Degitization of Business

Case Study- Presentation

HOW A FIRM’S COMPETITIVE ENVIRONMENT AND

DIGITAL STRATEGIC POSTURE INFLUENCE

DIGITAL BUSINESS STRATEGY

GROUP 3

ROLL NO: 17 – 24

Introduction

THE BUSINESS INFRASTRUCTURE HAS BECOME DIGITAL WITH INCREASED INTERCONNECTIONS AMONG PRODUCTS, PROCESSES, AND SERVICES.

THE TIME IS RIGHT TO RETHINK THE ROLE OF IT STRATEGY, FROM A FUNCTIONAL PERSPECTIVE

Emergence of Digital Business Strategy

Digital technologies are fundamentally reshaping traditional business strategy as modular, distributed, cross-functional, and global business processes.

It also enable different forms of dynamic capabilities suitable for turbulent environment.

It is also transforming the structure of social relationships in both the consumer and the enterprise space with social media and social networking.

Their working definition of digital business strategy is simply that of organizational strategy formulated and executed by leveraging digital resources to create differential value.

Going beyond the traditional view

Going beyond systems and technologies

Explicitly linking digital business strategy to creating differential business value

Scope/Focus

Understanding the scope helps to conceive its relationship to firms, industries, IT infrastructures, the external environment, and how digital business strategy can be more effective in a variety of settings.

IT investment

IT outsourcing investment.

Include Digitization of Products and Services

Many firms are beginning to see the power of digital resources to create new IT capabilities and craft new strategies around new products and services. ▫ Amazon’s Web Services on the cloud

The importance of scope under digital conditions is relevant even beyond technology companies

GE seeks to find technology-based extensions in areas such as aircraft engines, medical devices…

Digital resources around digital business strategy should be viewed relatively broadly.

Three Key Elements of theIndustry Environment

Industry turbulence : (dynamism) Turbulent industries are characterized by competitive opportunities arising from an ongoing stream of innovations and competitive actions by industry players.

Industry Concentration: (competition) In economics, market concentration is a function of the number of firms and their respective shares of the total production (alternatively, total capacity or total reserves) in a market. Alternative terms are Industry concentration

Industry growth : (munificence)A sector of the economy experiencing a higher-than-average growth rate. Growth industries are often associated with new or pioneer industries that did not exist in the past and their growth is related to consumer demand for the new products or services offered by the firms within the industry

Extend the Scope Beyond Traditional Industry Boundaries

The use of digital platforms enables firms to break traditional industry boundaries and to operate in new spaces and niches

Apple has redefined the mobile entertainment ecosystem

Amazon has redefined the book-selling ecosystem

Scale

Scale confers benefits of lower unit cost of products and helps enhance profitability.

They have identified at least four ways that scale of digital business strategy is distinct and qualitatively different.

(1)Rapid Digital Scale Up/Down as Strategic Dynamic Capability

When the digital infrastructure and business strategy are fused, this rapid scaling ability becomes a strategic dynamic capability for the firm to adapt to the dynamic requirements of the digital marketplace.

Service provider allow their customers to dynamically adjust their digital resources as competitive pressures may demand.

Amazon Web Services, SalesForce.com, Vmware…

(2)Network Effects Create Rapid Scale Potential

As more products and services become digital and connected, network effects become the key differentiator and driver of value creation.

Supply side with digitally interconnected partnerships

Google and Android-powered devices

Demand side with interconnections among web pages

Facebook and Open Graph

These ideas can be extended broadly as digital connections extend to other areas such as automobiles, retailing through mobile apps, and healthcare…

(3)Scale Will Increasingly Take Place under Information Abundance

We are in a world of amplified networks with an abundance of data, information, and knowledge.

Scale will require understanding how to develop the organizational capabilities to harness the huge quantities of heterogeneous data, information, and knowledge.

(4)Scale Through Alliances and Partnerships

When digital intensity increases and digital business strategy takes hold, scaling options are more likely to be based on alliances and partnerships through shared digital assets with other firms in the business ecosystem across different traditional industry boundaries.

Sources of Value Creation and Capture

Increased value from information

Business models rely on accurate, timely information Google, Facebook, and eBay

Value creation from multisided business models Google’s entry into mobile phones is based on giving away the software (Android) free and monetizing it

through its ability to influence and control advertising

Value capture through coordinated business models in networks

Involve complex and dynamic coordination across multiple companies

The business model are intersect and interoperate across these different players app developers, the mobile OS, hardware manufactures, telecom operators, and service providers (FB,

YouTube…)

Value appropriation through control of digital industry architecture Apple earns its profits not only its products but receives a share of the follow-on revenue

Special issue

The expanded scope and scale of digital business strategy as well as to the novel use of digital resources to rapidly formulate and execute it to create differential business value.

Focus on digital business strategy within and outside the enterprise, including

(1)the firm’s competitive industry environment

(2)its customer connections as determinants of digital business strategy.

Main Findings & Implications

This study set out to investigate how digital strategic posture influences a firm’s digital business strategy.

Strategic posture has a convergent effect for general IT investment and a divergent effect for IT outsourcing investment at the mean value of industry factors.

it is helpful to recognize how variations in the competitive environment explain the difference in how digital strategic posture of an organization.

We provide evidence for how managers view IT as a platform for undertaking strategic actions in response to actions of industry peers.

In turn, the results can help managers understand how competitors are likely to respond to their actions in different industry contexts.

The platform forward

Some firms have embarked on social media as part of their marketing operations, but without necessarily linking them back to their core IT infrastructure.

Other firms have focused on streamlining supply chains without necessarily taking an end-to-end look at the coordination challenges and rapid scale-up necessary to buffer against uncertainties in the environment.

The time is right to shift our thinking about IT, not as a functional-level response, but as a fundamental driver of business value creation and capture.

(1)Shape the new business infrastructure and (2)influence the new organizational logic and patterns of coordination within and across firms.

Urge researchers examining the impacts of digital business strategy to theorize and develop metrics reflecting the four themes introduced here.

They hope that this collection of paper will provoke IS researchers and strategic management researchers to step up their collaborative efforts and will provide an energizing platform to help produce the next generation of insights.

THANKS