The Internet's impact on Corporate Strategy

Submitted by mark on 5 September, 2007 - 09:15.

Whilst marketing strategy and tactics have conveniently been categorized into the “4P’s” of the marketing mix, the set of strategies and tactics available to other functional areas have not been similarly classified.

However, it is the case that the set of strategies and tactics available to functional areas such as finance, human resources, production, procurement,operations are also limited to mixing of standard “ingredients”.

What makes the Internet so disruptive?

It is only in the implementation of these standard tactics and strategies that variety of corporate strategies emerges. The characteristics of the internet that lead to these new tactics and strategies are:

its ease of use, ubiquity and low cost,
its speed, geographic reach and constant availability as a communication mechanism,
its relative freedom from control by any one interest group or government,
its ability to grant quick access to vast repositories of information, and
its ability for companies to easily measure and monitor the results of their strategy and to make adjustment when necessary.

Many may claim these characteristics are inherent in many other technologies today, but it is the quantitative improvements in these characteristics that have lead to qualitative changes the internet has on strategy.

These characteristics applies mainly to those systems that that are outward facing rather than internal systems. I.E. The Internet enhances a company's competitive advantage, when correctly implemented in strategy, by strengthening its supply and value chain and improving stakeholder participation in processes.

What are the new tactics and strategies enabled by the Internet?

The new tactics introduced by the global Internet affect all functional areas of the business, some functional areas will benefit more from these new “ingredients” than others. What are these new ingredients? I will list a few here:

Sales and marketing - this is the obvious area that benefits from the Internet and has been the most exploited to date. It can be used:
- - as an online sales channel
  - to provide product information to prospective and existing customers,
  - to build your corporate brand,
  - to implement or extend customer loyalty programmes,
  - to provide after sales support,
Distribution - The Internet is well known as a distribution channel for electronic goods. Electronic goods are not only software but includes the provision of knowledge based skills and remote support. What is seldom considered is the Internet's ability to indirectly support and build a physical distribution channel or network. Now a company is South Africa can easily support and build business partner networks throughout the world at minimal cost. E.G Providing business partner access to internal knowledge bases and allowing them to enhance this knowledge base with their own learnings and experiences,
Human Resources - Online recruitment is another well understood function on the Internet. It can reduce costs by cutting intermediaries. Besides direct recruitment the Internet can build a company's reputation with prospective employees as well as provide easy access to staff manuals, policies and procedures and online training,
Finance - Now it is easier than ever before to communicate directly with Investor. Finance departments can easily provide access to Annual Financial Statements, press releases and cautionary announcements,
Production - By providing easy access to supplier data and product information as well as internal and external knowledge bases the Internet can lead to a improve product and service quality and reduce wastage and downtime.
Procurement - The Internet can be used to provide list of required items and obtain competitive quotes online. Companies can allow suppliers to update details online while buyers can access supplier databases to see stock availability.