Page 62 - Electronic Commerce

Introduction to Electronic Commerce

Many managers have found ways to use electronic commerce technologies to reduce costs,
37
improve product quality, reach new customers or suppliers, or create new ways of selling
existing products. For example, software developers now almost universally use the Internet to
distribute updates. Doing so modified software developers’ industry value chains and has
provided additional opportunities for sales revenue (software developers now retain the profit
that retailers and distributors once added to the price of updates), but this revenue opportunity
was not a part of the software developers’ business unit value chains. By examining elements of
the value chain outside the individual business unit, managers can identify many business
opportunities, including those that can be exploited using electronic commerce.
The value chain concept is a useful way to think about business strategy in general.
When firms are considering electronic commerce, the value chain can be an excellent way
to organize the examination of business processes within their business units and in other
parts of the product’s life cycle. Using the value chain reinforces the idea that electronic
commerce should be a business solution, not a technology implemented for its own sake.
SWOT Analysis: Evaluating Business Unit Opportunities
Now that you have learned about industry value chains and SBUs, you can learn one popular
technique for analyzing and evaluating business opportunities. Most electronic commerce
initiatives add value by either reducing transaction costs, creating some type of network
effect, or a combination of both. In SWOT analysis (the acronym is for strengths,
weaknesses, opportunities, and threats), the analyst first looks into the business unit to
identify its strengths and weaknesses. The analyst then reviews the environment in which
the business unit operates and identifies opportunities presented by that environment and
the threats posed by that environment. Figure 1-11 shows questions that an analyst would
ask in conducting a SWOT analysis for any company or strategic business unit.

Learning

Cengage

2015
©
FIGURE 1-11 SWOT analysis questions

Copyright 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.