Exhibit 2.2 The e-business strategy framework consists of three main steps

1. Exhibit 2.2 The e-business strategy framework consists of three main steps Mobile e-commerce strategy 12 E-business strategy Strategic analysis Strategy formulation Strategy implementation 3 Externalanalysis 9 5 Strategyoptions Internal organisation Opportunities/ threats 6 10 7 13 Interaction with suppliers Implementation Sustaining competitive advantage Exploring new market spaces Strengths/ weaknesses 4 Internalanalysis 11 8 Creating and capturing value Interaction with users/customers

2. Chapter 3: External analysis: The impact of the web on the macro-environment and on the industry structure of e-business companies After this session you should be able to address the following topics: • Analyse trends in the macro-environment and explain their implications for e-business ventures. • Understand the value of the five forces industry framework for the analysis of industry attractiveness. • Explain the key characteristics of the co-opetition framework and show how it expands the five forces industry framework. • Define industries, segment and target markets for e-business applications.

3. Exhibit 3.1 E-business companies are impacted by their industry and macro-environment Remote Macroenvironment Legal & politicalenvironment Economicenvironment Industryenvironment Customers Naturalenviron-ment Techno- logicalenvironment Company Competitors Socialenvironment Source: Adapted from H. Hungenberg (2006), p. 90.

4. Exhibit 3.2 Five forces influence the attractiveness of an industry Potential entrants Threat ofnew entrants Bargaining powerof buyers Industry competition Suppliers Rivalry amongexisting firms Buyers Bargaining powerof suppliers Threat ofsubstitutes Substitutes Source: Adapted from M. Porter (1998), p. 4.

5. Exhibit 3.3 The Internet has a profound impact on the five forces that influence industry attractiveness (–) Reduces barriers to entry such as the need for a sales force, access to channels and physical assets. (–) Internet applications are difficult to keep proprietary from new entrants. (–) A flood of new entrants has come into many new industries. Barriers to entry Bargaining power of suppliers Bargaining power of channels and end users Rivalry among existing competitors (+) Eliminates (–) Shifts powerful bargaining channels or power to improves consumers. bargaining (–) Reduces power over switching traditional costs. channels. (–) Reduces differences among competitors as offerings are difficult to keep proprietary. (–) Migrates competition to price. (–) Widens the geographic market, increasing the number of competitors. (–) Lowers variable cost relative to fixed cost, increasing pressure for price discounting. (+/–) Procurement using the Internet tends to raise bargaining power over suppliers, though it can also give suppliers access to more customers. (–) The Internet provides a channel for suppliers to reach end users, reducing the leverage of intervening companies. (–) Internet procurement and digital markets tend to give all companies equal access to suppliers, and gravitate procurement to standardised products that reduce differentiation. (–) Reduced barriers to entry and the proliferation of competitors downstream shifts power to suppliers. Threat of substitute products or services (+) By making the overall industry more efficient, the Internet can expand the size of the market. (–) The proliferation of Internet approaches creates new substitution threats. Source: Reprinted from M. Porter (2001)

6. Positive interactions in industry • Joint setting of technology/ industry standards • Joint developments • Joint lobbying • “Complementors” (GM, Ford, Chrysler  Covisint) (Co-opetition - Companies that at the same time co-operate and compete with each other)

7. Exhibit 3.4 The value network outlines the main players in the co-opetition framework Supplier Firm Competitors Complementors Buyer Source: Adapted from A. Brandenburger and B. Nalebuff (1998), p. 17

8. Exhibit 3.5 The e-business market segmentation matrix classifies different types of interaction between different actors Buyer/ recipient Consumer/peer/citizen Business Government Consumer-to-consumer (e.g. ebay) Peer-to-peer (e.g. Napster) Citizen-to-citizen (French presidential election 2007) Consumer-to-business (e.g. Amazon.com) Citizen -to-government (e.g. online tax return forms) Consumer/peer/citizen Business-to-consumer (e.g. Ducati.com) Business-to-busines (e.g. Covisint.com) Business-to-government (e.g. online filing of corporate tax returns) Supplier/ provider Business Government-to- citizen (e.g. information about pension statements of citizens) Government-to-business (e.g. information about most recent legal regulations) Government-to-government (e.g. exchange of diplomatic information) Government

9. In order to target a specific market segment efficiently, the segmentation needs to fulfil four requirements Measurable It should be possible to measure the size of a defined segment in order to determine its purchasing power and its peculiar characteristics Substantial A segment should be large enough to justify that it is addressed separately Differentiable The segments must be exclusive and react differently to a variety of marketing approaches Actionable It should be possible to develop sales and marketing approaches to serve specific segments. Source: Kotler, (2005).

10. Exhibit 3.6 Segmentation variables are the basis for strategic customer analysis Segmentation type Criteria to be considered Geographic segmentation Geographic regions (e.g. continents, countries, states) Demographic segmentation Age, gender, income, life style Psychographic segmentation Personality type and personal interests (e.g. cash-rich, time-poor) Behavioural segmentation Purchasing frequency, usage patterns, etc. Source: Kotler (2005).

11. Exhibit 3.7 Target-market selection depends on the number of markets served and the number of different products and services offered Full market coverage (e.g. Nordea Bank, Amazon.com, Tesco.com) Product specialisation (e.g. Spreadshirt M1 M2 M3 M1 M2 M3 P1 P1 Many P2 P2 P3 P3 Selective specialisation, (e.g. Bertelsmann) M1 M2 M3 Number of market segments served (scale) P1 P2 Single segment concentration (e.g. Ducati, Porsche) P3 Market specialisation (e.g. ING DIRECT) M1 M2 M3 M1 M2 M3 P1 P1 P2 P2 Few P3 P3 Number of different products and services offered (scope) P = Product M = Market Few Many Source: Adapted from D. Abell (1977); “Strategy and Structure: Public Policy Implications” in Proceedings of Marketing and the Public Interest. Cambridge, Mass.: MarketingScience Institute.

12. Team Assignment – (Due in class – 1 week from today) PowerPoint presentation (Max 15 minutes) Choose a firm that engages in E-commerce. • Identify where the firm competes in the e-commerce segmentation matrix (B2B/ B2C…) (10% max grade) • Identify the players in the five forces model (40 % max grade) (minimum of 3 relevant players in each area) • Identify the players in the co-opetition framework (30 % max grade) (minimum of 3 relevant players in each area) • Use figure 3.7 in the book to identify the firm’s targeting strategy – explain why. (20% max grade)