IT Strategies to Maximize the Competitive Advantage of Organizations

This paper will examine how IT strategies, also referred to e-business or e-commerce strategies, are utilized by an organization to maximize the competitive advantage of the organization within the market place. This will include analyzing IT strategy in terms of global strategy and this will touch upon how an organization handles marketing. Basically strategy requires leadership and it is interesting how it interacts with all aspects of the organization in order to succeed. Specifically this paper will use four models: SWOT, Porters Five Forces, 7s model and Value Chain to analyze IT strategy within the Chinese nutrition market. This includes health food and vitamins. Specifically these four models will analyze the IT Strategy (or lack there of) being used at a Chinese vitamin company called Waseta International Trading Company. As a result of the findings, this paper will also explore implications of IT strategy and provide recommendations for implementation of one.

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Abstract i

Acknowledgements ii

Declaration iii

Table of Contents iv

List of Figures vi

List of Tables vii

Chapter 1

Introduction

1.1 Background

1.2.Statement of the Problem

1.2.1.Purpose of the Study

Chapter 2

Review of Related Literature

2.1 Introduction

2.1.1. Definition of Strategy

2.2. China and IT Strategy

2.2.1. China’s Health Food Industry 10

2.3. Executive Summary: Waseta 11

2.4. Four Models 12

2.4.1. SWOT Analysis

2.4.2. Porter’s Five Forces 13

2.4.3. 7s Model 14

2.4.4. Value Chain 15

2.5. IT Strategy and the Organization 16

Chapter 3

Methodology

3.1.Introduction

3.2 Procedure

3.2.Plan for Data

Chapter 4

Analysis, Discussions and Conclusion

4.1 Introduction

4.2.Strategic Analysis of Waseta 20

4.2.1. SWOT 21

4.2.2. Porter’s Five Forces 22

4.2.3. 7s Model 26

4.2.4. Value Chain 27

4.3.Shortcomings of the Research

4.4. Implications of IT Strategy

4.4.1. Risk Prevention 31

4.4.2. Brand Identity 31

4.4.3. From the Technical View 32

4.4.3.1. E-Supply Chain Management 33

4.4.3.2. Procurement 34

4.4.3.3. Enterprise Resource Planning 35

4.4.4. From the Managerial View 36

4.4.5. Internet Infrastructure 37

4.4.6. Online Security 39

4.4.7. Implementation of IT Strategy

4.5. Reasons for IT Strategy

4.5.1. Implementation Schedule 41

4.6 Recommendations

4.7 Conclusion

References

Appendices 1-7 49

List of Figures

Figure 1. European Online Shoppers 49

Figure 2. SWOT Analysis

Figure 3. Porter’s Five Forces Illustration 51

Figure 4. 7s Model 52

Table 1. 7s Model Table 53

Table 2. Implementation of E-Business Strategy Budget Costs (Estimated) for 2005

Use of IT Strategies to Maximize the Competitive Advantage of Organizations

Chapter 1: Introduction

1.1. Background

Today’s market place continues to shrink due to computer technologies and communication being at the speed of light. This makes the act of doing business on a large scale not only possible but expected. An organization needs implementation of strategy to happen on every level within the company structure in order to function.

Many factors contribute to a company’s success or failure. Company is defined by more than just its product or service and the price at which this product or service is sold in the market place. An effective organization has much strength in its favor to remain competitive. Factors such as: flexibility, creativity, openness to use of technology and innovations, communication across the organization and talented employees are a must for competitive advantage. It is an organization’s ability to adjust to changing times that creates a foundation for the public to admire. How an organization continues to reflect such a persona is entirely contingent on so many factors but really it comes down to vision and action. Integrity is crucial. Upholding the company’s value system and word to the public remains a key facet for success. Building any strategy or campaign on this premise presents the best possible and true corporate image to the public and allows for a great amount of trust to form. Building character and trust is very important within the financial world but also the retail forum of health products because there has been a backlash due to corporate lack of governance and scandal but also telecommunications is much like a double-edged sword. With the wrong image, comes poor press and lack of a first impression. It can make or break the situation. In this respect, strategy and strategic marketing can be a complex game. In order to better understand customers, it is important one understands how marketing works. This means not only having knowledge of traditional methods but also knowing the fundamentals of e-marketing and e-commerce.

Today’s Internet is a triumph for human ingenuity and spontaneous order. In some parts it embodies leading edge technology like Asynchronous Transfer Mode but really it is the use of new technologies combined with older ones that makes the Internet so fascinating and vital to business. Specifically the Internet ends distance limitations and it empowers individuals in important new ways to create new enterprise (Gasman 2005, p. 2). The Internet is relatively vast in its freedom. Unlike the traditional telephone, the Internet is not charged by the mile or any distance. This brings people together. Retailers see the Internet as a marketing tool they can use to target a smaller, regional niche market.

One must understand it is in the best interests of companies to make the e-retailing transitions because of the fact that most shopping now happens online. This is due to the increase in e-commerce and instant need for convenience. E-commerce makes purchasing easier and faster. It fits into the lifestyle of today’s 24/7 world where people do not have the time to shop at the mall or pay bills by writing out checks.

1.2.1.Statement of the Problem

The subject of IT strategy or e-business strategy in China’s nutrition industry, its frameworks, convenience and also problems or implications were assessed in this research to correlate with actual phone interviews and surveys found in the literature used as methodology.

As a result of this study, this research presented preliminary findings related to IT strategy in China. This leads us to looking at how e-strategy and use of the Internet to facilitate e-commerce has created a whole industry of service for the consumer or in other words, e-services. This required a look at different models to assess strategy and analysis a company’s role in the market. The models chosen are: SWOT, Porter’s Five Forces, 7s model and Value Chain. The study examined the use of IT strategy at Waseta International Trading Company as a tool of optimization.

1.2.1. Purpose of the Study

The overall purpose of this paper and study is to investigate the role of IT strategy within a Chinese nutrition company. This lead to further study of its use within the health food industry in China. In addition to examining exactly what strategy is and what it entails, this study also required an in-depth study of marketing, its techniques and different applications depending on the climate in which the marketing takes places. This allows us to better understand the nature of the market place and therefore, allowed us to understand strategy better. As growing importance in an organization’s competitive advantage and globalization makes an Internet presence an expectation, the right marketing strategy becomes all the more important in a company overall strategy but it also equals power.

An organization needs careful research prior to investment but also needs to strategize and ponder if the consumer is worth the profit. This paper will look at how a proactive strategic analysis allows an organization knowledge of the market in order to build a lasting presence and customer relationships. This paper will also explore the implications of IT strategy and how different degrees of brand presence within the market can create different concerns regarding risk and too much exposure. This would include any threat to protection of intellectual property as well as the organization’s image and customer relations.

This paper asks one to consider the scenario of the Waseta International Trading Company in regards to IT strategy. Does the company have one in place and if so how effective is it? If the company does have an effective IT strategy, what can be done to make improvements? This can be an especially daunting task as many elements warrant analysis in order to construct a feasible plan. Still the benefits of such an investment are endless. The possibilities for growth and optimal performance by creating a seamless system make work easier, faster and more competitive for even a small company.

Chapter 2: Review of Related Literature

2.1. Introduction

Information Technology is a powerful means that helps organizations meet the challenges of a competitive market environment and enable the firms to stay ahead of the competition. The information revolution is exerting substantial effects on the structure and functions of organizations. From the beginning of the computing era various studies have been made that predicted several positive effects ensuing from the implementation of information technology (IT) (Cash & Konsynski, 1986). Many cases have been published, as well as articles in the professional press, which predicted a net increase in business results of companies that invested more in IT (Buday, 1986). However, during the little more than 10 years of this research line, contradictory results have been found (Brynjolfsson, Hitt, & Yang, 2002). From the 1970s to 1980s, those companies that invested more in IT suffered a relative setback in the work factor productivity indexes. This paper will discuss the relationship between IT and competitive advantage in following content. We believe that IT is necessary to improve competitive position of the organization.

Many business professionals point to the use and deployment of IT as a point of weakness, not a point of strength in their organizations. They think that the reason for this is often that IT is being driven from a technical perspective, not from a business perspective (Orlikowski & Iacono, 2000). This phenomenon exists because many businesspeople think that the IT is too complicated, too expensive, too risky and too changeable. They would not like to spend time on understanding the complex information technology management. Most businesspeople only understand how specific technologies affect their ability to do their specific jobs. Poorly understand IT initiatives often end in failure.

The previous literatures reveal that IT brings huge impact on careers and information technology has impacted many jobs such as IT has replaced human labor and many organizations no longer pay people to simply oversee others and pass along information. The business benefits that are derived from the strategic use of technology are significant, but they are accompanied by risks that must be addressed. The failure to address IT vulnerabilities within their own organizations and throughout the supply chain can have devastating consequences for business operations n (Brynjolfsson, 1993).

2.1.1. Definition of Strategy

According to the Oxford English Dictionary or OED, the modern word “strategy” is derived from the words strategus and strategian with the earliest known use of the word starting in 1562 Armenia. The word at that time referred to someone “in office or command of a general, generalship (OED 2003).” Pliny accounts for “120 Strategies Governments or particular Jurisdictions of every Province (OED 2003) but also defines “strategy” as “the art of projecting and directing the larger military movements and operations of a campaign (OED 2003).”

Having a working definition helps create a strategy for management to use across the board when it comes to implementing changes to increase productivity and efficiency while reducing overall costs. This may mean changing the corporate strategy on many levels to better reflect a company’s core values and to add new ones. This may mean incorporating different management styles and embracing new innovations and technologies to gain competitive advantage within the marketplace. With this in mind, it is important to remember that not only does every corporation have different vision but also different goals. A strategy is not a cookie cutter or one size fits all. It is important to understand in essence that many factors contribute to successful IT strategy.

The best way to utilize strategy when it comes to marketing to an organization’s best benefit is to simply know the market in which business is done. It is imperative a company know its target and be flexible to new targets. An organization can remain at the forefront by having a cutting edge attitude toward change within the target audience. Gordon writes, “The mood of the marketplace profoundly affects a campaign’s success. It is important to respond correctly” (2003, p. 1). Also to remain competitive, an active pace is needed. Instead of allowing the market to define the marketing strategy, the organization should strive to define the marketplace. This can be done through incorporating innovative ideas across the board. This starts with the organization valuing innovation to begin with. By having innovation as a core value, one can create marketing and promotions plan to encompass many different audiences utilizing different methods. This may require branching out into new medias like the Internet or World Wide Web as a way of reaching new audiences. This all adds value to the strategy and by having a multi-faceted strategy; an organization will have more than one plan in which to rely upon during uncertain times.

2.2. China and IT Strategy

To this day, the country of China remains an enigma, isolated from the Western world and shrouded in mystery conceptualized by the Communist Red. Its culture both ancient and modern fascinates one on many levels mainly because it is so completely foreign. Aspects of their way of life, customs and lifestyle elements mirror the Communist doctrines and the absence of pure freedom seems sad to Westerners. Still slowly China is opening its doors to the West. There is a changing tide, a force at work. It is the advent of globalization, mass communication and new technologies that changed the atmosphere of China. The world is forever shrinking due to the marketplace is growing at the speed of light and commerce taking place over new mediums. This makes possibility happen. People from every nation have yearned to participate in this explosion.

The Chinese have been no exception. They have reached a point in their history where they must not only hold on to their cultural identity but also embrace change from outside. This has been the only way to take advantage of globalization and create a new persona for China. Still the seed of change had to grow from somewhere. This transformation did not happen over night. It can be difficult and frustrating for one to understand yet try to respect. It is out of understanding what one fears that one can be a catalyst for change. Only then can the barriers come down.

Much of the emergence of globalization can be attributed to the world economy. China has made steps of change within recent years and as a result found itself at the forefront of economic explosion. At this time the Chinese economy is growing at the rate of ten percent a year, faster than any other country in the world (Richardson, 2005, p. 1). As a result, the region of the Pacific Rim and more specifically South East Asia is considered an emerging market, one that many international corporations are focused on gaining a competitive advantage. This industry of health food and vitamins is no exception. Due to vast changes in available technologies, it is expected and imperative that all companies have an Internet presence or utilize a global e-strategy that involves their business practices to evolve into e-commerce.

2.2.1.China’s Health Food Industry

As addressed above, China’s economy is exploding at a tremendous rate. Its industries are growing because of exposure to the west and new opportunities available due to not only the country entering the World Trade Organization but also telecommunications technologies that make doing business easier. This trend does not apply to any one industry in China, in fact, they are all on the move. In fact, “statistics show that there are 1,027 enterprise specializing in 1,509 varieties of health food and products in China” (‘Chinese heath market matures’, 2005). It is estimated for the year 2000, this meant 18.15 billion yuan in sales at a growth of three percent. One of the reasons for health food taking off and profits on the increase is managements focus on quality management and new marketing strategies using the Internet. These enterprises have seen a change in shopping habits and have adjusted their strategy to meet demand (‘Chinese heath market matures’, 2005).

China represents to companies “relatively low manufacturing costs” (‘China’s Hunger’, 2005) and cheap labor. This is the main reason why the Chinese economy has seen such amazing growth because of foreign direct investment. Multi-national corporations have seen the advantage of setting up shop in China and as a result, local companies have had to make themselves stand apart to remain competitive. Regardless of who is doing what, China represents an enormous market for health food and vitamin consumption. It is estimated that “450,800 metric tons of vitamins were produced in 2004, of which, only 127,943 was exported” (‘China’s Hunger’, 2005). This is 17.9% annum over the last ten years and this rate is expected to hold steady until 2009. The market locally is so strapped for supply due to high demand, local enterprise cannot keep up with expansion. This has lead the larger companies like DSM to form join ventures with Chinese vitamin producers in order to continue a presence. This remains a conflicting issue for wholly owned Chinese companies; the question of rather or not to let the outside partner to gain strength. This is where strategy and now more than ever IT strategy become very important to the Chinese business person’s future.

2.3.Executive Summary

Waseta International Trading Company is a small yet leading supplier of high quality nutritional supplements, herbals, food additives and vitamin products. The company is located in Shanghai and is a relatively new and up-start venture founded in 1998. It is staffed with highly talented and experienced executives, scientists and associates. It is the company’s powerful value that sincerity comes first that makes the sales force dynamic and strong. For the past several years, the company has formed partnerships and exclusive agency agreements with many industry leading manufactures and suppliers local to China. Due to the nature of their product, they also have close working relationships with professional research institutes, colleges and factories. These alliances allow the company to bring to the market place the best product for the price but also educational information on the product. They are proud of this fact and encourage excellence in customer service while remaining innovative in new products and better public health.

2.4.Four Models

This project utilizes four models to analyze IT strategy. The models are as follows: (1) SWOT, (2)Porter’s Five Forces, (3) 7s model and (4) Value Chain. These four models and other like them assist management and strategists in understanding a company’s standing within the market place. By assessing a company’s strengths and weaknesses, one can have a better idea of which areas need attention.

2.4.1. SWOT Assessment

It is important to determine the impact a strategy will have on the operations and activities of an organization. The objective is to utilize present technologies and future innovations to plan the future of a company. It is important to allow a flexible framework for strategy to interact within the environment. Further the objective is to gain understanding of the surroundings and behaviors under which they are operating. The key is to create an excellent strategy in which to include within the organizational culture. It is best management remains informed of potential challenges and SWOT allows for clarity. See Figure 2.

2.4.2. Porter’s Five Forces

Michael Porter is a leading authority on competitive strategy and the competitiveness and economic development. His two seminal books Competitive Strategy: Techniques for Analyzing Industries and Competitors, and Competitive Advantage: Creating and Sustaining Superior Performance have been hugely influential. In them, he describes a concept that has become known as the ‘Five Forces Model’. This concept involves a relationship between competitors within an industry, potential competitors, suppliers, buyers and alternative solutions to the products or problem being addressed. Two things determine a company’s profitability – the industry in which it competes and its strategic position in the industry. Some industries have inherently low profit potential while others are highly profitable. The most profitable companies have a strong competitive position in a highly profitable industry. The poorest companies have weak positions in weak industries. See Figure 3 as an illustration of the Forces below.

Porter’s Five Forces are:

Buyers’/customers’ power

Suppliers’ power

Rivalry among competitors

Threat of new entrants

Threat of substitute products

The use Porter Five Forces model in understanding the e-commerce facet of the Chinese health food industry to gather conclusions about the influence e-business has on strategy is warranted. A market place can be an unstable environment. An organization’s ability to turn a profit is determined by Porter’s Five Forces of competition. These forces include: (1) the intensity of rivalry among existing competitors, (2) the barriers to entry for new competitors, (3) the threat of substitute products or services, (4) the bargaining power of suppliers and (5) the bargaining power of buyers. To compare and contrast side by side, these forces establish value for the product or service. It represents customers, suppliers, distributors, substitutes, and potential new entrants. By looking at the forces in detail, allows one to have insight into the factors that motivate an industry, its current profit levels and future successes. Porter’s five forces allow for probable changes in future such as different suppliers, channels, substitutes, or competitors.

2.4.3. 7s Model

Waterman, Peters and Phillips developed the 7s model approach. This model suggests that there are seven aspects of an organization that are needed to harmonize with each other, to point in the same direction like the needles of Figure 4 in the appendices illustrate. It is hypothesized than if all aspects support each other, then the organization can be considered organized. Each aspect that the organization must mindful of start with an “s” and hence the name of the model. The parts consist of: Strategy, Structure, Systems, Staff, Style, Shared Values and Skills.

The 7s models can be used in two main ways. First the strengths and weaknesses of an organization are identified by considering the links between each of the Ss. No S. is stronger or weaker than the other; no S. is more important than the other. In other words, each is equal and must work together in order for the company to work right. See Table 1 in appendices as it can be used to undertake a cross analysis. Secondly, the model highlights how change made in any one of the Ss will have an impact on all the others. So for the purpose of this study, of course, one will look ate how strategy used for IT at Waseta influences all other Ss. In management circles, this model is important because it focuses on both soft and hard components of the organizational.

2.4.4. Value Chain model

Value chain activities are not isolated from one another. Rather, one value chain activity often affects the cost or performance of other ones. Linkages may exist between primary activities and also between primary and support activities. Sometimes, however, the firm may be able to reduce cost in one activity and consequently enjoy a cost reduction in another, such as when a design change simultaneously reduces manufacturing costs and improves reliability so that the service costs also are reduced. Through such improvements the firm has the potential to develop a competitive advantage. Such structure creates efficiency in the employee and high customer satisfaction in the buying experience (Burn, p. 3).

By restructuring value chain activities as a means to prioritize importance, this opens the door to many business relationships, changes values and sets the stage for new propositions and recreates the business models.

Choosing the Four Models

We chose these four models to gather information for analysis to assist in the development of the e-Business strategy to better the existing strategy at Waseta. This allows for better understanding of the company’s potential for growth upon using the strategy. By understanding the company’s needs, time and money can be saved and a policy of consistency can be introduced. By using SWOT analysis, Porter’s 5, 7s model and the Value Chain model, one can better evaluate the needs of the company and which areas of e-strategy to focus upon. Using the models offers in-depth analysis of the market and consumer spending trends. It allows a company like Waseta to get a feel of not only what others are doing in the market but to also to gain a competitive advantage.

2.5. IT Strategy and the Organization

Introducing an IT or e-strategy to an organization somewhat familiar with such a concept or unwillingly flexible to change can be a challenge and take some time to implement. This process is not a transformation overnight but more of an evolutionary process. The implementation will need to be done on a step-by-step basis at a detailed level as to save money and time. There is not much room for a mistake or misunderstanding of the plan put in place as they can be costly and create resistance to change. Therefore it must be decided by management what the exact goals are for this strategy. Are they long-term or short-term? What are the expectations for the organization? What do they hope to gain?

Chapter 3: Methodology

3.1. Introduction

This research was conducted to study IT strategy and if its usage would optimize an organization. Specifically this research focused on the nutrition industry in China and looked at the IT strategy used by a company called Waseta. A qualitative descriptive methodology of analyzing different strategy models acted as framework for analysis. This study offered data to act as a basis of analysis when looking at the nutrition industry in China. These collections of data were used for research purposes only. The qualitative descriptive methodology was used to evaluate the data, which, was collected during this study. Part of the study included conducting a case study of Waseta International Trading Company. The case study looked at both strengths and weaknesses the company represents in the market.

3.2.Procedure

As part of any scientific study, it is important to achieve a baseline of study. In other words, it is important that the cases selected be assessed before continuing the study. In a more perfect world or setting where my own survey of subjects could be done with the chosen segment of health food companies and their IT strategists in China with the ability to determine their expectations, I would hope to conduct the following to better the data consistency and purity.

3.3.Plan for Data

Task 1: Literature review of strategy and IT strategy or e-strategy, its definitions and applications in general will be researched. More specifically an analysis of strategy was carried on the company Waseta and its present IT strategy. Articles, research reports, journal papers will be collected for that purpose. The literature will be comprehensive by covering both local and international experience.

Task 2: Selecting the Subjects

For the purpose of this paper, the subjects for this study ranged within the applicable criteria set forth by each individual case investigated. Due to the available studies internationally and local and each individual focus, the subjects varied but had many attributes in common to facilitate the completion of the data collection. Otherwise all data assessed included subjects over the age of eighteen years ranging as old as sixty-five depending on the category in which they fell. These subjects represent a cross section of American, European and Asian populations of health and vitamin employees. Originally, the intent of this project was to focus on IT strategists working in the health food industry in China.

Task 3: Analyzing the results

The last step on this research will be analyzing the data results. To do so, all data and accompanying studies will be analyzed. To achieve such analysis, four models were used to deconstruct IT strategy. After such analysis is achieved, a section of this project will be dedicated to the implications and solutions found regarding IT strategy and possible recommendations for future technology in the relatively new field of study.

Task 4: Final report and defense

At the end of this research, a better understanding of IT strategy and its impacts will be achieved. The final report will be ready and will be presented upon completion.

Chapter 4: Analysis, Discussions and Conclusion

4.1. Introduction

In both academic and professional performance management of strategies and the employees that use them, weight on building and maintaining market share and competitive advantage continues to increase with a central focus on customer retention. As it has been addressed during this work, a successful IT strategy begins with understanding the many elements of the organization and the business. It is our belief that in this day and age, such a strategy is warranted in order to survive. Many business people would argue with the power of technology and this information age but it is important to consider what the ramifications would be if technology was dismissed and change remained stagnant. This is what the non-believers want the believers to think that Brick and Mortar, a typical store front is the only way to do business. Believers who have seen IT strategy at work beg to differ. The truth, the non-believers are running scared.

4.2.Strategic Analysis of Chinese Health Food Industry and Waseta

After analyzing the facts from use of the four tools above, it is clear Waseta has many challenges and factors to consider before implementing a better e-business strategy. On the part of consultants, it is their job to bring attention to areas that need improvement. It is clear the group from tracking complications with their current system and has no policies and procedures in place to accurately use telecommunications effectively. It should be understood that use of such technologies would drastically reduce overhead operating costs and put into place a more efficient way of doing business. Companies in China should focus on the return on investment or ROI in order to prioritize its goals and the benefits of these goals.

4.2.1. SWOT

SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses are considered internal factors while Opportunities and Threats are external to company. It is important to note the analysis using this tool is very subjective in nature. In general SWOT analysis should be used as a guide for generation of new ideas for strategy and as a concrete plan.

Waseta

Strengths: The company has innovative science and cutting edge products that serve the gamete of the health/vitamin industry. The company also has a prominent sales force in house. The company has partnered itself with key manufacturers and suppliers in China. Other strengths include its strong value system of integrity that puts the customer and their satisfaction first. They are constantly introducing new product and improving old product. The company has a web site in both English and Chinese.

Weaknesses: The company is struggling to keep up with the demand the health food industry in China represents. It has not taken advantage of joint partnerships with outside companies nor has it campaigned for a global image. It appears that they do not produce the product but rely on outside vendors and researchers to produce the product.

Opportunities: The company has created alliances and joint ventures with other Chinese companies in the industry. This includes relationships with researchers that create innovative product lines for production. These researchers are also intend on improving existing products. The company has a sales force of 100 people who are actively communicating with other businesses in their industry.

Threats: Because the company does not have any alliance with outside industry leaders, it can be assumed that this element within the industry in their home country presents a threat. Maybe because they are small in nature, they worry that such partnership will cause problems within the organization. Maybe management wants complete control of the company’s decisions and therefore, have not ventured into outside foreign investment like other nutrition companies. Of course, there is the threat of other local companies, bigger that may be able to meet the demand for product better, cheaper and faster. The demand for product in itself while it can be motivator can also be threatening.

4.2.2. Porter’s Five Forces

The Five Forces framework gives the researchers a better idea of the forces at work within an industry. Change is inevitable and with the indication of the arrows flows through to affect such elements as consumer spending, rival companies, product availability and current retail designs in the market. It is important to recognize change, as flexibility to change will predict how well a company adjusts and succeeds with these forces present.

Customer Bargaining Power – High

Today’s Internet savvy consumer is educated when it comes to their health and how to actively treat their health situation. This gives the consumer power over retailers to match their need for a web site that will understand their intelligence. They know what they want and at what price they want it. It is that simple. Today’s consumer is constantly bombarded with options due to different types of media. Retail design as a concept for enticing new consumers is a constant in the market. This aids in driving the competition to find an advantage. The consumer knows it has a wide range of choices. They understand health care better and use this to shop around for the best product. As a result, the ability for a retailer to switch cost is very low. Everything depends on the quality of product which Waseta is focused on. There is a sense that today’s consumer is undecided when it comes to loyalty. They are willing to try anything. The truth is that they shop at multiple places before making a final decision. Online research has lead to an emergence in having multiple choices. It is up to the company how they choose to remain competitive and this begins with the type of Internet presence and infrastructure existing or that they can install.

Threat of Substitute Products and Services – Emerging

The health food industry in China is facing many changes due to a changing market and changing consumer needs. Never before has there been such demand. These changes could be seen as threats. Only diversification product which Waseta has will lead to success at this point. No longer are health food and vitamin companies a brick and mortar, mom and pop operation. The future of these companies depends on presentation of different formats and product specialty to keep the customer’s attention. These niche stores will meet consumer demand of specific needs. Instead of having all products under one mega-web site, there will be multiple “stores” and mini-web sites for each unique consumer need much like the design of the web site. Waseta would benefit for a partnership with a store like this in order to present its line of products to the public. Better yet, it should have its own online store.

Supplier Bargaining Power — low

The bargaining power of Waseta is relatively low because of the nature of the product. The company is legally bound by government guidelines to uphold the lawful sale of vitamins. Still this puts them in a role of great influence. Because today’s consumer is well educated in their health matters, in many ways the health specialist is seen as an expert and the consumer respects the role. This affects how the consumer spends their money on additional products from the web site. As a result, the companies like Waseta have had to adopt and aggressive attitude with suppliers or partners so they can provide diverse products to the consumer. The supplier or partner really has no room to bargain either due to increased competition on the wholesale market and media behavior being emotional in nature. One’s health is a serious matter. This tension creates stress, making it easier for the company to switch suppliers to meet the needs of the customer. They are also educated and looking for a company that can go the extra mile to please them. In this respect, Waseta holds the power to name the price according to their current partnerships with suppliers. They have this power because they do respect their clients and are willing to go the extra distance. In this industry, companies are constantly bargaining for the best price and suppliers are willing to yield to meet this demand for fear of losing a client.

Threat of New Entrants – Emerging

New entries into the market, one would think should be low because of the government guidelines health food companies must follow. Times are changing as expressed earlier. With the advent of e-business the explosion of Internet or direct to customer sales via telephone are rapidly impinging upon the traditional retail storefront. Also the emergence of dynamic search engines like Google and yahoo brings information to the fingertips of the customer and the fact this information may not allow them to find a web site for Waseta has impacted traffic into the online store. It is up to the company to have an ongoing static presence on such search engines to maintain a competitive edge in multiple languages. Still the popularity of such options remains a viable threat especially among the younger generations growing older and who have a fear of growing older and therefore need health care product like vitamins..

The Overall Level of Rivalry – Moderate

There is a perception that the more densely populated an area becomes the higher the competition with the company struggling for market participation. This is an incorrect assumption because most of the nutrition companies are operating online mainly suppliers to manufacturers or to the public. This results in less advertising and an environment where the competitive spirit is unvoiced. So it can be assumed that the competition is actually low. What determines the success of a vitamin company online has to do with the Internet presence not just as a web site but also to the customer via email or other sites as secured banners. Because of this, many other companies (like Waseta should) are looking into more flexible packages or are partnering with better IT providers in order to have greater Internet presence.

4.2.3. 7s Model

The 7s model asks that all seven S-word elements have equal influence on the organization. When all seven reach an equilibrium, then the organization is able to be stable and flourish in the market place. In this respect all seven feed off it each other and remain equally important to the organization. The moment one becomes a greater issue than the others is when an agent of change enters the situation. For the purpose of this analysis, we are looking at the impact of focusing on IT strategy has on the other six elements with regard to the company named Waseta. Clearly focusing on strategy takes attention away from the other six, which stresses out areas of the organization. Sometimes however, in order for the organization to focus on one area, the others must for the time suffer. Focusing on strategy influences areas like structure and staff because people’s roles in the organization change or shift because their expertise is needed to make the IT strategy work. Therefore, they are unable to work on their everyday responsibilities. Extra work to make the strategy fly and get buy in at different levels of the organization may cause changes in style of management as different people become involved in the process. Extra work may cause stress levels to increase and communication to become difficult (Waterman et al., 1980). For the time that it takes to get the strategy off the ground may be a period of time called “growing pains” where not only are people skills used differently than before but loss of the company’s main core values may result. Sometimes it is truly difficult to focus on the overall picture when so many parts of the picture are crucial. Once the focus is taken off of core values then all seven Ss fall out of balance according to this model.

Clearly at this time Waseta’s seven S’s are not in alignment. The company is much more focused on skills, staff, style and shared values than anything else. This may be why the organization has no clear structure or strategy for the future in place. As much as their motto is concrete and powerful; they lack the systems to keep the process of their everyday business together. Style is only important when it comes to their motto but it does not seem to be shared value as their partnerships keep many people isolated within the group. This can work for the short-run but in order for the company to succeed, its 7s must become more equal. This can happen as they establish more processes with the advent of IT strategy. Once their systems are more streamlined and more of the processes fall under one roof, then the Ss will fall into balance.

4.2.4. Value Chain Management

The notion behind value chain management is how value is added to the process of every day business. Will improved IT strategy better the environment of Waseta. It is believed that through new technologies they can focus less on outside distribution and production of product and instead have it all under one roof. From formulating the new vitamin in the test tube to physical shipping of the product out to the customer, every step would be at Waseta. Movement toward such a set-up would begin with implementing a new computer system that has the capability of networking all members of the company together so everyone is on the same page. All aspects of the process would be online and automated to make jobs easier for researcher or the sales person. The possibilities are endless on how value can be added at each step with just a change in IT equipment and training.

It is believed that by introducing a new company wide computer system, this will reduce inefficiency for customer orders, automate tracking of inventory and encourage communications across the company. These are positive outcomes that have a direct relationship with operating costs. By having the tools to promote these activities within the store, creates a uniform way of doing business and maintains the company’s image and identity to the public. By promoting these functions, will aid in reducing overall costs of operation, therefore, allowing the company to invest those funds back into the project or later when the project is completed into other company interests such as acquisition of new stores. By introducing a new computer system and an integrated tracking format for customer orders both in store and online, makes the management of supple easier for the employees. This type of automation may require outside sourcing to an independent IT company as to avoid continued cost involved with maintaining such a system. This reduces costs of hiring new employees and training of existing staff.

4.3. Shortcomings of the Research

There are many shortcomings to this study. One such shortcoming is the fact the data is immense. This specifically pertains to IT strategy data not just worldwide but specifically to Asian countries. Other shortcomings include specific factors in which some studies focused upon making it extremely difficult to disseminate data. The greatest shortcoming or barrier to the quality of the study, however was lack of a participatory survey done for the specific group participating in IT strategy activities across mainland China. In a more perfect situation, such surveys would have been constructed and performed.

4.4. Implications of IT Strategy

The implications of doing business in such a reality means constantly being open-minded and remaining comfortable knowing that not every day is same. Some people cannot work in such conditions. They are so overly programmed in the modernist view; it is difficult to open their point-of-view. It is realizing that the modernist view still exists that will aid the postmodernists in success. As Stephen Robbins’ comments, “As humans, we are creatures of habit. Changes substitute ambiguity and uncertainty for the known” (2001 p. 546). People, by human nature, inherently resist change. Management may find older employees are more loyal but have a harder time embracing new ideas like the Internet because they remember the old days. They remember when life was less complicated and doing business differently was not an issue for competition. Older employees remember that doing one thing and doing it well was all that mattered. This resistance to change can result in conflict but it also creates opportunities for innovation. The practice of innovation also begins with embracing or adopting the unexpected. Peter Drucker describes, “unexpected successes and failures are such productive sources of innovation opportunities because most business dismiss them, disregard them, and even resent them” (1998 p. 3) and this type of behavior represents people’s resistance to change but at the same time creates recognition of new opportunities within the market. Change in the global market, including multicultural demographics and new technologies, has required perceptions to change. The attitude toward knowledge has evolved because more than one type is needed in order to implement a new idea. This changes the needs of workers and organizations as diffusion of innovation takes place as many different points-of-view are considered. This adds value as it spawns creative thinking but it must also fall within economic reality. It is important to carry out a detailed implementation but also to remain on budget and schedule.

The concept of innovation brings up other implications, however. It produces a whole new reality that employees may not be prepared to handle. Product diversification could mean failure. Technology, while it is wondrous and makes jobs easier, can also be dangerous. With telecommunications, a new breed of crime has been created with identity theft and corporate brand protection becoming important. Technology can be disastrous if put in the wrong hands. Antibiotics used to cure infections have saved numerous lives while there is a continued threat of biological weapon of mass destruction. With innovations come new inventions that make our lives easier but also have a higher risk when used. This is the nature of the realm of possibility. The postmodernist movement has given permission to anyone to create and discover. This can backfire as it can also destroy and impose new rules of conduct upon communities. As much as many like the idea of innovation, for those scared of change, it is difficult to embrace fully. This leads to counter movements to conserve what is left of the modernist ideals. This means as change rapidly flourishes out of control, those resistant aim to gain control of laws and rules to make change more difficult.

4.4.1. Risk Prevention in E-Strategy

As with any company incorporating change, it is important to consider factors that may encourage risk. By introducing such technology, what kind of risks is the company opening itself to and what can be done to alleviate risk? In addressing this problem, the traditional business continuity methodology is still valid. There is a need for organizations to re-assess their organization’s risk procedures and damage control methods in order to assess better avenues of containment. It is advised that during implementation that an alternative site for data storage be created. By doing this, the company protects itself from any type of harm done to the administrative offices. This would include but is not limited to: fire, earthquake, flood or electrical outages. For each individual site, there is a need to consider these particular threats and put into place an action plan that details how to handle such threats. Still companies like Waseta should remain consistent in its policies toward risk, meaning that each store should carry out the same protocol during a risk situation.

4.4.2. Brand Identity company’s intellectual property begins with its name. Because the business of health and eating is greatly service oriented, it is of utmost importance that the company’s name must have integrity. I am not at all certain if Waseta’s name represents integrity but its motto does. With time as the company further establishes itself, the two will become interchangeable. The company has a reputation to uphold where market share remains wide-open and competitive advantage strong. Recently the company’s name and intellectual property in the forms of trademarks and brand has been at the forefront, in constant view thanks to e-business. The Internet has opened a whole new area of protection issues for companies and individuals especially when electronic crime seems on the rise. By having this arena of trade open, makes it possible for even the worst thief to take advantage of the situation. Using e-business can be a win situation for a company if they know how to protect these properties online similar to the way a company might set-up a security team to patrol its office buildings.

For a company like Waseta whose success is linked to its name in China, protecting these intellectual properties is extremely important for its internal and outside influences. Still a company of its size implements its own procedures and laws in a sense. The industry of health is regulated by government organizations on federal levels. Even so, it is important the company as a whole work very closely with a team of attorneys on every detail.

4.4.3 From the Technical View

In this Information Age, where the speed of transmission and the contents of communication make the world a smaller place, e-business can expose a company to new risks. The World Wide Web is a haven for predators, where skill is not a factor but knowledge of opportunity is indeed. Millions of people cruise the web daily and some with cruel intent. While the Internet is a competitive avenue to take advantage of, a company must proceed with caution. In this time of terror and war, it is not surprising for one to feel vulnerable. With a website, this is the threat of corporate espionage, data corruption and slander. It is important that a company put into place precautions to avoid such dangers. These precautions would include encryption programs, firewalls and other forms of online security. It is also imperative that China’s companies take measures to protect its name, employees and customers. This would involve proper data storage with a location that changes frequently. A company knows its name is its image and should secure the government trademarks to guard that name and update them regularly. Security measures must be built into the infrastructure to reduce the vulnerability for the sake of the company image.

4.4.4. E-Supply Chain Management

The typical SCM is one that is broadly linear in terms of supply and processing of raw materials and services into the final product for the customer. There are three main parts to the supply chain process. These parts are planning, procurement and fulfillment. The SCM solution would provide many benefits to bank’s day-to-day operations. The B2B relationship that they have to their suppliers would function more effectively. Immediate feedback can be given to know the effects of delivery date changes or increases in quantity parts ordered. This immediate feedback will allow a bank to manage their inventory and the expectations of their customers better. The immediate feedback is due to the real time connectivity the SCM system provides. The master planning allows one to manage the inventory by project or on an individual job bases. Minimizing the amount of headcount and space required for warehousing and managing inventory increases savings. The primary management of inventory is turned over to the suppliers. Purchasing is made simpler through the use of an electronic form that gets sent directly to the supplier after receiving the proper financial approvals within the bank. The electronic form eliminates the tedious drawn out paperwork process of the past. The fulfillment aspect of supply management is made easier by the ability to track your purchases and delivery times. Contingency planning is a part of the supply chain process that becomes a part of the fulfillment process. Reports can be printed to identify when a product has shipped, when it will arrive and how it will arrive. Based on this information it can assist in determining if contingency plans need to be implemented (SCM 2005).

There are SCM solutions available today that will also integrate into your pricing and discount models. These available modules or options can add additional value to the SCM package Waseta may purchase. The integration of these technologies often spill over into the other ERP, CRM and EDI solutions making the evaluation of these system much more important.

Still the model is evolving to include new innovations being used as tools. The Amorphous type of chain changes as the company introduces new strategies. This type of model best reflects the continuous flow of ideas and possibilities within the e-commerce construct or Internet medium specifically. It helps anticipate future occurrences. This aids a company’s tracking of Internet use especially when applied to advertising and promotions, as it is known “the number of businesses utilizing the Internet for e-business purposes was significantly low at 28% though a further 33% were actively considering the implementation” (Ritchie 2002, par. 5).

4.4.5. Procurement

Sometimes organizations look to outsourcing inventory as a way to cut costs and speed up the process. Waseta will find that by using the Internet as e-strategy that they can achieve multitasking on new levels, allowing for many lines of communication as once. The Internet will allow a Chinese companies to tap into a bigger supply base to ensure dependable supply and backup sources. This in turn will reduce the amount it takes to secure shipment of new products. Enterprise Resource Planning (ERP) systems are particularly valuable in new product introduction because it acts as a means of sharing information.

4.4.6. Enterprise Resource Planning (ERP)

Enterprise Resource Planning (ERP) systems are software packages that attempt to integrate the information flow within a company, solving the problem of incompatibility between systems and operating practices. The ERP system will streamline the company’s data flows and provide management with direct access to a wealth of real-time information. This is facilitated by the used of database technologies which will link applications together and pass relevant data between them as necessary. Any new information added to one of the system updates the other systems automatically, thus creating complete integration between them. Directory services and middle ware are used in order to connect the applications and provide an infrastructure for users to communicate with each other and connect to the sources of information.

There are many benefits and drawbacks to using this method of data transportation. It is important to analyze rather not this will be good fit for a company. “A key difficulty is that departments distrust the information provided by another department, be it via an information system or some other mechanism. Therefore checking and cleaning the data should be made an integral part of the implementation” (Bonner, par. 6). If ERP is integrated with the organization’s decision-making structure, ERP can begin to deliver business benefits, impacting data delivery levels. Still its success can only be measured by the attitude of the user.

4.4.7. From the Managerial View

In today’s company, the role of management also involves leadership within a team structure. Managers have the responsibility to set goals, maintain moral, aid in training and communicating corporate objectives. However, this does not mean a leader cannot be a subordinate. If a company is smart, it will encourage leadership by example across the board. This instills in the employee a sense of pride and motivates them to achieve goals. A good leader provides vision and clarity for the employee. Such a leader will be able to communicate and create a rapport with their team. This establishes their role.

This connection begins at a fundamental level of human sociology where the use of story is central. Howard Gardner reflects, “The ultimate impact of the leader depends most significantly on the particular story that he or she relates or embodies, and the receptions to that story on the part of the audiences” (1995 p. 14). By telling stories, allows for a certain level of openness or vulnerability on the part of the leader and makes them human. By opening the line of communication, gives the employee knowledge of their environment and develops trust. The leader’s role is to sell the idea of commitment within a culture. Odiorne suggests, “If employees know what is expected, and what help and resources are available, they can then be relied upon to govern their actions to achieve the commitments they have made” (1987 p. 138). This sets the stage for goals and achieving high performance. The culture in turn feeds off this energy and excitement. Bennis writes:

There are three reasons why leaders are important. First they are responsible for the effectiveness of organizations. Second, the change and upheaval of past years has left us with no place to hide. We need anchors in our lives as a guiding purpose. Third, there is a national concern about integrity of our institutions. Being mindful of own context is difficult for us. (1989 p. 15-16)

Managers with a keen understanding of leading represent these three key attributes and create a foundation from which to act. A leader must also display curiosity and have the guts to be daring. They must be a dominant force within the team. Bennis reflects, there are two kinds of people “those who are paralyzed by fear, and those who are afraid but go ahead away. Life is not about limitation but options (1989 p. 185). A healthy culture inspires options and the innovations that grow out of creativity.

4.4.8. Internet Infrastructure

China has seen the need to invest in new technologies as an infrastructure for its future on the world arena. However, it has paid attention to other infrastructures that need improvements along side of technology. For instance, the country’s transportation system and delivery system are behind and this has a direct influence on how quickly the new technologies can be used. Companies like FedEx and UPS have been unable to enter the market due to government regulations and other cultural barriers. As a result, while the Internet infrastructure gets closer to western standard, the rest of the country’s communication systems remain in the dark ages.

Much of the problem is that infrastructure remains this elusive concept. Much like when the Chinese built the Great Wall, there is an understanding of this need for protection against crime and mainly fraud but it is not well understood how it works by many in the country. In fact, many Chinese have grown to resent the Internet as it is redefining the culture and putting the many people on the fact track. Unlike many western countries, China has a well defined class structure that was put into to place by Communism and accents distinctions between the farming class and the working class. These distinctions still exist today as the working class is highly concentrated in the cities and this population has exploded. On the other hand, the farming class still lives in the rural areas of China still untouched by western culture but not for long. The farming class is struggling to hold onto what notion of culture they still have as farming opportunities become scarce. Part of the issue is that the Chinese government has seen to it that much of the land has been taken away from the farmers in exchange for zero compensation but for the betterment of the infrastructure. Part of the problem with the infrastructure aside for the expense incurred for its continued investment has been the government’s need for space to continue economic growth and this has meant many farmers losing their land. In this respect, the infrastructure is not just an invisible machine that maintains the technology but also physical evil for that many do not understand as life quickly changes to make room for new ideas. It is believed that because of these conflicts of interest, that is a major reason why Internet usage is not rocketing out of proportion as many people do not want anything to do with technology. The other factor is government regulations of such a device. It is almost as if the Chinese government has put the working class at an unfair advantage.

4.4.9. Online Security

Research suggests that the first reason for not using IT is the concern about security of the IT services in China. The second reason for not using IT is the benefits of Internet commerce services. Customers do not see benefits of using Internet services, at least not yet. Thus, the companies need to promote or educate customers about tangible and intangible benefits they may receive from using IT services. The third reason is the trust on Internet services provided by both companies and Internet Services Providers (ISPs) in China. This finding suggest that both companies and Internet Service Providers (ISP) need to create trust or have certificate authority (CA) seal on their web to ensure security and create trust for customers. In addition, the first three reasons for not using IT together are accountable for sixty-one percent (61%) of customer reasons not to use services on the Internet. The remaining ten reasons together are accountable for thirty-nine percent (39%) of reasons for not to use IT (Gasman, 2005). The findings suggests that both companies and Internet Services Providers (ISPs) should put more effort in educating, training, promoting and supporting the security, trust, benefits and ease of use of the Internet in order to attract more customers to use the Internet services.

4.4.10. Implementation of IT Strategy

Implementation can be a very detailed process that requires due diligence over a long period of time. With respect to entering the environment of e-commerce using the medium of the Internet, many questions come to mind. First, what kind of presence will be formed and over what time frame? What kind of image does Waseta want to portray to the public? What kind of competitive edge will the web site present? Is it a good idea to introduce a promotion at the same time or should the company take its time? What is the best approach to information storage and should an outside outsource company be used? Will such an approach really save money for the company and be a solid investment for the future?

4.5. Reasons for IT Strategy

Reasons why the company should adopt the strategy are numerous. For one, the overall investment will in the long run cut operation costs and increase efficiency for many levels within the organization. By adding the new sales channel of the Internet offers the customer another mean of interaction with the company. A web site creates a whole new level of advertising exposure to the public not just on a local scale but globally as well. Automation and tracking of inventory makes the store less cluttered and allows the sales staff to focus on customer service skills. This use of automation is very prominent in larger corporate business models. Wal-Mart practically invented the concept of data playing a very big in role in monitoring inventory on the shelves by what has left the store that day and what needs to be replaced. This anticipates the needs of the customer and allows the popular products to remain on the floor while older stock can be removed. Also having fewer inventories on the floor reduces risk of accidents for the customer and employee. This may reduce the amount of insurance needed for the store to operate.

E-business allows a company to offer cutting-edge options to the customer on a weekly or monthly basis. This means additional promotions or flyers sent to the customer via mail or email. These promotions can also be posted on the web site. The customer can also be told about special options only Waseta offers. These programs will need to be considered before implementation but could be and not limited to special delivery, 24-hour service, special seminars on health for customer of different ages and benefits for preferred customers. Automation of stock allows the company to better track inventory and can alert the employee when a certain product needs replenishing. It can also set-up a customer preferences database within each customer’s profile that provides information to the company about the customer. This information will not shared with any third party but used for marketing purposes only. Knowing the customer’s preferences can allow the store to alert them when their favorite product is on sale.

The consultants have presented a preliminary budget for management perusal. Please refer to Appendices 6 for the implementation budget.

4.5.1. Implementation Schedule

As expressed earlier, this implementation cannot happen overnight as an instant transformation but will need to take an evolutionary approach. It needs to rollout over a period of 6-9 months. Please see Appendices 7, the Project Timeline for Implementation of the IT Strategy. Such a timeframe allows Waseta adequate preparation time of the changes involved. It allows the company to examine the plan for any flaws or problems as each step occurs. A monitoring procedure can be set into place to ensure the project remains on schedule and under budget. What is monitoring system does is keep track of time and money management using a Quicken program. This program interweaves both elements of time and money to allow a seamless method for management use. As tasks are achieved, they are checked off a list of implementation goals. A tabulation of expenditures is watched in the same way. This program will send an email to the decision maker if time gets too short or goals have not been achieved in the time allotted. The same goes for if the budget for a particular item is close or over the limit.

4.6. Recommendations

It can be argued that multi-national corporations are change agents, which bring new technology and new management techniques to all corners of the world. This may be seen as a negative for those that desire to preserve cultural identity. It is believed that with understanding a new global culture can be adopted by organizations and people worldwide. To respond effectively to the demanding global environment and remain competitive, firms need to develop a range of capabilities in the areas of technology, marketing, management, human resources and finance and continuously create innovation over time. This allows an organization to not only have a global presence but to also survive.

4.7. Conclusion

IT strategy delivers opportunities to generate greater non-interest-based revenues, opens up new markets and reduces costs as transaction costs are lowered. Integrating back-end systems is also the key to effective services and vendors must work with nutrition companies to ensure high performance integration of legacy systems to exploit existing systems. Ease of integration, scalability and extendibility mean the bank is now ready to handle massive increases in Web site traffic, and offer new services as they are developed. Companies will also utilize the most complete, up-to-date activity behavior statistics for better customer relationship management or CRM and greater cross-selling opportunities.

As the region approaches a more complete e-commerce phase, companies like Waseta need to develop customer-centric online services to maintain competitive advantages and develop new business opportunities. Waseta will also need to create a tailored “virtual portal” for every customer, every time they log in. Services on these portals should be targeted at them based on enhanced data collection and analysis. In addition, customers should be able to review all accounts conveniently. The companies that embrace the Internet to deliver a real customer-centric approach will emerge as winners in the Chinese health food industry They will win on the bottom line and win by expanding market share and retaining customers.

For centuries China’s culture was at the forefront of discovery and innovation. Many western inventions can be attributed to discovery in the Far East. Such inventions range from spaghetti to the abacus. Many systems of math, language and war come from the Chinese culture. This was before the Cultural Revolution. For decades China has remained an elusive world power due its socio-political associations with Communistic doctrine. This choice of framework in which to run a country left China closed off from the western world and therefore, it functioned in a vacuum only doing business and having ties with other Communistic countries such as the former Soviet Union and Cuba. The world began to change as Communism fell to ideals of freedom. As a result, China’s role has changed, slowly but nonetheless. Recently within the last twenty-five years, China has been shifting to a new functioning role within the global economy due to globalization. As new western ideals and commercialism were introduced into the mainstream Chinese society, so did the country and its attitudes toward commerce and technology shift.

The advent of telecommunication technology has changed the way the world does business. Tools like the Internet and the World Wide Web have brought about a whole new world of business avenues to explore. It seems anyone and everyone in the business world is on the Web with some sort of presence and commerce operations. This presence on the Web contributes to a new form of commerce or e-commerce that spans the globe within the split seconds of time. Without an Internet presence, a company could not define its competitive edge well and will probably miss out on competitive advantage. The new technology has invented a whole new level of service and customer relations. Today’s customer expectations are vastly different from twenty years ago. Today they expect a Web Site; they expect customer service 24/7 on the Web and on the phone in return for loyalty and repeat brand purchase with confidence. They expect e-services. The world of health food and vitamins has been no exception to this trend. No longer is the traditional brick and mortar or classic retailing set in stone. It is no longer the old days of a store being a physical place but more of a presence within a community. Over the last twenty-five years not only has China opened its doors to changing commerce but also to changing its technology. Due to China’s economy quickly emerging because of seamless, wireless commerce, the country has had to keep up with demand for similar western services. The people of China have seen technology and service as a means of embracing the new world order and creating a competitive advantage for the country. As a result, China has slowly adopted e-services into its commerce framework with new service to come in the near future.

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Appendix 1

Figure 1. European Online Shoppers. (http://www.economist.com/surveys/showsurvey.cfm?issue=20040515,2004)

Appendix 2

Figure 2. SWOT Analysis (SWOT Analysis, 2005)

Appendix 3

Figure 3. Porter’s Five Forces (Porter, 1999)

Appendix 4

Figure 4. 7’s Model (Waterman, R.H. Jr., et al., 1980)

Appendix 5

Table 1. 7s Table (Waterman, R.H. Jr., et al., 1980)

Appendix 6

Table 2. Implementation of e-business Strategy Budget Costs for 2005

Revenues and Costs

E-commerce Establishment Costs

Money Spent ($)

Dollars ($)

Web Development

Registration of domain name

Advertising

System design (outside sourcing)

Staff Time and Training

Telecommunications

Software

New Data Storage System

Consultant Fees

Total Establishment Costs

Operating Benefit from E-commerce

Gross Profit from E-commerce

Add: E-commerce Cost Savings

Postage & Freight

Printing

Staff time: Communication

Staff time: Marketing

Telecommunications

Total E-commerce Cost Savings

Gross Benefit from E-commerce

Less: Ongoing E-commerce Costs

Amortization of capital over 4 years

Authentication services

Website hosting

System maintenance

System administration

DSL connection

Telephone Dial-up expenses

Total Ongoing E-commerce Costs

Operating Benefit for E-commerce

Budgetary Requirements for Implementation