E-business strategies refer to the plans and techniques used by organizations to conduct business activities online, leveraging the power of the internet, technology, and digital media. These strategies are designed to help businesses achieve their goals by optimizing their online presence and effectively utilizing digital resources to create value for their customers.
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There are various e-business organizations, ranging from established brick-and-mortar setups to those born on the Internet with additional revenues and earnings. Irrespective of its nature, each e-business organization needs to formulate its e-business strategy to define its objectives, goals, and operational activities. An e-business strategy can be defined as a corporate strategy that interconnects various business plans of an organization for all major functions, such as marketing and other strategic projects.
To formulate its e-business strategy, an organization needs to evaluate three factors, which are explained as follows:
A strong e-business strategy addresses three fundamental aspects of an organization.
The Chief Executive Officer (CEO) and other senior executives in an organization formulate the e-business strategy of the organization according to the organizational mission and objectives.
After drafting the e-business strategy, the organization needs to develop the technological infrastructure to implement the e-business strategy.
Finally, the organization should ensure that its staff can understand and deploy an e-business solution in the case of a crisis. It can implement organizational learning through shared insights, knowledge, and experience.
An organization formulates its e-business strategies based on some objectives.
An e-business organization adds value by providing better-quality products and services to customers. To do so, the organization arranges strategies to obtain information related to the market, customer orientation, and preferences. Some of the techniques used to implement these strategies are:
An e-business organization uses some strategies to reduce costs and increase revenue. For this purpose, it can increase the efficiency of business processes. It can reduce production costs by creating, marketing, and delivering products or services with fewer resources than before. To do so, the organization can reduce paperwork, decrease the staff required to run electronic processes through automation, and improve internal and external communications.
An e-business organization is vulnerable to risks and fraudulent practices caused due to exposure to the Internet. These risks include information risks, technology risks, and other business risks. To prevent and avoid these risks, an e-business organization should create a secure system by:
Due to increasing competition, an e-business organization must innovate and offer new products or services. To remain competitive and innovative, the organization can build strategies to:
Just like any traditional organization, an e-business company should expand its customer base. For this purpose, the organization can focus on the following strategies:
The aforementioned objectives drive e-business strategies and lead to the development of various other objectives.
E-business strategies are based on objectives that an organization aims to achieve. After identifying its organizational objectives, an e-business organization should integrate its strategies according to these objectives. In other words, the organization should plan strategies to provide direction and guidelines to achieve these objectives. Table 2.1 describes the relationship between objectives and strategies as follows:
| Organizational Objectives | E-business Strategies to Achieve these Objectives |
|---|---|
| To earn revenue from new markets | Introduce the e-business model in these new markets and increase promotion and advertising |
| To ensure customer retention | Improve aftersales services and offer special discounts |
| To improve the sourcing of raw material | Develop an e-procurement system |
| To develop new products and services | Use data mining and market analysis facilities |
| To increase the distribution network | Integrate the extranet of partners and promote paperless transactions |
While developing an e-business strategy, an organization should also develop a strategic plan. A strategic plan defines performance goals in terms of time, cost, and benefits against which its success can be measured. There is a cost involved in implementing any strategic plan. The organization can evaluate the return on investment after a certain period.
The most important benefit of a strategic plan is that it enables an organization to identify the problem areas and focus on their improvement actions, without wasting any time, money, and effort. For this purpose, the organization can implement a performance measurement system, which includes:
Since any e-business strategy requires a certain cost in planning, development, and implementation, an organization should determine its feasibility before implementation. This helps the organization determine the appropriate cost-benefit ratio of a strategy.
An organization typically incurs the following types of costs in formulating an e-business strategy:
It is essential for an organization to identify and estimate the costs before implementing a strategy in order to maximize the benefits and reduce any possible losses.
After estimating the costs that will be incurred in implementing e-business strategies, an organization should compare these costs with the expected benefits from the strategy. These benefits are the accomplishment of objectives, such as the addition of value, reduction in cost, management of risk, innovation in products and services, increase in revenue, expansion of customer base, and new product development.
An organization needs to first calculate the expected revenue generated by implementing strategies. It can do so by separately assessing the potential revenue from each target customer group. To do so, it can use market research and trend analysis techniques to evaluate how much revenue or sales per customer the organization can expect to generate.
To determine the expected revenue, the organization needs to find the following information:
The formula to calculate the estimated revenue in a year for an organization is:
Estimated revenue in a year = Number of customers × Average sale per customer × Number of sales per customer
After calculating the estimated revenue in a year, the organization can compare it with the cost of implementing strategies.
There are certain strategies where cost is not a factor to determine their benefits because of the necessity to implement them. Such strategies are meant for emergencies.
Before implementing an e-business strategy, an organization should identify its value proposition to determine if the strategy is core to its success. After that, the organization must design e-business strategies that fit its overall organizational strategy. To do so, it can use cost-benefit analysis.
An organization can compare the cost and benefit of implementing an e-business strategy by calculating its Return on Investment (ROI). ROI is a tool used for cost-benefit analysis. It is a performance measure used to assess the success of an investment.
In conclusion, an organization implements e-business strategies by integrating them with its business objectives. After determining strategies, the organization evaluates its benefits against the cost of implementation using the ROI measure. Finally, the organization adopts a strategy with a higher ROI.
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