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Integrating the Internet to your business strategy
Being part of the major revolutions that created deep mutations within the economy, information and communication technologies (ICT), notably the Internet, allowed businesses to work differently and more efficiently. These transformations created a direct and positive impact on productivity evolution. 'Between 1995 and 2000, the Internet and ICTs increase productivity in all non-agricultural sectors by 2.5% per year. It's not far from the golden age world record of between 1959 and 1973."
Quickly, the scope of the Internet and its impact at all levels of a business was measured: from productivity, financing, marketing, logistics, business processes, to human resources. The majority of observers recognised that e-commerce reduces transaction costs, enhances resource allocation, allows for economies of scale, and increases the competitiveness of businesses in general.
It is thus logical that the coming of such important changes shakes business models and existing ways of doing things, and generates countless reactions. Additionally, pervious technological revolutions were also characterized by exaggeration and non-realistic business models. The Internet is no exception. The speculated bursting of the Internet bubble thus came as no surprise. In this regard, the predictions of excessive e-commerce growth had as a consequence a data crisis, and we all know that came subsequently.
Many pioneers have also neglected the preparations involved with conducting Internet business. Many have underestimated the price to pay to make consumers change their habits, to create a new brand, or to master the complexities of a distribution network. Today, it is clear that the businesses that enjoyed the greatest advantages on the Internet were those that already had a brand and a business infrastructure, and that knew to integrate the Internet into their business strategies.
The absence of reliable and internationally comparable data motivated the US and other countries to integrate the measurement of electronic transactions in all their statistical models. This practice allowed to evaluate the electronic commerce index within global economical results. This way, decision makers can evaluate using real data and not using estimates that vary considerably from one private prediction firm to another.
On the field, the business world opts for an approach more though out when it comes to taking advantages and opportunities brought forth by the Internet. In other words, we recognized that the success of Internet business practices were real but not guaranteed.
This generalised attitude of clients towards the internet represents a driving force that conditions the Internet product and service industries. Henceforth, all Internet projects must be considered as business projects, in the sense that it has to be seen as an investment. In fact, no decision related to the Internet should be taken without a rational market analysis or a market potential analysis of a project. Additionally, trying to establish the best estimation of return of investment should never be put aside.
Time passes and the opportunities that Internet produces are confirmed and become stable. The new challenge for managers that want to succeed resides in the choice of those that can create value, competitiveness, and profitability. The experience of the previous years allows to situate these actions within two well known universes, those of Marketing and Operations.
It is primordial to have a clear idea of clients' needs and that which the business can offer. From a profitability point of view, its important to choose products and services, as well as distribution channels that meet the expectations of the clients. Also, its important to establish precise objectives in order to be able to measure results and correct certain aspects if necessary. However, the Internet has its own rules that govern the application of known marketing practices.
For example, if we want to use a Website as a communication tool, the concepts of brand image, positioning, and differentiation, always apply. We're still preoccupied with communication strategies, graphics, and the creativity sought by clients. However, some things are done differently. Content is not handled in the same manner. Graphic design has to take into account the usability of the Website. Basically, the offer has to anticipate at the minimum some general functionality of added value compared to traditional communication methods. The Internet cannot be treated like other communication channels.
For marketing managers that are willing to invest resources and to review their business processes, the Internet allows them to enhance the way clients are served while at the same time optimising operational efficiency. The Internet also allows to accelerate the market implementation procedures and generates highly satisfying results when actions are targeted.
The companies that desire to enhance their financial performances can obtain very interesting results by taking concrete actions on their operations. Internet technologies bring up a multitude of applications. They can have a significant effect of profit margins, turnover, and return on equity. Managers have to, however, be willing to review certain business procedures, to mobilise troops, and to take the appropriate time to select the proper applications. All this while keeping in mind the operational and human reality of their businesses.
Those that will be able to convince their partners and suppliers will benefit from superior performance.
For those, performance will be relative to the integration of their information systems and the combination of their business processes with their willingness to share information with other businesses. It's a complex and ambitious task, but such cooperation on the Internet offers new alliance possibilities that can compete with other business networking strategies.
SMBs AND EXPORTATION
For SMBs, the Internet offers new possibilities for international commerce.
The Internet gives us access to new suppliers and partners. Additionally, it gives SMBs the possibility to implement new strategies that are less expensive and to create a brand image in markets that they previously couldn't access.
On the international commerce level, traditional marketing and exportation channels are dominated by countless intermediaries. It might be hard for a new comer to make a place for themselves within these infrastructures. The Internet made this situation easier by providing e-commerce.
But careful, a Website opens a window onto the international market, but it can't substitute an exportation strategy adapted to for the Internet. A good strategy must address financing, guarantee, transportation, and commercial information needs.
ROI AND STRATEGIC CONSEQUENCES
To assure a return on investment, we have to define the areas of priority in which a business can benefit from quick results. The business must also take advantage of all operational or business development efficiency opportunities that apply to the Internet, as soon as they present themselves. To enhance long-term business competitiveness, the business must take into account strategic consequences. This includes increasing customer satisfaction, the addition of new products or services to a new distribution channel, or even the sharing of knowledge and competencies between employees or partners.
In other words, those that will have the most success stemming from the Internet are those businesses that will incorporate it into their business strategy, and those that will adopt a thought out process regarding their investments.
 PDF Version
Lynda St-Arneault, Exo Marketing Intégré
References:
United Nations Conference on e-commerce and development, Report on e-commerce and development 2001, United Nations, New York and Geneva, 2001.
BARUA, Anitesh, PRABHUDEV, Konana, WHINSTON, Andrew B., et YIN, Fang, Driving E-Business Excellence, MIT Sloan Management Review, Cambridge, Fall, 2001, pp.36-44.
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