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Chapter 2 STRATEGIC AND COMPETITIVE OPPORTUNITIES Using IT for Competitive Advantage. Competitive Advantage Providing a product or service in a way that customers value more than what the competition is able to do. In perspective (do not be fooled) …. Its not the IT, it’s the People

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Chapter 2

STRATEGIC AND COMPETITIVE OPPORTUNITIES

Using IT for Competitive Advantage

Competitive Advantage

Providing a product or service in a way that customers value more than what the competition is able to do.

slide2

In perspective (do not be fooled) …

Its not the IT, it’s the People

It is not the information technology that gives a company the competitive advantage; it is the way people use the technology that makes the difference.

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… Main Chapter Menu…

Competitive Advantage Examples

  • FedEx
  • Schwabs
  • Dell
  • Cisco

Developing A Strategy For The Internet Age

  • The five forces model
  • The three generic strategies
  • The value chain

Key E-Commerce Strategies

  • Mass customization
  • Disintermediation
  • Global reach

The U.S. Airline Industry

competitive advantage examples dell computer
Competitive Advantage ExamplesDell Computer

Sell ----source -----ship

Buy ---hold--- sell

competitive advantage examples dell computer1
Competitive Advantage ExamplesDell Computer
  • Information partnership - lets two or more companies cooperate by integrating their IT systems.
competitive advantage examples cisco systems
Competitive Advantage ExamplesCisco Systems
  • Cisco Systems - a leader in utilizing the direct sell model over the Internet.
  • Business to Business (B2B) - companies whose customers are primarily other businesses.
  • Business to Consumer (B2C) -companies whose customers are primarily individuals.
developing a strategy for the internet age
Developing A Strategy For The Internet Age
  • Porter’s three frameworks are:
    • The Five Forces model
    • The Three Generic Strategies
    • The Value Chain
developing a strategy for the internet age using the five forces model
Developing A Strategy For The Internet AgeUsing the Five Forces Model
  • Buyer power
    • Giving choices to the buyer
    • For example: hotel chains
      • Give points
      • Other loyalty programs
      • Cash the points for free hotel stays at one of their resort hotels
    • Such programs have the effect of increasing the likelihood that a traveler will stay at a single chain.
developing a strategy for the internet age using the five forces model1
Developing A Strategy For The Internet AgeUsing the Five Forces Model
  • Supplier power
    • The objective is to ___________ supplier power.
      • B2B marketplace - an Internet-based service which brings together many buyers and sellers.
      • Find a way to put more information into the buyer’s hands
developing a strategy for the internet age using the five forces model2
Developing A Strategy For The Internet AgeUsing the Five Forces Model
  • Threat of substitute products or services
    • Consider the introduction of alternative IT products such as income tax preparation software.
      • Consumers now use it.
      • Accountant has less clients.
      • Accountant livelihood is threatened.
developing a strategy for the internet age using the five forces model3
Developing A Strategy For The Internet AgeUsing the Five Forces Model
  • Threat of new entrants
    • Entry barrier - a product or service feature that customers have come to expect from companies in a particular industry.
    • A good example is what banks did:
      • Introduce the bank card and as many ATMs around the world as possible.
      • Banking on the internet to pay bills, transfer funds and print reports.
developing a strategy for the internet age using the five forces model4
Developing A Strategy For The Internet AgeUsing the Five Forces Model
  • Rivalry among existing competitors
    • Using IT systems to be more ___________ and compete more strongly with others.
    • An example would be PRICE.
      • Computer systems can be bought from two different stores but one is cheaper than the other.
      • This is possible when one company uses IT in such a way to reduce its price.
developing a strategy for the internet age the three generic strategies
Developing A Strategy For The Internet AgeThe Three Generic Strategies

Figure 2.5

The Three Generic Strategiespage 52

developing a strategy for the internet age the value chain
Developing A Strategy For The Internet AgeThe Value Chain

Once you understand how IT can help you develop business strategy, you can ensure that IT supports all important business ___________ .

manufacturing value chain
Manufacturing Value Chain

Where has information system added value in the value chain?

key e commerce strategies
Key E-Commerce Strategies
  • Three capabilities made possible by the Internet are could help firms gain competitive advantage:
    • Mass ___________ and ___________
    • ___________
    • Global reach
key e commerce strategies mass customization and personalization
Key E-Commerce StrategiesMass Customization and Personalization
  • ___________ - a business gives its customers the opportunity to tailor its product or service to the customer’s specifications.
  • ___________ - a Web site can know enough about your likes and dislikes that it can fashion offers that are more likely to appeal to you.
  • ___________ - a method of placing you in an affinity group of people with the same characteristics.
key e commerce strategies disintermediation
Key E-Commerce StrategiesDisintermediation
  • Disintermediation – using the Internet as a delivery vehicle, intermediate players in a distribution channel can be bypassed.
key e commerce strategies global reach
Key E-Commerce StrategiesGlobal Reach
  • ___________ - the ability to extend a company’s reach to customers anywhere there is an Internet connection, and at a much lower cost.
  • ___________ - when you have given a merchant your permission to send you special offers.
the u s airline industry airline reservation systems
The U.S. Airline IndustryAirline Reservation Systems
  • Reservations systems
  • Frequent flyer programs
  • Yield management systems
  • Disintermediating the Travel Agent
  • Show porter video
chips system from earlier
Chips system from earlier
  • What kinds of information systems could be beneficial? Why?
  • What kinds of information products would be helpful? Why?
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