E-business: Marketing and Virtual Value Chain

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1) Explain whether competence-based thinking is more suitable for e-business strategy formulation than the activity-based approach outlined in the value chain concept.

Competence-based thinking focuses heavily on the resources and capabilities of a firm. It is thought to take a resource-based approach towards creating competitive advantage (Core competence, 2010). It considers how the different recourses and capabilities of a firm are used in conjunction with one another. Rather than looking at the individual activities of a firm, this approach evaluates the processes of a firm and how they can be used to create strategies that provide superior value to customers. The activity-based approach, on the other hand, measures the value and competitive advantage of a firm by analyzing individual activities in the firm’s value chain. Activities identified in the firm’s value chain include those activities that can provide a competitive advantage for a firm; such activities should have economics of scale or scope Competency-based thinking allows companies to align its strengths with the business opportunities and eliminate weaknesses in order to avoid threats creates a ‘strategic fit’ between its internal competencies and the external environment. The competence-based thinking allows businesses to investigate and understand the entire picture of the organizational structures and actual practices in order to understand the current situation. It can improve and enhance the current practice and further plan for the future. Competency development can take place over a period of time if the company has measures in place to ensure that employees learn and develop the competencies as their careers progress. Competency-based thinking in e-business strategy can be an effective model for businesses to use also. Small business owners must be able to develop technical competencies to thrive in the field of e-business. One of the primary barriers that many small business owners face in e-business is the lack of know-how in the development of effective websites and marketing strategies used to develop a web presence. Managers and business owners need to constantly update their knowledge of the Internet and the effective measures used by other companies to develop their business.

The competence-based approach looks at how the resources and capabilities of a firm interact across different functions and activities. The core competencies of a firm are comprised of individual activities; therefore, the activities of a firm are also addressed in this approach. The activities-based approach, on the other hand, considers only the individual activities of a firm. It neglects to fully consider the processes and resources of a firm (Jelassi & Enders, 2008, p. 86).

2) Think critically of possible applications of the virtual value chain concept within specific industries and business sectors. Are there some specify business sectors where this concept fits better than in other sectors?

The virtual value chain is useful in many different industries and business sectors. For instance, e-businesses operating in the online retail industry can benefit immensely by developing a virtual value chain. Customer information can be used to help make a more personalized experience for the customer. An e-business retailer could provide product recommendations based on previously purchased or view items; enable the customer to view order status and order history; and develop personalized sales based on spending habits. For example, Old Navy emails advertisements and sale information to customers based on past purchases. Also, if a customer has an Old Navy credit card, they can view history of items they purchased in the store through Old Navy’s website. Another industry in which the virtual value chain is applicable is the credit card industry. Credit card companies allow customers to view transaction history and statements through secure websites. They...
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