Recap Chapter 2

1. Recap Chapter 2 Strategy: Fit between Market Positioning and Resource Exploitation Competitive Advantage: Through asset, competency, RBV SWOT Analysis Strategic Decision: Cost leadership, Differentiation, Hybrid Chapter 3: External Analysis Firm < Industry < Remote macro-environment Industry: Porter’s Five Forces Co-opetition Framework Segmentation: Why segment? Features Types Targeting strategies

2. Chapter 4: Internal analysis: e-business competencies as sources of strengths and weaknesses • Goal of Strategy Formulation • Position an e-business venture so that it can: • Exploit the opportunities that are afforded by its environment • Avoid risks that it is exposed to

3. Chapter 4: Internal analysis: e-business competencies as sources of strengths and weaknesses After this session you should be able to: • Understand the meaning of core competence in e-business. • Assess the impact of the Internet on the value chain. • Appreciate how a company can leverage the virtual value chain. • Understand the four virtual spaces of the ICDT (Information, Communication, Distribution, and Transaction) framework. • Apply the ICDT framework for selecting activities suited for e-business. • Recognize that companies move from managing an internal value chain to operating along a value network.

4. Exhibit 4.1 Distinctive e-business competencies result from the combination of unique resources and capabilities Resources Tangibleresources Capabilities The ability todeploy resourcesby co-ordinating them through Strategic importance • Valuable • Unique • Hard to imitate/substitute • Valuable across different products/markets e-Business competencies (Equipment,location, ...) Intangibleresources • Structures • Processes • Systems (Technology, know-how, brand, ...) Utiliseresources Buildresources Source: Adapted from H. Hungenberg (2006), p. 143.

5. Exhibit 4.2 The core competence approach cuts across different functional areas within a firm Inbound logistics Operations Outbound logistics Marketing and sales After-sales services Demand and supply processes Service processes New product development processes Etc.

6. The following criteria should be used when including specific activities in a company analysis An activity should: Display different economics For instance, the development activity of a new software program displays very large economies of scale since the software can be replicated at a negligible cost. Provide high differentiation potential These are activities that can greatly increase tangible and intangible consumer benefits, such as product and service quality, convenience and reputation. Present sizeable costs These are activities that add significantly to the overall cost structure of the firm. Analyzing the internet-impacted value chain Source: See M. Porter (1998).

7. Exhibit 4.3 A company’s value chain consists of distinct value-adding activities • Firm infrastructure • Human resource management • Technology development • Procurement Support activities • Inbound logistics Operations Outbound logistics Marketing and sales After-sales services Primary activities Source: Adapted from M. Porter (1998)

8. Exhibit 4.4 The Internet impacts all activities in the value chain • Firm Infrastructure • Web-based, distributed financial and ERP systems • On-line investor relations (e.g. information dissemination, broadcast conference calls) • Human resource management • Self-service personnel and benefits administration • Web-based training • Internet-based sharing and dissemination of company information • Technology development • Collaborative product design across locations and among multiple value-system participants • Knowledge directories accessible from all parts of the organisation • Real-time access by R&D to online sales and service information • Procurement • Internet-enabled demand planning • Other linkage of purchase, inventory, and forecasting systems with suppliers • Direct and indirect procurement via marketplaces, auctions and buyer-seller matching Web-distributed supply chain management Source: Reprinted from M. Porter (2001)

9. Exhibit 4.4 The Internet impacts all activities in the value chain (Continued) • Operations • Integrated infor-mation exchange, scheduling and decision making in in-house plants and components suppliers • Outbound logistics • Real-time transaction of orders • Automated customer-specific agreements and contract terms • Customer and channel access to product development and delivery status • Collaborative integration with customer forecasting systems • Integrated channel management • Marketing and sales • Online sales channels including web sites and marketplaces • Real-time inside and outside access to customer information, product catalogues, dynamic pricing, inventory availability, online submission of quotes, and order entry • Online product configurators • Customer-tailored marketing via customer profiling • After-sales service • Online support of customer service representatives • Customer self-service via websites and intelligent service request processing • Real-time field service, access to customer account review, work-order update, etc. • Inbound logistics • Real-time integrated scheduling, shipping, warehouse management, demand management & planning, and advanced planning & scheduling across the company and its suppliers • Dissemination through out the company of real-time inbound and in-progress inventory data Web-distributed supply chain management Source: Reprinted from M. Porter (2001)

10. Customer identification information Purchasing information Logistics information Etc. Exhibit 4.5 The virtual value chain illustrates how information captured in the physical value chain can be used to develop new markets Customer identification Purchasing process Logistics Etc. Physical value chain Gather Organise Select Synthesise Distribute Data Data Data Data Virtual value chain New customers New products New markets New services Source: Adapted from A. Enders and T. Jelassi (2006), pp. 31–44.

11. Traditional marketplace Exhibit 4.6 The ICDT model describes the four main usage dimensions of the Internet in the virtual market space The market space Virtual information space Virtual communication space Virtual distribution space Virtual transaction space Selecting activities for online interaction with customers - the ICDT Framework (Information, Communication, Distribution, and Transaction) Source: Adapted from A. Angehrn (1997), pp. 38-47.

12. Exhibit 4.7 The value network includes numerous partners with differing functions Strategic core value chain partners Inbound logistics Manufacturing Admin., e.g. travel Upstream value chain partners Downstream value chain partners Value chain integrators Suppliers Fulfilment Core value chain activities Buy-side intermediaries Sell-side intermediaries Value chain integrators Finance Human resources Admin., e.g. travel Non-strategic service partners Source: Adapted from D. Chaffey (2007), p.282