Competitive Advantage

1. 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.

2. 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.

3. … 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

4. 23 159 867 632  www.canadapost.ca Competitive Advantage ExamplesFederal Express FedEx Package Tracking Screen fedex message

5. Competitive Advantage ExamplesCharles Schwab

6. Competitive Advantage ExamplesDell Computer Sell ----source -----ship Buy ---hold--- sell

7. Competitive Advantage ExamplesDell Computer • Information partnership - lets two or more companies cooperate by integrating their IT systems.

8. 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.

9. Developing A Strategy For The Internet Age • Porter’s three frameworks are: • The Five Forces model • The Three Generic Strategies • The Value Chain

10. Developing A Strategy For The Internet AgeThe Five Forces Model Video: porter

11. 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.

12. 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

13. 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.

14. 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.

15. 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.

16. Developing A Strategy For The Internet AgeThe Three Generic Strategies Figure 2.5 The Three Generic Strategiespage 52

17. 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 ___________ .

18. Developing A Strategy For The Internet AgeThe Value Chain The Components of a Value Chain

19. Manufacturing Value Chain Where has information system added value in the value chain?

20. Key E-Commerce Strategies • Three capabilities made possible by the Internet are could help firms gain competitive advantage: • Mass ___________ and ___________ • ___________ • Global reach

21. 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.

22. Key E-Commerce StrategiesDisintermediation • Disintermediation – using the Internet as a delivery vehicle, intermediate players in a distribution channel can be bypassed.

23. 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.

24. The U.S. Airline IndustryAirline Reservation Systems • Reservations systems • Frequent flyer programs • Yield management systems • Disintermediating the Travel Agent • Show porter video

25. Chips system from earlier • What kinds of information systems could be beneficial? Why? • What kinds of information products would be helpful? Why?