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Management article
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Reference no. R00313
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 2000

Abstract

The bright line that once distinguished the dot-com from the incumbent is rapidly fading. Success in the new economy will go to those who can execute clicks-and-mortar strategies that bridge the physical and virtual worlds. But how executives forge such strategies is under considerable debate. Despite the obvious benefits that integration offers--cross- promotion, shared information, purchasing leverage, distribution economies, and the like--many executives now assume that Internet businesses have to be separate to thrive. They believe that the very nature of traditional business--its protectiveness of current customers, its fear of cannibalization, its general myopia--will smother any Internet initiative. Authors Ranjay Gulati and Jason Garino contend that executives don''t have to make an either-or choice when it comes to their clicks-and-mortar strategies. The question isn''t, "Should we develop our Internet channel in-house or launch a spin-off?" but rather, "What degree of integration makes sense for our company?" To determine the best level of integration for their companies, executives should examine four business dimensions: brand, management, operations, and equity. Drawing on the experiences of three established retailers--Office Depot, KB Toys, and Rite Aid--the authors show the spectrum of strategies available and discuss the trade-offs involved in each choice. By thinking carefully about which aspects of a business to integrate and which to keep distinct, companies can tailor their clicks-and-mortar strategy to their own particular market and competitive situation, dramatically increasing their odds of e-business success.

About

Abstract

The bright line that once distinguished the dot-com from the incumbent is rapidly fading. Success in the new economy will go to those who can execute clicks-and-mortar strategies that bridge the physical and virtual worlds. But how executives forge such strategies is under considerable debate. Despite the obvious benefits that integration offers--cross- promotion, shared information, purchasing leverage, distribution economies, and the like--many executives now assume that Internet businesses have to be separate to thrive. They believe that the very nature of traditional business--its protectiveness of current customers, its fear of cannibalization, its general myopia--will smother any Internet initiative. Authors Ranjay Gulati and Jason Garino contend that executives don''t have to make an either-or choice when it comes to their clicks-and-mortar strategies. The question isn''t, "Should we develop our Internet channel in-house or launch a spin-off?" but rather, "What degree of integration makes sense for our company?" To determine the best level of integration for their companies, executives should examine four business dimensions: brand, management, operations, and equity. Drawing on the experiences of three established retailers--Office Depot, KB Toys, and Rite Aid--the authors show the spectrum of strategies available and discuss the trade-offs involved in each choice. By thinking carefully about which aspects of a business to integrate and which to keep distinct, companies can tailor their clicks-and-mortar strategy to their own particular market and competitive situation, dramatically increasing their odds of e-business success.

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