Chapter 12

E‐STRATEGY
 Chapter Contents 
2

¾ The Internet 

¾ Business Impact of the Internet 
p

¾ Internet and Extranet 

¾ Security and Other Risks

¾ Globalization 

¾ Develop A Global Strategy 
p gy
The Internet
3

What is internet? 

¾ A network of computer networks which operates world‐
A t k f t t k hi h t ld
wide using a common set of communications protocols as 
TCP/IP

¾ Started with four interconnected computers in 1969 by the 
U
US Department of Defense 
epa e o ee e
Business Impact of the Internet 
4

Conducting business electronically using some form of 
Conducting business electronically using some form of
communication link.

Option for establishing e‐commerce are:
Option for establishing e commerce are:
¾ In‐house provision – preferable because tailor system to own 
requirements. 
¾ Purchasing :Off the shelf”
P h i Off h h lf”
¾ Outsourcing to third party

E‐commerce options: 
¾ B2B
¾ B2C
Internet Trading – Strategic Overview
5

Legal Consideration Decide

id on Organization
O i i
Strategy

Issue with
Trading
Electronically Decide on Pricing
Technology
Policy

Discuss with
Find Value Added Existing
Benefit Distribution
System
How E‐commerce Will Affect Business? 
6

Decreased
Increased use of Decreased use of
communication costs
Intranets cash
from internet use

Telecommuting – D
Decreasedd
work take place transaction costs
in any location
How E‐commerce 
Will Affect  Personalized
C
Connect to
Internet almost
Business?  market via use
anywhere – of purchase
easier histories on
communications
i ti databases

Faster access to Eliminating of

EDI standard
data i
intermediaries
di i
method of
trading
E‐Marketing
7

Electronic Marketing:
Market place created using computer and electronic communication 
technology to link buyers and sellers of particular products. 

Benefit of e‐marketing: 
g
1. Access to a global market place
2. Small organization can compete with large “level playing filed” 
3
3. Set up and maintain an Internet site cheap
Set up and maintain an Internet site cheap
4. Brand awareness can be increase by internet advertising 
Intranets & Extranets 
8

Intranet: internet within one organization accessible only to 
employees of that organization. 

Extranet: extranet with access allowed by selected third parties.  
Uses and Benefits of an Intranet 
9

Training costs
Access to internal limited employees
database, no
Benefits of  already use
matter location Intranet  Internet
technology

Allow creation of Save costs

S t – no
global employee paper manuals
info needed

Access to legacy
Expand
p as necessaryy
d t
data
Uses and Benefits of an Extranet
10

Access to detailed Increased sales

products Benefits of  resulting from
specifications for increased service
Extranet provided
b
buyers

Provide
Links with EDI for information to
stock
k controll customers to add
value to product
Virtual Supply Chain
11

Supply Chain:
Links required from obtaining the appropriate raw 
materials through to delivering the products to the 
customer.
customer

Virtual Supply Chain:
i ua upp y ai
Using an intranet or extranet to co‐ordinate the activities 
within the supply chain. 
Security and Others Risks
12

Internet 
Main concerns with using Internet: business perspective. 
y Cost of establishing security and encryption procedures.
y Lack of paper‐based audit trail for transaction. 
p p
y Mis‐use of customer bank details. 

Making the site secure
Making the site secure
Internet site security uses:
y Secure Socket Layer (SSL).
y Encryption of message 
y Checks sender ID – server authentication 
y Message same as sent –
g message integrity 
g g y
Security and Others Risks ‐ 2
13

What online buyers want – risk of price competition 
y Some sites do offer significant discount 
y Other build on good reputation 
y Or brand name 

What concerns on‐line buyers 
Main issues:
Main issues:
y Security of payment
y Reputation of seller
p
Globalization
14

Speed of data transfer –

Data protection
i
International high speed not always
legislation – ensure
decision making – available
sufficient to allow
take into account IT transfer of
availability i f
information
i

Effect of 
Globalization Reliability of
Different telephone system –
communication some countries have
standards limit infrastructure

Political or legal
Cultural differences
regimes
i may diff
differentt
Developing a Global Strategy ‐1 
15

Gl b l business
Global b i strategies
t t i

There are four major business strategies:

Demotic Exporter Multinational

Global corporate activities Some central activates and some
centralized in the home country local

Franchiser Transnational
Product designed and developed in No national headquarters. Regional
one location but sold locally base for accounting etc. only.
Developing a Global Strategy ‐2 
16

Gl b l information
Global i f ti strategies
t t i

There are four major information strategies:

Duplicated
Centralized Systems development is still carried
Systems development and operation out centrally,
ll b but implementation
l
all take place in one central location and maintenance are performed
locally
Decentralized
Each individual country unit Networked
designed and implements its own IT System development and operation
system. take place across all the different
country units.
Fit of Business and IS Strategies
17

System
Configuration Domestic Multinational Franchiser Transnational
Exporter
Centralized

Duplicated

Decentralized

Networked
Guidelines to developing a global information 
system
18

Three main principles available to try to help 
organizations develop and implement global information 
systems.

1. Location of activities: place functions where obtain most 
value.
2. Develop appropriate system: some global but some local 
to meet local requirements
3 Chief information officer: to focus organization on 
3. Chi f i f ti ffi t f i ti
information requirements. 
Problems in Implementing Global Systems
19

User Co- coordinating

Problems with 
requirements worldwide
different in each
Implementing 
software release
country Global Systems
Global Systems

Many need to Encourage local

change local support of
procedures –
p international
difficult if existing systems – for
system working better service
fine.
 20

Questions?