CH 5

DIGITAL BUSINESS STRATEGY

Imagine you have a really cool new idea for a product, like a super small music player that
can hold tons of songs. Before this, people had bulky devices or had to carry around CDs or
tapes to listen to music on the go. Your new gadget is much smaller, sleeker, and can hold
way more songs than anything else out there.
So, this new gadget is a disruptive innovation because it's changing the game. It's creating a
whole new market for itself by making it easier and more convenient for people to listen to
music on the move. Before, only a few people might have used those bulky devices, but now
almost anyone can enjoy music wherever they go.
An excellent example of this is the transition from the Sony Walkman, which was popular in
the 1980s, to the Apple iPod in the early 2000s. The Walkman was the go-to portable music
device of its time, but it was bulky, and you could only listen to one tape at a time. Then,
along came the iPod, which was tiny, stylish, and could hold up to 1,000 songs. Plus, it
worked seamlessly with computers, making it easy to manage your music library. So, the
iPod disrupted the market by making portable music players more accessible and
convenient for everyone.

WINNING APPROACHES TO SERVICE INNOVATION

1. Focus on Service Innovation like Product R&D: Just like how product companies
invest a lot in research and development (R&D) to create new and improved
products, service companies should put the same level of effort into coming up with
innovative ways to serve their customers better. For instance, think about how
companies like Google constantly improve their search algorithms or how Amazon
keeps innovating with its Prime delivery service. They invest in making their services
better and more efficient just like product companies invest in making better
products.
2. Personalize the Customer Experience: Imagine you're using a streaming service like
Netflix. They personalize your experience by recommending movies or shows based
on what you've watched before. This makes your experience unique to you.
Similarly, banks might offer personalized financial advice based on your spending
habits. By tailoring their services to individual customers, companies can make the
experience more enjoyable and useful for each person.
3. Simplify and Automate Service Delivery: Think about how some companies have
made it super easy for you to do things online, like ordering food through an app or
booking a ride with a rideshare service. They've simplified the process so much that
it's just a few taps on your phone. Automation plays a big role here too. For example,
many banks now let you deposit a check by simply taking a photo of it with your
 phone. This simplifies the process for customers and reduces the need for manual
work by employees.
By focusing on these winning approaches, service companies can stay competitive and
provide better experiences for their customers.

KEY ELEMENTS OF DIGITAL DISRUPTION

1. Move from Product-Centric to Customer-Centric: In the past, companies would
create products and then market them to consumers. Now, the power has shifted to
consumers who actively seek products that meet their needs. For instance,
companies like Amazon and Netflix use algorithms to recommend products or
movies based on customers' preferences and behavior, making the experience more
tailored to individual needs.
2. Shift from Expensive, Risky, Slow-to-Market to Cheap, Low-Risk,
Fast-to-Market/Fail: Developing new products used to be costly and time-
consuming, with companies only knowing if they were successful after launch. Now,
digital tools allow for the creation of minimum viable products that are tested with
customers for feedback. For example, software companies often release beta
versions of their products to gather feedback before launching the final version.
3. Move Away from Niche Markets to Mainstream Impact: Traditionally, companies
marketed to niche audiences first to control costs. But with social media and digital
marketing, companies can quickly create buzz and reach a broader audience. An
example is how viral marketing campaigns on platforms like TikTok can quickly
propel a product or idea into the mainstream.
4. From Long Product-Development Cycles to Rapid Ideation, Iteration, Delivery, and
Optimization: Digitalization has shortened product-development times and allows
for constant testing and improvement. For instance, software companies regularly
release updates to their apps based on user feedback to enhance user experience
and fix bugs quickly.
5. From Devices to Apps, Sharing Economy, and Crowdfunding: Consumer behavior
has shifted towards mobile apps and sharing economy platforms. For example,
companies like Uber and Airbnb have disrupted traditional industries by providing
platforms for people to share rides or accommodations. Crowdfunding platforms like
Kickstarter enable entrepreneurs to raise funds for their projects directly from
consumers, bypassing traditional financing routes.
These elements show how digital disruption is fundamentally changing the way businesses
operate, from how they develop products to how they interact with customers and markets.
DIGITAL BUSINESS STRATEGY
Strategy: Strategy is like a roadmap for a company. It's a plan that outlines where the
company wants to go in the future and how it plans to get there. This involves setting
specific goals and deciding on the best ways to achieve them.
Digital Business Strategy: Digital business strategy is all about using new technologies to
improve how a company operates and stays competitive. It's about leveraging digital tools
and approaches to support the overall business strategy and gain an edge over competitors.
Explanation with Example: Imagine a traditional retail store that wants to expand its
business online. Their digital business strategy might involve setting up an e-commerce
website, using social media for marketing, and implementing customer relationship
management (CRM) software to track and analyze customer data. By doing this, they're
using digital technologies to enhance their business operations and stay ahead in the
competitive retail market.
Simplified Definition: Digital business strategy is a plan that uses new technologies to
improve how a company operates and gain a competitive advantage. For example, a retail
store might use digital tools like websites and social media to sell products online and
attract more customers.

IMPERATIVE OF DIGITAL BUSINESS STRATEGY

Imperative: In the context of business strategy, "imperative" refers to something that is
absolutely necessary or crucial for achieving success. It signifies a critical need or
requirement that cannot be overlooked or ignored if a company aims to thrive in its industry
or marketplace.

1. Missed Opportunities: This refers to situations where a company fails to recognize

or invest in digital initiatives that could benefit its business. These missed chances
could arise due to inadequate evaluation or insufficient resources allocated to digital
projects. As a result, more astute competitors might seize these opportunities,
gaining a competitive advantage.
2. Inappropriate Direction of Digital Business Strategy: This occurs when a company's
digital strategy doesn't align well with its overarching objectives. For instance, if a
company focuses too heavily on improving internal processes through digitalization
but neglects customer-facing aspects, such as online sales or service channels, it's an
improper direction. Essentially, it means placing emphasis on the wrong areas of
digital transformation, hindering the company's overall growth potential.
 3. Limited Integration of Digital Business: This refers to the lack of seamless
connection and communication between different digital systems or platforms used
within a company. When various departments or functions operate with separate
digital tools that don't integrate effectively, it results in isolated pockets of
information known as silos. This fragmentation impedes collaboration, decision-
making, and the ability to provide a unified experience for customers.
4. Resource Wastage: This occurs when a company duplicates efforts and resources in
developing similar digital solutions across different functions or departments. It
often stems from a lack of coordination and sharing of best practices. For instance, if
multiple teams independently develop similar software applications or digital tools
without collaborating, it leads to inefficient use of resources, including time, money,
and expertise.
In essence, the imperative for digital business strategy highlights the importance of
effectively evaluating, aligning, integrating, and optimizing digital initiatives within a
company to capitalize on opportunities, minimize inefficiencies, and maintain
competitiveness in the digital age.

DIGITAL CHANNEL STRATEGIES

1. Definition of Digital Channel Strategies: These are plans that outline how a company
will use electronic media to communicate with its customers and partners. They
involve setting specific objectives and developing strategies for various digital
channels, such as mobile commerce, social media, and social CRM.
2. Multichannel Digital Business Strategy: This strategy involves interacting with
customers using a combination of direct and indirect communication channels. For
example, a company might use both its website and social media platforms to
engage with customers.
3. Omnichannel Business Strategy: This strategy aims to provide a seamless experience
for customers across all channels. It involves integrating all channels so that
customers can transition between them effortlessly. Essentially, it's about ensuring
consistency and continuity throughout the entire customer journey, from awareness
to purchase and beyond.
4. Components of Digital Business Strategy: This defines how a company should
communicate the benefits of using digital channels, prioritize target audiences or
partners for digital channel adoption, prioritize products sold or purchased through
digital channels, and achieve digital channel targets.
5. Creating Differential Value: Digital channel strategies aim to create unique value for
all parties involved in a transaction, including customers and partners. It's about
 offering something distinctive and valuable through digital channels that sets the
company apart from competitors.
6. Selective Adoption and Right-Channelling: Not all products or services are suitable
for digital channels, and not all partners will derive sufficient value from them. Right-
channelling refers to the selective adoption of online channels, where companies
focus on reaching the right customers, using the right channels, delivering the right
message or offering, at the right time.
In summary, digital channel strategies are crucial for companies to effectively communicate
with customers and partners through electronic media. They involve setting specific
objectives, utilizing various channels, and creating differential value, while also ensuring
selective adoption and integration across channels.

KEY PLATFORM STRATEGIES

Platform Strategies: These are plans or approaches used by companies to leverage
technologies like cloud computing, social media, and mobile devices to create platforms
where users can connect, share, and transact.
Key Success Factors:
1. Connection: This is about how easy it is for people to join and use the platform and
engage in sharing or transactions. For example, think about how easy it is to sign up
for a social media platform like Facebook or Instagram. The easier it is for users to
join and interact, the more successful the platform is likely to be.
2. Gravity: This refers to how well the platform attracts both producers (those who
create content or products) and consumers (those who use or purchase them). For
instance, a successful e-commerce platform like Amazon attracts both sellers and
buyers, creating a strong gravitational pull towards the platform.
3. Flow: This is about how well the platform facilitates the exchange and co-creation of
value among its users. For example, consider a platform like Airbnb, where hosts and
guests exchange accommodation services. The smoother and more efficient this
exchange process is, the more value is created for all parties involved.
In simple terms, for a platform strategy to succeed, it needs to be easy to join and use,
attract users effectively, and facilitate the smooth exchange of value among its participants.
These factors determine how well the platform performs and how valuable it is to its users.
TYPES OF PLATFORM
1. Aggregation Platforms: These platforms bring together various resources or
offerings and help users connect with them. They are typically focused on facilitating
transactions or completing tasks quickly. There are three sub-categories:
 Data/Information Aggregation Platforms: These platforms gather and
organize large amounts of data or information, such as scientific databases.
 Marketplace/Broker Platforms: Platforms like MoneySuperMarket, eBay,
and the App Store connect buyers and sellers, facilitating transactions
between them.
 Contest Platforms: These platforms allow users to post problems and offer
rewards for the best solutions. Examples include InnoCentive and Kaggle.
2. Social Platforms: These platforms aim to bring together people who share common
interests or goals. They help users build and maintain relationships over time.
Examples include Facebook and Twitter, where users communicate and interact with
each other based on shared interests or connections.
3. Mobilization Platforms: These platforms focus on turning common interests into
collective action. They encourage people to work together to achieve a goal or
accomplish something beyond individual participation. One example is crowdfunding
platforms like Crowdfunder and Kickstarter, where individuals contribute funds to
support business ideas or projects.
In essence, aggregation platforms connect users with various resources, social platforms
facilitate communication and relationship-building, and mobilization platforms encourage
collective action toward a common goal. Each type serves different purposes and caters to
different user needs.

Strategy process models for digital business

Think of a strategy process model as a step-by-step guide for developing a digital business
strategy. Just like following a recipe to bake a cake, a strategy process model lays out the
necessary ingredients and steps to create a successful strategy for your digital business.
Here's a breakdown in simpler terms:
1. Framework for Key Activities: The model provides a structured framework that
outlines all the important tasks and activities needed to develop a digital business
strategy. It's like having a roadmap that ensures you don't miss any crucial steps
along the way.
 2. Logical Sequence: It presents these activities in a logical order, so you know what to
do first, second, third, and so on. This logical sequence helps to organize your
thoughts and actions, making the strategy development process more manageable
and efficient.
3. Continuous Improvement: The model also emphasizes the importance of continuous
improvement. This means that even after you've developed your initial strategy, you
should regularly revisit and refine it to adapt to changes in the digital landscape and
improve its effectiveness over time. It's like fine-tuning your recipe based on
feedback to make an even better cake next time.
In essence, a strategy process model guides you through the process of creating and
evolving your digital business strategy, ensuring that you cover all the essential steps and
make ongoing improvements to stay competitive and successful in the digital world.

key elements Strategy process models

for digital business
1. Internal and External Environmental Scanning or Analysis: This means regularly
looking both inside and outside of your company to understand what's happening in
the environment. Internally, you assess your strengths and weaknesses. Externally,
you keep an eye on what your competitors are doing and any changes in the market.
In digital business, this scanning needs to happen continuously because the digital
world is always evolving with new platforms and trends.
2. Clear Statement of Vision and Objectives: You need to clearly define where you
want your digital business to go and what you want to achieve. This clarity helps
everyone understand the company's direction, including employees and customers.
Objectives are specific goals that help you track whether you're making progress
toward your vision. Since digital business often involves significant changes over the
long term, having a clear vision and objectives is crucial for staying focused and on
track.
3. Strategic Definition: This involves coming up with different options for your strategy,
evaluating them, and then choosing the best one. It's like considering different paths
to reach your destination and picking the one that seems most promising.
4. Enactment of the Strategy: Once you've developed your strategy, it's time to put it
into action. This involves implementing the plan throughout your organization,
making sure everyone knows what they need to do to make it happen.
 5. Control and Optimization: You need to monitor how well your operations and
strategy are working. If there are any problems or areas where things aren't going as
planned, you need to adjust and make improvements. With digital business, you can
use digital analytics to track things like how people are interacting with your website
or social media channels. This data helps you understand your audience better and
make informed decisions to improve your business.
In summary, these key elements of the strategy process model for digital business guide you
through the steps of understanding your environment, defining your vision and objectives,
developing and implementing your strategy, and continuously monitoring and optimizing
your operations for success in the digital world.

Three key dimensions for

defining an e-commerce strategy:
1. Where will the organization compete?: This dimension focuses on determining the
markets or segments within the external environment where the organization will
operate. It involves identifying the specific target markets or customer segments that
the e-commerce strategy will focus on serving. For example, if a company sells sports
equipment, it might choose to compete in the online fitness market or target specific
demographics like young athletes or fitness enthusiasts.
2. What type of value will it create?: This dimension involves defining the value
proposition of the e-commerce strategy. It's about determining how the organization
will create value for its customers and stakeholders. This could include strategies to
increase revenue, such as offering unique products or services, providing exceptional
customer service, or implementing innovative pricing models. It could also involve
strategies to reduce costs, such as streamlining operations, optimizing supply chain
processes, or implementing efficient logistics solutions.
3. How should the organization be designed to deliver value?: This dimension focuses
on the internal design and structure of the organization to effectively deliver the
value proposition defined in the second dimension. It involves designing the
organizational structure, processes, systems, and capabilities necessary to support
the e-commerce strategy. This could include decisions about staffing, technology
infrastructure, distribution channels, partnerships, and customer engagement
platforms. The goal is to ensure that the organization is equipped to deliver value to
customers in alignment with its strategic objectives.
In essence, these three dimensions help guide the development of an e-commerce strategy
by addressing questions about where to compete, how to create value, and how to design
the organization to deliver that value effectively.
STRATEGY TYPE
1. Prescriptive Strategy:
 Explanation: In a prescriptive strategy, the process of strategic analysis
(understanding the current situation), strategic development (planning for
the future), and strategy implementation (putting plans into action) are
linked together in a sequential manner. This means that each stage follows a
specific order, with one leading naturally into the next.
 Example: Imagine a retail company that wants to expand into new markets.
First, they conduct thorough market research (strategic analysis) to
understand customer needs and competitor landscape. Then, based on this
analysis, they develop a detailed expansion plan (strategic development),
including target markets, product offerings, and marketing strategies. Finally,
they implement this plan by opening new stores and launching marketing
campaigns (strategy implementation), following the sequence laid out in their
strategy development phase.
2. Emergent Strategy:
 Explanation: In contrast, emergent strategy involves a more flexible and
adaptive approach. In this type of strategy, strategic analysis, strategic
development, and strategy implementation are interrelated and developed
together. This means that the strategy evolves over time based on ongoing
learning and feedback, rather than following a fixed sequence.
 Example: Consider a tech startup that develops a new software product.
Initially, they have a broad vision for the product but lack detailed plans. As
they begin to develop and release early versions of the software, they gather
feedback from users and monitor market trends (strategic analysis). Based on
this feedback, they continuously refine and adjust their product roadmap and
business model (strategic development). Meanwhile, they implement
changes and updates to the software in real-time (strategy implementation),
responding to emerging opportunities and challenges as they arise.
In summary, prescriptive strategy follows a linear sequence of analysis, development, and
implementation, while emergent strategy involves a more fluid and adaptive approach
where these elements are intertwined and evolve together over time.
STRATEGIC ANALYSIS

Strategic Analysis: This is like taking a deep dive into both the inside and outside of a
company to understand where it stands and where it's headed. It involves gathering and
reviewing information about the company's internal processes and resources, as well as
external factors in the marketplace. The goal is to gather insights that will help shape the
company's strategy.
Internal Resources and Processes: This part of the analysis involves looking closely at what
the company has - its people, technology, finances, and operations. For example, if we're
analyzing a tech company, we'd look at things like their software development capabilities,
the skills of their employees, and their financial health. This helps us understand the
company's strengths and weaknesses.
Immediate Competitive Environment (Micro-Environment): Here, we focus on what's
happening right around the company - its customers, competitors, and partners. For
instance, if we're analyzing a retail business, we'd study customer preferences, what
competitors are offering, and how the market is structured. This gives us insights into the
company's position in the marketplace and potential areas of competition.
Wider Environment (Macro-Environment): This part of the analysis zooms out to look at
the broader context in which the company operates. This includes factors like economic
trends, regulatory changes, and cultural shifts. For example, if we're analyzing a food
delivery startup, we'd consider trends in food consumption, government regulations on
food safety, and cultural attitudes towards ordering food online. Understanding these
external factors helps us anticipate opportunities and threats facing the company.
Example: Let's say we're analyzing a company like Netflix. Internally, we'd look at their
streaming technology, their original content production capabilities, and their subscriber
growth. In the micro-environment, we'd examine their competitors like Amazon Prime
Video and Disney+, as well as trends in viewer preferences and subscription pricing. In the
macro-environment, we'd consider factors like the rise of streaming as a dominant form of
entertainment, regulatory changes in the media industry, and shifts in consumer behavior
towards online streaming. All of this analysis helps Netflix understand its strengths,
weaknesses, opportunities, and threats, informing its strategy for growth and staying
competitive in the streaming market.
Resource and Process Analysis
Resource Analysis: This involves evaluating the digital business capabilities of a company.
It's all about assessing whether the company has the right technological infrastructure,
applications, and financial and human resources in place to support its digital operations
effectively.
Example: Let's consider a digital marketing agency. In terms of technological infrastructure,
they need robust software tools for tasks like social media management, email marketing,
and analytics. They also need reliable hardware such as computers and servers to run these
tools efficiently. Financial resources are essential for investing in these technologies, as well
as for hiring skilled professionals to manage them effectively. Human resources include
employees with expertise in digital marketing, content creation, data analysis, and other
relevant skills. By conducting a resource analysis, the agency can identify any gaps or
weaknesses in its capabilities and take steps to address them, such as investing in new
technology or hiring additional staff.
Process Analysis: This focuses on how these resources are utilized to create efficient
business processes. It's about ensuring that the company's resources are harnessed
together effectively to achieve its business objectives.
Example Continuation: Once the digital marketing agency has the necessary resources in
place, they need to develop efficient processes for managing client campaigns, analyzing
data, and delivering results. This may involve creating standardized workflows for tasks like
content creation and approval, implementing project management systems to track
progress, and establishing clear communication channels between team members and
clients. By optimizing their processes, the agency can streamline operations, reduce
inefficiencies, and deliver better results for their clients.
In summary, resource and process analysis for a digital business involves evaluating the
company's capabilities and how they are utilized to create efficient business operations. By
understanding their resources and optimizing their processes, companies can better
leverage digital technologies to achieve their goals and stay competitive in the digital
marketplace.

Stage Models of Digital Business Development:

Definition of Stage Model: A stage model is a framework that breaks down the progression
of a company's digital business development into distinct levels or stages. These stages
represent different levels of maturity in adopting digital technologies and integrating them
into various aspects of the business.
For Sell-Side E-commerce:
1. Level 0: No Presence: At this stage, the company has no online presence. It doesn't
have a website or any listing on web directories.
2. Level 1: Basic Web Presence: Here, the company is listed on a website directory, but
it doesn't have its own website. It's simply a name listed among others.
3. Level 2: Simple Static Website: The company establishes a basic website with static
information about the company and its products or services. This website acts like a
digital brochure, providing essential details but lacking interactivity.
4. Level 3: Simple Interactive Site: In this stage, the website becomes more interactive.
Users can search for information and make queries through forms or email. Basic
customer support features, such as FAQs or online forums, may be introduced.
5. Level 4: Interactive Site with Transactions: The website evolves to support
transactions. Users can now make purchases or place orders online. However, the
functions are usually limited to basic online buying processes.
6. Level 5: Fully Interactive Site: At the highest level, the website becomes fully
interactive and supports the entire buying process. It offers advanced features like
personalized recommendations, customer accounts, and comprehensive support
services. This stage emphasizes relationship marketing, aiming to build strong
connections with individual customers and facilitate a wide range of marketing
interactions.
For Buy-Side E-commerce:
1. Level I: No Web Use for Sourcing: At this stage, the company doesn't utilize the web
for sourcing products, and there's no electronic integration with suppliers. Purchases
are made through traditional methods.
2. Level II: Review and Selection: The company starts using intermediary websites, B2B
exchanges, or supplier websites to review and select products from competing
suppliers. However, orders are still placed conventionally.
3. Level III: Electronic Orders via Intermediary Sites: Orders are now placed
electronically through EDI or intermediary sites. However, there's no integration
between the company's systems and the supplier's systems, so manual rekeying of
orders into internal systems is required.
4. Level IV: Electronic Orders with Procurement Integration: Orders are placed
electronically and integrated into the company's procurement systems. This
integration streamlines the procurement process and reduces manual tasks.
5. Level V: Full Integration: At the highest level, orders are placed electronically with
full integration into the company's procurement, manufacturing requirements
planning, and stock control systems. This level of integration optimizes the entire
supply chain process, leading to increased efficiency and cost savings.
In essence, these stage models provide a structured approach for companies to assess their
current digital business capabilities and identify areas for improvement as they progress
towards full digital transformation. Each stage represents a milestone in the journey
towards achieving a fully integrated and optimized digital business environment.

Organizational & IS SWOT Analysis:

Definition: SWOT analysis is a strategic planning tool used to evaluate the Strengths,
Weaknesses, Opportunities, and Threats facing an organization or a specific project. When
applied to Information Systems (IS), it helps assess the internal and external factors that
impact the organization's digital capabilities and strategies.
Evaluation Framework: Perrott (2005) suggests a framework that balances internal
resources with external forces. This framework involves considering the organization's
internal capabilities and incentives alongside external factors and capabilities.
Quadrants: The framework defines four quadrants that represent different scenarios
organizations may find themselves in regarding digital business adoption:
1. Market-Driving Strategy: This quadrant represents organizations with high internal
capabilities and incentives but low external forces or incentives. These are typically
early adopters who have strong internal resources and motivations to drive digital
innovation, regardless of external pressures. For example, a tech startup that
pioneers a revolutionary digital service in a relatively traditional market.
2. Capability Building: Organizations in this quadrant have low internal capabilities and
incentives but face high external forces or incentives. They are considered later
adopters who are compelled to improve their digital capabilities due to strong
external pressures, such as changing consumer preferences or regulatory
requirements. For instance, a traditional brick-and-mortar retailer investing in e-
commerce platforms to compete with online competitors.
3. Market-Driven Strategy: Here, both internal capabilities and external forces or
incentives are high. These organizations are well-positioned to leverage their internal
strengths while also capitalizing on external opportunities. They actively shape their
strategies based on market demands and technological advancements. An example
could be a digital-native company continuously innovating its products and services
based on customer feedback and market trends.
4. Status Quo: Organizations in this quadrant have low internal capabilities and
incentives, coupled with low external forces or incentives. They see little urgency or
necessity to change their current strategies or digital investments. They may
maintain traditional business models and resist digital transformation efforts. An
example might be a small local business that relies primarily on word-of-mouth
marketing and has minimal online presence.
In summary, this framework helps organizations understand where they stand in terms of
digital business adoption and guides their strategic decisions by considering both internal
strengths and weaknesses and external opportunities and threats.

Competitive Environment Analysis:

Demand Analysis:
 Demand analysis involves assessing the current and future levels of customer,
partner, and internal engagement with digital technology platforms and e-commerce
services.
 It's crucial for shaping digital business strategy objectives and informing decisions in
digital marketing planning.
 For example, demand analysis helps businesses understand how many customers
are using online platforms, what services they're interested in, and how their
preferences might change in the future. This information guides companies in
tailoring their digital offerings to meet customer needs effectively.
Considerations for Buy-Side E-commerce:
 In addition to analyzing customer demand, companies involved in buy-side e-
commerce need to consider the e-commerce services offered by their suppliers.
 They should assess how many suppliers offer e-commerce services and where they
are located geographically.
 This analysis helps companies determine the availability and accessibility of e-
commerce services among their suppliers, which can influence their procurement
strategies and supply chain management decisions.
 For instance, if most suppliers offer robust e-commerce services, a company may
prioritize digital procurement processes to streamline operations and improve
efficiency.
In summary, competitive environment analysis involves understanding customer demand
for digital services and considering the e-commerce capabilities of suppliers. This
information enables businesses to develop effective digital strategies and optimize their
operations in the digital marketplace.

COMPETITIVE THREATS
Threat of New E-commerce Entrants:

 Description: This threat arises when new players, often with lower barriers to entry,
enter the market and challenge existing businesses.
  Example: Traditional banks facing competition from online-only banks like Zopa.
These new entrants leverage digital platforms without the need for extensive
physical infrastructure, thus disrupting the market.
2. Threat of New Digital Products:
 Description: This threat stems from the emergence of new digital products or
services, often at lower costs, challenging established players.
 Example: Kodak faced the threat of declining demand for traditional film with the
rise of digital cameras and online photo-sharing services. Despite efforts to adapt,
Kodak struggled to compete effectively in the digital market.
3. Threat of New Business Models:
 Description: This threat arises when new business models disrupt existing industry
norms, leading to increased competition and market rivalry.
 Example: The rise of online marketplaces like Amazon transformed traditional retail
by offering a vast selection of products at competitive prices. This forced brick-and-
mortar retailers to innovate or risk losing market share.
Sell-side Threats:
 Customer Power and Knowledge: Customers' ability to compare prices online,
leading to increased price sensitivity.
 Power of Intermediaries: Risks of losing market share due to disintermediation or
competition from intermediary platforms.
Buy-side Threats:
 Power of Suppliers: Companies leveraging digital tools to demand efficiency
improvements from suppliers.
 Power of Intermediaries: Risks associated with integrating with buy-side
intermediaries and potential cost increases.
In summary, competitive threats in digital business stem from new entrants, products, and
business models, along with shifts in customer behavior and supplier dynamics. Businesses
must adapt to these threats by leveraging digital technologies, enhancing customer
experiences, and fostering strategic partnerships.