Ben Clegg, Aston Business School ‘This text provides a strong strategic framework to help students understand this fast-moving subject, as well as a useful guide to practical analysis.’
Mette Præst Knudsen, University of Southern Denmark
What approach to e-business strategy should you follow? How much do you need to invest in e-business? Which processes should be your priorities? Written in an engaging and informative style, E-Business and E-Commerce Management explores these questions, equipping you with the knowledge and skills to navigate today’s fast-paced world of continuous technological development. In this latest edition of his bestselling text, leading authority Dave Chaffey brings together the latest academic thinking and professional practice. Covering all aspects of e-business including strategy, digital marketing and supply chain management, E-Business and E-Commerce Management gives you the benefit of:
• A structured approach to planning, implementing, assessing and improving
e-business strategy for all types of organization. The latest on managing e-business security and cutting edge e-marketing • techniques such as social media and search engine optimization. • Case studies of technology leaders such as Dell, Facebook and Google, as well as start-ups and small businesses. • Real-life interviews with professionals who describe their e-business strategies.
Dave Chaffey (www.davechaffey.com) is an e-business consultant and visiting lecturer on e-business courses at Warwick University and Cranfield School of Management. Additional learning resources are online at
www.pearsoned.co.uk/chaffey
An imprint of
CVR_CHAFF9601_04_SE_CVR.indd 1
www.pearson-books.com
Fourth Edition
Chaffey
Whether you’re an undergraduate or postgraduate student studying e-business and e-commerce, or a business manager, E-Business and E-Commerce Management is the essential text to help you keep pace with technology, strategy and implementation.
E-Business and E-Commerce Management
‘This book keeps getting better and better with every version. It is fast becoming the de facto standard for e-business and e-commerce – for both faculty and students.’
Fourth Edition
E-Business and E-Commerce Management Strategy, Implementation and Practice Dave Chaffey 8/4/09 09:31:49
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Contents
Preface Guided tour About the author Author’s acknowledgements Publisher’s acknowledgements
xiii xxiv xxvi xxvii xxvii
Introduction 52 Real-world E-Business: More Th>n 53 The e-commerce environment 57 Strategic agility 57 Online marketplace analysis 59 Location of trading in the marketplace 67 The importance of multi-channel marketplace models 70 Different types of online intermediary 71 Types of intermediaries 74 The importance of search engines 76 Business models for e-commerce 77 Revenue models 79 Online publisher and intermediary revenue models 80 Focus on auction business models 86 Case Study 2.1 The impact of B2B reverse auctions 87 Focus on Internet start-up companies 88 From ‘bricks and mortar’ to ‘clicks and mortar’ 88 Assessing e-businesses 89 Valuing Internet start-ups 89 Case Study 2.2 lastminute.com – an international dot-com survivor 91 The dot-com bubble bursts 93 Why dot-coms failed 93 The impact of the dot-com phenomenon on traditional organizations 95 Case Study 2.3 Zopa launches a new lending model 95 Summary 98 Exercises 99 References 100 Further reading 101 Web links 101
Part 1 Introduction 1
Introduction to e-business and e-commerce Learning outcomes / Management issues Links to other chapters Introduction The impact of the electronic communications on traditional businesses Real-world E-Business: HP.com What is the difference between e-commerce and e-business? E-commerce defined E-business defined Case Study 1.1 A short history of Facebook Business or consumer models of e-commerce transactions E-business opportunities Business adoption of digital technologies for e-commerce and e-business Drivers of business Internet adoption Case Study 1.2 North West Supplies extends its reach online E-business risks and barriers to business adoption Evaluating an organization’s e-business capabilities Drivers of consumer Internet adoption Barriers to consumer Internet adoption Management responses to e-commerce and e-business Part 1: Introduction Part 2: Strategy and applications Part 3: Implementation Case Study 1.3 eBay – the world’s largest e-business Summary Exercises References Further reading Web links
2
E-commerce fundamentals Learning outcomes / Management issues Links to other chapters
1 3 3 3 4 6 7 9 10 13 17 26 29 30 30 33 35 36 37 39 39 39 40 42 42 46 46 48 49 49 51 51 51
3
E-business infrastructure Learning outcomes / Management issues Links to other chapters Introduction E-business infrastructure components Real-world E-Business: Random House Internet technology Hosting of web sites and e-business services The Internet timeline Just how big is the Internet? Case Study 3.1 Innovation at Google Intranets and extranets Web technology Internet-access software applications Blogs and blogging Electronic mail or e-mail Feeds Voice over IP (VoIP)
103 103 103 104 105 107 109 110 111 114 115 116 124 128 129 131 132 134
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How does it work? Internet standards Networking standards The HTTP protocol Uniform resource locators (URLs) Domain names Web presentation and data exchange standards Audio and video standards Focus on Internet governance Managing e-business infrastructure Managing hardware and systems software infrastructure Managing Internet service and hosting providers Managing employee access to the Internet and e-mail Managing e-business applications infrastructure Focus on web services, SaaS and service-oriented architecture (SOA) Benefits of web services or SaaS Challenges of deploying SaaS Case Study 3.2 New architecture or just new hype? EDI Focus on mobile commerce Wireless Internet access standards Wireless access devices Popularity of mobile applications Summary Exercises References Further reading Web links
136 136 138 139 139 141 152 152 158
E-environment
192 192 192 193 196 198 198 209 222
Learning outcomes / Management issues Links to other chapters Introduction Real-world E-Business: GD Worldwide Social and legal factors Factors governing e-commerce service adoption Privacy and trust in e-commerce Other e-commerce legislation Environmental and green issues related to Internet usage Taxation Freedom-restrictive legislation Economic and competitive factors Focus on e-commerce and globalization Case Study 4.1 The implications of globalization for consumer attitudes The implications of e-commerce for international B2B trading Political factors Internet governance E-government Technological innovation and technology assessment Approaches to identifying emerging technology Summary Exercises References
159 160 165 165 168 168 169 174 176 177 178 179 179 186 187 188 190 190
227 229 231 232 233 235 236 238 239 240 241 244 246 246 247
249 249
Further reading Web links
Part 2 Strategy and applications 5
253
E-business strategy Learning outcomes / Management issues Links to other chapters Introduction Real-world E-Business: Standard Life What is e-business strategy? The imperative for e-business strategy E-channel strategies Strategy process models for e-business Strategic analysis Resource and process analysis Competitive environment analysis Assessing competitive threats Co-opetion Competitor analysis Strategic objectives Defining vision and mission How can e-business create business value? Case Study 5.1 Capital One creates value through e-business Objective setting Case Study 5.2 Setting the Internet revenue contribution at Sandvik Steel Strategy definition Decision 1: E-business channel priorities Decision 2: Market and product development strategies Decision 3: Positioning and differentiation strategies Decision 4: Business, service and revenue models Decision 5: Marketplace restructuring Decision 6: Supply-chain management capabilities Decision 7: Internal knowledge management capabilities Decision 8: Organizational resourcing and capabilities Strategy implementation Failed e-business strategies E-business strategy implementation success factors for SMEs Case Study 5.3 Boo hoo – learning from the largest European dot-com failure Focus on information systems strategy and e-business strategy Elements of IS strategy Investment appraisal Summary Exercises References Further reading Web links
255 255 255 256 256 259 261 262 264 269 269 276 276 281 281 281 282 285 286 287 292 295 298 300 303 306 308 309 310 310 313 314 315 316 319 320 320 324 325 326 328 329
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6
Supply chain management Learning outcomes / Management issues Links to other chapters Introduction Problems of supply chain management What is supply chain management? Using technology to support supply chain management – an example A simple model of a supply chain Case Study 6.1 Shell chemicals redefines its customers’ supply chains What is logistics? Push and pull supply chain models Focus on the value chain Restructuring the internal value chain The value stream Value chain analysis Value networks Towards the virtual organization Options for restructuring the supply chain Using e-business to restructure the supply chain Technology options and standards for supply chain management Adoption rates of e-business applications Case Study 6.2 Tesco develops a buy-side e-commerce system for supply chain management IS-supported downstream supply chain management Outbound logistics management IS infrastructure for supply chain management Supply chain management implementation Data standardization and exchange Human resources requirements of SCM The supply chain management strategy process Managing partnerships Managing global distribution Case Study 6.3 RFID: keeping track starts its move to a faster track Summary Exercises References Further reading Web links
7
E-procurement Learning outcomes / Management issues Links to other chapters Introduction What is e-procurement? Understanding the procurement process Types of procurement Participants in online procurement Drivers of e-procurement Case Study 7.1 Cambridge Consultants reduce costs through e-procurement Focus on estimating e-procurement cost The impact of cost savings on profitability Risks and impacts of e-procurement
330 330 330 331 334 335 337 340 341 345 347 348 350 351 351 352 354 356 358 359 360 363 365 365 366 368 368 369 371 372 374 374 375 376 377 379 379 380 380 380 381 381 384 385 386 387 388 390 391 392
8
ix
Organizational risks Failure to achieve real cost reductions Technology risks Implementing e-procurement The growth in adoption of web-enabled e-procurement Integrating company systems with supplier systems Focus on electronic B2B marketplaces Case Study 7.2 Covisint – a typical history of a B2B marketplace? Types of marketplace The future of e-procurement? Summary Exercises References Further reading Web links
393 393 394 394
E-marketing
412 412 412 413 414 415 416 416 417
Learning outcomes / Management issues Links to other chapters Introduction Chapter structure Real-world E-Business: Guess What is e-marketing? Marketing defined E-marketing defined Distinguishing between e-marketing, e-business and e-commerce E-marketing planning Is a separate e-marketing plan required? Situation analysis Demand analysis Competitor analysis Intermediary analysis Internal marketing audit Objective setting Case Study 8.1 The e-volution of easyJet’s online revenue contribution Strategy Market and product positioning Target market strategies Focus on characteristics of new-media marketing communications Tactics Product Case Study 8.2 Dell gets closer to its customers online Price Place Promotion People, Process and Physical evidence Focus on online branding The importance of brand online Actions Control Case Study 8.3 The new Napster changes the music marketing mix
396 397 400 403 405 407 407 408 409 410 410
417 418 418 420 421 425 427 428 428 431 433 436 437 443 448 451 453 456 460 462 464 464 467 469 470 471
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475 476 477 479 480
Customer relationship management
481 481 481 482 483 484 486 487 488 490 491 492 493
Part 3 Implementation
559
10 Change management 9
Learning outcomes / Management issues Links to other chapters Introduction Marketing applications of CRM Real-world E-Business: Warner Breaks What is e-CRM? Benefits of e-CRM Permission marketing Customer profiling Conversion marketing The online buying process Differences in buyer behaviour in target markets Differences between B2C and B2B buyer behaviour The net promoter score Customer acquisition management Focus on marketing communications for customer acquisition The characteristics of interactive marketing communications Assessing marketing communications effectiveness Online marketing communications Customer retention management Personalization and mass customization Online communities Techniques for managing customer activity and value Lifetime value modelling Focus on excelling in e-commerce service quality Improving online service quality Customer extension Advanced online segmentation and targeting techniques Technology solutions for CRM Types of CRM applications Integration with back-office systems The choice of single-vendor solutions or a more fragmented choice Data quality Case Study 9.1 Tesco.com increases product range and uses triggered communications to support CRM Summary Exercises References Further reading Web links
493 495 498 498 499 502 503 526 528 530 533 534 536 536 539 540 546 547 547 548 549
549 552 552 553 556 557
Learning outcomes / Management issues Links to other chapters Introduction The challenges of e-business transformation The challenges of sell-side e-commerce implementation Different types of change in business Case Study 10.1 Process management: making complex business simpler Planning change The imperative for project governance? The project plan and schedule for an e-business system Prototyping Human resource requirements Staff retention Outsourcing Revising organizational structures Approaches to managing change Senior management involvement Models for achieving change Organizational culture Focus on knowledge management What is knowledge? Objectives of knowledge management Implementing knowledge management Technologies for implementing knowledge management Case Study 10.2 Using Web 2.0 tools to support knowledge management at Janssen-Cillag Australia Risk management Summary Exercises References Further reading Web links
11 Analysis and design Learning outcomes / Management issues Links to other chapters Introduction Real-world E-Business: Arena Flowers Analysis for e-business Workflow management Process modelling Process mapping Task analysis and task decomposition Process dependencies Validating a new process model
560 560 560 561 561 563 566 570 572 572 574 576 579 580 581 583 586 586 586 588 590 590 592 593 594 596 598 600 600 601 603 603 604 604 604 605 606 608 609 610 610 610 612 618
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Contents Data modelling Design for e-business Architectural design of e-business systems Focus on user-centred site design Use-case analysis Designing the information architecture Customer orientation Elements of site design Web accessibility Case Study 11.1 Dabs.com refines its web store Focus on security design for e-business Managing computer viruses Controlling information service usage Monitoring of electronic communications E-mail management Hacking Secure e-commerce transactions Approaches to developing secure systems Current approaches to e-commerce security Reassuring the customer Case Study 11.2 Building an e-business fortress Summary Exercises References Further reading Web links
12 Implementation and maintenance Learning outcomes / Management issues Links to other chapters Introduction Real-world E-Business: Thomas Cook Alternatives for acquiring e-business systems Development of web-based content and services
619 621 621 623 627 634 639 641 646 649 652 658 660 660 665 669 671 671 673 674 674 675 676 677 679 679 680 680 680 681 682 684 686
Creating static web content Software and services for web-site development and testing Testing The testing process Testing environments Changeover Database creation and data migration Deployment planning Content management and maintenance Frequency and scope of content updating Maintenance process and responsibilities Focus on measuring and improving performance of e-business systems Principles of performance management and improvement Stage 1: Creating a performance management system Stage 2: Defining the performance metrics framework Stage 3: Tools and techniques for collecting metrics and summarizing results Budgeting Case Study 12.1 Learning from Amazon’s culture of metrics Summary Exercises References Further reading Web links
Glossary Index
xi 686 689 694 694 695 695 696 697 697 697 699 703 704 705 706 711 724 726 732 732 733 734 735 736 754