Mumbai University > Information Technology > Sem 7 > E–Commerce & E-Business

Marks: 10 M

Year: May 2014

Introduction:

1. Situation analysis can be defined as environmental analysis and review of internal processes and resources to inform strategy.
2. The aim of situation analysis is to understand current and future environment in which the company operates in order that the strategic objectives are realistic in light of what is happening in the marketplace.

Diagram:

Description: The major elements of situation analysis are as follows:

1.Demand Analysis:

• Demand analysis for e-business can be defined as “assessment of the demand for e-commerce services amongst existing and potential customer segments”.
• Demand analysis examines current and projected customer use of each digital channel within different target markets.
• It can be determined by asking for each market:
  • What percentage of customer businesses has access to internet?
  • What percentage of members of the buying unit has access o the internet?
  • What percentage of customers is prepared to purchase your particular product online?
  • What percentage of customers with access to internet are not prepared to purchase online, but are influenced by web based information to buy products offline?
  • What are the barriers to adoption amongst customers and how can we encourage adoption?
• Example: Savvy e-markets use tools provided by search engine services such as Google and Yahoo to evaluate the demand for their products and services on the volume of different search terms typed in by search engine users.
• Thus the situation analysis as part of e-marketing planning must determine levels of access to the Internet in the marketplace and propensity to be influenced by the Internet to buy either offline or online.

2.Competitor analysis:

• Competitor analysis for e-business can be defined as “review of e-business services offered by existing and new competitors and adoption by their customers.
• Competitor analysis is required in the marketplace due to the dynamic nature of Internet medium.
• Benchmarking is used to compare e-commerce services within a market.
• Traditional competitors will be well known. With the Internet and the global marketplace there may be new entrants that have the potential to achieve significant market share.
• This is particularly the case with retail sales. For example, successful new companies have developed on the Internet that sells books, CDs and electronic components.
• As a result companies should review:
  • Well-known local competitors
  • Well-known international competitors
  • New internet companies locally and worldwide.

• The equation that can be used in combination to assess competition when benchmarking are as follows:

  Competitive capability= Agility * Reach
              Time-to-market
  

• Example: A company in the financial services industry could look at what portal sites are providing and see if there are lessons to be learnt on ways to make information provision easier. When scanning competitor sites, the key differences that should be watched out for are:
  • New approaches from existing companies.
  • New companies starting on Internet
  • New technologies, design techniques and customer support on the site which may give a competitive advantage.

3.Intermediary analysis:

• Web based intermediaries play an important role in driving traffic to an organization’s website.
• Situation analysis will also involve identifying relevant intermediaries for a particular marketplace.
• These will be different types of portals such as horizontal and vertical portals which will be assessed for suitability for advertising, PR or partnership.
• This activity can be used to identify strategic partners or will be performed by a media planner/buyer when executing an online advertising campaign.
• Various questions answered by analysis of intermediaries include:
  • Do competitors have any special sponsorships arrangements and are micro-sites created with intermediaries?
  • To what extent are competitors using disintermediation or reintermediation?
  • How are existing channel arrangements being changed?
• Example: A book e-tailer needs to assess which comparison or aggregator services such as Kelkoo and Shopsmart it and its competitors are represented on.

4.SLEPT factors:

• Social factors: Social factors include the influence of consumer perceptions in determining usage of internet for different activities. Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety.
• Legal and ethical factors: Legal factors determine the way by which products can be promoted and sold online. Government, on behalf of society, seek to safeguard individual’s right to privacy. Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law
• Economic factors: Variations in the economic performance in different countries and regions affect spending patterns and international trade. Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands.
• Political factors: National governments and transactional organizations have an important role in determining the future adoption and the control of internet by which it is governed. Political factors are basically to what degree the government intervenes in the economy. Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability. Furthermore, governments have great influence on the health, education, and infrastructure of a nation.
• Technological factors: Changes in technology offer new opportunities to the way products can be marketed. Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation.

• Opportunities and Threats:

  Opportunities

  It includes the following factors:

  • What good opportunities can you spot?
  • What interesting trends are you aware of? Useful opportunities can come from such things as:
  • Changes in technology and markets on both a broad and narrow scale.
  • Changes in government policy related to your field.
  • Changes in social patterns, population profiles, lifestyle changes, and so on.
  • Local events

  Threats: It includes the following factors:

  • What obstacles do you face?
  • What are your competitors doing?
  • Are quality standards or specifications for your job, products or services changing?
  • Is changing technology threatening your position?
  • Do you have bad debt or cash-flow problems?
  • Could any of your weaknesses seriously threaten your business?

• Resource Analysis:-

  a) Resource analysis can be defined as “the review of technological, financial and human resources of an organization and how they are utilized in business processes”.

  b) Resource analysis is primarily concerned with e-business capabilities, i.e. the degree to which a company has in place the appropriate technological and applications infrastructure and financial and human resources to support it.

  c) These resources must be harnessed together to give efficient business processes.

  d) Stage models are helpful in reviewing how advanced a company is in its use for information and communication technology (ICT) to support its processes.

  e) Example: Consider a sell-side e-commerce, there are 6 choices for a company deciding on which marketing services to offer via an online presence:

  • Level 0: No website or presence on web.
  • Level 1: Basic web presence.
  • Level 2: Simple static informational web site.
  • Level 3: Simple interactive site.
  • Level 4: Interactive sites supporting transactions with users.
  • Level 5: Fully interactive site supporting the whole buying process.

7.E-Business Strategy:

• The strategy element of e-marketing plan defines how e-marketing objectives will be achieved.
• Strategy definition has to be tightly integrated into the e-marketing planning process since e-marketing planning is an iterative process from situation analysis to objective setting to strategic definition.
• Six key decisions in strategy definition for e-business: