Solving the Online Offline Channel Conflict

Adding an online channel to a pre-existing offline channel can present a variety of challenges to a company. The e-business strategy of the online channel must be properly aligned with the business strategy of offline channel, so that the two channels can work in harmony with one another (Jelassi & Enders, 2008, p. 265). When a company neglects to do so, their operations can end in organizational demise. In order to successfully implement an online channel, a company must address a number of strategic issues.

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The first issue an organization must address is to determine which products or services they will offer through their offline channel. A company may choose to offer the same products/services through both channels; an entirely different set of products/services online which are not offered offline; or a combination of new and existing products/services (Jelassi & Enders, 2008, p. 264). When making such a decision, the company should evaluate their target audience and their preferences. They can also assess their competitors’ strategies to see how customers are utilizing the channels. Products/services offered online are often complementary to the offline channel; however, the organization must ensure that the online channel does not cannibalize the offline channel.
David’s Bridal, a wedding and formal wear retailer, for instance, offers a combination of new and existing products via their website. There is a large portion of products which are offered through both the physical store and website, as well as a group of products offered strictly online. Most wedding dresses are offered via both channels, as customers prefer to try the dress on in the store before buying; however, they offer a number of ceremony and reception products through the website only. Offering such products online helps to maintain costs in the physical store, as such products require additional shelf space and warehousing costs.
Another issue which a company must address when adding clicks to bricks is to determine their pricing strategy. A company must determine how they want to price their online products/services in comparison with their offline products/services. They may choose to charge the same prices via both channels or charge higher or lower prices online. Each of these options communicates a different message to the customer. Offering the same prices tells the customer that the additional value of purchasing online can be found in other ways than through price discounts; charging lower prices acts as a financial incentive; and charging higher prices expresses to the customer that the company incurs additional costs when offering products online (Jelassi & Enders, 2008, p. 264).
From my personal experience, I have found that most retailers charge either the same or lower prices via their online channels. It appears that many retailers charge the same price; however, they offer additional sales and increased savings when purchasing online. Many companies have online exclusive sales, which they do not offer through the physical store. As a consumer, I would not purchase a product through a website if the same product was offered at a lower price in a physical store. I find this to be the least successful pricing strategy which a company could choose.
The final strategic issue which a company must address is how to prevent or manage channel conflict. When a company implements an online channel to an existing offline channel, there is a possibility that conflict may arise between the channels. First, the company must determine the likelihood that conflict will arise and the importance or the affected channel. If the affected channel is of little strategic importance, the company should accept the decline of the existing channel and/or ignore the conflict. If the affected channel is of strong importance, then the conflict must be addressed (Jelassi & Enders, 2008, p. 189).
It is important to mention that a company must find ways to manage the conflict between an online and offline channel in order to advance the organization’s progress. Many companies are fearful of moving into online sales; therefore, if they find the likelihood of conflict to be high, they often avoid moving into the online world altogether. This is an unsuccessful strategy as the company may miss out on vital opportunities and can easily fall behind their competitors. Instead, the company should evaluate the opportunities and threats of each channel and determine how to “extract the most value from each” (Bendix, Goodman, & Nunes, n.d.).
Adding clicks to bricks may prove to be an enduring challenge; however, when managed appropriately, implementing an online channel can yield positive results. In today’s business environment, most companies are forced to add an online channel in order to keep pace with the competition (Gilbert & Bacheldor, 2000). Over the next decade, I believe it will be standard practice for companies to have a website advertising their business, if not, selling their products or services.
Essay Question 2
In today’s business world, most companies are beginning to implement an online channel to their existing offline channel, if they have not done so already. When adding clicks to bricks, an organization may encounter conflict between the channels. Such conflict is a common occurrence and the organization must ensure that the new channel does not cannibalize the existing channel (Jelassi & Enders, 2008, p. 264). There are several options a company has to solve online/offline channel conflict, as discussed below.
The most obvious and ineffective way to solve online/offline channel conflict is to avoid the conflict altogether. Many organizations are guilty of discarding online implementation plans in order to avoid channel conflict (Bendix, at. el., n.d.). The online environment can provide ample opportunities to an organization. When an organization does not follow through with their plans, they will most likely set themselves up for failure. Organizations should avoid this option by all means, as they can easily fall behind their competitors and lose market share.
The most effective way to solve online/offline channel conflict, on the other hand, is to develop ways to manage such conflict. When conflict between the channels is high and the importance of the affected channel is also high, it is imperative that the organization address the conflict (Jelassi & Enders, 2008, p. 264). Based on a case study performed on a variety of firms, the following are several options for managing channel conflict:
Alignment of goals: In order to manage channel conflict, the goals of both channels must be aligned. The channels cannot work against one another, or else the operations will fail. Online channels can be used as a way to reduce costs, support existing clients, and target a new audience. Organizational members must be made aware of the benefits of the online channel and be encouraged to contribute to online sales (Steinfield, 2004). The organization needs to develop ways for the channels to work in harmony with one another. For instance, they can integrate the online channel with their existing offline channel and create a central profit center (Jelassi & Enders, 2008, p. 264).
Coordination and control mechanisms: Coordination and control mechanisms are another way in which the online/offline conflict can be solved. The company must find ways for the channels to complement one another. Customers should be able to utilize both channels when performing a transaction (Steinfield, 2004). For instance, they can check the availability of a product online before going to the store. The inventory of the physical store must be coordinated with the online channel. Additionally, control measures, such as the accuracy of inventory information and speed of in-store pickups, can be used to monitor the coordination of the channels (Steinfield, 2004).
Synergy benefits: Another way a company can solve conflict between channels is to create synergy benefits between the channels. Many companies lack the web development or logistic skills necessary to conduct online operations (Steinfield, 2004). Rather than develop an in-house online division, the company can build on their competencies by creating an alliance with an established e-commerce company (Steinfield, 2004). As a result, the company’s core operations are not affected by online operations.
There are a variety of options a firm can choose to solve the online/offline channel conflict. Most importantly, the company must address the conflict and find ways for the channels to complement one another. In today’s technologically savvy environment, many customers look at an organization’s website as an indication of their professionalism. Online and offline channels should be highly integrated and coordinated in order to avoid conflict and provide the most value to the customer.
Essay Question 3
Creativity is a key component to developing an innovative e-business strategy. It can be defined as “the ability to transcend traditional ideas, rules, patterns, relationships, or the like, and to create meaningful new ideas, forms, methods, interpretations, etc” (Creativity, 2010). Creativity stems from an individual’s openness to new experiences. The more exposure an individual has to different experiences, the more creative their ideas will become (Jelassi & Enders, 2008, p. 271). Case studies, in particular, help spur an individual’s creativity by opening them up to a variety of business styles and techniques.
Case studies present factual information regarding an organization’s operations, strategies, and business methodology. They enable the reader to draw conclusions and formulate ideas based on the organization’s successes and failures. Businesses can develop novel ideas and strategies by reviewing case studies and drawing insights from different organizations, cultures, or industries (Jelassi & Enders, 2008, p. 278). Each type of case study analysis adds a different degree of creativity to a business strategy, as discussed below.
Case studies can be used as an intra-industry benchmarking tool within an organization’s own culture. This type of benchmarking involves an organization comparing their operations and strategies to those of their direct competitors. While the organization can determine where they need to make adjustments or are falling behind the competition, performing an analysis within their own culture will only provide a relativity low degree of creativity (Jelassi & Enders, 2008, p. 278). The organization will not be able to draw upon fresh ideas which have not been used among their direct competitors.
Case studies can also be used as an intra-industry benchmarking tool across cultures. Rather than focus on organizations within one’s own culture, the organization compares their operations to organizations operating in other cultures. This type of analysis can open the organization to a variety of new ideas, technologies, and strategies which have not been achieve among their direct competitors. By looking across cultures, the organization can develop creative strategies which will place them ahead of the competitors operating in their own culture. Analyzing cross culture case studies can provide a mid-level degree of creativity.
The most innovative ideas can be developed by analyzing case studies across industries. In such cases, the organization ventures outside of the comfort of their own industry. This type of analysis can prove to be challenging, as the organization must find ways to apply these e-business strategies and techniques to their own industry. However, despite such challenges, such an analysis can provide groundbreaking results (Jelassi & Enders, 2008, p. 278). Analyzing case studies across industries can spur high degrees of creativity, which enable the organization to develop competitive advantages.
Throughout the course of receiving my MBA, I have read several case studies in different classes. The information presented in these cases studies has opened my eyes to real organizational struggles, as well as creative business ideas. I have referred back to the case studies of past classes when studying unrelated topics. Although the topics were not related, much information was to be learned from these case studies. I believe that studying innovative companies, in particular, can provide a user with the most creative ideas.
For example, I read a case study on 3M. 3M is a highly successful innovative company. They provide their employees with designated time to explore their own ideas. This has proved to be a successful tactic, as many new product ideas are developed this way. Although 3M is a product based company, other companies can learn from their successful business approach. Their techniques can be allied in a variety of industries and help inspire readers to develop innovative strategies.
Another example is a case study I read on General Electric (GE) in my ethics course. GE began offering ultrasound machines in India; however, such technology is found to be controversial in India. While they had an obligation to provide technology which could save lives and provide early detection of life treating conditions, GE Healthcare also had to recognize a major cultural difference (Wicks, Freeman, Werhane, & Martin, 2010, p. 131). The struggles presented in the case study and the manner in which GE handled the situation can offer innovative ways for companies to handle cultural differences. This case study can apply to any type of organization regardless of their industry, as ethics is an issue which must be addressed in all businesses.
Readers of case studies must have an open mind. They must be able to look at the issues and struggles encountered by other organizations and determine ways to proactively avoid or manage such challenges. Readers must also find ways to exploit their opportunities and strengths. It is important that they read a variety of case studies before drawing conclusions. The more exposure they have to different types of management styles, business strategies, and operations, the more the creativity will flow.
Essay Question 4
Creativitypool.com is an interactive website which allows users to submit their own, personal and creative ideas. The concept of the website is for individuals to share their unused ideas with the world. Other users can view the idea and, if they choose, they have the right to pursue the idea. By submitting an idea to the creativity pool, the user relinquishes all rights to the concept. If their idea is pursued, they will not receive monetary compensation. Instead, the user can suggest a reward they would like in exchange for the use of their idea, such as a free copy of an invented product (Creativitypool.com, n.d.).
Many individuals have great, innovative ideas; however, they may not have the means to pursue their ideas. Creativitypool.com is a great way for the ordinary individual to share their ideas with others for the hopes of their idea being recognized. As stated on the Creativity Pool website, many people have great ideas and wait around for others to think of the same idea and to develop them. Creativitypool.com is a great way to speed up the creativity process for people and organizations that have the means to produce such ideas. While not all ideas are sufficient for production, the website is a fun way for users to share their quirky ideas with others.
The Creativity Pool website is broken down into a variety of categories, including, but not limited to, clothes and fashion, sports and fitness, companies and services, home and work, pets and animals, society and politics, etc. (Creativitypool.com, n.d.). When you click on a link for a certain category, a forum appears filled with users’ ideas. Users can write comments, vote on the idea, or forward the idea to their friends. Comments are available via a link titled “messages” next to each idea. When clicking on the link, a separate forum appears to discuss a certain idea. The format of the website is very clean, easy to read, and user friendly.
One idea, in particular, which I found to be very interesting and useful is a metal detector shoe. The user suggested a metal detector be placed on the bottom of a soldier’s shoe so that they could detect mines and trip wires when out in the field (Creativitypool.com, n.d.). The idea has a 95% rating and 16 comments. Users wrote messages on possible problems with the idea, as well as suggestions on how the idea could be improved.
Overall, Creativitypool.com is an interesting website to explore. Even if the user does not find any ideas to pursue, it can help open them to a variety of new experiences. Exposure to such innovative ideas can help spur creativity. Creativitypool.com is a great website for inventors and business professionals, as well as ordinary citizens wishing to share their ideas.
Essay Question 5
As an organization works through the strategy formulation process, it is important that they extend the breadth and depth of their analysis. In order for their strategy to be successful and efficient, they should cover a broad horizon and perform an in-depth analysis of each element (Jelassi & Enders, 2008, p. 283). The concepts and frameworks presented throughout this course and in the textbook can help increase the depth of analysis when formulating an e-business strategy.
This e-business course has covered a wide range of e-business and strategy concepts. By studying the topics in this course, one would be able to look for and recognize important issues that need to be further investigated. In particular, the course has covered e-business specific concepts, generic strategic concepts, and fundamental economic concepts (Jelassi & Enders, 2008, p. 285). By starting at the most basic level of analysis, one can uncovered deep rooted issues and continue working their way down to specific elements of the problem.
The most basic level of analysis can be achieved by analyzing e-business specific concepts. This course has covered a wide range of concepts including virtual value chain analysis, online/offline channel conflict, the ICDT model, etc. (Jelassi & Enders, 2008, p. 285). Each of these issues is fundamental to e-business companies. Once an organization has analyzed issues specific to e-business, they must further their analysis by investigating cause-effect relationship between these issues.
Cause-effect relationship can be identified by exploring the generic strategic concepts covered in this class. Such strategic concepts include the five forces industry model, strategy formulation process, differentiation and cost leadership strategies, co-opetition, etc. (Jelassi & Enders, 2008, p. 285). These strategy concepts can be applied to any industry or business model. They allow the organization to explore cause-effect relationships of specific elements identified at the first level of analysis. By considering such concepts, the organization will begin to question the structure and importance of specific activities within their value chain, which will help them identify their core competences and develop competitive advantages.
Once the organization has explored strategic concepts, they can continue their analysis by evaluating economic concepts. This course has covered a range of fundamental economic concepts which include transaction costs, economies of scale, perceived use value, value creation, value capturing, etc. (Jelassi & Enders, 2008, p. 285). Expanding their analysis to this level will help the organization develop effective pricing strategies and determine ways to lower or maintain their costs.
It is important to extend the depth of analysis from e-business specific concepts to fundamental economic concepts. The concepts presented in this course will help students to develop effective e-business strategies by presenting them with a broad overview of important strategic concepts. By gaining a deep understanding of such concepts, the student will have the knowledge to identify the activities and issues that require further analysis. Performing an in-depth analysis is a fundamental step in developing an effective e-business solution (ISKIV.net).