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Understanding new strategic approaches is provided by examining how the online world is being exploited by organisations in sectors of a modern economy such retailing, healthcare and the public sector in terms of creating new forms of competitive advantage as a consequence of the advent of mobile technology and online social networks.



1. The Online World

The birth of an entirely new industry is usually the result of a visionary idea for a new product, service or industrial process. Evolving the idea into a viable commercial proposition will often involve solving significant scientific or technological problems. Zott and Amit (2007) noted that in the early years of a new industry there is only limited understanding of what market opportunities exist and how these might be exploited. Over time, as summarised in Figure 1.1, interaction between identified opportunities, the nature of the technology and organisational capability leads to the emergence of one or more new business models. Figure 1.1Business model emergence

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2. Big Data and Analytics

Marketing has long relied upon using data to generate understanding of customer needs. In recent years the effective utilisation of all data sources has become an increasingly important organisational competence. This is because the generation and exploitation of new knowledge is fundamental to sustaining competitive advantage (Bughin et al., 2010).

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3. Opportunities

No organisation is capable of responding to all sources and types of change. Hence in deciding upon a revision or fundamental entrepreneurial change in strategy, an organisation will need to define priorities in relation to which are the greatest identified opportunities.

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4. Technology

Technological change is possibly one of the most critical of the meta events that can create a future strategic opportunity or threat for any organisation. This is because technology has the potential to offer the basis for creating totally new industries or permit smaller firms to develop an entrepreneurial competitive advantage through which to challenge market leaders. Technology may even allow developing nations to implement faster industrialisation of their economy, which can eventually permit these countries to become the new global market leaders.

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5. Capabilities

The strategic philosophy concerning market success based upon exploiting superior internal capability is known as the ‘resource based view of the firm’ (or RBV). The RBV literature stresses the importance of an organisation’s ability to organise resources to produce goods and services that will permit creation of a competitive advantage. The philosophy can be contrasted with the alternative ‘environmentalist perspective’, which is focused upon the competitive positioning of products within a market.

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6. i-Strategies

Mintzberg (1990) concluded that strategy evolves gradually over time as managers acquire a deeper understanding of the factors influencing success. Mintzberg’s (1999) typology for this type of strategic behaviour is the ‘Learning School’. His criticism of the conventional linear sequential planning approach, which he described as the ‘Design School’, is that this involves the specification of a deliberate, detailed strategy which he does not believe remains a feasible proposition in today’s increasingly uncertain world.

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7. Marketing Mix

Marketing planning and execution is a managerial process that is highly reliant upon external information. Until recently, internal organisational data from customer activity such as orders, pricing and delivery were complemented by the use of conventional market research to enhance understanding or close information gaps. The drawback with conventional market research is that the methodology is asynchronous, never or infrequently repeated because of high cost, based upon a small sample which limits the ability to undertake micro-analysis and data may be biased by non-response error.

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8. Websites

Various concepts have been utilised to evolve models to define the nature of customer behaviour in relation to the utilisation of websites. Alhudaithy and Kitchen (2009) posited that these various theories may not encompass all the factors that could influence an individual’s Internet utilisation. This is because these various theories tend to provide somewhat vague constructs which may not be entirely relevant to the specific nature and impact of online technology. As a consequence, these authors concluded that the actual nature of a website’s specific features needs to be considered when seeking to achieve an effective understanding of visitor behaviour.

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9. Social Media

One of the earliest online social media applications was dating sites, which offered a new way for individuals to make contact with potential partners. The arrival of Web 2.0 acted as a catalyst for an increase in the number and types of social media platforms which can be divided into four types; namely (i) social networks, (ii) blogs, (iii) microblogs and (iv) Really Simple Syndication (RSS). The latter is less well-known than other social media. This platform filters information from numerous websites and alerts members to information in which they have registered a specific interest. RSS technology protects users from being overwhelmed by data because the software delivers an update on a regularly timed basis.

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10. Blogs, Tweets and Apps

A wiki, or ‘work in progress’, is a fluid and collaborative collection of web pages where everyone in a given community can add, delete or modify content. Possibly the most successful example of a wiki is Wikipedia. The term ‘blog’ is a shortened version of the combination of ‘web’ and ‘log’, and is most frequently equated to an online diary or journal. Like other Web 2.0 tools, a blog can be spearheaded by one individual, but may include contributions by others that can evolve into a dialogue.

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11. Online Retailing

Pure play and clicks and mortar retailers seeking to optimise the performance of their online operations need to focus on the key aspects of the sequential transaction process to maximise the volume of successful transactions (Rowley, 1996). This sequential process ensures the customer successfully progresses through each of the activities of (i) searching, browsing and identifying goods of interest, (ii) selecting and ordering, (iii) making a secure payment and (iv) the delivery of purchases.

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12. Online Service Firms

Many service businesses are involved in the provision and transfer of information. Consequently, some of the first companies to generate significant revenues from the World Wide Web were service firms. Examples include online retailers, the travel industry, finance organisations and search engines. Further opportunities arose following the digitisation of data which created new opportunities in the entertainment industry. Internet technology improvements in areas such as download speeds and multi-media software tools caused many service businesses to migrate online as a whole range of new opportunities became apparent. The Internet permitted greater real-time and synchronous interactions between customer and provider. Additionally, as an interactive medium, the web allowed the merger of mass production and mass customisation to deliver the added customer benefit of one-to-one marketing.

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13. Public Sector Online

By the mid-1980s, inflation and rising unemployment were problems confronting virtually every Western democracy. With welfare services costs rising faster than tax revenues, reform of the public sector was implemented under the banner of ‘New Public Management’ (NPM). (Graham, 1994). As problems over implementing genuinely customer-orientated strategies began to emerge, some academics questioned the potential of NPM to achieve fundamental reform. Hood and Jackson (1992) concluded that NPM was a ‘disaster waiting to happen’, and Farnham and Horton (2007) perceived NPM as a ‘failed paradigm’.

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14. Online Governance

The early forms of corporate entities which emerged during the early 17th century in Europe were created to serve the common good, such as the building of hospitals and creation of orphanages. The concept of a commercial corporation in the UK was defined by an 1844 Act of Parliament. This permitted corporations to define their own purpose and activities. A second Act in 1854 gave shareholders limited liability that protected their personal assets from the consequences of the financial failure of a corporation. This legislation stimulated the emergence of business corporations in both England and Holland. In many of the existing trading companies, partners combined their personal assets and exchanged them for company shares in return for receiving relief from personal liability. This form of organisation gave corporations the added benefit of unlimited life and easy transferability of ownership (Grant, 2003).

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15. Future Market Innovations

Europe was the original crucible in which the Industrial Revolution was forged, with the nature of national- and organisational-level wealth generation being changed forever. Although Europe was the initial centre of industrial innovation, by the end of the 19th century a new age was emerging in which technologies based upon advances in areas such electricity, electronics, computing, the internal combustion engine, jet propulsion and healthcare would totally alter wealth generation.

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Chapter 14 Online Governance, page 253 has been updated

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