Page 399 - Introduction to Electronic Commerce and Social Commerce

12.2 A Strategy for Global E-Commerce 387

cyclical process begins with setting up goals and objectives for Justifying Social Networking and the Use
organizational and EC performance, which is then expressed of Web 2.0 Tools
by a set of metrics. The metrics are expressed by a set of key Justifying social networking initiatives and the use of Web
performance indicators (KPIs), which are the quantitative 2.0 tools can be difficult due to the intangible benefits and
expressions of critically important metrics. Often one metric the potential risks. However, in many cases, the cost is rela-
has several KPIs. tively low and so companies embark on such projects with-
The KPIs are continuously monitored by the organization out formal justification. The major issue could be that of risk
(e.g., via Web analytics, financial reports, marketing data, and assessment. Some of the tools are available for free or are
so forth). As shown in Figure 12.1, the KPIs that reflect actual being added by vendors to communication and collaboration
performance are compared to the desired KPIs and planned tools. For a comprehensive e-book, see Petouhoff (2012).
metrics. If a gap exists, corrective actions take place and then Also, watch two videos from Salesforce.com: “How to Build
goals, objectives, and metrics are adjusted if necessary. a Business Case for Social Media” and “How to Measure
Another example of metrics is shown in the balanced Social Media ROI” (connectedtimes.com/2012/04/09/how-
scorecard method. This method uses four types of metrics: to- build-a-business-case-for-social-media). For a compre-
customer, financial, internal businesses processes, and hensive coverage, see Turban et al. (2016).
learning growth.
One of the most useful tools for EC management is Web
analytics. Web analytics are closely related to metrics.
SECTION 12.1 REVIEW QUESTIONS

Web Analytics 1. List some of the reasons for justifying an EC invest-
ment.
Web analytics refers to tools and methods that are used to 2. Describe the risks of not conducting an EC justification
measure, analyze, and optimize Web usage and other Internet study.
activities. A common usage of Web analytics is to evaluate 3. Describe how an EC investment is justified.
website traffic, but it can also be used as a tool for EC market 4. List the major EC investment categories.
research. The outcomes of advertising campaigns can also be 5. When is it unnecessary to formally justify EC invest-
assessed with Web analytics. For additional information, see ments?
Beasley (2013). 6. What are metrics? What benefits do they offer?
Now that we understand the need for conducting EC jus- 7. Describe KPI.
tification and the use of metrics, let us see why EC justifica- 8. Describe the cyclical use of metrics as it relates to orga-
tion is difficult to accomplish. nizational performance.
9. What is Web analytics, and what role does it play in the
justification of EC projects?
The Process of Justifying EC and IT Projects 10. Describe the process of justifying EC projects.

The major steps of this process are:
12.2 A STRATEGY FOR GLOBAL

1. Establish an appropriate basis for analysis with E-COMMERCE
your vendor, and then conduct your ROI.
2. Investigate what metrics to use (including internal and Deciding whether to “go global” is a strategic issue. The sta-
external metrics) and be sure about their accuracy. tistics regarding Internet and smartphone usage worldwide
3. Justify the cost–benefit under appropriate assump- illustrate the enormous potential that exists for companies to
tions. expand their market share globally using EC.
4. Verify all data used in the calculation. The decision to go global is made for many reasons, both
5. Include strategic benefits, including long-term ones. reactive and proactive. Reactive reasons include factors
Find contributions to competitive advantage. Make such as competitors that are already selling internationally.
sure not to underestimate costs and overestimate Proactive reasons include sellers that are seeking economies
benefits (a tendency of many managers). of scale, looking for new international markets, gaining
6. Make data as realistic as possible, and include cost access to sufficient or new resources, cost savings, and local
avoidance and risk analysis. government incentives. Regardless of the reasons, expand-
7. Commit all business partners, as well as suppliers ing globally to realize a company’s strategic objectives
and major customers to your plans. requires extensive planning and responding quickly to
opportunities.