What are the strategy shaping characteristics of the e commerce environment which apply to organisations in
... Main Body · What is the Internet and e-commerce ? · How does internet technology impact the company and industry value chains · How has the internet reshaped the competitive environment · What are the strategy shaping features of the Internet technology · Can we learn from the strategic mistakes made by early Internet companies · What are the E-Commerce Business Models and Strategies for the future 3. ... Both the Industrial revolution and the birth of the Internet and e-commerce are revolutionary reforms that have been implemented with dramatic speed. Today most independent analysts and observers believe the world is in the middle of a twenty-first century revolution, this one driven through modern business implementation of, and embrace of the Internet and e-commerce. ... The Internet and e-commerce environment we are now living through has a combination of devastating advantages. ... Instead of requiring a prime physical site to impress customers, e-commerce businesses can be located anywhere at the lowest cost; in fact they dont even have to be in the same part of the world as its customers. ... He espoused this as the central theme throughout the book “The Goal”, and this assertion underpinned his entire philosophy as he developed and implemented The Theory of Constraints mode of manufacturing Having read this report, the expected outcome is that the reader will have a thorough grasp of the fundamentals of the Internet and e-commerce as they apply to business practices and strategic planning in the Internet era. ... What is the Internet and E-Commerce ? ... This will include web page design, and the set up of e-commerce systems to allow trade to be done on the web in a safe and secure manner. ... Finally there are those companies who are e-commerce enterprises, and this category includes those companies who have focused on either business to business trade such as Intel or Dell who conduct most of their business online, there are the companies who focus on business to consumer enterprises such as Amazon or e-Bay, there are those companies who focus on media such as Disney and Nintendo, and finally there are those companies who are recognised content providers such as Yahoo or AOL. ... There are clear implications for all firms competing in the modern world, not least of which is how they change and shape their strategy to take full advantage of the Internet build out. ... With colossal rewards comes the inevitable risk of failure, and this paper will detail the key challenges facing modern companies when choosing when and how they adapt their strategy to be successful in the e-commerce environment. It should be noted that I said “when” and not “if” they decide to participate in the e-commerce arena, and this is predicated by my belief that in today’s business environment there is no option for companies other than to embrace the internet as a key medium for doing business. ... However, the choice of strategy a company adopts can be the difference between success and failure, and for a lot of companies this can be a very difficult thorn to grasp. ... ” The intent of this paper will be to provide the reader with a clear and concise summary of the characteristics that shape the companies strategy when pursuing entry into the e-commerce world. ... It should serve as a discussion paper which will leave the reader in no doubt as to my position regarding the opportunities available for companies through e-commerce, and the inevitability of their need to play in the e-commerce market. The rewards are simply too large to ignore, especially in today’s environment where e-marketing is allowing companies to build lasting and meaningful customer relations, whilst offering an extended choice of goods in the safety, comfort and convenience of their homes. Perhaps to try and gauge the extent of the opportunities available to companies, Intel Chairman Andy Grove, who was asked in 1997 what he felt the return on investment in e-commerce would be, best sums it up. He replied rather tartly “what’s my return on investment in e-commerce ? ... Having analysed the birth and generic make-up of the Internet and e-commerce world, it is timely to move on to look at how the Internet technology and e-commerce impacts the company and industry value chains. ... Table 1: Ways To Integrate the Internet Into value Chain Activities Purchased Supplies and Inbound Logistics Operations Distribution and Outbound Logistics Sales and Marketing Service Data sharing with suppliers to deliver just in time schedules Build to order capabilities Online dealer ordering and order processing Customer ordering capabilities via website Extensive online product information Coordinate parts and component design Interplant coordination of production Customer and dealer access to delivery schedules Online product catalogues Online support for customers eg call centre, email etc Use of internet auctions to procure parts and components Real time inventory management and visibility to sale force Collaborative data sharing of real time sales Real time access to customer accounts data Real time order status reports Online systems for ordering, processing and paying suppliers Production co-ordination with contract manufacturers Collaborative sales forecasting with distribution channel partners Online price quotations and targeted marketing Online order processing and invoicing Opportunities exist to apply Internet technology all along the company and industry value chain systems, offering considerable potential for improving operating efficiency, reconfiguring value chains and lowering costs. Analysing the value chain efficiency there are three key areas in particular where the Internet Technology and e-commerce greatly improves the efficiency of the organisation and these can be categorised as follows ; 1. ... For example, the advent of e-commerce and the internet allows for much greater speed and flex when procuring items from suppliers, reducing inventory needs, expediting design and production of new parts and in general engaging in a collaborative manner with your suppliers. ... The many e-procurement applications now available permit comprehensive revision of purchasing and inbound logistics, and this provides great incentives for both companies and their suppliers to collaborate closely and achieve mutual cost savings and operating improvements. ... Manufacturers can link the orders of customers to production at their plants, and to deliveries of components from their suppliers, This can lead to very lean inventory builds, and in the ideal environment, a build to order strategy, such as that offered by the likes of Dell Computers. ... The Internet technology and e-commerce also impacts distribution channel efficiency in a positive manner. ... In summary, the potential of the Internet and e-commerce to deliver major efficiency improvements on the company and industry value chains is so pervasive that it is driving fundamental changes in how business is conducted both internally and externally with suppliers, dealers and end users. Increasingly companies are implementing the benefits of Internet technology and making the use of electronic systems and e-commerce a standard way of doing business. Moreover, increasingly businesses are recognising that having a world-class e-commerce strategy and medium can be a compelling competitive advantage for the business. How has the internet reshaped the competitive environment ? ... This new-found rivalry is often exacerbated by freshly launched e-commerce strategies of both existing rivals and the entry of new dot com companies. ... An effective strategy for using the Internet adds a valuable weapon to the competitive advantage of rival sellers, and affords them another way to jockey for market position and dominance. ... Specifically the entry barriers in to the e-commerce world are comparatively low. It is fairly easy and cheap to start up a dot com venture or to add e-commerce capability to your organisation. The software required to add e-commerce capability is cheap and readily available. ... This is where companies such as Amazon and e-Bay have, to some extent, managed to gain first mover advantage in the market place, and any aspiring company would have to have a very structured and well thought out advertising and marketing strategy prior to entering the marketplace. ... Finally there is an impact on the Supplier Bargaining power and the Supplier to Seller collaboration due to the growth in e-commerce and use of the Internet technology. ... For both buyers and sellers the ability to trade in e-markets allows them to take advantage of low transaction costs, and eliminating lots of unnecessary bureaucracy and overheads. E-markets effectively lower buyer switching costs, which in turns increases price competition between suppliers, and the extended information on process allows buyers to bargain more aggressively with present suppliers. The impact of the Internet and e-commerce on the Seller to Supplier Collaboration is a marked one. As stated above, e-markets allow much greater supplier-seller cooperation, and companies and their suppliers have a strong incentive to leverage the benefits of the Internet to streamline purchasing and logistics. ... In summary, the Internet technology and e-commerce is driving shifts in competitive forces. ... The key message is that e-commerce only allows a company to enhance it’s profitability and gain a competitive edge only to the extent that it can do a better job of doing so than its rivals can. What are the strategy shaping features of the Internet technology ? In addition to the impact on the company and industry value chains, e-commerce and the Internet technology have other key characteristics that shape a company’s strategy and should be viewed as strategically relevant. ... Companies have the ability to expand their markets to foreign countries at fairly low costs since national boundaries are of no real concern in an e-commerce marketplace.