E-business Strategic Planning
Gregory T. ClarkDeveloping an e-business requires extensive research and planning in order to be successful in cyberspace. This planning involves the development of a solid and concise business plan, and a focused marketing plan well before a website is created. An e-business plan must have clearly defined goals as it is difficult for any business organization to stay on track if there are no goals in place for guidance.
E-business Strategic Planningn recent years, the Internet has presented a wealth of opportunities for conducting commerce on a global scale. As a result, there has been a significant increase in both the number of start-up businesses in the e-commerce field, as well as the number of traditional "brick and mortar" businesses entering this "new economy." According to Forrester Research, an independent technology and market research company, US online retail sales will grow from $172 billion in 2005 to $329 billion in 2010. This increase translates to a steady 14% compound annual growth rate over the next 5 years. E-commerce will represent 13% of total US retail sales in 2010.
Developing an e-business requires extensive research and planning in order to be successful in cyberspace. This planning involves the development of a solid and concise business plan, and a focused marketing plan well before a website is created. An e-business plan must have clearly defined goals as it is difficult for any business organization to stay on track if there are no goals in place for guidance.
Strategic planning determines where an organization is headed over the next year or more, how it's going to get there and how it will know if the results are successful. There are a variety of perspectives, models and approaches used in strategic planning. The way that a strategic plan is developed is dependent on the nature of the organization's leadership, culture of the organization, size of the organization, complexity of the organization's environment and expertise of planners. Goals-based planning is perhaps the most common strategic planning model and begins with focus on the organization's mission and vision and strategies to achieve these goals.
Vision and Mission Statements
A successful organization understands that it takes more than a good plan to succeed in business. It takes an empowered organization with impassioned leadership, focused on realistic goals. It takes vision, consensus and a sense of purpose. According to Jack Welch, previous Chairman for General Electric, "Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion." The vision statement describes what the leaders of an organization want it to look like in ideal terms in the future - the results they seek to achieve and characteristics needed to possess in order to achieve those results. The strategic vision statement provides direction and motivation for organizational goal setting.
A mission statement is an organization's declaration of its principles, purposes, and objectives that can be used to initiate, evaluate, and refine all life activities. It is an enduring statement of purpose for an organization that identifies the scope of its operations in product and market terms, and reflects its values and priorities. Every company no matter how big or small, needs a mission statement as a source of direction, a kind of compass, that lets its employees, its customers, and even its stockholders know what it stands for and where it's headed. A mission statement gives everyone the opportunity to know what the organization is about.
Environmental Analysis
Environmental analysis plays a central role in strategic management. For a company to gain or maintain a sustainable competitive advantage in the e-commerce marketplace, it must be ever attentive, watching and preparing for shifts in the business environment and must be prepared to alter its strategies and plans when the need arises. Companies conduct environmental analysis to identify market opportunities and threats and also to anticipate changes in highly complex and dynamic environments. By anticipating changes accurately, companies can gain competitive advantage through quick action. Environmental analysis assesses current environmental circumstances and projects, forecasts, and monitors their future situation. According to eSocrates.com, a knowledge, management and eLearning company, Environmental analysis also helps the firm to position itself in a continually evolving environment by matching its characteristics to the environment's demands.
Competitive Factors
In formulating an e-business strategy, a company must consider the strategies of their competitors. A competitive analysis allows them to identify the competition within the same market in order to analyze their strengths and weaknesses. This will help a company develop strategies that will provide them with a definite advantage and barriers that can be established in order to prevent competition from taking over the market. A competitive analysis can also identify any weaknesses that can be improved within the business development cycle.
Economic Factors
The economic environment consists of factors that affect consumer purchasing power and spending patterns. The environment in which an organization operates is very much determined by macro-economic factors. A recession can dramatically reduce total income and expenditure levels in the economy, in turn affecting consumer demand. Higher taxes, internet rates and inflation similarly serve as disincentives to consumer confidence (and therefore spending), while economic growth and prosperity can generate spending and an overall "feel-good factor." The importance of the economic environment - the broad trends in employment, inflation and growth that shape regions, nations and the world - to the growth of e-business in the U.S. should not be underestimated.
Social / Demographic Factors
Demography is the study of human populations in terms of size, density, location, age, ethnicity, income, occupation and other statistics, as well as those variables bringing about change in that population. The demographic environment consists of the customers who form the marketplace. These customers may be demographic environment shifts as customers enter the market, mature, and leave the market.
As the consumer's level of comfort with online functions such as e-mail and research continues to increase, so too will their level of participation in e-commerce. A growing online consumer base, increases in new product categories, and efforts by online retailers to optimize online shopping experiences will spark significant growth in e-commerce in years to come.
Long Term Objectives
One of the key purposes of a comprehensive planning process is to establish a set of long-term objectives and recommend a series of strategies and policies to ensure that these goals are attained in the most effective way. The established goals combined represent an organization's vision or desire for a future condition that will enhance its overall image and quality of life. It is important to understand that these objectives serve as the backbone of the strategic plan. That means that any planning element included in this plan should function as reinforcement to these objectives.
The achievements of an organization are based on the combined efforts of each individual within the organization working toward common objectives. These objectives should be practical, should be clearly understood by everyone within the organization and should mirror the organization's basic personality and character.
Here are some steps that an organization can take to evolve the company culture toward e-business:
- In order to be successful, e-business requires that information flow freely within an organization. Business experts need to be designated in each major functional area to facilitate the free flow of information and connect people and processes throughout the enterprise.
- Recognize that an e-business is an inside-out proposition. In order to operate as a true e-business, your core processes must be predominantly real-time, online, integrated and interactive.
- Remember that continual education and training is essential. Everyone within the organization must be knowledgeable of basic e-business concepts. For those who are accountable in areas that involve direct interaction with customers, more detailed training is needed.
- Instill a sense of urgency necessary to deliver the level of service that should help drive business decisions. Customers now expect immediate quality service, whether it is in person, on the phone or on the web.
- Recognize that the Internet and the realities of e-business have permanently changed the barriers to competition. Viable competitors can spring up almost overnight.
The completion of a written strategic plan document marks an important milestone in the planning process, but major benefits accrue to the organization only when the plan is put into operation. Achieving the established goals will require effort and attention from every part of the organization. Research must be conducted in order to determine all questions concerning success measurement. The questions "What do we want to achieve with this e-business website?" and "How do we know when the goal for the site is reached?" are of primary interest.
Continuous planning with feedback is a strategic planning necessity that involves company wide activity. Ongoing measurement and evaluation after completion is necessary to track success of the e-business plan and to determine if any further changes or modifications need to be made. Most importantly, one must constantly revisit their strategic plan to ensure that they are meeting the customer's needs and providing the highest level of customer service.
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