Chapter 3 : Strategic Intiatives For Implementing Competitive Advantages

Strategic Initiatives

Organization can undertake high-profits strategic initiatives including :-

SUPPLY CHAIN MANAGEMENT(SCM)

• Involve 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 SCM includes :-

Effectiveness and efficient SCM system can enable an organization to :

• Decrease the power of its buyers.
• Increase 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 advantage through cost leadership

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 goals that an organization must embrace on an enterprisewide level.

CRM can enable an organization to :

•  Identify types of customers
• Design individual customer marketing campaigns
• Treat each customer as an individual
• Understand customer buying behaviors

CRM Overview

 BUSINESS PROCESS REENGINEERING

(BPR)

• BUSINESS PROCESS - A standardized set of activities that accomplish a specific tasks, such as processing a customer's order.
• BPR - The analysis and redesign of workflow within and between enterprises.
• The purpose of BPR is to make all business processes best-in-class.

                                    Seven Principles of business Process Reengineering

Finding Opportunity Using BPR

• A company can improve the ways it travels the road by moving from foot to horse and the horse to the car.

 BPR looks at taking a different path, such as an airplane which ignore the road completely.

Progressive Insurance Mobile Claims Process

The Benefits and Magnitude of Change

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.
• ERP systems collect data from across an organization and correlates the data generating an enterprise wide view

Chapter 2: Identify Competitive Advantage

What is Competitive Advantage?

• Competitive Advantage is a product or service that an organization's customers lace a greater value on the similar from competitor.
• It is temporary because competitors keep duplicate the strategy.
• The company should start the new competitive advantage.

Five Forces Model   

Michael Porter's  Five Forces Model is useful tool to aid organization in challenging decision whether to join a new industry or industry segment :

BUYER POWER

• The ability of buyers to affect the price they must pay  for an item.
• 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. For example, rewards online on free airline tickets or hotels.

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.

-Example : Used loyalty programs ( Jusco card, tesco card - being a members to get the discount)

SUPPLIER POWER

• Consists all parties involved, directly or indirectly in obtaining raw materials or a product.
• High : when buyers have few choices of whom to buy.
• Low : when their choices are many.
• Best practices of IT to create competitive advantage : 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.

THREAT OF SUBSTITUTE PRODUCTS OR 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 a few substitutes of their product or services.
• Best practices of IT : Electronic product- same function different brands.

THE COMPETITIVE ENVIRONMENT

 Threat of Substitutes.

• To the extent that customers can use different products to fulfil the same need, the threat of substitute exists.
• Example : Electronic products- same function different brands.
• Switching Cost : costs can make customer reluctant to switch to another product or service.

THREAT OF NEW ENTRANCE

• High : when it easy for new competitors to enter a market.
• 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 organization and must be offered by entering organization to complete and survive.
• Best practice of IT : New bank must offers online paying bills, acc monitoring to compete.

THE COMPETITIVE ENVIRONMENT

Threat of New Entrants

• Many threats come from companies that do not yet exist or have a presence in a given industry or market.
• The threat of new entrants forces top management to monitor the trends, especially in technology, that might give rise to new competitors.
• Example : New bank (online paying bills, acc monitoring to compete)

RIVALRY AMONG EXISTING COMPANIES

• High : when competition is fierce in a market.
• Low : when competition is more complacent
• Best practice 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 ENVIRONMENTRivalry Among Existing Firms

• Existing competitors are not much of the threat : typically each firm has found its "niche".
• However, changes in management, ownership, or "the rules of the game" can give rise to serious threats to long term survival from existing firms.

3 GENERICS STRATEGIES

RELATIONSHIP BETWEEN BUSINESS PROCESS AND VALUE CHAIN

• Supply chain : a chain or series of process that adds value to product and service for customer.
• Add value to its products and services that support a profit margin for the firm

Chapter 1 : Business Driven Technology

Information Technology Impact's on Business Operation

Organizations are typically organized and operate by functional silos

• While you might think these are independent they are actually because they require information form. 

What is Information Technology?

Information Technology or in simple word is IT can be define as a field concerned with the use of technology in managing and processing information. IT also is an important enabler of business success and innovation.

What is Management Information Systems?

Management Information System is a general name for the business function and academic discipline covering the application of people, technologies and procedures to solve business problems. It also similar to Accounting, Finance, Operations and Human Resource

DATA, INFORMATION AND BUSINESS INTELLIGENCE OF IT RESOURCES & IT CULTURES

1. DATA- Raw facts that describe the characteristic of an event
2. INFORMATION - Data converted into a meaningful and useful context
3. BUSINESS INTELLIGENCE - Applications and technologies that are used to support decision making efforts

IT RESOURCES 

ORGANIZATIONAL INFORMATION CULTURES

1. INFORMATION FUNCTIONAL CULTURE - Employees use information as a means of exercising influence or power over others. 
2. INFORMATION SHARING CULTURE - Employees across departments trust each other to use information to improves performance.
3. INFORMATION INQUIRING CULTURE - Employees across departments search for information to 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.