CHAPTER 3 : STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

 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 reengineering (BPR)

–Enterprise resource planning (ERP)

1. 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 the resources required to meet customer demand for all products and services
• Supply chain partners - the partners chosen to deliver finished products, raw materials, and services including pricing, delivery, and payment processes along with partner relationship monitoring metrics
• Supply chain operation - the schedule for production activities including testing, packaging, and preparation for delivery. Measurements for this component include productivity and quality
• Supply chain logistics - the product delivery processes and elements including orders, warehouses, carriers, defective product returns, and invoicing
• Effective and efficient supply chain management systems can enable the organization to : 
• Decrease the buyer power
• Increase supplier power
• Increase switching costs
• Create entry barriers
• Increase efficiencies while seeking a competitive advantage through cost leadership

Effective and efficient supply chain managements effect on Porter's Five Forces

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  2. 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

*CRM is not just technology, but a strategy, process, and business goal that an organization must   embrace on an enterprisewide level

*CRM can enable the organization to

      - identify types of customers

      - design individual customer marketing campaigns

      - treat each customer as an individual

      - understand customer buying behaviours

   3. Business Process Reenginering (BPR)  - analysis and redesign of workflow within and between the enterprise

• The purpose of BPR is to make all business processes best-in-class

• Finding opportunity using BPR

• Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit

   4. 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 enterprisewide view

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.

FIVE FORCES MODEL 

1.Buyer power

2. Supplier power

3. Threat of substitute products or services.

4. Threats of new entrants.

          5.  Rivalry among existing companies

Introduction : Michael porter's five forces model is useful tool ta aid organization in                                    challenging decision whether to join industry segment.

BUYER POWER

1.High – when buyers have many choices of whom to buy.

2.Low – when their choices are few.

3.To reduce buyer power (and create competitive advantage), an organization must make it more attractive to buy from the company not from the competitors.

4.Best practices of IT-based

•            Loyalty program in travel industry (e.g. rewards on free airline tickets or hotel stays ) 
• 
  
•           SUPPLIER POWER

            1.High – when buyers have few choices of whom to buy from. 

                         2. 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. 

                TREAT OF SUBSTITUTE PRODUCTS & SERVICES

             1. High – when there are many alternatives to a product or service.

             2. Low – when there are few alternatives from which to choose.

             3. 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

TREAT OF NEW ENTRANTS 

1. High – when it is easy for new competitors to enter a market.

2. Low – when there are significant entry barriers to entering a market.

3. 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.

4. Best practices of IT

§E.g. new bank must offers online paying bills, acc monitoring to compete.

RIVALRY AMONG EXISTENCE COMPETITORS.

1. High – when competition is fierce in a market

2. Low – when competition is more complacent

3. 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.

THREE GENERICS STRATEGIES

1. Cost Leadership

*becoming a low-cost producer in the industry allow producer in the industry allows the company to lower prices to customer

*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

VALUE CHAIN

 Supply Chain - a chain or series of processes that adds value to product & service for customer.

Add value to its products and services that support a profit margin for the firm

Diagram :

Chapter 1 : Business Driven Technology

Business Driven Technology

 

Business Operation

Business function receiving the greatest benefits from information technology 

1. Customer service
2. Finance
3. Sales and Marketing 
4. IT Operations
5. Operation Management
6. HR
7. Security  

Information Technology Project Goals

1. Reduce cost or improving productivity.
2. Improve customer satisfaction
3. Create competitive advance
4. Generate Growth
5. Streamline supply chain
6. Global expansion

Information Technology’s Impact on Business Operations

"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 system( MIS)

•         A general name for the business function and academic discipline covering the application of people, technologies and procedures to solve business problem.
•         MIS is a business function, similar to Accounting Finance, Operations and Human Resources

- When beginning to learn about information technology it is important to understand.

1.         Data, information an business intelligence IT resources
2.          IT cultures

Information

•        Data : Raw facts that describe the characteristic of 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  

* People use

* Information technology to work                         

* Information 

IT Cultures 

•        Organizational information cultures include
•        Information- Function culture : Employees use information as a means of exercising influence or power over other.
•        Information-Sharing Culture : Employees across department trust each other to use information about to improve performance
•        Information- inquiring culture : Employees across department search for information to better understand the future and align themselves with current trends and new directions.
•       Information-discovery culture : Employees across department are open to new insight about crisis and radical changes and seek ways to create competitive

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