 58 major corporations in the
USA, Europe and Austral asia that the leading companies were
astute at distinguishing the contributions of information and
technology, and considering them separately. They make the
point that competitive advantage comes not from technology, but
from how information is collected stored, analyzed and applied.
• An established aspect of information systems strategy
development is the focus of IS strategy on business impact or
alignment.
• In the business-alignment approach, a top-down approach is
used to review how information systems can be used to directly
support a defined business strategy. Referring to e-business
strategy, Pant and Ravichandran (2001) say:
• Alignment models focus on aligning the information system’s
plans and priorities with organizational strategy and business
goals.

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Slide 5.

• Follow an appropriate strategy process model

• How does e-business strategy differ from

Michael Porter on the Internet

• The key question is not whether to deploy

Alternative definitions of strategy

– ‘Sets allocation of resources to meet goals’

– ‘Selects preferred strategic option to

– ‘Provides a long-term plan for the development

• In this chapter we seek to show how an e-business strategy can be

What is e-business strategy?

• Lynch (2000) describes strategy as an organization’s sense of

Figure 5.1 Different forms of organizational strategy

Figure 5.1 Different forms of organizational strategy

• Johnson and Scholes (2006) note that organizations have different

• We can observe that there is a tendency for e-business

The imperative for e-business strategy

Strategy process models for e-business

Sell-side e-commerce strategy (Chapters 8 & 9)

Buy-side e-commerce strategy (Chapters 6 & 7)

Figure 5.2 Relationship between e-business strategy and other strategies

Figure 5.2 Relationship between e-business

What happens where there is

Figure 5.3 BA communicates its online value proposition (www.britishairways.com)

Figure 5.4 A generic strategy process model

Figure 5.4 A generic strategy process model

Figure 5.5 Dynamic e-business strategy model

Figure 5.5 Dynamic e-business strategy model

Figure 5.6 Elements of strategic situation analysis for the e-business

Figure 5.6 Elements of strategic situation analysis for the

Summary applications of a portfolio analysis for an

Figure 5.7 Summary applications of a portfolio

Figure 5.8 SWOT analysis

Figure 5.8 SWOT analysis

Porter’s five forces

‫‪Porter’s five forces‬‬

Activity – Impact of Internet

• For one of the industries below, assess how

Figure 5.9 Matrix for evaluation of external

Figure 5.11 Elements of strategic objective setting for the e-business

Figure 5.11 Elements of strategic objective

Defining vision and mission

Example vision or mission statements from e-

An evaluation tool relating information to business value. An

Figure 5.12 An evaluation tool relating information to business

Figure 5.13 Arena Flowers (www.arenaflowers.com)

Figure 5.13 Arena Flowers

Figure 5.14 An example of conversion modeling for an online retailer

Figure 5.14 An example of conversion

Grid of product suitability against market adoption for

Figure 5.15 Grid of product suitability against market adoption for

• Activity 5.2 Assessing the significance of digital channels.

Figure 5.16 Elements of strategy definition for the e-business

Figure 5.16 Elements of strategy

Figure 5.17 Matrix for evaluating e-business strategy alternatives

Figure 5.17 Matrix for evaluating e-business

Figure 5.18Strategic options for a company in relation to the importance of the

Figure 5.18 Strategic options for a company in relation

Figure 5.19 Using the Internet to support different growth strategies

Figure 5.19 Using the Internet to

Figure 5.19 Using the Internet to support different

Figure 5.20 Elements of strategy implementation for the e-business

for the e-business