Subject Proposal

Grenoble Graduate School of

Business

Final project proposal

Project Tutor: Andrew WALKER

Subject

Virtual regroupment:

An alternative for small photo businesses to build a web presence

I. Introduction

In the 70s, small photo retailers regrouped under the form of cooperative chains to concentrate their ressources as they were facing a growing competition of big distribution firms. The mother chains mainly focused on developping two aspects of their activities: they built strong purchasing powers and developped efficient centralised marketing campaigns. By doing so, chains brought pieces of rationalization and standardization in the shops, which were required to match with the brand names they were representing.

Internet has created a space for competition and changed the nature of it and most of the big distributors entered it; it also enabled manufacturers to manage their owns sales to the final consumers. Small retailers lost power and market shares facing both disintermediation and the coming of foreign distributors through on line sales. As a response, many of them tried to enter e-commerce but like many other small businesses, they failed. The project will point some of the mistakes that were done and propose a study of an alternative approach through c-commerce.

In 1999 in an interview to Web Business Magazine, Don Tapscott mentioned disintermediation as a major theme of e-economy saying “when information becomes bits, everything in the middle goes away”; yet he added “re-intermediation opportunities, that is, the opportunities to create new value between consumers and producers based on the net, are greater than the disintermediation dangers”. The project will cover the possibilities of re-intermediation through the analysis of the chain value creation of that industry and the added values small retailers could be generating going on line.

Some major corporations primarily based their e-business strategy on lowering costs through automation and volume of exchanges. Nowadays, many of them are trying to reach the mass-customization level of exchanges. Knowledge of clients and personalization used to be the strategic advantage of the small retailers before e-commerce; yet, they failed in capitalizing on it, as they wrongly believed Internet brought the opportunity to imitate their big competitors rather than developing differentiators’ aspects. Therefore, the project will confront different strategic approaches for building c-commerce networks. Comparing divers forms of e-regroupments it will determine a frame in which small retailers could concentrate their resources to be present on the web.

II. Aim

Learning lessons from the past and applying some theoretical models of e-business deployement, the aim of the project is to assess the feasability of developing e-business activities based on virtual regroupements for small photo retailers. It is expected to determine a realistic collaborative approach of e-business deployement that is deeply relevant to their business objectives and capacities.

It intends to identify what could be the most appropriate form of e-presence for them. Options include:

• Specialized portals regroupment

• Virtual market places

• Virtual “franchises”

• Specialized or general Electronic malls

As a result the project should provide a picture of the role distribution of the different partners (suppliers, IT services providers, mother chains and shops) in such processes.

Finally, based on another Tapscott’s remark about disintermediation and its victims in the same interview “it’s typically those in the middle that don't find it within themselves to transform themselves”, the project is hope to be taken as a base to initiate actual implementation of changes by the network of shops it will study.

III. Objectives

Objective 1: To identify realistic opportunities for small retailers to develop their activities on line through c-commerce, clarifying the main reasons of failures of going on line from the past experiences.

Objective 2: Define what form of virtual regroupment such as e market place or website portals should be the most appropriate, carrying the most relevant opportunities in order to compete with well established virtual firms. To identify which aspects of their business could benefit from a collaborative approach to e-business.

Objective 3: To determine/evaluate the role of the divers actors of the industry that are implicated in the value chain creation: suppliers, brand chains, and stores.

Objective 4: To identify the barriers to develop c-commerce entities and to assess the level of compatibility of virtual regroupments with the existing physical groups under their divers forms: franchise, brand chains, cooperative of purchases.

IV. Research method

Primary research

Many retail shops already experienced managing a website since the maturation of e-commerce with a very low rate of success. Some invested large amount of their revenu in the development of individual website, while other chose a more discrete approach through participation in web portals. The primary research will take three forms of enquirements: questionnaire, interviews and website case studies. It is expected to support, reinforce or contradicte the secondary research outputs.

1. Questionnaire:

A questionnaire will be sent through the network of Sapc shops (around 400 shops) and is expected to produce a representative inventory of e-business activities. The results of the questionnaire will evaluate the effectiveness of past and current e- business presence of the shops. It will also provide the scope of development of e-regroupments based of the perception of the media, the expectations of the shops and an their overall capacity of involvment to developp such process.

Extract and define segmentation through the building of statistics: two or three profiles of shops classified regarding their superficies, number of employees, age of the owner, …

Measure the implication in electronic media adoption: rate of website (or any other electronic media equipment) of the stores, position in the e-adoption ladder, what resources have been allocated to support their e-strategy.

Evaluate the relevance of current e-business strategies compared with business objectives: Measure the results of current and past e-commerce activities; identify mistakes and lacks from past experiences

Provide a picture of the perception and the knowledge of Internet environment in the shops. Find evidences of misunderstanding of the media.

Define shops expectations in terms of mother chains involvment in developping e-business strategies. Measure level of satisfaction of the current approach.

Evaluate the willingness of shops to embrace divers and new forms of regroupment, and measure their willingness to share information.

2. Interviews:

SAPC’s CEO

The objective of this interview is to assess the role of the chain toward its members regarding e-business. It is expected to provide information about the current e-business strategy of the chain, its perception of the shops efforts in that field, and its perception of e-regroupement possibilities.

Shop owners

These interviews are expected to reinforce or contradict the results of the questionnaire. The shop owners to be interviewed will be selected accordingly and representatively of the segmentation generated by the questionnaire results.

3. Website case studies:

Actors websites will be extracted as samples in order to be surveyed under the from of two case studies:

First case study:

The case study will compare the pro and cons of each forms of web presence in the photo industry. It will determine which one of them is the most qualified to substain the small retaillers in order to succeed in their e-business strategy.

One retail store website that reflects or underlines the results of the questionnaire.

One City portal that has integrated a photo retailer page, to measure and analyse the results and limitations of such partnerships.

Portals website of lab service suppliers will be compared in oder to assess the level of complyance they both reached towards the shops.

Second case study:

A survey of a web portal that is effectively working in another industry.

The purpose is to open the study to other examples of regroupment in other areas (i.e book, edition industry and Amazon) whether they are succeeding or not, analysing the answers that were found to solve their specifics issues and contraints. There might be some examples of business models or processes to be analysed and synthetized in order to be appllied to the photo distribution industry.

Secondary research

Literature Review and Analysis:

Literature review will consist in the analysis and synthesis of theorical points of views and models that are related to the following areas of e-business:

Importance of developing e-business strategy for small businesses: impact in re-intermediation processes, role in value chain creation.

Design of new business models: to avoid channel conflicts, to create new sources of revenues.

c-commerce: restrictions and opportunities, standardization requirements and organizational changes.

Impact of e and c-commerce on supply chain managmement,marketing and Customer Relationship Management.

Documents to be reviewed and commented will be extracted from sources that include:

Online academic resources

Photo industry press

Academic Journals

Marketing reviews from Photo Marketing Association

Books

MBA Course Material

Expectations

Results of primary research will be confronted to secondary research outputs in order to identify the key issues by similarity. It is expected to point evidences of the reviewed theoretical concepts

I expect research to demonstrate that:

Photo retailers mainly failed in implementing e-business strategies because of a misunderstanding of the electronic environment. Although, they are now reluctant to invest more in that area, other barriers that are to be identified may remain secondary.

Developing an e-strategy for such small businesses, even they only compete on local geographic areas, has become mandatory and should not only be perceived as an opportunity to generate secondary revenues.

Developing an efficient web presence should enable a better knowledge of the clients and improve margins using accurate offers.

There are possibilities to develop a collaborative approach to e-business regrouping resources and lowering the investment costs; it could also be leveraging other identified barriers.

Evidences that c-commerce can help retailers to improve their relationship with theirs suppliers.

Evidences that c-commerce would generate new nature of strategic advantages for small retailers.

V. Outputs

The outputs of the project will consist of:

I. Introduction

Industry and abstract context

Statement of objectives

II. Research

Secondary Research

· Literature Review:

Literature review will analyse different themes of the subject and lead to a synthetic conclusion. This will include:

o Analysis and synthesis of value chain creation concepts: the role and importance of small businesses in the chain, opportunities of re-intermediation.

o Comparison of applicable supply chain structures in c-commerce:

o Synthesis of barriers and opportunities of c-commerce: how to bypass the barriers of technology standards and financial investments; how to develop opportunities to regroup expensive operations (i.e CRM systems), and create a strategic advantage.

Primary Research

· Questionnaire/Interviews/case studies: these parts of the research will be built in relation to the main issues detected in the secondary research, in accordance to the specific context of the industry.

The results will be expressed under divers forms that will include:

o Statistic graphs and schemas

o Analysis

o Synthesis

o Conclusion

III. Conclusions

Synthesis of Primary and Secondary Research Results

· Comparison with the outlined expectations

· Confrontation to the outlined objectives

· Conclusion

Conclusion

· Answer to the initial question

· Proposition of roadmap/recommandations

IV. Bibliography

V. Appendix

Statistics graphs

Questionnaire and interviews