E-Business Strategies Use the Web and Apps for Business Success. A common question asked of business executives is "What is your e-bu siness strategy?" This refers to the strategic use of the Web and mobile apps to gain competitive advantage. Table 7.1 describes common Web~based business models that employ a variety of the following strategies.15 BZC strategies link businesses with consumers. Whenever you buy a music download from Apple's iTunes Store, order a book from Amazon, or shop at Patagonia for the latest out- door gear, you are the \"C" in a 82C strategy. BZB strategies link businesses with members of their supply chains. For example, Alibaba links manufacturers with retailers and distributors. Dell Computer has special Web services that allow major corporate customers to manage their accounts online. Walmart ties suppli- ers into its information systems so they can electronically manage inventories for their own products. C23 strategies [in k consumers with businesses thatcan supply needed products or ser vices. In contrast to 82C, the C28 strategy puts the initiative forthe transaction in the ha ads of the potential customer. Elance, for example, [in ks customers needing a special project completedsay a Web animationwith businesses who bid forthe work. C23 \"inlluencers\" on sites like Instagram, Twitch, and YouTube guide viewers to businesses selling their pre- ferred products. C2C strategies link consumers to one another. Transactions take place in online mar ketplaces where the host site collects a fee. Examples are eBay. Craigslist, and Etsy. With the growing power ofWeb \"connections\" and \"communities\" C2C has shifted substantially toward P2P strategies. These are peer-to-peer connections in the sharing economy where apps directly link persons needing services with those willing to provide them. Examples are Uber matching riders with drivers, TaskRabbitmatching small jobs with \"taskers\" willing to do them, and Airbnbmatching travelers with host residences. There's a lot of buzz today about social media strategy. Think of this as an organization using social media such as Facebook or Twitterto engage with customers, clients, and external audiences. How often do you hear or read " Find us on Facebook\" or \"Follow us on Twitter?\" Goals for social media strategies range from direct sales to corporate imaging to relationship development to product design and development. The latter often involves crowdsourcing to allow existing and potential customers to make suggestions and express opinions on prod- ucts and their designs. An example is Threadless.com. The firm's online visitors submit designs TABLE 7.1 Sample Web-Based Business Models Advertising model: Provides free information or services and then generates revenues from paid advertising to viewers [e.g., Yahoo!, Google) Brokerage model: Brings buyers and sellers together for online business transactions and takes a percentage from the sales (e.g.. eBay, Priceline} Community model: Provides a meeting point sold by subscription or supported by advertising (e.g., eHarmony, Facebookl Offers a free service and encourages users to buy extras leg, Skype, Zynga} lnfomediary model: Provides a free service while collecting information on users and selling it to other businesses (e.g., Epinions, Yelp} Merchant model: Sells products directly to customers through e-tailing leg, Amazon,Apple iTunes Store) FFBQI'I'IIIJI'I'I model: Referral model: Provides free listings and gets referral fees from online merchants after directing customers to them leg, Shopzilla. PriceGrabber) Subscription model: Sells access to highvalue content through a subscription Web site {e.g., Netflix, Wall Street Journoi l nteractive) An ebusiness strategy refers to the strategic use ofthe Web and mobile apps to gain competitive advantage. BIC strategies link businesses with consumers. BZB strategies link businesses with one another. (:23 strategies link customers to businesses that can supply what they need. czc strategies link consumers together to make business trans actions in online marketplaces P2P strategies directly link per- sons needing services with those willing to provide them. A social media strategy uses social media to engage with an organization's customers, clients, and external audiences. A crowdsourcing strategy uses the Web to allow customers to provide opinions and suggestions on products and their designs. To Porter's list, we must add the following: A strategic leader must be the champion of control. One of the lessons business firms learn from economic crisis is that a strategic leader has to maintain strategic control. This means that the CEO and other top managers must stay Strategic control makes sure in close touch with the strategy, stay rigorous with performance measurements, and recognize strategies are well implemented when the strategy needs to be changed or discarded.25 and Poor strategies are tweakEd A posting on Patagonia's Web site once said: \"During the past thirty years, we've made 0' scrapped. many mistakes but we've never lost our way for very long.\"26 Not only is the firm being hon est, it is also communicating an important point about the strategic management process: Mis takes will be made, but strategic leaders both correct and learn from them. To Porter's list, we must add the following: A strategic leader must be the champion of control. One ofthe lessons business firms learn from economic crisis is that a strategic leader has to maintain strategic control. This means that the CEO and other top managers must stay in close touch with the strategy, stay rigorous with performance measurements, and recognize when the strategy needs to be changed or discarded.25 A posting oWeb site once said: \"During the past thirty years, we've made many mistakes but we've never lost our way for very l0ng.\"25 Not only is the firm being hon est, it is also communicating an important point about the strategic management process: Mis takes will be made, but strategic leaders both correct and learn from them. Study Guide Learning Objective 7.2 Describe How Managers Formulate and Implement Strategies. Terms to Define BCG Matrix Focused differentiation Strategic management Core competencies strategy Strategy formulation Cost leadership strategy Strategic analysis Strategy implementation Differentiation strategy Strategic control SWOT analysis Focused cost leadership strategy Strategic leadership Rapid Review - Strategic management is the process of formulating and implementing strategies to achieve a sus- tainable competitive environment. - A SWOT analysis sets a foundation for strategy formulation by systematically assessing organiza- tional strengths and weaknesses, as well as environmental opportunities and threats. - Porter's five forces model analyzes industry attractiveness in terms of competitors, the threat of new entrants, substitute products, and the bargaining power of suppliers and buyers. - Porter's competitive strategies model describes business and product strategies based on differenti- ation (distinguishing one's products from the competition}, cost leadership (minimizing costs relative to the competition}, and focus [concentratingon a special market segment}. - The BCG Matrix is a portfolio planning approach that describes strategies for businesses classified as stars, cash cows, question marks, or dogs. - Strategic leadership is the responsibility for activating people, organizational resources, and man- agement systems to continually pursue and fully accomplish strategy implementation. Questions for Discussion 1. Can an organization have a good strategy but a poorsense of mission? 2. Would a monopoly receive a perfect score for industry attractiveness in Porter's five forces model? 3. Does the ECG Matrix oversimplify a complex strategic management problem? Be Sure You Can - describe the strategic management process explain Porter's five forces model explain Porter's competitive strategies model describe the purpose and use ofthe BEG Matrix explain the responsibilities of strategic leadership Career Situation: What Would You Do? For some years now, you've owned a small specialty bookshop in a college town. You sell some textbooks but mainly cater to a broader customer base. Your store always stocks the latest fiction, nonfiction, and children's books. Recent numbers show a steep decline in sales, including of books that would normally be considered best sellers. You suspect this is because of the growing popularity of e-books and e-read- ers such as the Amazon Kindle and Barnes & Noble Nook. Some of your friends say it's time to close up because your market is dying. Is it hopeless, or is there a business strategy that might save the store? Strategic control makes sure strategies are well implemented and poor strategies are tweaked or scrapped. Learning Objective 3.2 l Describe Ways to Maintain High Standards of Ethical Conduct. Things to Remember . Personal characterinfluences ethical decision making. . Managers acting as positive role models can inSpire ethical conduct. - Training in ethical decision making can improve ethical conduct. . Protection of whistleblowers can encourage ethical conduct. . Formal codes of ethics set standards for ethical conduct. Look around and you'll see many people and organizations operating in ethical and socially responsible ways. Some are quite well knowncompanies such as Patagonia, Stonyfield Farm, and Tom's of Maine are examples. Others are less visible but still perform every day with high ethical standards. Surely there are examples of small businesses in your local community that show how \"profits with principles\" can be achieved. As you think about organizations that do these good things, don't forget that the underlying reasons rest with the people who run themindividuals like you and me. Personal Character Influences Ethical Decision Making. Something called \"character\" is a major influence on our personal ethics. It comes from family influences, religious beliefs, personal standards, personal values, and past expe- riences. And as the chapter subtitle reminds us: Character shouldn't stay home when we go to work. But it isn't always easy to stand up for what we believe when we are exposed to extreme performance pressures, when we get contradictory orjust plain bad advice, or when our career or personal well-being is threatened. \"Do this or lose yourjob!\" is a terribly intimidating message. Does it surprise you that 56% of U.S. workers in one survey reported feeling pressured to act unethically in theirjobs . . . or that 48% of them selfreported as having committed ques tionable acts.23 It is easier to deal with tough problems and situations when we already have solid ethical frameworks in place. These are wellthoughtout personal rules and strategies for ethical decision makingthat give high priority to virtues such as honesty, fairness, integrity, and selfrespect. Ethical frameworks are foundations of personal character and help us to act consistently and confidently, even under the most difficult conditions. Learning Objective 3.3 Explain What We Know About the Social Responsibilities of Organizations 59 means actively and visibly balancing the pursuit of profit with genuine contributions to the public good. Consider this statement from the agenda of the 50th World Economic Forum in Davos, Switzerland: \"Today's global companies are agents of unprecedented change, playing a greater role than ever before in shaping the political, social and cultural forces that are trans- forming the world?" This thinking is consistent with the notion of shared value advocated by Mark Kramer and Michael Porter.They say: \"The purpose of a corporation must be redefined as creating shared value, notjust profit?\"a Their point is that executives can and should make business decisions with full understanding that economic gains and social progress are fundamentally interconnected. They aren't mutually exclusive. Businesses can make prots for shareholders while striving to do good for all stakeholders and overcome social ills such as racial injustice, resource depletion, pollution, poverty, illiteracy, and disease. Instead of viewing CSR from a winlose perspective that pits the interests of sharehold ers and owners against other stakeholders, shared value takes a winwin perspective. Busi ness decisions are made so that economic value is created by pursuing social value, and business advantage is gained by aligning practices and strategies with social contributions. In fact, a new for-profit entity known as the benefit corporation, or B Corp, formalizes the shared value concept of success for shareholders and success for stakeholders. To become a certified B Corp, a business must meet standards assessed by the global nonprofit B Lab and confirm its social and legal commitments to benefit workers, communities, and the environment, as well as make profits. Prominent B Corp examples are Patagonia and Ben 81 Jerry's.\" Shared value approaches business decisions with understanding that economic gains and social progress are interconnected. The benefit corporation, or B Corp, is committed to both creating profits for shareholders and creating value for employees, communities, and the environ ment as stakeholders. Ethics \"ifyou've lost your job, you're not thinking about sustainabiiity" benefitscan be costly in the short term. And when a crisis like the pandemic hits, those practices can quickly lose out to other more immediate concerns. One observer ofthe pandemic response bluntly states: \"Busi nesses that were planning to help save the world are now simply saving themselves." Another says: "If you've lost your job, you're not thinking about sustainability. . . the average consumer does not have the resources to shop in a way that always protects the environment.\" The Covid19 aftermath has seen losses or pauses in water conservation, sustainable farming, electric vehicle initiatives, and waste avoidance, among others. But Blackrock CEO Larry Fink says: "When we exit this crisis, things will be different. . . business will change. Consumption will change.\" He believes that sustain- ability goals will regain priority in the long term and that we will see \"a return to companies focusing on materiai sustainability management and reporting." He stands by his firm's commitment to \"doingwell by doing good.\" Can Sustainability Survive Crises like the Covid-19 Pandemic? i. . Fostocklzishutterstockxom Your Decision? Sustainability may be a luxury commodity that is pursued when times are good but put on the shelf when things get bad.And things do get bad; the Covid-19 pandemic is a potent reminder ofthat fact. When personal and organizational livelihoods are at risk, survival tends to trump other priorities. Sustainability and CSR goals have permeated our society and gained prominence as guides to personal and organizational behavior. A growing percentage of college graduates have been endorsing socially responsible organizations as preferred employ ers, But sustainable practiceswith all of theirsocial and long-term Is itjustifiable to push sustainability and CSR practices aside when the survivability of a business or a community or a fam- ily is at risk? Is the first ethical responsibility of management in times of extreme crisis to preserve the business or service organization for its employees and customers? Can saving a business today help build a stronger business for tomorrow, perhaps one more committed than ever to sustainability and CSR? How about you and your family? Where did sustainabil- ity and CSR goals fit in your consumption behaviors during the Covid-19 crisis