Strategies for e-Business

The purpose of this chapter is to set the stage for the remainder of the book. To create a clear and shared view of what this domain entails, this chapter introduces definitions of e-business-related terms and concepts as well as some strategy-specific perspectives. The concept of strategy and recognizing the different levels of strategy development is defined. This chapter also develops a framework that describes the typical stages of technological revolutions and positions the evolution of electronic business within this framework.

In Part II of this book, we propose an overarching e-business strategy framework that can serve as a comprehensive basis for e-business strategy formulation. Besides, strategic thinking for e-business and critical success factors of e-business strategy are presented in this chapter.

This chapter firstly provides a framework for analyzing the macro-environment. Secondly, it discusses Porter’s five forces framework for analyzing the attractiveness of an industry. It also analyses the impact of the Internet on each force of Porter’s framework, i.e., industry rivalry, barriers to entry, threat of substitute products, and the bargaining power of buyers and suppliers. Thirdly, this chapter presents the co-opetition framework, which offers an alternative perspective for industry analysis. Finally, it addresses the question of how to define industries within which to compete and how to segment specific customer groups that a business should target through its e-business offering.

This chapter first defines the concept of core competence and discusses it in the context of e-business. It then presents the value chain concept as a way to analyze the individual steps in the value creation process. Thirdly, it introduces the virtual value chain concept and suggests ways for companies to leverage it for value creation. The chapter then describes the four virtual spaces of the ICDT (Information, Communication, Distribution, and Transaction) framework and indicates ways of using it when selecting activities suited for e-business. Finally, the move for businesses from managing an internal value chain to operating along a value network with external partners is highlighted.

This chapter focused on strategic options in e-business markets. First, it reviewed generic strategy options for value creation in e-business. These options revolved around cost leadership and differentiation strategies. Secondly, this chapter discussed the concept of being stuck in the middle, which refers to companies that focus on neither a cost leadership nor a differentiation strategy. These companies face the risk of not possessing any competitive advantage vis-à-vis more specialized rivals. However, there are also factors that can allow a firm to outpace its rivals by offering both lower costs and differentiation. These include the development of new technologies, wastefulness of companies, scale economies, and learning effects. Thirdly, this chapter discussed how to create a better fit between the chosen strategy and value chain activities in order to achieve a sustainable competitive advantage. It described the three main levers that determine the fit of activities within a firm. These are consistency between activities, reinforcement of activities, and optimization of efforts. Fourthly, this chapter introduced the concept and importance of business models. It illustrates how to use business model canvas to design and analyze a business model synthetically. Finally, this chapter presented major e-business models. They are B2B, B2C, C2C, and government-related e-business models.

This chapter discusses the fundamentals of competitive advantage, the requirements for a successful imitation, the barriers to imitation, and how a company can create and sustain it and how to deal with the threats of a disruptive innovation in e-business. The ways that companies can follow in order to deal with a disruptive innovation are clarified. The chapter also provides some ways for selecting the appropriate cognitive frame (mindset) for an efficient response to a disruptive innovation.

This chapter indicated that digitalization largely disrupts borders between sectors and analyzed how firms can break away from traditional forms of competition and redefine their value proposition by opening up new market spaces. This can be done first by gaining insights into new market spaces through the value curve. This chapter also discussed timing issues for market entry in e-business. More specifically, it analyzed the different types of early-mover advantages and disadvantages that an Internet venture can exploit (or should avoid).

In this chapter, we illustrated how value is created and captured via e-business strategies, which can be divided into two parts: theory and practice. First, we will discuss some basics on value creation and capture so that readers can generally grasp the gist of value creation and capture. Second, two distinct perspectives on value creation and capture are introduced. We highlighted the importance of the Service-Dominant logic because it is more fit with e-business. Third, based on the Service-Dominant logic, we revealed the different roles of a business and customers in value creation. Fourth, to bring together, we depicted the causal pathways of value creation and value capture so as to point out the key activities that a business should notice in the pathway. Last, we applied theoretical parts into a business case, WeChat.

Firstly, this chapter analyzed the degree of integration of individual activities of the value chain. More specifically, it discussed which activities a business should perform (or “make”) by itself and which activities it should source (or “buy”) from external providers. Secondly, the chapter analyzed how to choose the organizational structure for e-business activities and presented the following four options: (1) in-house integration, (2) joint venture, (3) strategic partnership, and (4) independent business (e.g., a spin-off). It then discussed the benefits and drawbacks of each organizational option. Finally, the chapter analyzed the unbundling of the traditional organization as a result of falling transaction costs made possible by the Internet.

Firstly, this chapter introduced the definition of e-procurement and discussed the advantages and drawbacks of e-procurement. Secondly, the chapter analyzed critical success factors of adopting e-procurement. Thirdly, the chapter first introduced a procurement process and then illustrated a general process of e-procurement and ultimately pointed out technologies and systems involved in e-procurement process.

This chapter provided an overview of Web 2.0. It discussed why Web 2.0 brings about strategic changes in Internet business models. It explained how advances in network infrastructure and software development led to an increased number of web users and a richer user experience. In this chapter, we take a closer look at how businesses leverage the new technological capabilities of the Internet to involve their customers and website users more deeply in the information sharing and content creation process.

This chapter started out by giving a definition of mobile e-commerce and depicting the players of the mobile value network. These include mobile equipment vendors for wireless infrastructure and hand-held devices, mobile network operators, IT enablers, application and content providers, as well as portal providers. By segmenting mobile e-commerce consumer and business services, this chapter illustrated the many uses of wireless applications. A detailed classification of mobile commerce services and applications, both for corporate and individual consumers, was also presented. Next, this chapter explained the main advantages of mobile e-commerce over wired e-commerce. Finally, a brief presentation of the ubiquitous commerce framework, which is considered to be the next stage in e-commerce evolution, highlights the new strategies and applications in the field.

This chapter introduces strategic aspects of m-commerce. First, we conceptualize the m-commerce strategy and illustrate its elements to help readers understand its key tenets. Second, as mobile and commerce adoption is a prerequisite for its success, we discuss its potentially influential factors. Third, in order to let readers realize the tremendous value of m-commerce, its value for consumers and businesses is described. Fourth, since mobile payments are a strategic, novel, and profitable business, it is valuable for m-commerce adopters to delve into how they may capture more value. Fifth, practical m-commerce tools and apps are included in this chapter. In many cases, businesses do not need to work with their own apps and can use existing apps and tools to boost their m-commerce. Last but not least, m-commerce has its advantages over traditional commerce but also has diverse challenges that are discussed in the last section of this chapter.

Firstly, this chapter presents reasons why businesses should adopt social commerce strategies. Any new strategy should be well studied before being officially adopted by businesses. Secondly, this chapter classified various social commerce activities. Thirdly, social commerce has a special structural frame and characteristics. Strategists need to consider these structural distinctions and characteristics when applying and deploying social commerce in practice. Fourthly, marketing is a major business activity on social platforms. With advances in technologies, marketing approaches and mindsets are evolving from Marketing 1.0 to Marketing 3.0. Fifth, this chapter delineates what value co-creation is on the social web. Sixth, advertising strategies and commerce strategies are two main strategies to monetize social platforms. Lastly, in terms of today’s mobilized e-business, social commerce implementation should be in the mobile context. This chapter presented a three-layer design of mobile social commerce and presented a case to show that mobile social commerce is a feasible strategy in practice.

Firstly, this chapter presented reasons why firms should implement omni-channel strategies. Secondly, this chapter provided a framework of an omni-channel system. An omni-channel system needs to increase channel visibility and channel integration. This chapter detailed channel integration encompassing channel types, channel agents, and channel stages. Thirdly, this chapter discussed three major stumbling blocks on the journey to omni-channel. Fourthly, this chapter categorized channel conflicts and offered contingent solutions for each type of channel conflict. Lastly, SoLoMo represents three dominant vehicles to integrate various channels. This chapter shed light on how companies should devise their omni-channel strategy by SoLoMo.

This chapter provided a synthesized understanding of Amazon and Alibaba from various dimensions. The two companies offer similar e-business services, such as e-commerce, cloud computing, artificial intelligence, and omni-channel businesses. Yet their business models and strategies are quite different. Amazon and Alibaba, as two e-business exemplars, provide many practical lessons on e-business. In this chapter, we firstly describe the lessons that businesses can learn from Amazon and Alibaba. Secondly, we separately analyze their e-business practices. The last section concludes by highlighting the practical implications of the strategic moves made by Amazon and Alibaba.

This chapter will provide a landscape of strategic trends for e-business and indicate what will fundamentally change and revolutionize e-business in the future. Businesses should consider how to manage these trends, seizing potential opportunities and devising strategies for next-generation e-business.

The goal of this chapter’s roadmap is to propose the different steps involved in setting up and implementing an e-business strategy from a process-oriented perspective. Firstly, the chapter suggested in broad terms a roadmap for e-business strategy formulation. It then described in detail each of the nine steps involved in this roadmap and illustrated them through examples and some of the case studies contained in this book.

In 2016, Axel Springer was one of Europe’s largest media houses, with numerous regional and national print publications, including Die Welt and Bild, two of Germany’s best-known newspaper brands. At the turn of the millennium, the company experienced declining revenues and profitability mainly due to digitization of the publishing industry. In response to these problems, CEO Mathias Döpfner decided to break away from the company’s reliance on print and embarked on an internationalization and digital transformation strategy in 2002. The goal was to become the leading digital publisher in Europe.

Italy, March 2016. Andrea Pontremoli looked proudly through his office windows at the new building now soaring over the headquarters of Dallara Automobili SpA in Varano de Melegari, a scenic village near Parma, Italy. It was almost 9 years to the day since he had left his position as CEO of IBM Italy and joined the adventure of one of the most peculiar race car manufacturers in the world. This had not been an entirely rational decision: He had simply not been able to resist the call of passion. His instincts had warned him that it would not be an easy ride. Change was already in progress at Dallara and more was on its way, sooner rather than later. It would be his job, with the help and support of Gian Paolo Dallara, the company’s legendary founder and president, to steer this ship in the right direction and get it ready for more turbulent times to come. During his stay in office, he had already orchestrated a profound transformation of the company, but he was starting to wonder if Dallara Automobili was ready for the next batch of changes. In effect, Andrea and Gian Paolo had decided to invest most of the company’s earnings into a new R&D center that would enable Dallara to compete with the best in carbon fiber technology and its applications.

1 August 2013. Piyush Gupta, CEO of DBS, had just announced that the bank was walking away from its bid to acquire Indonesia’s Bank Danamon. This was a major setback to the bank’s plans to expand its presence in Asia’s growth markets.

It had been a busy week in India for Piyush Gupta, CEO of DBS. The launch of DBS digibank in India on 26 April 2016 had gone well, and the months leading up to it, although intense, suggested the transformation of DBS from a world-class multinational bank to a 22,000-person start-up was well on track. The digibank team had delivered on time, leaving Gupta optimistic that they would achieve their ambitious new business targets. But was this enough? Ant Financial, the 3-year-old financial services spin-off from Alibaba, had just announced another successful funding round that valued it at US$60 billion. It already had a banking license in China, its payments arm had 451 million active users, and its wealth management business boasted $760 billion assets under management.

The view had changed since Bob Collymore, chief executive officer of Kenya’s leading telecom operator, made his first helicopter flight over Nairobi, when he moved there 6 years earlier. Soaring up into the sky, he still remembered the excitement he had felt when he got his first bird’s-eye view of the city that would soon become his home.

Since CEO Piyush Gupta and his colleagues reset DBS’s vision and strategy and commenced its transformation in 2009, DBS doubled both its top and bottom lines (see ◘ Table 24.1—Company Financials). The accolades and awards it received in 2016 suggested it had successfully transformed to become a world-class multi-national bank and was well on its way to becoming a 22,000 start-up (see full list of accolades and awards ► https://www.dbs.com/awards/default.page ). This included being recognized by Euromoney as the World’s Best Digital Bank:

AccorHotels, Europe’s leading hotel group, was going through a major digital transformation initiated by its CEO, Sébastien Bazin. A relative newcomer to the hospitality industry, the private equity investor was shaking up the traditional strategy of a large hotel chain and disrupting AccorHotels’ business model.

As Tee Bin Ong, Bossard’s vice president of sales and marketing, headed to the strategy meeting with Bossard’s management team and board, his expectations were high, and he was excited about the prospects. He had invested a substantial amount of time preparing for the meeting on “Smart Factory Logistics,” where the evolution of Bossard’s strategy around the “smart factory” and its implementation would be discussed. One of the key strategic questions was whether Smart Factory Logistics would be the trigger for Bossard’s digital transformation or an important differentiator for Bossard’s value proposition. The newly created website ► www.SmartFactoryLogistics.com would point in this direction. A third option was pointing in a very different growth direction, i.e., using the technology that was established by a fastener distributor to enter completely new markets with no connection to the fastener industry, e.g., hospitals.

In January 2014, Mary Barra took over as the first female CEO of General Motors, which celebrated its 100th anniversary in 2008. She rose to the CEO role after joining the company in 1980 as a co-op student. During her time at GM, she saw the company go through extreme economic fluctuations, from a world-class brand with record sales to ► Chap. 11 bankruptcy and the subsequent $50 billion US government bailout that positioned the company for a new future. Since Barra’s takeover, the company had bought back the last government-owned stock and was back on its feet.

5 April 2015. Kaan Terzioglu, Turkcell’s CEO, was in a pensive mood on his fifth day on the job. He had just received his first WhatsApp call, which highlighted the challenge his company—Turkey’s largest mobile communications provider—was facing from over-the-top (OTT) service providers. Of Turkcell’s 35 million mobile subscribers, 10 million were WhatsApp users.

14 March 2018. Kaan Terzioglu, Turkcell’s CEO, and his top team had spent Capital Markets Day with global investment analysts celebrating the firm’s achievements.

The Nestlé Institute of Health Sciences (NIHS), a specialized biomedical research institute, was part of Nestlé’s global research and development (R&D) network. Over the last few years, the Institute had developed a platform that combined the processing and analysis of macro data (e.g., lifestyle, diet, and activity) and bioinformatics to create predictive models of health and disease. Nestlé’s ambition was to achieve the following:

Utrecht, Fall 2018. For Nieke Martens and Bart Leurs, summer 2018 marked a pivotal point in the digital transformation of Rabobank.