Lesson 4 - Questions Flashcards
Note 1
Digital business strategy outlines the plan of how the business will apply digital technology to improve profitability and processes for customer-facing, partner-facing, and internal communication. The digital business strategy serves as the strategic framework supporting senior management to achieve this business goal, and is an integrative part of the overall business strategy.
Note 2
Note 2: Digital Disruption and Strategy
Digital disruption refers to disruptive changes driven by new digital technologies, products, or business models, even when such changes create value and enable competitive advantage. Digital disruption can result from emergent solutions, systems, and innovative digital tools that companies should adopt to serve their customers, streamline their processes and activities, and secure their competitive advantage. Innovations such as online communication, ERP systems, online shopping carts, e-commerce systems, mobile payments, CRM systems, electronic procurement, online collaborative tools, intelligent systems, big data, Internet of Things (IoT), virtual reality, and cloud computing have transformed the way businesses manage their activities. Firms need to ensure that the adoption of these digital solutions support the digital business strategy. Senior management needs to adapt their strategy and examine which solutions will help create value; they need to understand how they can incorporate and capitalize on digital disruption to turn problems into opportunities, and ensure business continuity.
Note 3
Note 3: Business Plan
A business plan is the written document that identifies a company’s goals, and outlines how the company intends to achieve the digital business strategy and what key resources are needed. It is usually used to sell a new business idea or justify how a proposed new innovative solution (proposed strategy) will help support the company and solve problems. A business plan is an official document to show investors the viability of a project. It usually contains data such as analysis of competitors, market size, profitability, revenue model, resources required, and so on.
Question 1: What three elements should organizations focus on during strategic analysis?
Strategic analysis is intended to help organizations meet their goals and so achieve and maintain competitive advantage. It helps companies strengthen their management decision-making processes by identifying and analyzing key internal and external factors that affect their business. Strategic analysis also helps organizations meet the needs of clients while responding to the new challenges of a hypercompetitive economy. The company should focus on the following three elements.
Resource and process analysis
Immediate competitive environment (i.e., customer demand and behaviour; competitor activity; marketplace structure; relationships with suppliers, partners, and other stakeholders)
The wider environment where the business operates (i.e., social, legal, economic, and political factors that affect business activities).
Question 2: What is SWOT, and why is it important for strategic analysis?
SWOT is the acronym for strengths (S), weaknesses (W), opportunities (O), and threats (T). SWOT analysis is a method of environmental scanning that helps managers plan for the company’s future by examining internal corporate strengths and weaknesses, as well as by identifying the major opportunities and threats that the external environment presents. SWOT analysis helps management understand the environment in which the company operates. It also highlights areas to focus on, either to fix a deficiency or to capitalize on an opportunity.
Question 3: What critical risks and issues should managers address in strategic analysis?
There are several issues managers should address in strategic analysis. The first is change management. It is important to consider not only IT and systems, but, more critically, “soft” business behaviour and culture, attitudes, insights. It is very important for people to understand the scope of this change and accept it as a part of their daily work. This means focusing hard on business needs and cutting through the Internet hype.
Question 1: How does scenario-based analysis contribute to discovering e-commerce opportunities?
Scenario-based analysis is a very useful approach in investigating which digital business opportunities the company should invest in. It enables business managers to explore and understand potential alternative visions of the future before setting their objectives. Specifically, it helps managers better understand the key drivers of the future of the business, and evaluate the eventual risks.
Question 2: How can digital business create business value?
A well-designed digital business enables the company to achieve their competitive advantage, sustain their market, serve their customers well, and strengthen relationships with partner. Add value (e.g., increase revenue through better quality products and services, gather and use accurate and relevant information, increase efficient processes).
Reduce costs (e.g., increase efficiency of communication, automate processes, reduce human errors, shorten time-cycle).
Manage risks (e.g., improved risk identification and management in critical business activity areas such as accounting, finance, HR, corporate performance).
Create new reality (e.g., innovate solutions to serve business needs and support business processes).
Question 3: What is the meaning of SMART, and how is important in defining strategic objectives?
SMART is a metric that can be used to assess and measure the suitability of objectives set to drive different strategies of the digital business. SMART is an abbreviation that stands for the following criteria.
Specific—objectives should be sufficiently detailed to measure the new opportunity.
Measurable—objective should be measurable by way of quantitative or qualitative attributes.
Actionable—objectives should be clear enough to be used for performance improvement.
Relevant—objectives should relate to specific problems the firm faces.
Time-related—objectives should be set up with a defined timeframe.
Question 4: Give examples of metrics that could be used to assess the strategic objectives of a retailer looking to expand its operation digitally.
The retailer needs to define some SMART objectives that fit with the strategic move the retailer has in mind. Example of metrics for assessing this strategic objective include
revenue amount
revenue source (which geographical markets, segments, and products)
acquisition and retention of particular segments
new product development
cost and lead times that are part of the supply chain.
Question 1: Give examples of tools used to assess the viability of the main cost elements for potential digital projects.
To assess the viability of a project, business managers need to consider all elements, including requirements for internal people resources (cost/time), agency resources (cost/time), set-up costs and technical feasibility, ongoing costs, and business and implementation risks. Examples of tools that could be used to assess these requirements are
portfolio analysis, to select the most suitable digital business projects
matrix approach, to plot the digital business strategy’s viability (return on investment) against fit (with the organization’s capabilities).
Question 2: Explain how the matrix approach could be used to assess digital business strategy alternatives.
The two main elements of the matrix approach are fit and viability. Project fit means that the proposed digital opportunity should align with the firm’s core capabilities and other strategic initiatives, fit with the firm’s organizational structure, culture, and values, as well as exhibit ease in terms of technical implementation.
Project viability refers to the added value of the project and its long-term contribution to the company’s sustainability. This can be measured through market value potential (return on investment), time to positive cash flow, as well as personnel and funding requirements.
Question 3: Explain the productivity paradox and outline its implications for managers.
The productivity paradox refers to research results that indicate a poor correlation between organizational investment in information systems and organizational performance measured by return on equity. You should note the arguments for and against the existence of this concept. Even so, it has implications for companies to carefully assess the cost/benefit of investment in all IS, particularly for major initiatives such as digital business. Assessment should be based on business impact and alignment techniques. Successful implementation depends on analysis and design to meet business requirements, and change management through education and training.
Question 4: What critical success factors should a SME business consider when defining and implementing their digital strategy?
When defining and implementing their digital strategy, a SME business should strive for a well-designed interface of their products and services, with quality content as well as easy and convenient navigation features. It is important to foster relationships with their community, and ensure a healthy interaction with all stakeholders. Moreover, the SME must sustain their brand image and gain customer confidence through competitive prices, high quality products, and valuable customer care. In addition, the firm needs to define healthy and viable partners to leverage their forces and ensure sustainability and profitability. Internally, the company needs to streamline their operations through integration and adoption of innovative solutions.
Question 5: What are the key reasons for failed strategies?
The main reasons for failed digital business strategies are related to
timing errors
lack of creativity
offering free services; non-sustainable revenue model
over-ambition
insufficient rigour in research and analysis
failure to set realistic and clear objectives
poor decisions about business and revenue models, target markets, pricing strategies, distribution, and other critical strategic business decisions.
