On The Mode Of Overall Cost Leadership Strategy Based On Electronic Business

Facing a variety of challenges such as the raise of enterprise transaction costs and labor costs, the elimination of advantageous barriers as well as the promotion of Social Accountability 8000 International Standard,the low-cost"Made in China"based on the low-cost labor force and producers'goods would be difficult to sustain. So it's really necessary for our companies to look for a new mode of overall cost leadership strategy (OCL). The emergence of Electronic business (E-business) provides an idea for the construction of a new mode. Now, the problem is whether the enterprises could achieve the goal of OCL through E-business, and if they could, how would they build such a mode? These are what the paper has to discuss and resolve.This paper is starting with the breakthrough of the traditional Value-chain caused by E-business, so as to analyze the cost advantages of E-business. Although the applications of E-business will inevitably raise the cost, it will enhance the cost advantages from a long-term perspective, especially the transaction cost advantages. The sources of such kind of advantage mainly exists in purchasing, Inventory, logistics and marketing. It shows that focusing on one aspect of reducing cost or any combination of these cost reduction may constitute several independent modes of OCL based on E-business.Secondly, the paper demonstrats the reality of the new mode on the basis of case analysis. With the case study of Dell and Wal-Mart, and the theory of Value-net, this article concluds some pre-conditions (including product applicability, with the strength and applicability of the combination of e-commerce) and a number of drivers of OCL based upon E-business (such as virtual economy of scale, resources exclusivity, pre-emptive and the expansion of business process reengineering).Finally, this paper gives some advice on building"the mode of overall cost leadership strategy based on electronic business"in Chinese manufacturing enterprises as follow: In order to achieve OCL through E-business, what manufacturers need to do is to make full use of its E-business operations (Building 4 - E module), and integrate upsteam and downstream companies to build a value-net of their own--a network-based manufacturing system.