Opening Digital Markets: Battle Plans and Business Strategies for Internet Commerce

Opening Digital Markets: Battle Plans and Business Strategies for Internet Commerce

by Walid Mougayar
     
 

"How will Internet commerce change my organization,now and in the future?" That's the burning question being asked by business and technology executives,and here are the answers. It explains step-by-step how to plan and implement successful Internet marketplaces by highlighting the major management and strategic considerations within a logical framework. It also…  See more details below

Overview

"How will Internet commerce change my organization,now and in the future?" That's the burning question being asked by business and technology executives,and here are the answers. It explains step-by-step how to plan and implement successful Internet marketplaces by highlighting the major management and strategic considerations within a logical framework. It also includes insightful looks at dozens of thriving Internet ventures and "new intermediary" businesses. This book even maintains an associated Website for the latest internet commerce information!

Product Details

ISBN-13:
9780070435421
Publisher:
McGraw-Hill Companies, The
Publication date:
12/28/1997
Pages:
292
Product dimensions:
6.25(w) x 9.31(h) x 1.04(d)

Read an Excerpt

Where do you start to introduce and develop electronic commerce capabilities into the organization? From a planning viewpoint, Internet electronic commerce has the following characteristics:

  • It is multi-disciplinary from a job perspective, cross-functional from an inter-organizational perspective and interindustry from a broad market perspective.
  • It requires a business management approach.
  • It has multiple starting points, each with a different angle.
  • It requires a long-term approach to achieve a strategic impact.

Setting Internet's expectations

A number of management-level issues must be addressed prior to deciding on the implementation steps. Since Internet commerce is a new methodology for doing business in the non-physical marketplace, its impact can be as strategic as you are willing to make it. Unfortunately, because of the challenges that were outlined earlier, there may be a nonlinear relationship on the return on investment.

Regardless of the approach taken, the need for a quick view on your investment is more important than an immediate return on the investment. Learning in this marketplace becomes the most important thing, and learning can only be achieved by early experience, so that you can see some results in less than three months from the start.

Sometimes, even if all the pieces are there, and implementation does not lack any resources, ultimate return on the investment may still be questionable.

Answering strategic questions

At the end of your planning period, you have to answer the following questions very succinctly:

  • How is Internet commerce going to change our business? This is a fundamental question, as it can set the stage for how deep you end up taking your strategy. You have to articulate at the strategic level the linkage between your current business objectives and your objectives in cyberspace by outlining clearly how they will change with the Internet. This must done with concrete expectations, not just wishful thinking based on marketplace approximation.
  • How do we uncover new types of business opportunities? There are two types of opportunities. Ones that allow you to extend your current model into the Internet, and ones that are entirely birthed with the Internet in mind. For either type, there will be more tempting opportunities than ones that need to be pursued. As much as this sounds like a cliché, with the Internet, it becomes even more difficult to accurately predict the market factors and parameters which you usually make decisions on. Many of my consulting engagements focused entirely on covering this aspect. With one client, we identified 10 possible ventures, 4 of which received funding for further research. The client ended up launching one of them.
  • How can we take advantage of new electronic linkages with customers and trading partners? If you already have a number of trading partners, the Internet allows you to expand the capabilities you currently have with them, and it allows you to link newer partners, much faster than before, by opening your Intranets to them. For example, Michelin with its independent dealer network, Fruit of the Loom with its distributors, and Cisco continuously pushing the limits of their Intranets with their distribution partners.
  • Will intermediaries be eliminated in the process? Or do we become intermediaries ourselves? By examining how each piece of your value chain may be affected, you can determine whether it is time to become an intermediary, or defend a position weakened by the rise of a new intermediary.
  • How do we bring more buyers and sellers together electronically (and keep them there)? Today, it is a challenge to bring electronic buyers into your sphere of selling influence. However, once you have mastered this initial challenge, it becomes more important to keep them. The old adage that "keeping a customer is cheaper than getting a new one" applies equally as well in the marketspace. For your customer, your competitor is only a "click away" from you. It becomes too tempting to switch when it is so easy.
  • How do we change the nature of our products and services? You have to evolve beyond hard goods, to soft goods and information-based products and interactive services. There is an evolution to be followed, even if it cannibalizes initially some of your existing offerings.
  • Why is the Internet affecting other companies more than ours? You might be asking yourself whether you are immune to the Internet. It would be nice not to have headaches or anxiety associated with the uncertainties of electronic commerce. In reality, it is hard to imagine a large corporation not being affected by the Internet.
  • How do we manage and measure the evolution of our strategy? Once you have identified where to focus your priorities, you then have to ensure that you are following up with a sustained management and measurement framework for monitoring and refining your success in the marketspace.

Ten steps to Cyber maturity

In order to avoid some of the possible pitfalls, we recommend assessing the following ten steps and acting on perfecting the outcome of each one, in order to maximize the chances of success. Your "cybermaturity" will increase when you are addressing all of them simultaneously.

  1. Conduct necessary education
  2. Review current distribution and supply chain models
  3. Understand what your customers and partners expect from the Internet
  4. Re-evaluate the nature of your products and services
  5. Give a new role to your human resources department
  6. Expand your current systems to the outside
  7. Track new competitors and market shares in the new digital marketspace
  8. Develop a Web-centric marketing strategy
  9. Participate in the creation and development of virtual marketplaces and intermediaries, NOW
  10. Instill electronic markets management style

Step 1 -- Conduct necessary education

Education involves more than communication. Communicating an idea that is well understood is one thing, but communicating a new and perhaps complex new way of doing business requires additional education. There are two sides to the education imperative. First, internally executives and managers must be educated. Second, externally customers, prospects and trading partners must also be educated.

Educate internally, from the top down.

The Internet has been labelled as probably the most important new tool for today's learning organization. In order to avoid having Internet technology surpass the ability of management to exploit it effectively, the proper executive education has to formally take place. Because of its newness and complexity, the Internet and electronic commerce represent a learning challenge that has to be met with a business education focus.

Education, education, education. When all levels of employees and managers are well educated about Internet commerce, they will each begin to discover their own business opportunities. Any implementation becomes much easier if it is understood that the pain of not doing anything is greater than the pain of doing something about it. After my seminars to executives, I always ask them: "what will you do next when you go back to your office?" The answer that is most frequently mentioned is always: "Conduct more executive education".

By addressing the management training needs early, organizations can better understand and absorb how to take advantage of the Internet effectively. The best decisions are taken by the most informed managers. For example, organizations can start with a half-day executive education and awareness session that covers the following topics:

  • Internet market segmentation: What is our strategy for each one of them?
  • Inventory review of Internet applications (internal/external functions)
  • Evolution of Internet deployment within an organization
  • Strategic planning elements for the Internet
  • Introduction to electronic commerce on the Internet (definitions and state of practice)
  • Buyer/seller model and transactions
  • Drivers and challenges to electronic commerce
  • New Internet commerce business opportunities
  • Major building blocks to Internet commerce
  • Assessment of management readiness
  • Case for action requirements on the basis of scenario planning

Executive education has nothing to do with "surfing the Net", but rather with understanding how it is going to change your organization. The audience should include selected senior managers and executives who will have an influence on how the Internet may be deployed within your organization. They will become the internal marketers and champions you will need later.

It is a logical step to start with executive education, since with a greater degree of knowledge, your organization will be able to better deal with the Internet and any implementation that may follow. This could give you an edge against your competition. As an action item, executives are encouraged to move Internet business education to the center of the corporate agenda.

Once the education awareness has been kicked off, it is important to follow with an internalization of these concepts. While visualization helps you explain the strategy and vision, action starts to happen only when a large number of employees and managers begin to internalize the concepts and issues that affect them directly. You can test various aspects of this transition by specifically asking employees how the Internet is affecting their jobs, and how they interact with customers and trading partners. When employees have internalized and understood the forces of change within your vision, you can really begin to reap the rewards of employee Internet productivity. The burning platform scenario helps to fuel the case for action.

Educate your customers about your capabilities and their benefits.

You must constantly and directly educate your customers and electronic partners about how to interact with you in this new marketplace. It is no longer enough just to give out your Web site URL address. You have to specifically explain and show to customers the benefits of using all Internet venues and features, including, but not limited to, your Web site.

The Web site is the product, and it is becoming a complex one. Therefore, many of its features may not be obvious at first sight, and must be explained. What will attract customers to it will not be the user's guide, but rather the brochure. When you look at a product, you don't want to try to figure out its features. They have to jump at you. Keeping electronic partners and customers will be more challenging than getting them in the first place.

Desired outcome of Step 1

  • Understanding the new meanings to Internet commerce leads to the creation of a common framework for action.
  • Informed managers and executives are able to uncover opportunities for their own business functions.
  • When employees have internalized the strategy, they are better able to act on it.
  • When customers know about your new capabilities, there is a better chance that they will try them.

(Steps 2 through Step 10 are outlined in the book, including desired outcomes for each one.)

CHAPTER SIX CONTINUES.

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What People are saying about this

Larry R. Cross
I searched the entire literature for the best text for my Electronic Commerce courses and corporate seminars which include executives and managers from Fujitsu Ltd., Sony, and so forth. The first edition of Opening Digital Markets stood out from the rest. The new, improved 2nd edition is even better and still is the leader of the pack for understanding the potential power and profits from the Net.
Bill Gurley
This is the most comprehensive look at Internet commerce that I have read to date. If you have any interest in using the Internet to conduct business, I suggest you read this book.

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