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310 Part 2 Strategy and applications

Decision 7: Internal knowledge management capabilities

In addition to the decisions about sell-side and buy-side e-commerce mentioned above,
organizations should also review their internal e-business capabilities and in particular how
knowledge is shared and processes are developed. Questions which can be answered in this
category are:

How can our intranet be extended to support different business processes such as new
product development, customer and supply chain management?
How can we disseminate and promote sharing of knowledge between employees to improve
our competitiveness?
We reviewed intranet management issues in Chapter 3 and knowledge management issues in
more detail in Chapter 10 in the ‘Focus on’ section.

Decision 8: Organizational resourcing and capabilities

Once the e-business strategy decisions we have described have been reviewed and selected,
decisions are then needed on how the organization needs to change in order to achieve the
priorities set for e-business.
Gulati and Garino (2000) identify a continuum of approaches from integration to separation.
The choices are:

1 In-house division (integration). For example, the RS Components Internet Trading Channel
(www.rswww.com).
2 Joint venture (mixed). The company creates an online presence in association with another
player.
3 Strategic partnership (mixed). This may also be achieved through purchase of existing dot-
coms, for example, in the UK Great Universal Stores acquired e-tailer Jungle.com for its
strength in selling technology products and strong brand, while John Lewis purchased
Buy.com’s UK operations.
4 Spin-off (separation). For example, the bank Egg is a spin-off from the Prudential financial
services company.
Gulati and Garino (2000) give the advantages of the integration approach as being able to
use existing brands, being able to share information and achieving economies of scale (e.g.
purchasing and distribution efficiencies). They say the spin-off approach gives better focus,
more flexibility for innovation and the possibility of funding through flotation. For
example, financial services company Egg was able to create a brand distinct from Prudential
and has developed new revenue models such as retail sales commission. Gulati and Garino
say that separation is preferable in situations where:
a different customer segment or product mix will be offered online
differential pricing is required between online and offline
there is a major channel conflict
the Internet threatens the current business model
additional funding or specialist staff need to be attracted.
The other aspects of organizational capability that should be reviewed and changed to
improve their ability to deliver e-business strategies are shown in Table 5.11. These include:
Strategy process and performance improvement. The process for selecting, implementing
and reviewing e-business initiatives;
Structure. Location of e-commerce and the technological capabilities through the software,
hardware infrastructure used and staff skills;
Senior management buy-in. E-business strategies are transformational, so require senior
management sponsorship;