Submitted By | Tanmay And Elise

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STRATEGIC E BUSINESS

Strategic E business Assignment

Tanmay and Elise

Table of Contents
LO5A Question 1: Develop a FOUR step e-business strategy for the owner of City......................2
Analyse the external and internal environments.............................................2
Select the e-business strategy........................................................................3
Implement the e-business strategy.................................................................4
Evaluate the success of the e-business strategy.............................................4
5B Question 2: Discuss TWO tools to support the e-business strategy formulation process in the
above case study......................................................................................................... 5
SWOT Analysis.................................................................................................... 5
Pest Control........................................................................................................ 6
LO5C Question 3: Discuss TWO alternative strategy which City Flowers can employ to achieve ebusiness capability....................................................................................................... 6
LO6B Question 4:Explain the SIGNIFICANCE of the Tesco Information Exchange system (TIE) to
support supply chain management and the value chain..........................................................7
LO6B Question 5:Explain the SIGNIFICANCE of the Engine Condition Monitoring (ECM) IT
system to support supply chain management and the value chain to Rolls Royce..........................8
LO6B Question 6:Explain the SIGNIFICANCE of the IBMs RFID infrastructure software system to
support supply chain management and the value chain in Airbus............................................10
L07A Question7:Identify THREE benefits and TWO risks of e-procurement which Ford faces in its eprocurement strategy.................................................................................................. 11
LO7C Question 8:Analyse the initiatives undertaken by Carl Zeiss and its suppliers to integrate their
business processes..................................................................................................... 12
LO7C Question 9:Assess TWO options for integration of inter-organizational information systems. 14
REFERENCES......................................................................................................... 15

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CASE STUDY 1

LO5A Question 1: Develop a FOUR step e-business strategy for the owner of City
Having access to the Web is essential for SMEs (Small to Medium Enterprises) as owning a
fax machine or a telephone. And though SMEs usually have limited material and human
resources at their disposal, successful e-business solutions are still within the reach for city
flowers. By thinking strategically about e-business, the owner and IT support can select
technological solutions that support the companys business strategies and create value for
the shop and their clients.
For city flowers especially adopting an e-business model will definitely make significant
changes in their business processes and in the way they interact with customers and suppliers.
Failure to plan for these changes could threaten the existence of their online presence is why
strategic planning is so important.
The e-business strategic management process is based on the traditional model of strategic
management. It is a systematic process consisting of four interrelated steps:

Analyse the external and internal environments

Select the e-business strategy
Implement the e-business strategy
Evaluate the success of the e-business strategy

Analyse the external and internal environments

In the traditional strategic planning model, managers identify their companys strengths and
weaknesses, as well as the obstacles and opportunities in their business environment. They
are then ready to make strategic decisions that seek to balance their companys competencies
with the business opportunities around them. This step is equally crucial for e-business
planning.

The main barriers to e-business adoption

A wait-and-see attitude and scepticism on the part of clients and partners can put up
barriers that discourage e-business solutions. In other cases, the nature of the
companys product can make it more difficult to introduce e-business. For SMEs
located outside major urban centres, it is sometimes hard to find simple, economic
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solutions for distributing the products they sell on-line. The Web makes it possible for
City flowers to increase their customer base, but it cannot solve all the logistical
difficulties related to the sale. However, studies indicate that by far the most
important obstacle to e-business adoption among small- and medium-sized enterprises
was lack of financial resources. The size of the investment and the long and
sometimes uncertain payback period frequently cause SMEs to postpone investing in
e-business.

What conditions enable e-business adoption?

When developing their e-business strategic plan, city flowers must take into account
the number and nature of external factors that are compatible with the adoption of ebusiness. Depending on the industry, government financing may be an incentive for
adopting e-business. Other proven incentives are the time spent with SMEs to
understand their needs and the investments in technological infrastructure made by
the leaders of sector-based associations and the funding and technological expertise of
partners such as government agencies and large corporations.

Select the e-business strategy

The selection of an e-business strategy requires solid knowledge of how e-business can create
economic value for the firm. Successful SMEs know how to identify the scope of their
activities and determine which products, clients and geographic markets they should target.
They also know how to set clear and measurable goals.

How can e-business create economic value?

The ultimate goal of any strategic decision is to create value. Efficiency is mainly
derived from lower costs due to faster transactions, increased automation of the
companys operations, and the ease with which clients can research relevant
information. By locking in to a particular, reliable technological solution, city flowers
gains approval and trust among its client base. Complementarities are mainly
concerned with the bundling of resources and technological capabilities, as well as the
bundling of products and services, of various partners in one electronic network.

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Using e-business allowing city flowers to reduce costs and find new clients. Value can
also be created through complementarities and lock-in.
Implement the e-business strategy

After defining the targeted client base and geographic markets for new or traditional
products, city flowers should plan the implementation of their e-business and decide what
type of technological solution and supply chain to adopt.

What are the most suitable technological solutions?

City flowers have a wide range of technological options from which to choose. Online study
shows that SMEs usually develop Web sites and e-shops that complement their products and
services, and fulfil their need for identity and independence. SMEs in plastics and printing
often are reluctant to embrace technological solutions that impose standardization on the
entire industry. In fact, portal solutions, virtual communities and e-mails are usually not
attractive to SMEs because they do not support the SMEs need for identity and
independence which is what city flowers should work towards to. Some businesses prefer to
involve other retailers or partners in their technological solutions, and to devise a technical
format that is tailored to the specific operations of their association or sector.

What mode of e-business procurement should be chosen?

The procurement model that city flowers select needs to complement the strategic importance
of the project and the in-house availability of resources to develop such solutions. Businesses
that enter into partnerships generally seek a partner (consultant or service provider) who can
supply the expertise they lack to develop the new information system. However, most SMEs
prefer to hire freelance programmers, because a partnership arrangement with a consulting
firm is often expensive and time-consuming.

Evaluate the success of the e-business strategy

After acquiring a sound understanding of how to create economic value with e-business and
determining the owners desired positioning, IT support must finalize objectives relating to
sales growth, cost reduction and profitability. They must also select the indicators that will
enable them to assess the success of the e-business solution-scorecards showing financial,
client, internal process and learning and growth indicators can be vital tools.

Indicators for evaluating e-business success

Overall, the business uses a small number of unsophisticated indicators for evaluation of the
success of the e-business. They placed importance on the profitability of transactions, and
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measured performance by analysing additional sales volume and the savings realized by
using e-business. Continuous monitoring, documentation and reviewing are vital for stay
competitive against other online florist.
5B Question 2: Discuss TWO tools to support the e-business strategy formulation
process in the above case study.
SWOT Analysis

STRENGTH

WEAKNESS

OPPORTUNITY
with venturing
into e business ,
city flowers can
increase
potential clients
advantage of
selling their
product s online
to a larger
target market

city flower is
currently an on
going business

there is shortage
of resources in
the organisation

further benefits
due to brand
recognition

there is a
shortfall of
online presence
against their
competitior

wide range of
products
available not
limited to
flowers

higher prices
than city
flowers the
competitor

able to reduce
their labour cost

potential clients
look for better
deals and
product on
other online
competitors

networking
with customers
and suppliers to
gain trust and
continuous
business

employment are
sufficiently
staffed and
sales is enough
to cover cost

THREAT
lack of
competitive
advantage
against preexisting online
florist
there are no IT
administator to
monitor sales
online
lack of reliable
payment
methods such as
paypal or
Amazon
payments
unabale to
deliver to
certain
countries due to
trade barriers

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Pest Control

POLITICS

ECONOMIC

SOCIAL

TECHNOLOGY

aging population
resulting
implications in
areas such as
spending

internet usage,
mobile usage and
mobile
advertising

intricate law on
privacy and data
storage

change in interest
rates or inflation

change of
government
locally or at
federal or
national level

unemployment
rate and income
level may effect
city flowers retail
sales

Disposable
income amongst
certain groups

social media, ecommerce, R&D

and
manufacturing
practices

changes in
economic growth
due to recession

Increasing
internet usage
and all things
digital amongst
younger
generation

technology
access, licencing,
patents,
manufacturing
capability

different
taxation schemes
or levels being
introduced

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LO5C Question 3: Discuss TWO alternative strategies which City Flowers can employ
to achieve e-business capability.

E-procurement would be the ideal alternative as the business strategy for city flowers. Webenabled B2B e-commerce enhances inter-organizational coordination resulting in transaction
cost savings and competitive sourcing opportunities for city flowers in the long run. By
examining the procurement processes, IT support can develop an objective for the type of eprocurement system that would best fit the business and their desire to go online.
There is another alternative strategy can be used that is advertising-subscription revenue
model which is City Flowers can put their advertisement into some subscriber channels,
website or magazine which are famous such as trade me, Time, New Zealand Herald etc.
which are widely accepted and spread in the local area. That would be the significant solution
for the hidden customers to pay attention to the products, which would advance the
reputation of the City Flowers and gain possible benefits.
CASE STUDY 2: TESCO

LO6B Question 4: Explain the SIGNIFICANCE of the Tesco Information Exchange

system (TIE) to support supply chain management and the value chain.
By using automated data collection software to feed information into its big data analytics
program, British grocery and merchandise retailer Tesco has dramatically boosted profits and
more proactively met consumer demands.
Tesco has used big data analytics to improve its supply chain, primarily targeting
its inventory management systems. According to Information Age, Tesco's new supply chain
optimization program helped the company save up to 16 million (approximately $24.5
million) annually because it is now better able to predict customer buying habits and track the
effectiveness of special sales offers.

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In particular, Tesco has developed an analytics model that uses weather patterns to properly
stock store shelves. By looking at historical buying data and expected temperature trends, the
business can accurately predict what consumers in a specific area will want to purchase and
then supply locations accordingly.
The retail giant has also been applying sophisticated analysis to its supply chain data. And by
identifying opportunities to cut waste, to optimise promotions and to match stock to
fluctuations in demand, Tesco's supply chain analytics function has saved the company many
millions of pounds.
The suppliers were given access to the product database. They could now do the demand
forecast themselves and process the information in real-time. They were not caught off-guard
now with regard to the supplies and had a clear idea related to fast or slow movement of
different products. They were rather in a better position to make adjustments to the supplies
either increase or decrease the same, subject to sales and then replenish or re-supply
efficiently.
During product promotions, the suppliers, having an access to the product database, could
very well see the accurate movement of the different products. This made them prepared to
replenish efficiently in real-time and also enabled them to plan for over-supply or undersupply in future.
CASE STUDY 3: ROLL ROYCE AERO ENGINES

LO6B Question 5: Explain the SIGNIFICANCE of the Engine Condition Monitoring

(ECM) IT system to support supply chain management and the value chain to Rolls
Royce.
An Engine Condition Monitoring (ECM) approach has been adopted by many engine
manufacturers and operators, in which intelligent real-time data analysis systems are
employed to assess the condition of engine components. The objective is then to make
maintenance needs be determined according to the engines operating condition, rather than
maintenance being performed at fixed periods of time. ECM involves both manual
practices such as MCD, oil consumption and vibration monitoring, and computer methods
based on performance analysis and mechanical parameter monitoring using an adequate
software tool. These monitoring systems for engine health typically process data from
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engine-mounted sensors, whose recent evolution in robustness and versatility have made the
implementation of ECM possible.

The significance is as follows:

Low risk, fixed cost engine maintenance - The comprehensive suite of engine
management services available provides predictable costs over the life of the agreement and
covers all aspects of engine maintenance and management.

Reduced management burden It enables airlines to focus on their priorities,

because Rolls-Royce provides a full suite of Engine Management Services

Enhanced aircraft resale value - It is transferable with the aircraft and therefore
increases its residual value

Reduced capital investment It needs fewer spare parts and tools

24/7 - Benefit from a world-wide network of support focused on the needs of

corporate jet operators. Their network is always there 24 hours a day, 365 days a year.
The monitoring of aircraft and engines consist a continuous compilation process of flight
data, which is then analysed in different ways to assess the level of degradation and
performance at that moment. Particularly for engines, the continuous following of an engines
health can allow significant savings in several ways.
Engine Condition Monitoring (ECM) is becoming used on a daily basis in many airline
companies, for they have understood the potential savings that can be achieved, in fuel, parts
and maintenance actions.
ECM continuously assesses the health of an engine, and therefore the performance it will
present in terms of fuel consumption. If this information could be complemented with a Fuel
Monitoring tool that would compile and analyse all data regarding routes, flight time, aircraft
weight, number of passengers, take-off weight (TOW), etc., the operator could establish a
direct correlation between every engine maintenance action and fuel consumption, assessing
their cost-effectiveness and allowing to define long term strategies to reduce costs.
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ECM may be used for three different approaches, one pre-emptive, one reactive and one
more analytical and educational. Through the condition monitoring, early warning of
potentially hazardous engine conditions may result in the identification of the precursors to
component failure in advance of the actual failure. This is a prognostic approach to condition
monitoring, and is useful for types of faults that may be prevented if identified soon enough.
Faults for which there are no such precursors like a bird strike" require a diagnostic
approach. Those monitoring systems automatically identify engine faults that have occurred,
and may recommend restorative maintenance actions appropriate to the type of fault.
There was no break in the flight schedules and the customers were more than happy and
satisfied with the high level of customer services provided by the airlines.
Since the ECM system could predict the most likely date of failure and the most likely parts
to fail, the airlines could now plan for the engines maintenance well in advance and also had
sufficient time to arrange for the spare aircraft or order the spare parts. Therefore, by
controlling the inventory levels, the costs of operations were reduced which led to increased
profits.
CASE STUDY 4: AIRBUS IMPROVES PRODUCTIVITY WITH RFID

LO6B Question 6: Explain the SIGNIFICANCE of the IBMs RFID infrastructure

software system to support supply chain management and the value chain in Airbus.
As it is in constant competition with Boeing, the European aircraft manufacturer Airbus is
looking for every opportunity to increase productivity, reduce costs, and make its production
process more efficient. One of its latest efforts is to use RFID technology in both
manufacturing and maintenance of its airplanes. The basic idea is to use RFID to track parts
and tools, which are scattered over a large area. Airbus had major delays in completing its
A380, the two-decker, 525-seat airplane scheduled for completion in 2007 and 2008.
Airbus hopes that RFID will become as everyday as barcoding. The company
experimented with the technology for three years before signing a multimillion-dollar deal
with vendors to implement the technology. It also created a value cabin visibility and RFID
unit to implement the biggest private sector RFID deal ever.

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Airbus has implemented process-improvement projects involving RFID to track parts inside
warehouses, as they move from one region to another, and as they are built into aircraft, as
well as to track how and where tools are used for manufacturing and maintenance. The new
RFID software infrastructure lets Airbus employees and systems exchange information
collected by RFID readers. The infrastructure also integrates RFID data with business
systems such as Airbus core ERP system.
The software also manages data from barcodes, which remain an important part of Airbus
supply chain. RFID tags can hold more information and require a line-of-sight reader. Airbus
expects RFID to augment ongoing supply chain process improvements, saving money by
reducing time spent searching for parts, reducing inventory, and improving productivity.
IBMs RFID infrastructure software system helps in:

Integrating real-time data capture with business processes to reduce time to market.
Track assets to reduce loss and theft.
Optimally manage work in process and logistics networks.
Build a secure, responsive and flexible supply chain - to ultimately deliver value to

your end customers.

The company hopes to increase efficiency by tracking parts and materials.

CASE STUDY 5: FORD E-PROCUREMENT IN A MANUFACTURING COMPANY

L07A Question7: Identify THREE benefits and TWO risks of e-procurement which
Ford faces in its e-procurement strategy.
Three benefits of e-procurement are as follows:
1) Cost reduction benefits With e-procurement, costs were reduced by leveraging volume
and having structured supplier relationships. The improved and streamlined methods of
spending and performance measurement led to lower overhead and marketing costs while
improving quality and supplier performance. The employees could quickly locate products
from preferred suppliers and did not indulge in any maverick purchases.

Accounts payable staff reduction of 75% (over 375 individuals) - Accounts payable
in some divisions is nearly 5% of old headcount dedicated only to handling

exceptional situations
Reduced inventories
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Achieved high levels of purchasing economies of scale

Elimination of overpayment
Streamlined administrative functionspractically eliminated paperwork and indirect
overhead.

2) Supplier benefits E-procurement automated all three parts of the purchasing process
viz. sourcing (negotiating prices), procurement (raising and fulfilling orders) and payment
(collecting invoices and arranging payment). The centralized tracking of transactions enabled
full reporting on requisitions, items purchased, order processes and payments made.

Reduces their cost of doing business with Ford - Less paperwork, fewer errors.
Better production planning, leading to reduced inventories, improved product quality,

better delivery schedules.

Joint problem solving.

3) Increased quality With e-procurement, the staff ordered instantaneously from online
manufacturers catalogues through an online requisition and ordering system. The purchasing
approval was almost immediate. Thus there was reduction in paperwork/rework/errors, no
wastage in time and the procurement process became faster and efficient. Also some of the
procurement staff members were released from the job of processing orders and handling low
value transactions to concentrate on strategic sourcing and improving supplier relationships.

Overall product quality and cost improvement.

Suppliers are not consumed/concerned about winning the next contract and selling,
but on improving product quality and cost.

Two risks of e-procurement are as follows:

1) Integration of technology with suppliers - A key market-related barrier to Ford remains
the reluctance by suppliers to subscribe over fears of the effect of reverse auctions on
component price. Suppliers may show unwillingness in initiating a full organizational
restructuring associated with technological changes related to e-procurement. Suppliers have
to collaborate completely with Ford in terms of the technology and other infrastructure
requirements of e-procurement. But they may be reluctant to adopt the idea of e-procurement
due to high training costs associated with switching to e-procurement.

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2) Leaking of confidential data - Management fraud risk associated with a smaller set of
suppliers who have special relationship could impact Fords sales. Accounting information
risk if the procurement system is not adequately integrated with financial processes and
systems and Infrastructure risk related to application system deployment, logical security,
database management, and business/data centre recovery. Usage of e-procurement technology
will allow the flow of sensitive and confidential data between Ford and its suppliers. An
unauthorized entity or a hacker can gain access to the database and disrupt the supply chain
activities.
CASE STUDY 6: CARL ZEISS

LO7C Question 8: Analyze the initiatives undertaken by Carl Zeiss and its suppliers to
integrate their business processes.
Some of the initiatives taken by Carl Zeiss and their suppliers to integrate business process
are by

Leveraging the companys internal systems via an extended ERP solution and by
allowing access to important SAP R/3 data to their suppliers, it gives the company
advantage of eradicating the time and workforce exhaustive schedule of organizing

data between different groups in the supply chain.

All data of the company is monitored via user identification which means members in

the supply are only able to access and/or view data that are applicable to them.
The suppliers of Carl Zeiss were given access to its product database and they could
process the demand in real-time. But a lot of time was wasted in coordinating data
between members of the supply chain. Different suppliers needed data relevant to
their requirements. The data had to be collated manually subject to the IT system used
by the supplier and therefore a great deal of coordination was required between

Zeisss IT system and those of the suppliers.

The integration of business processes connected all the suppliers with their respective
part of the data in the product database of Carl Zeiss via proprietary GUI (Graphical
User Interface) of Carl Zeiss.

In an increasingly concentrated market for optical equipment, dominated by regional and

national optician chains, building close ties with each individual chain has become vital for
Carl Zeiss. Supply Chains are demanding that key suppliers provide means for online
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ordering and supply chain visibility. Suppliers have also adapted to ongoing data format
changes as required by the chain. The positioning of Carl Zeiss as a flexible and adaptable
supplier became a key priority and this goal required a change of the integration
infrastructure.
The access of each supplier to Carl Zeisss product database was password protected and
therefore each supplier could access only the data relevant to its requirement. Also the data
accessed was compatible with the processing capabilities of the IT system of each supplier.
A key goal for Carl Zeiss is

To establish one enterprise application integration platform for all communication

between SAP and other applications, with the communication as close as possible to

the SAP core application.

The companies also centralize development on one platform with central monitoring
and a central storage area for business process information. Being able to adapt its
order systems to those of the chains and to implement changes rapidly strengthens

the companys competitiveness.

Being easy to do business with is a key selling point when competing for new
optician chains in a combine and increasingly competitive market for eyeglass lenses.
Integration involving static data formats is faster, because the mapping from one

format to the other is done visually with no coding involved.

LO7C Question 9: Assess TWO options for integration of inter-organizational

information systems.
The two options for integration of inter-organizational information systems are
Business to Business:

A company selling products to customers online

The technology, used by both the company and the customers, must be compatible

The GUI (Graphical User Interface) of the company is the same for every customer

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The customers can only access the information and cannot update/modify the
information

There is only one product catalogue for every customer and a customer cannot
customize the catalogue

A customer does not require a password for access

The concept of e-purchasing applies which means just buying online

Business to Consumer:

A company buying products from suppliers online

The technology, used by both the company and the suppliers, must be compatible

Each supplier has a proprietary GUI (Graphical User Interface), designed as per the
requirements of the supplier

Each supplier can access/update/modify the information

Each supplier has a customized catalogue

Each supplier requires a password for access

The concept of e-procurement applies which means negotiating prices/quantities

while buying online

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REFERENCES
Mohsen Attaran (2012). Critical Success Factors and Challenges of Implementing RFID in
Supply

Chain

Management,

Available:

http://www.csub.edu/~mattaran/home2/body_content/slides/MGMT602/Critical%20Success
%20Factors%20and%20Challenges.pdf. Last accessed 13 January 2014.
Bobbye

Alley

(2014).Five

Steps

of

the

Model

Business

Strategy,

Available:

http://smallbusiness.chron.com/five-steps-model-business-strategy-17960.html. Last accessed

14 January 2014.
Gxs (2013). How Tesco Uses the Cloud to Work with Its Suppliers, Available:
http://www.gxs.com/resources/webinars/how-tesco-uses-the-cloud-to-work-with-itssuppliers. Last accessed 14 January 2014.
Dirk Stelzer, Daniel Fischer & Ina Nirsberger (2006).A Framework for Assessing Interorganizational Integration of Business Information Systems, Available: http//www.tu
ilmenau.de/fileadmin/public/iwm/StelzerFischerNirsberger_Framework_Assessing_Interorganizational_Integration_2006.pdf. Last accessed 13 January 2014.
http://govwin.com/knowledge/eprocurement
http://www.airbus.com/fileadmin/media_gallery/files/brochures_publications/FAST_magazin
e/FAST47_8-rfid.pdf
http://www.purchasing-procurement-center.com/e-procurement-advantages.html

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