Do Business Well

For ‘clicks and mortar’ companies, one of the key debates about Internet strategy concerns the implications for organizational structure. The question is whether it should be ‘a detailed strategy that is part of the broader strategic marketing planning process . . . or a separate strategy for a company for which the Internet is a significant communications or sales channel’ .

It is important to distinguish structure from operational marketing activities. Regardless of the degree of online/ offline structure, actually promoting the company through a combination of online and offline means can generate valuable synergies.

According to Gulati and Garino (2000), the advantages of creating of a separate Internet division are that it provides more focus and flexibility for innovation, it avoids having to integrate legacy systems, and it offers opportunities to float as a separate business. The Abbey National Bank has pursued this strategy in the UK with the development of Cahoot (www.cahoot.co.uk). On the other hand, the advantages of integration include leverage of existing brands, generation of economies of scale, and sharing of information.

Sawhney and Zabin recommend that Internet operations should initially be separated from the rest of the organization, but over the longer term there should be a clear integration plan. They note: ‘Remember that e-business is a crutch, not a leg. It is useful to separate it from the lines of business when you are learning to walk, but eventually it needs to become an integral part of the business‘(2001: 27). They describe how in 1999 Bank One launched WingspanBank.com in an early example of separating out online business activities. The new venturewas promoted under the tag line ‘If your bank could start over, this is what itwould be.’ In practice, while the parent bank offered both online and offlineaccess to its customers, WingspanBank’s customers were not allowed to use BankOne branches in order to keep the new venture completely separate from theparent. As a result, the parent bank gained more ‘online‘ customers than it ‘Internet only’ venture did, despite huge promotional spending. A U-turn was performed and Wingspan brought back into the core business.

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