chapter 3
strategic initiatives for implementing competitive advantages.
Strategic Initiatives.
* Organizations can undertake high-profile strategic initiatives including:
- Supply chain management(SCM)
- Customer relationship management(CRM)
- Business process re-engineering (BPR)
- Enterprise resource planning(ERP)
Supply Chain Management.
- Supply chain management(SCM)-involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.
- Four basic components of supply chain management include:
> Supply chain strategy- strategy for managing all resources to meet customer demand
> Supply chain partner- partner throughout the supply chain that deliver finished products, raw material, and services.
> Supply chain operation- schedule for production activities
> Supply chain logistics- product delivery process
wal-mart and procter & gamble (P&G) SCM.
paper manufacturer <> packaging supplier <> procter & gamble<> wal-mart warehouse or distributor <> wal-mart store <>customer <> cocoa oil manufacturer<> scented manufacturer.
*indicated information flows for products, pricing, scheduling, and availability
=> Effective and efficient SCM systems can enable an organization to :
- Decrease the power of its buyers
- In crease its own supplier power
- Increase switching costs to reduce the threat of substitute products or services
- Create entry barriers thereby reducing the threat of new entrants.
- Increase efficiencies while seeking a competitive advantages through cost leadership.
=> Effective and efficient SCM system effect on porter's five forces.
decrease
Buyer power Organization's supply chain Supplier power
Threat of substitute product or services
Threat of new entrants
increase
Customer Relationship Management.
- Customer relationship management (CRM)- involves managing all aspects of a customer's relationship
with an organization to increase customer loyalty and retention and an organization's profitability
- Many organizations, such as charles schwab and kaiser permanente, have obtained great success through the implementation of CRM systems.
- CRM is not just technology, but a strategy, process and business goal that an organization must embrace on an enterprise wide level
- CRM can enable an organization to :
> Dentify types of customer
> Design individual customer marketing campaigns
> Threat each customer as an individual
> Understand customer buying behaviors
Business Process Re-engineering.
- business process - a standardized set of activities that accomplish a specific task, such as processing a customer's order.
- business process re-engineering (BPR)- the analysis and redesign of workflow within and between enterprises:
> The purpose of BPR is to make all business process best in class
- Re-engineering the corporation- book written by michael hammer and James Champy that recommends seven principles for BPR.
Finding Opportunity Using BPR.
> A company can improve the way it travels the road by moving from foot to horse and then horse to car.
> BPR looks at taking a different path, such as an airplane which ignore the road completely.
> Progressive insurance mobile claims process
> Type of change an organization can achieve,along with the magnitudes of change and the potential business benefit
Enterprise Resource Planning.
- Enterprise resource planning(ERP)
=>integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprise wide information on all business operations
- Keyword in ERP is "enterprise"
- Sample data from a sales database
- Sample data from an accounting database
- ERP systems collect data from across an organization and correlates the data generating an
enterprise wide view
Tuesday, 17 December 2013
Tuesday, 10 December 2013
Chapter 2. IDENTIFYING COMPETITIVE ADVANTAGE.
Chapter 2.
IDENTIFYING COMPETITIVE ADVANTAGE.
Competitive Advantage :
- A product or service that an organization's customers place a greater value on than similar offerings from a competitor.
- Unfortunately, CA is temporary because competitors keep duplicate the strategy.
- Then, the company should start the new competitive advantage.
The Five Forces Model.
* Michael Porter's Five Forces Model -> useful tool to aid organization in challenging decision whether to join a new industry segment.
Five Force Model.
¡High – when buyers have many choices of whom to buy.¡Low – when their choices are few.¡To reduce buyer power (and create competitive advantage), an organization must make it more attractive to buy from the company not from the competitors.¡Best practices of IT-based§Loyalty program in travel industry (e.g. rewards on free airline tickets or hotel stays )
The Competitive Environment.
Bargaining Power of Customers./ Buyer power.
- customers can grow large and powerful as a result of their market share.
- many choices of whom to buy from.
- low when comes to limited items.
- E.g: used loyalty programs( Jusco card, Tesco card,-being a members to get the discount).
2.Supplier Power.
¡High – when buyers have
few choices of whom to buy from.
¡Low – when their choices are many.
§Best practices of IT
to create competitive advantage.
§E.g. B2B marketplace – private exchange
allow a single buyer to posts it needs and then open the bidding to any
supplier who would care to bid. Reverse auction is an auction format
in which increasingly lower bids.
An organization within the Supply Chain
¡ Supplier power is the
converse of buyer power.
Suppliers ---(*)---> Organization ----(#)----> Customers.
(*) = Organization want supplier power to be low here.
(#) = Organization want supplier power to be high here.
3. Threat of Substitute products & Services.
¡ High – when there are many alternatives to a product or
service.
¡ Low – when there are few alternatives from which to choose.
¡ Ideally, an
organization would like to be on a market in which there are few substitutes of
their product or services.
§ Best practices of IT
§ E.g. Electronic product -same function
different brands
The Competitive Environment.
Threat
of Substitutes.
o To the extent that customers can use
different products to fulfill the same
need, the threat of substitutes exists.
o E.g:
electronic product -same function different brands
o Switching cost- costs can make customer reluctant to
switch to another product or service
4.
Threat of new entrants.
¡ Low – when there are significant entry barriers to entering a market.
¡ Entry barriers is a product or service feature that customers have come to expect from organizations and must be offered by entering organization to compete and survive.
¡ Best practices of IT
§ E.g. new bank must offers online paying bills, acc monitoring to compete.
The Competitive Environment.
Threat
of New Entrants.
o Many threats come from companies that
do not yet exist or have a presence in a given industry or market.
o The threat of new entrants forces top
management to monitor the trends, especially in technology, that might give
rise to new competitors.
o E.g. new bank (online paying bills, acc
monitoring)
5. Rivalry among existence competitors.
¡High – when
competition is fierce in a market
¡Low – when
competition is more complacent
¡Best Practices of IT
§Wal-mart and its
suppliers using IT-enabled system for communication and track product at aisles
by effective tagging system.
§Reduce cost by using
effective supply chain.
The Competitive Environment.
Rivalry
Among Existing Firms.
o Existing competitors are not much of
the threat: typically each firm has
found its "niche".
o However, changes in management, ownership, or "the rules of the
game" can give rise to serious
threats to long term survival from existing
firms .
o E.g: the airline
industry faces serious threats from airlines operating in bankruptcy, who do not pay on
the debts while slashing fares against those healthy airlines who do pay on
debt. (MAS & AIR ASIA)
Competitive Advantage.
•Porter’s 3 generics strategies
.
*1. Cost Leadership
•Becoming a low-cost
producer in the industry allows the company to lower prices to customers.
•Competitors with higher
costs cannot afford to compete with the low-cost leader on price.
*2. Differentiation
•Create competitive
advantage by distinguishing their products on one or more features important to
their customers.
•Unique features or
benefits may justify price differences and/or stimulate demand.
•Ex: i-care by Proton
*3.
Focused Strategy
•Target
to a niche market
•Concentrates
on either cost leadership or differentiation
3 Three Generic Strategies.
3 Three Generic Strategies.
Competitive Advantage.
•Relationship between business process and value chain
The
Value Chains- Targeting Business Processes.
q Supply Chain - a chain or series of
processes that adds value to product & service for customer.
q Add value to its products and services
that support a profit margin for the firm
*Supply Chain Diagram.
- A chain or series of processes that adds value to product & service for customer.
Monday, 2 December 2013
Chapter 1: Business Driven Technology.
Nursuhada Bt Abd Ghafar 4C BM111.
*Information technology is everywhere in business.
Information Technology's Impact on Business Operations.
*Business Functions Receiving the Greatest Benefits from Information Technology.
70% of Customer Service.
51% of Finance.
42% of Sales and Marketing.
39% of IT Operations.
31% of Operations Management
17% of HR
17% of Security.
*Information Technology Project Goals.
81% of Reduce Costs/Improve Productivity.
71% of Improve Customer Satisfaction/Loyalty.
66% of Create Competitive advantage.
54% of Generate Growth.
37% of Streamline Supply Chain.
16% of Global Expansion.
*Common Departments in an Organization.
~ACCOUNTING. ~MARKETING. ~OPERATIONS MANAGEMENT.
~HUMAN RESOURCES. ~PRODUCTION MANAGEMENT.
~FINANCE. ~SALES. ~MANAGEMENT INFORMATION SYSTEMS.
- Organizations typically operate by functional areas or functional silos
- Functional areas are interdependent
Information Technology Basics.
-Information Technology(IT) :
a field concerned with the use of technology in managing and processing information.
-Information technology is an important enabler of business success and innovation.
-Management Information Systems (MIS) :
a general name for the business function and academic discipline covering the application of people technologies, and procedures to solve business problems.
-MIS is a business function, similar to Accounting, Finance, Operation, and Human Resources.
-When beginning to learn about information technology it is important to understand :
* Data : raw facts that describe the characteristic of an event.
* information : data converted into a meaningful and useful context.
* business intelligence : applications and technologies that are used to support decision-making efforts.
* IT resources : 1. people use
2. information technology to work with
3. information
* IT cultures :
1. information-functional culture :
-employees use information as a means of exercising influence or power over others.
for example, a manager in sales refuses to share information with marketing. this
causes marketing to need the sales manager's input each time a new sales strategy
is developed.
2. information-sharing culture :
-employees across departments trust each other to use information ( especially about
problems and failures) to improve performance.
3. information-inquiring culture :
-employees across departments search for information ti better understand the future
and align themselves with current trends and new directions.
4. information-discovery culture :
-employees across departments are open to new insights about crisis and radical
changes and seek ways to create competitive advantages.
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