What is E-Business Strategy - Essay Example

?[Your full October 31, E-Commerce What is E-Business Strategy? Internet has served as a very sophisticated and intelligent tool for business observers, investors, and world market, providing a better means of strategic positioning than ever before. E-business involves much more than just buying and selling of goods and services. It also includes transactions with customers, investors and within the organization; thus, there is need for high end business strategies that are able to make e-business successful and productive. Kourdi defines business strategy as “the plans, choices and decisions used to guide a company to greater profitability and success” (3). In e-business terms, we can mould this definition to state that e-business strategy is the plans, choices and decisions that are used by the business owners to guide their electronic transactions with other businesses, customers, suppliers, executives, partners and investors to achieve high end productivity in the virtual world. If the e-business owners are able to implement clearly focused strategy, they are then able to provide commercial success to their virtual businesses. On the other hand, if the strategy is faulty, this leads to total destruction of the company in the short or long run. Therefore, it is important to understand the importance of e-business strategy which is quite different from the real world business strategy. It is also important to differentiate between the strategic plans and otherwise decisions because many businessmen have the “tendency to label every plan and decision strategic when most are about implementing strategy rather than setting it”, according to Kourdi (3). Successful E-Business Strategy- An Example How and why e-business strategies are successful is understood when the results and outcomes are observed. Dave mentions in his book that when the e-business owner knows in which direction he will drive his company and what kind of organizational culture he is going to impart to his e-business so as to enhance the productivity and attract e-consumers efficiently, this enables them to lay down such a strategic plan that helps them achieve their mission. E-business strategies are successful because they tend to clarify the mission statement and the vision of the e-company thus resulting in goal-based and productive performance of the company in the cyberspace. Dave mentions in his book many examples of successful e-businesses out of which a very interesting one is that of the Dow Chemical (p.249). According to Dave, Dow chemical is the result of implementation of a successful e-business strategy which has been formed by “combining use of their own site with independent e-marketplaces to communicate with existing and potential customers” (p.249). This strength of Dow Chemical’s e-business strategy won it many industry awards too. Another example is that of the Worldwide Universities Network, “which provides collaboration for research and e-learning facilities” (Dave, 2008, p.285). This e-business started in 2000 with the ambition of providing good quality distance learning around the globe especially in China and Korea. The suppliers included countries like the Unites States, United Kingdom, Australia and New Zealand, according to Dave. These countries united together so that they could raise enough funding together in order to market the service and attract a wider audience. This was not possible if they acted individually or without partnership. This strategy aimed to help the learners to avail cheaper education while remaining at their places. Learners could also avail a wider variety of specialized courses due to providers from different countries. Till now the strategy was fine but, since the idea of distance learning through e-business was ahead of time, so this e-business proved to be a “dot-com disaster for the universities involved” (p.285). This proves that a successful e-business strategy must consider the factor of correct timing because timing error leads to e-business failure in the long run. Why E-Businesses Fail? A weak and faulty e-business strategy is the primary most reason why an e-business fails despite all its other efforts and good ambitions. Chaffey Dave lists reasons in his book regarding why some e-businesses fail. He quotes Miller who studied failures of e-businesses and states that Miller believed that “the biggest mistake companies made was to ‘massively overestimate the speed at which the marketplace would adopt dot com innovations’ (251). The companies also assumed that “new innovations would rapidly displace existing product offerings” (Dave 251). For example, as Dave states, companies assumed that online grocery shopping would rapidly take the place of conventional means of grocery shopping. Thus first of all, there were timing errors. Then there was lack of innovation or lack of creation which Dave described as copying of existing models by the new services being provided over the internet. This lack of innovation leads to distracting the e-consumers. Moreover, offering of free services also became a reason for the failure of e-businesses because when a good service was provided for free, it limited the opportunity for paid services to achieve. A consumer enjoying a good free service never opted to pay for a similar but little better service. Dave gives the example of Webshots.com which is a company website offering free wallpapers and screensavers but wished to gain revenue from massive downloads. Over-ambition is another reason for failure in which the e-businesses exaggerate their demands and growth to attract the e-investors. Other than these factors, poor situation analysis, weak objective setting, poor strategy definition, and faulty implementation of the strategy are other main reasons for the failure of e-businesses. Case Study Discussion- Boo hoo Boo.com is the largest European dot com failure, as described by Dave in his book (252). The closing of Boo.com throws light on the big mistakes that an e-business can make. The case study makes us understands the importance of the e-business strategy and its proper implementation. Founded in 1998 by Swedish entrepreneurs and named after the filmstar Bo Derek, Boo.com had the mission to become the world’s largest online sports retailer starting from Europe and America. The target consumers were the young self-conscious people interested in sports and fashion. To re-create the consumer experience, a virtual salesperson called Jenny and later Miss Boo was created guiding the consumers through the website. Problems with implementing the new technology and heavy finances lead to the delay of website development and launch. “A monthly cost of more than $500,000” was being observed which weighed heavily on the budget (Dave). In 1990s when the users had no fast means to download the pages, the download speed became an issue. After all funding and investing was done, the founders of the company now needed the personnel yet to be recruited to carry out individual tasks. After the recruitment of personnel and assignment of tasks, the classical channel conflicts arose which involved difficulty in attracting fashion and sports brands to offer their goods through Boo.com. Investors refrained from online bargain bucket where pricing issues also existed. However, investors invested but the company remained unable to clarify its goals. This resulted in low conversion rate and negative PR once the website was launched. Sales results were also disappointing. Further investment was needed. Boo.com closed in 2000 when no further investment was raised to meet the costs. Conclusion Internet has been able to put forward a lot of opportunities for e-businessmen to conduct their e-commerce and other electronic transactions around the globe. This has given rise to a great number of start-up and brick-and-mortar e-businesses. The development of an e-business requires extensive research and strategic planning in order to maintain its integrity in the cyberspace. A solid and straight forward strategic plan is required right from the development of a website to interacting with customers and investors. A successful strategic plan must have clearly considered and carefully defined goals and objectives even before the website is developed. Weak strategies result in failure of e-businesses, like the end of Boo.com. Works Cited Dave, Chaffey. E-business and E-commerce Management. USA: Prentice Hall, 2008. Kourdi, Jeremy. “What is Business Strategy?” Business Strategy: A Guide to Taking your Business Forward. USA: John Wiley and Sons, 2009. Read More