Managing Business Performance and IT

Term Paper 2008 14 Pages

Business economics - Business Management, Corporate Governance



A. Critical Review of Process of Requirements for a Company to Improve Performance in a New Country

B. A Suitable e-Business Strategy for the Company

C. Challenges for the Company (Sciserve) in Relation to e-Business

D. Critical Success Factors for the e-Business of Sciserve


A. Critical Review of Process of Requirements for a Company to Improve Performance in a New Country

Companies extending their business range to new countries largely depend upon factors which have been generated by the economic globalization. If we try to give a critical review of the process analysis which companies should conduct that want to set up business in a new country we have to investigate the appropriateness of business models and their process development in the context of an intensifying competition (McKay/Marshall, 2002). With respect to the background information given to the course (HE7) the producing and selling scientific machinery as well as electronic systems has to maintain a special observation of the international markets dealing with such products.

Setting up new operations of productivity and of selling in a new country that is to say on a more or less global scale one of the main keywords is “think globally, act locally” (www.pwc.com). Improving performance in a new country on a global scale must therefore more or less automatically imply the implementation of an e-business system dealing with all levels of acquirement (CRM, marketing etc.) as the global scale can only be successfully covered by the new dimensions offered by the intelligent technologies of the internet. Looking at business processes on such a scale it is obviously necessary to take all important business levels into account.

Looking at the business model and the particular requirements for an appropriate organisation process in a new country the company needs to make precise assessments as to possible profits, costs, revenues as to possible suppliers of the company and the kind of relationship it wants to develop with them, as to possibilities of sourcing to get the required resources, as to the modes of its organisation, as to the variety and diversity of goods and services which it wants to offer, as to segments of customer which it wants to serve (Hammer/Champy, 1993, p. 91).

Operating in a new country means that the company has to analyse its weaknesses and strengths, try to access the necessary capital markets, implement changes to gain improvement for the performance in a long-term period, try to integrate human resources in the new working situation, comply with new terms of pensions, taxes and business practices, comply with a new culture of social context and of working behaviour. The above mentioned keyword “think globally, act locally” means in this context that the home base of the company has to coordinate all the company’s actions with its daughters abroad. This not only goes for the implementation of a precisely formulated political company strategy but also for human resource services, a recruitment of appropriate local staff, the management of cultural and political agreements with local constellations, the entry into new markets and the management of its financial risks (Hofstede, 2006).

From the above listed aspects cultural diversity is one of the most important issues for a business which operates in a new country. Therefore communication is essential for a well running business and especially language is an often underestimated challenge if a company starts to operate in another country. Even among native speakers is communication a challenge, so it is not surprising that if there are linguistical problems and different cultural backgrounds that there is an extraordinary attention required.

Also the rate of exchange is an issue at financial aspects at a business which should be considered. A good example for a business which didn’t pay enough attention at this aspect is Airbus, a German company which builds airplanes. This enterprise had financial problems, because they put their bills in US-Dollar and the rate of exchange for US-Dollar went rapidly down. As a result the revenues of Airbus declined by equal production costs so that Airbus got financial problems.

Looking at the context of a globally operating company in general it is obvious that for introducing e-business into the general management and into all levels of operation an appropriate change management is necessary. Staff has to be given incentives to sustain the changes, to follow them and to implement them using an effective knowledge management (Chaffey, 2002, p. 405). Concerning the internet base of the company that operates in a new country McKay/Marshall (2002) suggest three models as a guide to go by: The “direct-to-customer model”, the “content provider model” and the “intermediary model” (McKay/Marshall, 2002, p. 47).

The direct-to-customer model offers to the business a better base of information about customer demand and enlarge the flexibility of the business to react on changes at customer demands. An example for it is every web-page where a business sells products or service direct to the customer.

A content provider offers usual information or digital products for example Wikipedia. Ebay is a business which applies to the intermediary model, because it brings sellers and buyers together.

But which model a company should use depends on their kind of business and their targets. In practical application you can often find a mix of these models.

Every of these three models of operating on an internet basis on a global scale provide three alternatives of linking the corporation to e-business procedures.

B. A Suitable e-Business Strategy for the Company

Given the background information about the company (from now on called Sciserve) appropriate internet strategies have to be implemented in order to use the possibilities of the e-business. With reference to the items above an e-business strategy of Sciserve can be defined as the appropriate implementations of e-tools whose internal and external electronic communication applications can support the general corporate strategy on a global scale (Deise/Nowikow et al., 2000, p. 69). In general an e-business strategy must fit into the general constellation of the company, its various targets and the interdependency of its business perspectives.

The diagram below demonstrates such a strategy

illustration not visible in this excerpt

Diagram demonstrating e-business strategies with relation to various levels of the company (Chaffey, p. 163)

The diagram demonstrates that an e-business strategy is of importance for the management of the supply chain (SCM), for customer relationship management (CRM), for general information and also for marketing. All these areas and relationships at a business could be affected by implementing e-business tools.

Looking at the Sciserve Company and its requirements as a technical company, appropriate tools for an e-business have to be implemented.

As the machinery and complex technology equipment which Sciserve produces are liable to constant improvement, to change, but also the risk of bigger competition, it is useful to refer the business strategy to Porter’s description of competitive strategies.

Integrating the idea of Porter’s five forces and their importance for Sciserve there is a number of tools that can help the management to recognize “the role of IT, the strengths and weaknesses of the existing IT function…” (McKay/Marshall, 2002, p. 69). Porter’s five forces imply the “threat of new entrance to the market”, “the power of bargaining of suppliers”, “the bargaining power of buyers”, “the threat of substitute products or substitute services” and – most important – “the intensity of competition among existing players” (Porter, 1980, p. 4). A precise e-business strategy is able to analyse the exact position of the products of Sciserve in the global market and the risks of falling behind including future challenges (McKay/Marshall, 2002, p. 73).

To keep rivals within the industry where Sciserve is operating under control e-business is able to help with organising an improvement of performance ratio with respect to the price ratio (McKay/Marshall, 2002, p. 75). Implementing a precise system of e-business can also serve Sciserve to fasten the innovation rate of its products, to give a differentiating sway of its products and finally to organize logistic services and to find out about the preferences of its customers in the frame of CRM.

To improve the price ratio the e-business strategy for Sciserve should in the first step be implemented at the supply chain management with the focus to reduce costs. For example this could be realised through an electronic supplier catalogue. Such a supplier catalogue could contain different criterions about the supplier like quality, price, average delivery time and so on. Such an electronic catalogue enables all employees with access to this catalogue to find the best suitable supplier very fast and uncomplicated.

As a result the needed time for searching suppliers and valuate them is shortened. This also enables the business to react on changes at the customer demands very quick. The supplier catalogue should be a part of a large business data base, where all relevant information about the products, its responsible interfaces, departments and the business processes are stored.



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managing business performance



Title: Managing Business Performance and IT