E-commerce
Strategies
2017/7/28
Main content
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Case: www.travelocity.com
Overview of E-commerce strategies
National E-commerce Strategies
Enterprise E-commerce Strategies
Research Methods of EC Strategies
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Case: www.travelocity.com
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Key Points
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Planning Procedure of EC Strategies
National EC Strategies
Enterprise EC Strategies
Research Methods of EC Strategies
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Overview of EC strategies
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Definition of E-commerce Strategies
Strategy
A complete strategy involves three aspects:
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It’s planning for the future directions of events;

It’s a prospective blueprint for future developments;
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It’s strongly tactical, with the purpose of gaining sustained
advantages over one’s competitors and guiding other decisions.
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Definition of E-commerce Strategies
Organizational Strategy
Organizational
strategy is the macro-procedure on how to
conduct competitions, how to set up organizational objectives
and what plans and policies are necessary to implement and
achieve these objectives.
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Definition of E-commerce Strategies
E-commerce Strategy
E-commerce
strategy is the application of military strategic
ideas to E-commerce. It’s the policy decision for E-commerce to
develop in ways anticipated by and favorable to oneself.
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Overview of EC strategies
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The Components of E-commerce Strategy
The Temporal Perspective (Vertical)
From
the temporal perspective, E-commerce strategy is a
process with four stages:
Introduction
Formation
Implementation
Assessment
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The Components of E-commerce Strategy
The Spatial Perspective (Horizontal)
From
the spatial perspective, E-commerce strategy is the
integration of
different elements:
strategy
objectives
policies
strengths
measures
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The Categorization of E-commerce Strategies
Categorization according to Subjects
Governments
Strategies
decided on by the central government will guide
and promote the development of the nation's E-commerce.
Organizations
APEC,
for example, raised its E-APEC strategies in 2000.
Enterprises
They
include market competition strategies such as the
leader strategy, the follower strategy and the stopgap strategy
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Overview of EC strategies
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The Categorization of E-commerce Strategies
Categorization according to Industries
E-commerce
can belong to different trades, so it’s possible to
categorize its strategies according to industries.
E-commerce
strategies of industries have different levels.
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The Categorization of E-commerce Strategies
Categorization according to Nature
Competition
This
Strategies
is the basic category of E-commerce strategies.
grabbing
talent
fast lane strategy
risk strategy
blazing
a trail strategy
implicit
attack strategy
Cooperation
Strategies
Cooperation
strategies are complementary to competition
strategies. An enterprise will resort to both types.
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National EC Strategies
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National E-commerce strategies, generally macroscopic,
are based on the following considerations:
E-commerce is an important index of a nation’s
competitiveness in the world’s knowledge- economy.
E-commerce, a rapidly growing sunrise industry, has been
characteristic of knowledge economy.
Economic globalization has become a world tendency.
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National EC Strategies
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Overseas E-commerce Strategies
The United States
During
the process of E-commerce development, the
government tries not to intervene but manages to create healthy
market and institutional environments.
The government endeavors to promote E-commerce
globalization so as to develop international markets.
The US government strives for the worldwide acceptance of
American E-commerce standards or policies.
The US government reinforces the construction of and
investment in information infrastructure.
The US government encourages its enterprises to develop Ecommerce.
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National EC Strategies
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Overseas E-commerce Strategies
India
Open
up the market
Create
a favorable legal environment
Construct
Extend
Hold
and perfect relevant infrastructure
the application of E-commerce actively
forums and exhibitions on E-commerce
Support
the development and export of E-commerce software
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National EC Strategies
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Chinese E-commerce Strategies
Guidelines of Chinese E-commerce Strategies
To
combine government impetus with enterprise
predominance
To
combine environment creation with application promotion
To
combine network economy with entity economy
To
combine focal point propulsion with coordinated
development
To
combine accelerating development with reinforcing
management
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National EC Strategies
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Chinese E-commerce Strategies
Anticipated Objectives of Chinese E-commerce Strategies
To
shift the drive of economic growth from extensive to
intensive economy, to improve the efficiency and quality of
national economy.
To
meet the challenge of economic globalization, to take the
initiative in development, to enhance international
competitiveness, to strengthen the capacity to deploy resources
across the world.
To
eliminate restraints on fair competition.
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National EC Strategies
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Chinese E-commerce Strategies
Contents of Chinese E-commerce Strategies
To
improve the policies and statutes for the regulation of Ecommerce development.
To accelerate the construction of the credit system,
authentication, standards, payment and modern logistics
To promote the application of E-commerce with the
predominance of enterprises
To advance E-commerce technology and service standards
To enhance public awareness of E-commerce application of
enterprises and citizens
To strengthen communication and cooperation and participate
in international competition
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National EC Strategies
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Chinese E-commerce Strategies
Measures for the implementation of E-commerce strategies
To
reinforce overall planning and coordination
To
accelerate the credit system construction
To
go ahead with the enterprise informationization
construction
To
develop relevant equipment and software
To
strengthen E-commerce publicity
To
strengthen international communication and cooperation
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Enterprise EC Strategies
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Formulation of Enterprise E-commerce Strategies
The Significance for an Enterprise to Formulate its E-
commerce Strategies
The
competition of commerce opportunities has extended
beyond nations and industries.
E-commerce
is not simply to move the business onto the
Internet, but to transform existent operation models.
E-commerce
strategies, in nature, are business-driven instead
of IT-driven.
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Formulation of Enterprise E-commerce Strategies
Designing Principles of Enterprise E-commerce Objectives
To
put priority on the competitiveness indexes of E-commerce
system.
To
base considerations of demands on the global economic
environment.
To
make operational objectives the core of strategy objectives.
To
quantify the value measurement indexes of E-commerce
system.
To
set up a complete responsibility monitoring system.
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Formulation of Enterprise E-commerce Strategies
Components of Enterprise E-commerce Strategies
Enterprise
E-commerce strategies are composed of:
E-commerce
market
technology strategies
strategies
network
marketing strategies
network
advertising strategies
logistic
strategies
product
strategies
security
strategies
human
resources strategies.
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Formulation of Enterprise E-commerce Strategies
Decision on Enterprise E-commerce Strategies
The
following questions need to be considered and answered
Will
it strengthen or weaken the core competitiveness of the
enterprise?
Will
it bring the competition edge to the enterprise and if so,
for how long?
Does
the enterprise have the necessary resources for the
implementation of the strategies?
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Enterprise EC Strategies
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Formulation of Enterprise E-commerce Strategies
Decision on Enterprise E-commerce Strategies
The
decision is also related to the following factors:
Development
life
degree of market economy in the area
cycle of the industry
situations
of the enterprise itself
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Enterprise EC Strategies
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Steps of Enterprise E-commerce Strategy Formulation
An enterprise will go through a series of steps when
formulating its E-commerce strategies.
Proposing
Strategies
Analyzing
the External Environment
Analyzing
the Internal Environment
Identifying
the Gap
Formulating
Strategies
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Enterprise EC Strategies
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Phasic Tasks of Strategy Planning
Initiation of Strategies
The
main tasks of this stage are as follows.
Enterprise
Enterprise
Analysis and Value Plan Report
analysis involves analysis of enterprise prospects, tasks, value
plans, objectives, capacity, restraints, strengths and weaknesses.
Core
Capacities
Core
capacities are the unique combination of certain enterprise
resources and experience.
Prediction
Prediction
is the identification of commercial, technological, political,
economic and other tendencies
Analysis
of Competitors (Competing Business)
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Phasic Tasks of Strategy Planning
Strategy Formulation
Main
tasks in this stage include:
Enterprise
opportunity
Cost-profit
analysis
Risk
analysis, assessment and management
Business
brief
plan
introduction
technological
verifying
setting
audit
competition
objectives
determining
audience
building
teams
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Phasic Tasks of Strategy Planning
Implementation of Strategies
The
main tasks in this stage include
Project
planning
setting
specific project objectives
making
project agenda
determining
Resource
Enterprise
performance assessment objectives
deployment
resources are all the resources, obtainable to or controllable to
and owned by an enterprise.
Project
This
management
is to turn selected projects into reality.
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Phasic Tasks of Strategy Planning
Strategy Assessment
The
completion of strategies will be followed by strategy
assessment.
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Research Methods of EC Strategies
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SWOT Analysis
S stands for strength
 W weakness
 O opportunity
 T threat.
 S and W are internal
factors
 O and T are external
factors.
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SWOT Analysis
Four combinations of SWOT analysis have been identified:
SO
SO
is an ideal strategy aimed at developing the internal
strengths and taking advantage of external opportunities.
WO
WO is to use external opportunities to make up for internal
weaknesses
ST
ST refers to taking advantage of enterprise strengths to
avoid or lessen the impact of external threats
WT
WT is a defensive strategy aimed at reducing internal
weaknesses and avoiding external threats.
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Five-Forces Analysis Model
bargaining power of suppliers
bargaining power of customers
threat of new entrants
threat of substitute products or services
competitive rivalry within an industry
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Five-Forces Analysis Model
Bargaining Power of Suppliers
Generally,
a supplier satisfying the following conditions will
have strong bargaining power
Supplier
business is under the control of enterprises with a
stable market position and free from fierce competition.
The
products of each supplier enterprise are special in some
way.
Suppliers
can conveniently have forward alliance or
integration.
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Five-Forces Analysis Model
Bargaining Power of Buyers
Generally,
a buyer satisfying the following conditions has a
strong bargaining power:
The
total number of buyers is limited, and the purchase
quantity of each buyer is bulky.
Seller
business is composed of many small- scale
enterprises.
Buyers
mainly purchase a standardized product and it’s
economically feasible to order from more than one seller.
Buyers
have the ability to achieve backward integration
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Five-Forces Analysis Model
Threat of New Entrants
The
degree of threat posed by competitive entrants depends
on two factors: the difficulty in entering a new line and the
reaction of existent enterprises to new entrants.
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Five-Forces Analysis Model
Threat of Substitute Products
the
presence of substitutes open to clients will limit the pricing
and profit potentials of an existent enterprise
the
invasion of substitute products will force an existent
enterprise to raise its product quality, or lower its cost and
hence its price, or make its product special
the
competitiveness of substitute product makers is decided
by buyer switching cost
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Five-Forces Analysis Model
Competitive Rivalry within an Industry
Most
enterprises in a business have interlocked interests. The
competition strategies of an enterprise are aimed at gaining
advantages over its competitors, so conflicts and confrontations
will ensue and rivalry will arise among existent enterprises,
which are shown in price, advertising, product introduction and
after-sale service. The intensity of rivalry is related to many
factors.
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PEST Analysis
Politics
Economy
Society
Technology
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PEST Analysis
PEST Factors
Politics
Is
Factors
the political situation stable?
Will
state policy change to strengthen enterprise supervision
and collect more taxes?
What
is the market ethical standard of the government?
What
is the economic policy of the government?
Is
the government concerned about culture and religion?
Has
the government signed any trade agreements with other
organizations such as EU, NAFTA and ASEAN?
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PEST Analysis
PEST Factors
Economic
Factors
Questions
to be analyzed include
①
Interest rate.
②
Rate of inflation and employment rate per capita.
③
The long-term expectation of GDP per capita.
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PEST Analysis
PEST Factors
Society
Factors
Which
What
religion has the largest number of disciples?
are people's attitudes toward foreign products and
services?
Will
language barrier affect product promotion?
How
much leisure time do consumers have?
What
are the respective roles of men and women in the
country?
Do
people in this country enjoy a long life span? Are the
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PEST Analysis
PEST Factors
Technology
Has
Factors
technology lowered costs of products and services and
raised quality?
Has
technology provided more innovative products and
services, such as online banking and a new generation of cellphones?
How
has technology changed the distribution channels,
such as online bookstores, airline tickets and auction?
Has
technology provided a brand-new channel for an
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to communicate
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with
its consumers,
such
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PEST Analysis
Factors that Influence PEST
P,
or politics, refers to political powers, laws and regulations
that exert actual or potential impact on an organization’s
operation
E, or economic, refers to a country’s economic system,
economic structure, industrial pattern, resource conditions,
development level and future economic tendencies.
S, or society, refers to factors such as ethnic characteristics,
cultural traditions, values, religion, education and customs.
T, or technology, includes not only revolutionary inventions,
but also the emergence, development trends and application
foreground of new technologies, techniques, materials and
tendencies that are concerned with enterprise production.
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BCG Matrix
It distinguishes four business combinations:
question
marks (high growth rate, small market share)
stars
(high growth rate, big market share)
cash
cows (low growth rate,
big market share)
dogs
(low growth rate, small
market share)
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BCG Matrix
Basic Principles
This
model recombines enterprise products by their marketing
growth rate and market share. On the coordinate axis, the
ordinate axis represents enterprise marketing growth rate, while
the horizontal axis stands for market share, each with 10% and
20% as the midpoint distinguishing low and high.
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BCG Matrix
Operational Steps
Calculate
the marketing growth rate and market share of each
product.
Absolute market share of a certain product in an enterprise =
the sales volume of this product in the enterprise/ the total
sales volume of this product on the market
Comparative market share of a certain product in an
enterprise = the market share of this product in the enterprise/
the market share of this product in the biggest market share
holder(or of a certain competitor)
Draw the four quadrant diagram
With 10% marketing growth rate and 20% market share as
the boundary between high and low, divide the axis into four
quadrants.
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BCG Matrix
Strategic Countermeasures
Stars
“Stars”
are products that have a high growth rate and big
market share. Such products have the potential to become
“cash cows” for an enterprise, so investment needs to be
increased to support its rapid growth.
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BCG Matrix
Strategic Countermeasures
Cash
Cows
“Cash
cows”, or huge-profit products, are those with a low
growth rate but a big market share. Financially, such products
have a large sales volume, high profit rate and low debt ratio.
Cut
down facility and other investments.
Operating
like an oil mill, try to gain the biggest profits possible in a short
time and provide capital for other products.
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BCG Matrix
Strategic Countermeasures
Question
Marks
“Question
marks” are products with a high growth rate but a
low market share, indicating both market opportunities and
prospects and problems in marketing.
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BCG Matrix
Strategic Countermeasures
Dogs
“Dogs”,
or declining products, have a low growth rate and
small market share. Financially, it has a low profit rate and a
high debt ratio.
First,
reduce the production and withdraw gradually. Give up those with a
very low growth rate and market share immediately.
Second,
Third,
allocate the remaining resources to other products.
reorganize the product series.
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Summary
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The
components of E-commerce strategies, viewed from the
temporal perspective, are introduction, formation,
implementation and assessment, while viewed from the spatial
perspective, are objectives, policies, strengths and measures.
The
types of E-commerce strategies can be classified
according to different criteria. They can be categorized
according to such criteria as industries, nature and subjects,
namely subjects of government, organization and enterprises.
To
formulate E-commerce strategies is to meet the needs of the
transformation of their operational modes, increasing returns
and the competitions between enterprises. Enterprises can take
these steps in formulating strategies: defining the objectives,
analyzing the environment, identifying the gaps and formulating
the strategies.
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Summary
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SWOT
analyzes the conditions of an enterprise, specifically, its
Strength, Weakness, Opportunity and Threat.
Five-Forces
model analyzes the five sources of competition:
Bargaining power of suppliers and buyers, Threat of new entrant,
Threat of substitute product or services and Intensity of
competition rivalry to make clear the competition situation of an
industry. Through this analysis, a corporation can be more
aware of its edge over its rivals.
PEST
analyzes the background and situation of an enterprise
from the four aspects of Politics, Economy, Society and
Technology.
BCG
analyzes the business types of an enterprise by
classifying the products into 4 types: Question Marks, Stars,
Cash Cows and Dogs.
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