Transcript Business Strategy

BUS1MIS Management
Information Systems
Semester 1, 2012
Week 3 Lecture 1
To be a Good Student in MIS
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Stay aware of MIS web page
Have the textbook and Subject Learning Guide
Print off slides before lectures
Attempt tutorial questions before tutorials
Keep looking ahead for upcoming online tests and tutorial assessments
Relate content to business experience
Business Strategy
Business constantly strives to gain competitive advantages incorporating IT
and IS
To achieve a competitive advantage a business needs to:
1.Identify potential opportunities that can lead to a competitive advantage
(Porter’s Five Forces Model). An opportunity might involve entering a new
market, for instance.
2.Formulate a strategy for implementing the opportunity (Porter’s Three
Generic Strategies)
3.Identify how IT can be used to add value to one or more business
activities to provide a competitive advantage (Value Chain Analysis)
Ref: Textbook section 1.2 pp 25-34
Business Strategy
Competitive Advantage
To survive and thrive an organisation must create a competitive advantage
Competitive advantage – a product or service that an organization’s
customers place a greater value on than similar offerings from a
competitor
First-mover advantage – occurs when an organisation can significantly
impact its market share by being first to market with a competitive
advantage
Example
FedEx delivers parcels. FedEx developed a system to allow a customer to request
parcel pickups, print mailing slips and track parcels on-line
… so they gained a first-mover advantage over their competitors
Business Strategy
Competitive Advantage
Can you contribute some examples of competitive advantage to the lecture?
Business Strategy
Environmental Scanning
To create a competitive advantage you have to be aware of
what your competitors are doing.
The term used to describe this is environmental scanning.
Information technology can play a role in this …..
… from accessing a competitor’s on-line presence to the use
of hand held computers to record product offerings, product
placements and product listings by your representatives at a
competitor’s retail site.
For example – how does the junk mail for Big W and Target feature the
same products each week?
Business Strategy
Porter’s Five Forces Model
Used to identify and analyse a potential business opportunity that may
lead to a competitive advantage.
Figure 1.13
Business Strategy
Porter’s Five Forces Model
Buyer power - the ability of your customers to influence what they
are prepared to pay for your goods/services. High when buyers
have many sellers to choose from.
Supplier power - the ability of your suppliers to influence how much they will
charge for the raw materials they are supplying to you. High when there are
few suppliers.
Threat of substitute products or services – high when there are many
alternative products or services available from other businesses.
Threat of new entrants – high when it is easy for new competitors to
enter a market.
Rivalry among existing competitors – high when competition is fierce in a
market.
Business Strategy
Porter’s Five Forces Model - Examples
Buyer power
High –
Low -
Supplier power
High –
Low Threat of substitute products or services
High –
Low -
Threat of new entrants
High –
Low Rivalry among existing competitors
High –
Low - Eco-Pole Ashtray
Business Strategy
Porter’s Five Forces Model – Gaining a Competitive Advantage
Buyer power – need to reduce. Make changing business difficult for example, loyalty programs.
Supplier power – need to reduce. Use standardised parts that can be
obtained from multiple suppliers.
Threat of substitute products or services – need to reduce. Increase
quality, lower price, improve after purchase service, etc.
Threat of new entrants – increase entry barriers. Improve brand
name recognition, tie up distribution channels, etc.
Rivalry among existing competitors – need to reduce. Brand loyalty and
switching costs need to be increased.
Business Strategy
Entering a new market
Organizations typically follow a strategy when entering a new market:
A broad strategy aims to target a large market segment
A focused strategy aims to target a niche market within the broader market
Porter has identified three generic strategies based around these
ideas
Business Strategy
Entering a new market
Business Strategy
Value Chain Analysis
Once an organization chooses its strategy, it can use tools such as the value
chain analysis to determine how a competitive advantage can be achieved.
A value chain – views an organization as a series of processes, each of
which adds value to the product or service
Business Strategy
Value Chain Analysis
To gain a competitive advantage the value chain must enable the organisation
to provide unique value to its customers.
This may be expressed as lower costs or superior benefits to the
customer.
IT can used to support those activities which have been targeted as being
important in adding value.
Business Strategy
A video will be played from the textbook web site featuring Panera Bread.
As you watch the movie contemplate the following questions:
1.How does CEO Ron Shaich use employee empowerment to affect Porter’s
Five Forces?
2.What type of generic strategy is Panera Bread using?