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.

First-mover Advantage is occurs when an organization can meaningfully impact its market shareby being first to market with a competitive advantage.

There are three common tools used in industry to analyze and develop:

1. Porter's Five Forces Model
2. Porter's Three Generic Strategies
3. Value Chains

THE FIVE FORCES MODEL - Evaluating Business Segments.

Porter's Five Forces Model determines the relative attractiveness of an industry (Have their own calculate)

1.  BUYER POWER 

> High when buyers have many choices.

> Low when their choices are few.

Way to reduce buyer power is through Loyalty Program & Switching Costs.

• Loyalty Program: rewards customers based on the amount of business.
• Switching Costs: costs that can make customer reluctant to switch to another product or services.

   2.   SUPPLIER POWER 

> High when buyers have few choices of whom to buy.

> Low when their choices are many ( Have many supplier )

Supply Chain consists of all parties involvedin the sale of product or raw material.

Supplier power is the converse of buyer power.

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.

  3.  THREAT OF SUBSTITUTE PRODUCT 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.

• Threat of new entrants: High when it is easy for new competitors to enter a merket. Entry Barrier is a product feature that customers have to expect from organizations in a particular. 

  4.  RIVALRY AMONG EXISTING COMPETITORS 

> 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 THREE GENERIC STRATEGIES - Creating a Business Focus

Follow one of Porter's Three Generic Strategies when entering a new market.

 VALUE CREATION

> 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.

• Customers determine the extent to which each activity adds value to the product or service.
• The Competitive Advantage is to:

1. Target high value-adding activities to further enhance their value.
2. Target low value-adding activities to increase their value
3. Perform some combination of two.

ni

Notes chapter 1 19/09/2017

CHAPTER 1: Business Driven Technology

Chapter 1- BusineTechnologyss Driven

           

 

Learning Outcomes:

       1.1  Compare management information systems (MIS) and information technology (IT)

 §MIS is not IT.  MIS is a business function.  IT is a computer-based tool.  Most organizations have an IT Department that is responsible for performing the MIS function.   This is similar to an organization having an Accounting Department that is responsible for performing the accounts payable and accounts receivable functions.

       1.2 Describe the relationships among people, information technology, and  information

§IT in and of itself is not useful unless the right people know how to use and manage IT     efficiently and effectively

§People, information, and information technology (in that order of priority) are inextricably linked
1.3 Identify four different departments in a typical business and explain how technology helps them to work together.

§Accounting, Finance, Human resources, Sales, Marketing, Operations management, Management information systems (MIS)

§Functional areas are anything but independent in a business. In fact, functional areas are interdependent. Sales must rely on information from operations to understand inventory, place orders, calculate transportation costs, and gain insight into product availability based on production schedules.

   For an organization to succeed, every department or functional area must work together sharing common information and not be a “silo.” Information technology can enable departments to more efficiently and effectively perform their business operations.

§If  students are unfamiliar with any of these areas, or business in general, point them in the direction of plug-in B1 – Business Basics. 

1.4 Compare the four different types of organizational information cultures and decide which culture applies to your school. 

§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

§Information-Sharing Culture

    Employees across departments trust each other to use information (especially about problems and failures) to improve performance

§Information-Inquiring Culture

    Employees across departments search for information to better understand the future and align themselves with current trends and new directions

§Information-Discovery Culture

    Employees across departments are open to new insights about crisis and radical changes and seek ways to create competitive advantages