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10MultinationalE-Commerce:StrategiesandStructuresLearningObjectives(1of2)Definetheformsofe-commerce.UnderstandthestructureoftheInterneteconomy.Identifythebasiccomponentsofasuccessful
e-commercestrategy.Knowthebasicmultinationale-commercebusinessmodels.LearningObjectivesIdentifythepracticalitiesofrunningamultinational
e-commercebusiness.Understandthefunctionofenablersinmultinational
e-commerceoperations.TheInternetEconomyAlthoughsmallincomparisontothetraditionaleconomy,theInterneteconomyis:Growingfasterthananyotherbusinesstrendinhistory;aworldwidephenomenonDrasticallychanginghowinternationalbusinessisdoneTheInternetallowsanycompanytocreateavirtualandglobalpresencetoconductoperationsworldwide.TheInternetEconomyManyoftheissuesinvolvedinbusinessovertheWebaresimilartothosefacedbytraditionalMNCs.ThenextgenerationofMultinationalmanagersmustaddressuniquechallengesinformulatingandimplementingmultinationalstrategiesfortheInterneteconomy.WhatIsE-Commerce?(1of2)E-Commerceisthesellingofgoodsorservicesovertheinternet,andincludesthosedeliveredonline(downloadedsoftware)andoffline(deliverybyUPS).Typesoftransactions:B2C:Business-to-ConsumertransactionsExample:buyingtoysfromeToys.B2B:Business-to-Businesstransactions75-80%oftransactionsWhatisE-Commerce?(2of2)Typesoftransactions:(cont’d)C2C:Consumer-to-ConsumertransactionsAnyonesellingonlineeBayfacilitatesC2CtransactionsC2B:Consumer-to-BusinesstransactionsExample:pricecomparisonwebsites.Exhibit10.1:
E-CommerceValueChainMeasuring
TheInternetEconomyTwoindicatorsoftheglobalpresenceofe-commerce:SecureServer:anInternethostthatallowsuserstosendandreceiveencrypteddataInternetHosts:computersconnectedtotheInternetwiththeirownIPaddressesTheextentofe-commerceisdifficulttomeasure.Onemethodistoestimateitscontributiontoacountry’sGDP.Exhibit10.2:
InternetEconomyasaPercentageofGDPforSelectedCountriesExhibit10.3:
PercentageofHouseholds
withInternetAccessFundamentalsofE-CommerceStrategy&StructureE-commerceisevolvingquickly.Failuresofmanystart-upsshowit’snotwithoutrisks.EachlayeroftheInterneteconomyhasitsthreatsandopportunities.Exhibit10.4:
E-CommerceBusinessModels:OpeningsandBarriersforGoingGlobalStepsforaSuccessful
E-CommerceStrategyExpertssuggestsevenfundamentalrequirements:1.LeadershipSuccessfule-commerceisonlypossiblethroughdynamicandstrongleadership.2.Buildoncurrentbusinessmodelsandexperimentwithnewe-commercemodelsUsee-commercetosearchforwaystoreducecostsorenhancethebusiness.StepsforSuccessful
E-CommerceStrategy(cont.)Expertssuggestsevenfundamentalrequirements:(cont’d)3.Meetthechallengeofdevelopingane-commerceorganization.Theentirefirm(notonlytopmanagement)mustbepreparedtoembracethee-commercemodel.4.Allocateresourcestothee-commercebusiness.Commitfinancial,human,andtechnologicalresourcestodevelope-commercecapabilities.StepsforSuccessful
E-CommerceStrategy(cont.)Expertssuggestsevenfundamentalrequirements:(cont’d)5.Haveane-commercestrategy.Usestrategicmanagementtoimplementastrongandadequatestrategice-commerceplan.6.Developappropriatee-commercesystems.Removetraditionalbarrierstoensureincreasedcoordinationandinformationflowsamongthevariousfunctionalareas.StepsforSuccessfulE-CommerceStrategy(cont.)Expertssuggestsevenfundamentalrequirements:(cont’d)7.Measuresuccess.Havemetricsinplacetomeasuree-commercesuccess.Obviousoutputsuccessmeasuresincludewebsitehits,numberofnewe-commercecustomers,e-commercerevenueandnumberofcustomerslearningaboutnewproductstopurchasethroughotherchannels.E-CommerceStructure:IntegratedorAutonomous(1of4)Thecompanyneedstodecidehowe-commercefitsintoitsexistingdesign.Rightmixtureof“bricks”and“clicks”HowmuchtointegratetheInternetintotraditionalbusinessBrick-and-mortar:traditional,non-virtualbusinessoperationsE-CommerceStructure:IntegratedorAutonomous(2of4)Thedegreeofinteractionbetweenbrick-and-mortaroperationscanoccuranywhereinthevaluechain.ItcanrangefromnearseamlessoperationsofanOfficeDepottothemostlyindependentoperationsofBarnes&NobleandB.Eachchoicehasitsbenefits.E-CommerceStructure:IntegratedorAutonomous(3of4)Theindependentbenefits:FasterandmoreentrepreneurialFreedfromcorporatebureaucracyTheintegratedbenefits:Cross-promotion,sharedinformation,increasedquantitypurchases,samedistributionchannelsThechoiceisseldomclear-cut.Thebestoptionformostfirmsliessomewhereinbetween.E-CommerceStructure:IntegratedorAutonomous(4of4)Additionalstepstointegrateonlineandofflineoperations:Keepcustomersinformed.Retailersfinditimpossibletomaintainthesamepricingandinventoryonwebsitesandinstores.Customerscanbefrustrated,andappreciatebeinginformed.Sharecustomerdataacrosschannels.Example:Retailerscansendtailoredproductemailsbasedonstorepurchases.Exhibit10.5:
KeyDecisionsin
WebBusinessIntegrationAdditionalOperationalChallengesforanE-CommerceBusinessFindingpartnershipsandallianceswithcustomersorthirdpartiesAttracting,retaining,anddevelopingemployeesinthee-commerceunitInadequatee-commercetrainingE-commerceemployeeretentionDecidingwhate-commercefunctionstooutsourceAPureE-BusinessCompanyCanMeetItsChallengesDevelopinformationandmanagementsystemstorespondtogrowth.Maintainrapiddecisionmaking,creativity,innovation,andflexibility.Buildrelationshipswithe-commercesupportcompaniesandcustomers.Attractandretaine-commerce–capabletalent.DevelopaneffectivemanagementteamATraditionalFirmwithE-CommerceCanMeetItsChallengesBuildacommonvisionandcommitmentto
e-commercethroughouttheorganization.ChangetheorganizationalstructureforquickreconfigurationofassetsandcapabilitiesChangetheorganizationalculturetocreateasupportingenvironmentfore-commerce.Attractandretaine-commerce-skilledemployees.AlterHRprogramstosuitthedifferentskillrequirementsofe-commerceemployees.Exhibit10.6:OrganizationalChangesinMajorMultinationalCompaniesBuildingE-CommerceBusinessesE-CommerceSecurity(1of3)E-CommerceSecurity:thedegreetowhichcustomersfeelthattheirprivate,personalinformationcanbesafeguardedinthehandsofonlinecompaniescollectingsuchinformationCybercriminalsarebecomingincreasinglysophisticated.E-CommerceSecurity(2of3)MultinationalsmustprotecttheirInternetsecurity:Confidentiality:protectingprivateinformationAvailability:ensuringinformationisaccessibletoauthorizedusersIntegrity:ensuringthattheinformationcollectedisaccurateandreliableAuthentication:havingsystemsinplacetoensurethatpersonsusingthesystemsarelegitimateE-CommerceSecurity(3of3)Companiesarealsounderincreasedpressuretoprotecttheprivacyofindividuals.Expertssuggesttheuseof:FirewallsandantivirusprotectionsoftwareDataencryptionandseverallevelsofauthenticationforusersAbidingbyprivacyrulestoaddressInternetsecurityissuesGlobalizing
ThroughtheInternetTheInternetisenablingtheemergenceofanewformofmultinational,theborn-globalfirm.Born-globalfirmsareabletoobtainasignificantportionoftheirrevenuesfromsalesininternationalmarkets.Thoughawebsitegivestheworldaccesstofirm’sgoodsandservices,theinternationalizationchallengesfacedbytraditionalMNCsremain.Thefirmmuststillsolvetheglobal–localdilemma,anddealwithnationalcultureandinstitutionalcontexts.MultinationalE-CommerceStrategyFormulation:
TheNatureoftheBusinessWhatkindofe-businessiseasiesttotakeglobal?Itdependsonthetypesofproductsorservicesofferedthroughe-commerceE-commercecompaniesworkin3areas,andrequire3typesofinfrastructure:TelecommunicationsinfrastructuretomoveinformationPaymentinfrastructuretomovemoneyPhysicalinfrastructuretodeliverproductsMostdifficultaree-commercebusinessesthatrequireaphysicalinfrastructure.BasicOpportunities&ThreatsofMultinationalE-Commerce(1of3)Themajorattractionsofe-commerceare:Costreduction:It’slessexpensivetoreachinternationalcustomers.Technology:Thetechnologytoreachcustomersisreadilyavailable.Efficiencies:Electroniccommunicationcanbeveryefficient.Convenience:TheWebisinoperation24/7.SpeedofAccess:Onceawebsiteisrunning,thefirm’sproductscanbeaccessedimmediatelyfromanywhereintheworld.BasicOpportunities&ThreatsofMultinationalE-Commerce(2of3)Themajordeterrentstoe-commerceinclude:Thereturn/receiptburden&costofdelivery:Businessesshouldexpecta30-40%returnrateforonlinepurchases.Costsofsiteconstruction,maintenance,upgrades:Websitecreationinmultiplelanguages,currenciesandtaxlocationsisexpensive.Channelconflicts:Distributorsandretailersofafirm’sproductsmaybeincompetitionwiththefirmitself.Easilycopiedmodels:Competitorscanseeandcopythefirm’swebsite.BasicOpportunities&ThreatsofMultinationalE-Commerce(3of3)Themajordeterrentstoe-commerceinclude(cont’d)CulturalDifferences:UnderstandingglobalcustomersandovercomingculturalbarrierscanbedifficultontheWeb.Traditionalcross-bordertransactioncomplexities:Issuesincludepricingforexchangerates,varyingtaxes,andgovernmentregulations.Standardorlocalwebsites:Companiesmustdecidewhethertostandardizewebsitesortailorthemtolocalcontexts.Customertrustandsatisfaction:Companiesmustdeterminewhethercustomersabroadwilltrustandbesatisfied.PickingaMarket(1of2)Targetcountriesbasedontwofactors:CountrieswithmarketinefficienciesE.g.,formerlystate-controlledeconomiesCountrieswithattractivedemographiccharacteristicsAnInternetpopulationofatleast5%AhighliteracyrateParticipationinatleastonefreetradeagreementAgovernmentwithaviablelegalsystemPickingaMarket(2of2)E-commercepotentialmaybesubstantialinLatinAmericabecauseoftheMercosurtradegroup.PotentialexistsforSoutheastAsiancountrieswithmembershipinASEAN.TheopenbordersandcommoncurrencyofEuropeanUnionisalsofertilegroundfore-commercegrowth.Notallcountriesareequallye-commerceready.Exhibit10.8:
E-Readinessof
SelectedCountriesMultinationalE-CommerceStrategyImplementationSuccessfulimplementationofamultinationale-commercestrategyrequiresbuildinganappropriateorganizationanddevelopingthenecessarytechnicalcapabilitiestoconductelectronictransactions.Thefollowingprovidesanoverviewoftheoptionsavailabletomultinationalmanagers.TheMultinational
E-CommerceOrganizationHowisamultinationale-businessorganized?ConsiderAandYahoo!.Eachhasa3-tieredmixofglobal&localfunctions:1.Corporateheadquarters:Theglobalcoreprovidesvision,strategy,&leadershipforworldwideelectronicmarketing.2.HQalsoprovidessharedservicessuchasnetworkinfrastructure.3.Localsubsidiarieswhichdeliverthegoods,takechargeoffunctionsbetterdonelocally.Exhibit10.8:
OrganizationalStructuresoftheMultinationalE-CorporationTechnicalCapabilities&ImplementationOptionsforMultinationalE-commerce(1of2)Requiredtechnicalcapabilitiesare:SoftwaretoprocesspricinginmultiplecurrenciesSystemstocalculate&showpurchaseinformationoninternationalshipping,duties,andlocaltaxesSystemsthatcheckcompliancewithlocalandinternationallawsTheabilitytogivesupportinmultilingualservicecentersFraudprotectionElectronicpaymentmodelsinadditiontocreditcards
TechnicalCapabilities&ImplementationOptionsforMultinationalE-commerce(2of2)
Also,localrealitiesrequireimplementationdecisions.Man
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