Business Strategies Over Web

BUSINESS STRATEGIES OVER WEB The World Wide Web has literally burst upon the businesses in recent times. With the Web doubling in size every 53 days or so, the growth is biological. With a technology as recent and fast proliferating as this one, paradigms often lag behind action, and the hype. Value chain analysis helps businesses identify specific areas where the Internet can add value and the transaction cost analysis provides a basis for why value is added as transactions move across boundaries in value chains.

Introduction The advent of the Internet as a viable business tool is likely to have the same impact on businesses and their information systems as the spread of personal computers during the early 1980s. The two important aspects of this technology are strategies and economics of doing business on the Internet.

From Strategic Thinking to Strategic Planning Even before the businesses realized the potentials of the Web to attain competitive advantage, they realized the strategic importance of information systems and planning for such systems. Strategic Information Systems Planning (SISP), is the analysis of a corporation's information and processes using business information models together with the evaluation of risk, current needs and requirements

Characteristics of strategic IS planning which help in providing a framework for doing business on the Web are: • Main task: strategic/competitive advantage, linkage to business strategy. • Key objective: pursuing opportunities, integrating IS and business strategies • Direction from: executives/senior management and users, coalition of users/management and information systems. • Main approach: entrepreneurial (user innovation), multiple (bottom-up development, top down analysis, etc.) at the same time.

Strategic Information Systems Planning SISP with or without the web, is not an easy task because such a process is deeply embedded in business processes. These systems need to cater to the strategic demands of organizations, i.e., serving the business goals and creating competitive advantage as well as meeting their data processing and MIS needs

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Two Frameworks for Strategic Systems Planning SISP methodologies are classified into two categories: impact and alignment. Impact methodologies help create and justify new uses of IT, while the methodologies in the "alignment" category align IS objectives with organizational goals. 1

Benefits of doing business over the Web • • • •

Electronic alternative to the real marketplace Viable and more efficient Low entry barriers Fast and innovating

Value Chain - A Framework For Internet Strategy Formulation • Value chain analysis allows the managers to separate the underlying activities a firm performs in designing, producing, marketing and distributing its product or service.

• Value Chain Analysis provides an appropriate framework for planning Web based businesses because it deals with the value added aspect of a system • The concept of value chain is to treat every firm as a collection of activities that are performed to design, produce, market, deliver, and support its product with information technology being one major support activity for the value chain. • Information systems technology is particularly pervasive in the value chain.A firm that can discover a better technology for performing an activity than its competitors gains competitive advantage

A Typical Value Chain

Internet positively affects all parts of the value chain of a firm • Inbound logistics -- fast, inexpensive, reliable connection to suppliers. • Operations – Intra-firm connectivity-- Lotus Notes like connectivity through the Web -- customer participation, quicker response to changing needs. • Outbound logistics -- fast, inexpensive, reliable connection to suppliers. • Marketing and sales -- greatest value added in this area at present. Cost of advertising a product on the Web is just a fraction of the cost of a newspaper advertising.

• Service -- high impact, similar to that on marketing and sales The Internet also affects the Support activities like Corporate structure, Human resources, Technological development and Purchasing positively. Some examples of such positive impact of the Internet are: • Corporate structure -- flatter organizations, disappearing middle layer, whole organization becomes externally oriented. • Human resources -- Internet as a vast training and recruiting tool kit. • Technological development -- faster, richer interaction with the rest of the world, sharing of information, software. Collaborative advantage. • Purchasing -- similar advantages as in marketing.

Conclusion The Web offers unprecedented and unique opportunities in supporting existing businesses as well as in transforming them. Since this technology is new, and evolving at a fast pace, as yet there are no stable models for understanding the business uses of the We The issue of economics of the Web-based businesses is intimately related to the issue of information being a factor of production, and increasingly gaining prominence over other factors of production as computing costs go down, networks become wider and more stable and users become more computer friendly.