E-commerce strategy

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INTRODUCTION:

E-commerce is about doing business electronically. It’s more than just buying and selling using the internet, though the Internet and World Wide Web play a fundamental role, but includes any form of business or administration transaction or information exchange executed using information and communication technology (Rowley, 2002).

Organisations are now building E-commerce Strategies into their Business Strategies in an effort to increase their competitive advantage and market share.

Organisations must take careful consideration of many factors when designing and implementing an e-commerce strategy. It is important to consider factors in the internal and external environments, the external being the operating and remote environments (Finlay, 2000).

The immediate marketplace shaped by customer needs and the way in which services are provided to them via competitors, intermediaries and upstream suppliers has the most significant influence on an e-commerce strategy.

Wider issues such as government pressures and actions, legal and ethical issues, local and international economic conditions, demographic trends, information technology developments and the society at large (Chaffey, 2004) also need to be examined and understood to ensure potential problems facing organisations wishing to develop a revenue stream through B2C e-commerce are overcome.

 

                                                                                                

An effective e-commerce strategy establishes goals and objectives and sets out how objectives will be achieved. It is therefore important that organisations develop e-commerce strategies as effectively it creates a framework for future operational decisions and planning (Rowley, 2002). Furthermore:

  • It allows organisations to establish which markets it should operate in
  • It allows organisations to evaluate whether or not they have the skills, resources and other assets internally to achieve its objectives
  • It allows organisations to monitor its marketplace and changes that may occur in the external environment
  • It enables organisations to make key decisions as to which strategies it will actually implement in order to achieve objectives

                

Having developed an e-commerce strategy, organisations need to make decisions as to how and where they will implement their strategy. Organisations, particularly large or multinational organisations are built on a set of three strategic levels.

It is widely agreed that those organisations having implemented an e-commerce strategy at a corporate level are the market leaders. A survey carried out by Conspectus (2002), suggested many organisations that had adopted this strategy did it at a corporate level. The surveys findings showed:

  • 48% of organisations had implemented a strategy at a corporate level
  • 4% of organisations had implemented a strategy at a Business Unit level
  • 48% of organisations had implemented a strategy through a mixture of both.

It is at the corporate level however, problems devising and implementing an e-commerce strategy originate. In our present climate, corporate levels are constructed of senor executives, mature in age and born in generations outside of the ‘Knowledge Age’ (Finlay, 2000). This has lead to an opinion that many senor executives have a lack of understanding of new technology and the implications of information technology. As a result, senior executives are reluctant to provide their sponsorship of e-commerce initiatives and therefore only small portions of organisational budgets are spent on e-commerce strategies. Furthermore, Business Units feel their divisions are not always given a strong enough representation within the corporate level e-commerce strategy and believe the corporate level should consult with the Business Units and incorporate their needs into the e-commerce strategy prior to implementation.

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We will now go onto discuss problems organisations face devising and implementing an e-commerce strategy in the operating and remote environments.

The operating environment is composed of elements that an organisation can influence and in turn, can influence an organisation. The operating environment is often measured using Porter’s famous Five Competitive Forces model (Finlay, 2000). This model provides a suitable framework for identifying problems with e-commerce that arise in the operating environment.

2.1: Bargaining Power of the Buyers

Organisations implementing an e-commerce strategy will have to face lowering ...

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