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If you think you need to keep your Internet initiatives separate from your traditional business, think again. Many of the most innovative Internet...

need better on this time, because last time i got 2 B on this paper.thanks a lot

If you think you need to keep your Internet initiatives separate from your traditional business, think again. Many of the most innovative Internet players are integrating their virtual and physical operations. The key to success, they've found, lies in how you carry out the integration. Get the Right of Bricks Clicks B Y RANjA Y GULAT I AN D JASO N GARIN O THE BRIGHT LlNt that once distinguished the dot-com from the incumbent is rapidly fading. Companies are recognizing that success in the new economy will go to those who can execute clicks- and-mortar strategies that bridge the physical and the virtual worlds. But in forging such strategies, executives face a decision that is as difficult as it is crucial: should we integrate our Internet business with our tradi- tional husiness or should we keep the two sepa- rate? Despite the obvious benefits that integration offers - cross-promotion, shared information, pur- chasing leverage, distribution economies, and the like - many executives now assume that Internet businesses need to he separate to thrive. Influenced by the cautionary tales of Clayton Christensen, author of The Innovator's Dilemma, they helieve that the very nature of a traditional business - its HARVARD BUSINESS REVIEW May-Tune 2000 107
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Get the Right Mix of Bricks and Clicks protectiveness of current customers, its fear of cannibalization, its general myopia-will smother any Internet initiative. Barnes &< Noble is one company that embraced such thitiking. To compete with Amazon.com, it established a completely separate division-Barnes- andnoble.com - which it ultimately spun off as a stand-alone company. By breaking free of the exist- ing organization, the on-line outfit gained many advantages. It was able to speed up its decision making, maintain a high degree of flexibility, create an entrepreneurial culture, attract quality manage- ment, and tap into the vast pool of capital available to Internet start-ups. But despite those benefits, Barnesandnoble.corn has struggled. In January 2000, CEO Jonathan Bulkeley resigned after only a year on the job. In February, its stock price full to aii all-time low of 7.5, down more than 50% from its offering price of 18. By divorcing its on-line business from its established stores, Barnes &. Noble may have actually sacrificed tnore than it gained. For example, the compatiy forfeited tremendous marketing op- portunities by not promoting Barnesandnoble.com in its stores. In studying how incumbent companies like Barnes &. Noble have moved onto the Web, we bave learned a lot about clicks-and-mortar strategies and their likelihood of success. Our most important finding is a simple one: the benefits of integration are almost always too great to abandon entirely. Instead of focusing on an either-or choice - Should we develop our Internet channel in-house or launch a spin-off? - executives should be asking. What degree of integration makes sense for our company? In this article, we'll look at three established retailers that have taken very different approaches to inte- grating their physical and virtual operations. Their experience reveals the spectrum of choices avail- able and illustrates some of the trade-offs involved ia each choice. Office Depot's Seamless Strategy office Depot has found success by tightly integrating its Web site and its physical stores to form a single, seamless retailing network. As CIO Bill Seltzer puts it, "The Internet is just another channel that gets plugged into the business architecture." The company had two very good reasons to inte- grate the on-line business rather than spin it off. First, its existing catalog-sales operation provided it with much of the service infrastructure needed to support an Internet store. With a professional call center and a fieet of more than 2,000 delivery trucks. Office Depot was well equipped to process individual orders and deliver directly to the con- sumer. Second, years earlier it had developed a sophisticated information system containing complete product, vendor, customer, and order information as well as real-time inventory data for each of the company's 1,825 stores and 30 warehouses. That system made it easy to coordinate Office Depot's on-line store and its physical outlets. By providing information about store locations and inventory on-line, Office Depot's Web site has actually increased the traffic at its physical outlets. For customers, the integrated channels make shopping simple and convenient. Let's say you're looking to buy a new printer. You ean researcb your choices at OffieeDepot.com, clicking through rich information on features and prices. Once you find the best model for your needs, you can buy it on-line and have it delivered the next day free of charge. Or, if you need it immediately, you can cheek the site to ensure it's in stock at your neighborhood Office Depot superstore and go pick it up yourself. By providing information about store locations and inventory on-line. Office Depot's Web site has actually iticreased the traffic at its physical outlets. At the same time, the company uses its stores to promote its site. It is, for example, expanding a pilot program that uses in-store kiosks to give customers Web site access. The customers can use the site to research the choices available to them in the physical store. And by learning about the capabilities of the site, they increase their likelihood of using it while at work or at home. Rather than cannibalize each other, the two channels promote each other, creat- ing a virtuous circle. OfficeDepot.com does cannibalize the catalog business to some degree, but that's probably a good Ranjay Gulati is an associate professor at Northwestern University's f.L. Kellogg School of Management in Evanston. Illinois, and a membei of its Technology and E-Commerce Group. A student at Northwestern. Jason Garitto will join the Chicago office of the Boston Con- sulting Group this fall To discuss this article, join HBR's authors and readers in the HBR forunj at www.hbr.org/forum. 108 HARVARD BUSINESS REVIEW May-|uoe 2000
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Please carefully read the Article 5; then do as follows: - What are the advantages of having a completely “separated” online division of a company in determining the bricks and clicks strategy of a company? - Briefly explain with an example of how each of the following factors influence the choice of bricks and clicks strategy: (a) Brand Name, (b) Management, (c) Equity and funding issues? - What are the advantages of having a completely “integrated” in-house division as the online part of a company’s operation?   Your responses in your report need you to well articulate your thoughts and learning, and express your understanding and your position in professional business & marketing language. Simple copy-pastes are not needed; elaboration to clarify and project your comprehension of the issues is required here. Further, there is no exact right or wrong answer; I'm looking for your opinion and how well you can justify your stance.
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J8744265 - Bricks and Clicks.doc

Running head: BRICKS AND CLICKS 1 Bricks and Clicks
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Institution BRICKS AND CLICKS 2 The merits of having an entirely separated online division of an enterprise in determining
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