Cross cultural management 3e by cullen ch09

Chapter Multinational E-Commerce: Strategies and Structures Copyright© 2004 Thomson Learning All rights reserved Learning Objectives •• •• •• •• Define Define the the forms forms ofof e-commerce e-commerce Appreciate Appreciate the the growing growing presence presence ofof e-commerce e-commerce inin the the global global economy economy Understand Understand the the structure structure ofof the the Internet Internet economy economy Identify Identify the the basic basic components components ofof successful successful e-commerce e-commerce strategy strategy Copyright© 2005 South-Western/Thomson Learning All rights reserved Learning Objectives •• Understand Understand the the attractions attractions ofof and and deterrents deterrents toto building building aa multinational multinational e-commerce e-commerce business business •• Know Know the the basic basic multinational multinational e-commerce e-commerce business business models models •• Identify Identify the the practicalities practicalities ofof running running aa multinational multinational e-commerce e-commerce business business •• Understand Understand the the function function ofof enablers enablers inin multinational multinational e-commerce e-commerce operations operations Copyright© 2005 South-Western/Thomson Learning All rights reserved The Internet Economy •• Internet Internet Economy Economy •• Growing Growing faster faster than than any any other other business business trend trend inin history history •• Companies Companies face face issues issues similar similar toto those those faced faced by by traditional traditional multinational multinational companies companies Copyright© 2005 South-Western/Thomson Learning All rights reserved What Is E-Commerce? •• Refers Refers toto the the selling selling ofof goods goods or or services services over over the the Internet Internet •• Includes Includes goods goods or or services services delivered delivered offline offline •• E.g., E.g.,Amazon.com Amazon.com shipping shipping book book via via UPS UPS •• Also Also includes includes goods goods and and services services delivered delivered online online •• E.g., E.g., downloaded downloaded computer computer software software Copyright© 2005 South-Western/Thomson Learning All rights reserved Types of E-Commerce Transactions •• B2C: B2C: business-to-consumer business-to-consumer transactions transactions •• Buying Buying toys toys from from eToys eToys •• B2B: B2B: business-to-business business-to-business transactions transactions •• Makes Makes up up 70 70 toto 85% 85% ofof current current e-commerce e-commerce business business •• C2C: C2C: consumer-to consumer-to consumer consumer transactions transactions •• Anyone Anyone selling selling online online •• C2B: C2B: consumer-to-business consumer-to-business transactions transactions Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 9.1: E-Commerce Value Chain Copyright© 2005 South-Western/Thomson Learning All rights reserved The Internet Economy •• Two Two indicators indicators ofof the the global global presence presence ofof e-commerce e-commerce •• Secure Secure server: server: an an Internet Internet host host that that allows allows users users toto send send and and receive receive encrypted encrypted data data •• Internet Internet hosts: hosts: computers computers connected connected toto the the Internet Internet with with their their own own IP IPaddresses addresses •• OECD OECD dominate dominate the the Internet Internet with with over over 90% 90% ofof Internet Internet hosts hosts Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 9.2: Secure Servers and Internet Hosts in Selected OECD Countries Copyright© 2005 South-Western/Thomson Learning All rights reserved The Internet Economy •• InIn 1991, 1991, 33 million million people people used used the the Internet Internet and and almost almost none none used used itit for for e-commerce e-commerce •• Between Between 2001 2001 and and 2002, 2002, U.S U.S consumers consumers spent spent over over $1.3 $1.3 billion billion on on e-commerce, e-commerce, increase increase ofof over over 90% 90% •• Recent Recent estimates estimates suggest suggest growth growth around around the the world world •• Offers Offers tremendous tremendous opportunities opportunities for for multinationals multinationals Copyright© 2005 South-Western/Thomson Learning All rights reserved E-Commerce Deterrents •• Cultural Cultural differences differences •• Web Web sites sites must must be be appropriate appropriate culturally culturally •• Traditional Traditional cross-border cross-border complexities complexities remain remain •• Exchange Exchange rates, rates, different different taxes, taxes, and and government government regulations regulations Copyright© 2005 South-Western/Thomson Learning All rights reserved Picking a Market •• •• Two Two factors factors toto target target countries countries Those Those with with market market inefficiencies inefficiencies •• E.g., E.g., formerly formerly state-controlled state-controlled economies economies •• Attractive Attractive demographic demographic characteristics characteristics •• Internet Internet population population ofof atat least least 5% 5% •• High High literacy literacy rate rate •• Participation Participation inin atat least least on on free free trade trade agreements agreements •• Government Government with with viable viable legal legal system system Copyright© 2005 South-Western/Thomson Learning All rights reserved Picking a Market (cont.) •• E-commerce E-commerce potential potential isis substantial substantial inin Latin LatinAmerica America because because ofof MERCOSUR MERCOSUR •• Potential Potential exists exists for forAsian Asian countries countries with with membership membership inin ASEAN ASEAN •• Open Open borders borders and and common common currency currency ofof European European Union Union isis also also fertile fertile ground ground Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 9.8: E-Readiness of Selected Countries Copyright© 2005 South-Western/Thomson Learning All rights reserved Multinational E-Commerce Strategy Implementation •• Requires Requires building building an an appropriate appropriate organization organization and and developing developing the the necessary necessary technical technical capabilities capabilities toto conduct conduct electronic electronic transactions transactions Copyright© 2005 South-Western/Thomson Learning All rights reserved The Multinational E-Commerce Organization •• •• Three-tiered Three-tiered mixing mixing ofof global global and and local local functions functions Headquarters Headquarters •• Vision, Vision, strategy, strategy, leadership leadership for for worldwide worldwide electronic electronic marketing marketing •• Also Also provide provide shared shared services services such such as as network network infrastructure infrastructure Copyright© 2005 South-Western/Thomson Learning All rights reserved The Multinational E-Commerce Organization (cont.) •• Shared Shared functional functional services services •• Provide Provide HRM, HRM, marketing, marketing, partner partner management management toto regions regions •• Local Local subsidiaries subsidiaries •• Deliver Deliver goods, goods, manage manage functions functions better better done done locally locally such such as as the the supply supply chain chain Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 9.9: Organizational Structures of the Multinational E-Corporation Copyright© 2005 South-Western/Thomson Learning All rights reserved Technical Capabilities for Multinational E-commerce •• •• Ability Ability toto process process multiple multiple currencies currencies Ability Ability toto calculate/show calculate/show purchase purchase information information on on international international shipping, shipping, duties, duties, and and local local taxes taxes such such as as VAT VAT •• Systems Systems that that check check compliance compliance with with local local and and international international laws laws Copyright© 2005 South-Western/Thomson Learning All rights reserved Technical Capabilities for Multinational E-commerce •• •• •• Ability Ability toto provide provide support support inin multilingual multilingual service service centers centers Fraud Fraud protection protection Electronic Electronic payment payment models models inin addition addition toto credit credit cards cards Copyright© 2005 South-Western/Thomson Learning All rights reserved To Build or Outsource Technical Capabilities? •• Two Two options options •• Run Run all all e-commerce e-commerce functions functions internally internally or or outsource outsource toto e-commerce e-commerce enablers enablers •• E-commerce E-commerce enablers: enablers: fulfillment fulfillment specialists specialists that that provide provide services services such such as as Web Web site site translation translation •• Provide Provide services services and and software software that that translate translate Web Web sites, sites, calculate calculate shipping, shipping, value-added value-added taxes, taxes, duties, duties, and and other other charges charges unique unique toto each each country country Copyright© 2005 South-Western/Thomson Learning All rights reserved “Mission-Critical” Factors to Communicate to Global Audience 1.1.Link Link all all Web Web sites sites toto corporate corporate Web Web site site 2.2.Web Web site site should should contain contain all all nonelectronic nonelectronic local local contact contact information information for for feedback feedback or or comment comment 3.3.Provide Provide aa prominent prominent list list ofof languages languages used used by by the the company’s company’s Web Web site site 4.4.Use Use different different languages languages for for downloads downloads Copyright© 2005 South-Western/Thomson Learning All rights reserved “Mission-Critical” Factors to Communicate to Global Audience (cont.) 5.5.Localize Localize by by language language the the parts parts ofof the the parent parent company company Web Web site site that that receive receive the the most most access access 6.6.Provide Provide aa site site map map 7.7.Provide Provide the the firm’s firm’s privacy privacy statement statement inin all all local local languages languages Copyright© 2005 South-Western/Thomson Learning All rights reserved “Mission-Critical” Factors to Communicate to Global Audience (cont.) 8.8.Guard Guard against against local local piracy piracy by by putting putting your your policies policies inin local local languages languages 9.9.Localize Localize your your graphics graphics and and written written material material 10.Localize 10.Localize content content management management Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 9.10: Major Problems Identified in Web Site Globalization Copyright© 2005 South-Western/Thomson Learning All rights reserved ... history •• Companies Companies face face issues issues similar similar toto those those faced faced by by traditional traditional multinational multinational companies companies Copyright© 2005 South-Western/Thomson... e-commerce organization organization 1.Entire 1.Entire firm firm (not (not only only top top management) management) must must be be prepared prepared toto embrace embrace the the e-commerce e-commerce... Steps for Successful E-Commerce Strategy (cont.) •• Make Make sure sure the the entire entire management management team team aligns aligns with with the the e-commerce e-commerce agenda agenda Copyright©