Chapter 3 : Strategic Initiatives for Implementing Competitive Advantages

Strategic Initiatives for Implementing Competitive Advantages

Strategic Initiatives

Organizations can undertake high-profile strategic initiatives including:

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:

1. Supply chain strategy – strategy for managing all resources to meet customer demand
2. Supply chain partner – partners throughout the supply chain that deliver finished products, raw        materials, and services.
3. Supply chain operation – schedule for production activities
4. Supply chain logistics – product delivery process

Effective and efficient SCM systems 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

Effective and efficient SCM systems effect on Porter’s Five Forces

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.

• 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:

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

                    

3. Business process reengineering (BPR) 

Business process is a standardized set of activities that accomplish a specific task, such as processing a customer’s order. BPR define as the analysis and redesign of workflow within and between enterprises. 

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

The 7 principle of BPR

1. organize around outcomes, not tasks.

2. identify all the organization 's processes and prioritize them in order of redesign urgency.

3. integrate information processing work into the real work that produces the information.

4. treat geographically dispersed resources as though they were centralized.

5. link parallel activities in the workflow instead of just integrating their results.

6. put the decision point where the work is performed, and build control into the process

7. capture information once and the source

          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 air plane which ignore the road completely
•        Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit

4. Enterprise resource planning (ERP)

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”

• ERP systems collect data from across an organization and correlates the data generating an enterprisewide view

Chapter 2 : IDENTIFYING COMPETITIVE ADVANTAGE

IDENTIFYING COMPETITIVE ADVANTAGE

definition of competitive advantages is :-

• 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.

1.1 The Michael Porter's Five Forces Model Of Competition.

credit to http://www.sqaki.com//11/PorterMichaelFiveCompetitiveForces/

1. buyer power

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.

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 (Aeon member 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.

An organization within the Supply Chain

• Supplier power is the converse of buyer power. 

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. 

The Competitive Environment

Threat of Substitutes.  

• To the extent that customers can use different products to fullfill the same need, the threat of substitutes exists.
• E.g: electronic product - same function different brands
• Switching cost- costs can make customer reluctant to switch to another product or service

4. Threat of new entrants

High – when it is 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 organizations and must be offered by entering organization to compete and survive.

The Competitive Environment

• 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.  
• 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

The Competitive Environment

• 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 .
• 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)

1.2 The Three Generics Strategies

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.

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.

Focused Strategy

• Target to a niche market
• Concentrates on either cost leadership or differentiation.

2.3 Relationship Between Business process and value chain

Targeting business process

   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

supply chain diagram

taken from /credited to http://management-class.co.uk/mba_sub/balys_8.htm

Chapter 1 : Business Driven Technology Overview

Business Driven Technology Overview

1.1 Information Technology’s Role in Business

We can see that information technology( IT ) is used in many area of business operations

which means information technology is EVERYWHERE in business!!!

   

           

each area of department has its own systems and will communicate on each other to give and received data and resource.

using IT will make the business operations performs more effective and efficient.

1.2 Information Technology Basics

IT is a place where the use of technology in managing and processing information and it is a key to business success and innovation.

Management information system (MIS) is the general name for the business function and academic discipline covering the application of people, technologies, and procedures to solve business problems. it is also similar to Accounting, Finance, Operations, and Human Resources.

When beginning to learn about IT, it is important to understand about :-

• Data, information, and business intelligence IT resources
• IT cultures

Information.

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

  

1.3 IT Resources.

                  

• People use

• Information technology to work with

• Information

1.4 IT Cultures

Organizational information cultures include:-

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.

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

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

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

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

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

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

 the end..