Week 09 Flashcards
Explain strategic analysis and the external and internal considerations
Collect and review information about internal processes and resources and external marketplace factors in order to inform strategy definition
External - competitive forces: Porter five forces and competitive strategies
Internal processes- value chain analysis and CSF analysis
What are Porter and Millars Five Forces?
Bargaining power of customers
Threat of substitutes
Threat of new entrants
Rivalry between existing competitors
Power of suppliers
What are porters five forces of competition?
- Rivalry of Competitors
- Threat of new entrants
- Threat of substitutes
- Customer bargaining power - limited number of suppliers limits customer choices
- Suppliers bargaining power - your competitor pays supplier in days not weeks for example
Give a number of competitive strategies
Cost Leadership
Focus or Niche
Alliance
Growth (small enough profit margin)
Innovation
Differentiation
What actions does IT play a crucial role in?
– scheduling
– controlling
– optimising
– measuring
– co-ordinating
What are the different environmental threats a business faces?
Supplier threats, Competitive threats (new business models, new entrants, new digital products), customer threats (buying stops)
Explain competitive strategies in particular innovation and differentiation
One strategy alone won’t usually fix the problem. Generally need a combination. Innovation and differentiation are competitive strategies but innovation does not necessarily mean it’s something different. Equally differentiation does not necessarily innovative (Could just be making a product with more efficient shipping)
Define low-cost leadership in terms of IT and give an example
Use cost saving operational IT to get the lowest operational costs and prices - trying to eliminate need for physical spaces that are expensive.
ex: Walmart has inventory system that sends order to suppliers when purchase recorded at cash register - minimises costs and inventory at warehouses
Explain the importance of cost leadership strategy and Business analytics in the airline industry
A business can use decision making IS to optimise systems for
lowest cost e.g. Business Analytics
ex: Ryanair - maximise airline fleet usage by ensuring planes are always full of customers and the turnaround time is minimum
Explain how Product Differentiation strategy can be actioned on using IT with an example
Use IS to enable new products and services, or
greatly change the customer convenience in
using your existing products and services.
E.g., Google’s continuous innovations
Use information systems to customise,
personalise products to fit specifications of
individual consumers.
Use IT to offer distinct products
Give an example of how dell use IT to offer product differentiation to customers
Dell allow customers
select the options they
want
Dell’s assemble-to-
order system is a major source of competitive advantage
Explain how focus on market niche strategy can be actioned on with IT with an example
Use IS to enable specific market focus, and serve
narrow market better than competitors.
– Analyses customer buying habits, preferences
(Business analytics)
ex: Tesco clubcard analyses data on customers preferences
How to align IT with the business Objectives
– Identify business goals and strategies.
– Break strategic goals into concrete activities and processes.
– Determine metrics for measuring progress.
– Identify how IT can help achieve business goals.
– Measure actual performance
How does the internet effect business’s competitive advantage
Internet widens the market increasing competitors and price pressure
Reduces barriers to entry for new entrants
Facilitates creation of new substitute products and services
Bargaining power shifts to customer
We know more about marketplace than we ever have
Name some other IT strategies to remain comeptitive
Use inter-enterprise systems to increase
switching costs to lock in customers or suppliers ex: Apple customers keep buying mac
* Make investments in ICT that build barriers to
entry against competitors.
* Use ICT in products and services to make the
substitution more difficult
* Investment in IS people, hardware, software, databases and networks from operational uses in strategic applications.
* Introduce enhanced business models using ICT.
Explain the value chain of activities in a business
In a business there are primary processes (directly add value) and support processes(indirectly add value)
Give example of primary business processes
Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, Customer Service
Give example of Support processes in a business
HRM
Administrative and support services
Technology development
Procurement of Resources
Explain the value web?
The value web is a flexible networked system that can synchronize the value chains of business partners within an industry to respond rapidly to changes in supply and demand.
Collection of independent firms that use IT to coordinate their value chains to produce a product collectively is called a value web.
Give an example of a company that uses links from customers to suppliers making experience convenient
Strong linkages to customers and suppliers
increase switching costs and loyalty by making customer experience more convenient.
Amazon: keeps track of user preferences for
purchases, and recommends titles purchased by others
What is the insurance value chain
Market using customer segmentation and big data
Sales - CRM and web sales
Underwirting - IOT and AI and data
Claim management - Fraud detection
Risk Management - AI and data
Explain critical success factors? Give an example
Indicators of the
performance of an
organisation and its
processes
How the business excels and outperforms competition
Core competencies
in specific activities
or managing links
between activities
Ryanair - Airplane turnaround time
Explain networks based strategies of IS strategies
Take advantage of firms’ abilities to network with
one another
* Include use of:
– Network economics
– Virtual company model
– Business ecosystems
Explain the importance and purpose of operational systems
They have a cost saving objective in a business. A certain performance level is required and organisations rely on these IS’s. Competitive advantage if better than competitors
ex: Operational failures pose a huge risk
