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Strategy
defines the future direction and actions of an organization or part of an organization. Johnson and Scholes 2006 define corporate strategy as:
the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a changing environment
to meet the needs of markets and to fulfil stakeholder expectations.
Lynch 2000 describes strategy as an organization’s sense of purpose. However, he notes that purpose alone is not strategy; plans or actions are also needed.
E-business strategies share much in common with corporate, business and marketing strat- egies. These quotes summarizing the essence of strategy could equally apply to each strategy:
‘Is based on current performance in marketplace.’ ‘Defines how we will meet our objectives.’
‘Sets allocation of resources to meet goals.’ ‘Selects preferred strategic options to compete within a market.’
‘Provides a long-term plan for the development of the organization.’ ‘Identifies competitive advantage through developing an appropriate positioning defining
a value proposition delivered to customer segments.’ Johnson and Scholes 2006 note that organizations have different levels of strategy, particu-
larly for larger or global organizations. These are summarized within Figure 5.1. They identify corporate strategy which is concerned with the overall purpose and scope of the organization,
business unit strategy which defines how to compete successfully in a particular market and operational strategies which are concerned with achieving corporate and business unit strat-
egies. Additionally, there are what can be described as functional strategies that describe how the corporate and business unit strategies will be operationalized in different functional areas
or business processes. Functional or process strategies refer to marketing, supply chain man- agement, human resources, finance and information systems strategies. Where does
e-business strategy
fit? Figure 5.1 does not show at which level e-business strategy should be defined, since for different organizations this must be discussed and agreed. We can
observe that there is a tendency for e-business strategy to be incorporated within the func- tional strategies, for example within a marketing plan or logistics plan, or as part of
information systems IS strategy. A danger with this approach is that e-business strategy may not be recognized at a higher level within organizational planning. A distinguishing feature of
organizations that are leaders in e-business, such as Cisco, Dell, HSBC, easyJet and General Electric, is that e-business is an element of corporate strategy development.
What is e-business strategy?
Strategy
Definition of the future direction and actions of a
company defined as approaches to achieve
specific objectives.
Q. When a large business is going through a major reorganisation, what are the main ways this can impact upon the e-commercedigital marketing team? What
types of demands are placed on the team by different business units?
Sharon Shaw, Standard Life:
The biggest problem tends to be a freeze on investment andor significant change. Digital teams are expected to carry on delivering business
as usual but won’t be given the opportunities to make often long-awaited improve- ments until the reorganisation is complete.
Projects get put on hold and the team feel stuck in limbo. Strong leadership is needed to keep everyone on track.
Source: www.econsultancy.comnews-blognewsletter3504interview-with-standard-life-s-sharon-shaw.html. Econsultancy.com provides information, training and events on best practice in online marketing and
e-commerce management.
E-business strategy
Definition of the approach by which applications of
internal and external electronic
communications can support and influence
corporate strategy.
Chapter 5 E-business strategy
There is limited research on how businesses have integrated e-business strategy into existing strategy, although authors such as Doherty and McAulay 2002 have suggested it is impor-
tant that e-commerce investments be driven by corporate strategies. We return to approaches of alignment later in the chapter. Box 5.1 illustrates some of the challenges in integrating
e-business into existing planning processes.
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Figure 5.1
Different forms of organizational strategy Business unit
strategies Functional
strategies Regional
strategies Corporate
strategy
Typical e-business planning
Part 2 Strategy and applications
Box 5.1
Perspectives on senior management buy-in to e-commerce
Research of retail banks by Hughes 2001 suggested that, in the early phases of e-business development, there is no clarity in e-commerce strategy at a senior level.
In one of the responding companies, interviewees comment that:
My perception would be that they are not leading e-commerce as actively as they are other parts of change within the organisation.
Organisation development manager, case 1 Another comments:
There is a lack of understanding of the new technology and its implications by the executive team: Whereas if it’s a life and pensions decision they can take that
because it’s in their blood. If it’s a technology decision, it’s much more difficult. Marketing manager, case 1
However, problems in defining strategy can occur, even though clear control is evident. In company 3 the importance of senior involvement is stressed:
The ability to drive forward a project without a very high level sponsor is doomed to failure really. [In our organization] The allocation of budgets is decided at the
highest level.
In organization 3, three senior managers are responsible for driving e-commerce: the chief executive, the head of the electronic channel and the technology director.
However, the marketing manager feels that the marketing function has not been suffi- ciently central in e-commerce development:
What marketing is trying to do is say there should be a strong consumer voice within there who can think about it purely from the marketing side. We’re trying to make
sure that we’ve got strong representation.
The imperative for e-business strategy
Think about the implications if e-business strategy is not clearly defined. The following may result:
Missed opportunities from lack of evaluation of opportunities or insufficient resourcing of e-business initiatives. These will result in more savvy competitors gaining a competitive
advantage; Inappropriate direction of e-business strategy poorly defined objectives, for example,
with the wrong emphasis on buy-side, sell-side or internal process support; Limited integration of e-business at a technical level resulting in silos separate organiz-
ational team with distinct responsibilities which does not work in an integrated manner with other teams of information in different systems;
Resource wastage through duplication of e-business development in different functions and limited sharing of best practice. For instance, each business unit or region may
develop a separate web site with different suppliers without achieving economies of scale.
To help avoid these typical problems of implementing e-business in traditional organiz- ations, organizations will want e-business strategy to be based on corporate objectives such
as which markets to target and targets for revenue generation from electronic channels. As Rowley 2002 has pointed out, it is logical that e-business strategy should support cor-
porate strategy objectives and it should also support functional marketing and supply chain management strategies.
However, these corporate objectives should be based on new opportunities and threats related to electronic network adoption, which are identified from environment analysis and
objectives defined in an e-business strategy. So it can be said that e-business strategy should not only support corporate strategy, but should also influence it. Figure 5.2 explains how
e-business strategy should relate to corporate and functional strategies. It also shows where these topics are covered in this book.
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Although these quotes date back to an early phase in e-business strategy develop- ment in organizations, they are still instructive in indicating the importance of senior
management sponsorship and ownership of e-business strategy. E-consultancy 2005, 2008a research into managing digital channels again showed the challenges and
importance of senior sponsorship. The main challenges identified by e-commerce managers from over a hundred participating companies from Europe and the United
States showed that gaining buy-in into e-commerce involved significant challenges for many. These are the ratings for the main challenges:
Gaining senior management buy-in or resource 68 agreed that this was a chal- lenge, 68 in 2005
Gaining buy-in resource from traditional marketing functions brands 68 agreed that this was a challenge, 66 in 2005
Gaining IT resource technical support 68 agreed that this was a challenge, 69 2005
Finding suitable staff appeared to have got more challenging 75 agreeing that this was a challenge compared to 60 in 2005.
However, enormous strides have still been made with almost three-quarters of respon- dents agreeing with the statement: ‘digital channels are fully recognised and integrated
into our annual planning and budgeting process’.
Chapter 5 E-business strategy
