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Dickson K.W. ChiuPhD, SMIEEE, SMACM, Life MHKCS

Jelassi & Enders: Chapter 6

COMP7880: E-Business StrategiesSustaining competitive advantage

Strategyoptions

Externalanalysis

Internalanalysis

Sustaining competitive advantage

Internal organisation

Implementation

Exploring new

market spaces

Interaction with suppliers

Interaction with

users/customers

Creating and

capturing value

Strategic analysis

Strategy implementation

3

4

5

6 7

8

9

10

11

13

E-business strategyMobile e-commerce strategy12

Opportunities/ threats

Strengths/weaknesses

Our Roadmap

Strategy formulation

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Dynamic e-business strategy model

Source: Adapted from description in Kalakota and Robinson (2000)

Consistency ≠ Static

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•Withhold information about profitability

•Forgo short-term profits for long-term success•Deterrence: signal promise of retaliation

•Make commitments to make threat credible

•Pre-emption: exploit all available investment opportunities/secure access to resources

•Tacit knowledge: rely on skills, processes or culture/resources that are implicit

•Causal ambiguity: rely on a complex, multidimensional mix of sources•Base differentiation on resources that are rare/immobile/contracted

•Exploit-time lags

Barriers against successful imitation

Must be able to identifycompetitive superiority1

Must be willing to imitate2

Must be able to understand sources of competitive advantage

3

Must be able to build/acquirenecessary resources4

Requirements for successful imitation

Imitator Incumbent

Source: Adapted from H. Hungenberg (2006), p. 251.

Barriers against imitation

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Time

Disruptiveinnovations

Most demanding customers

Perfo

rman

ce

Performance demanded by mainstream customers

Least demanding customers

Sustaininginnovations

Source: Adapted from C. Christensen and M. Raynor (2004), p. 33.

Disruptive innovations meeting demands of mainstream customers

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Rigid plan,high commitment Flexible plan,high commitment

Rigid plan,low commitment Flexible plan,low commitment

Threat

Framing during implementation

Fram

ing

durin

g re

sour

ce c

omm

itmen

t

Opportunity

OpportunityThreat

Overcoming organizational rigidities

Source: Adapted from C. Gilbert (2006), p. 152COMP7880-SCA-6

Determine threat of a disruptive innovation

Non-served customers

Over-served customers

Disruptiveness to competitors

Are there customers at the bottom end of the market who would buy the same product with fewer features for a lower price? Is it possible to build a profitable business model while keeping down prices?Is the innovation disruptive relative to all relevant rival companies that are currently competing in that market?

Is there a large group of people who previously did not have the money or the skills to purchase the product themselves? Did customers have to go to a central, inconvenient location to purchase the product?

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E-business strategy changes based onSWOT Analysis

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Dealing with disruptive innovationsNot responding at allMigrating/harvesting

Defending

Straddling

The migration strategy is based on a conscious decision to ‘milk existing resources’.When defending their existing markets, incumbents need to improve their business model so that they are either able to lower their prices or increase the benefits they provide to their customers

Not responding is quite often based on ignoring or not properly assessing the underlying facts.

Switching

Leapfrogging

This strategy attempts to combine the best of both worlds. While this option might seem to be the most promising at first sight, it also entails major risks. This option entails a complete switch to the new business model. Yet, it is also the riskiest of all options, since there is always a high degree of uncertainty associated.Through this approach, a company tries to out-substitute the substitution. From a long-term strategic perspective, this option is highly attractive, yet it requires a very deep understanding of how technology and market demand will evolve.Source: See P. Ghemawat (2005), p. 106. COMP7880-SCA-9

Alternative positioning for services / products / price

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