chapter3: strategic initiatives for implementing competitive advantages

CHAPTER 3: STRATEGIC INITIATIVES FOR IMPLETING COMPETITIVE ADVANTAGE

       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

       4  basic components of supply chain management:

      Supply chain strategy- strategy for management all resources to meet customer demand

      Supply chain partner- partners throughout the supply chain that deliver finished products, raw materials and services

      Supply chain operation- schedule for production activities

      Supply chain logistics- product delivery process

       Effective and efficient SCM systems can enable an organization to:

o   Decrease the power of its buyers

o   Increase its own supplier power

o   Increase switching costs to reduce the threat of substitute products or services

o   Create entry barriers thereby reducing the threat of new entrants

o   Increase efficiencies while seeking a competitive advantage through cost leadership

       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:

1.       Identify types of customers

2.       Design individual customer marketing campaigns

3.       Treat each customer as an individual

4.       Understand customer buying behaviors

       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 airplane which ignore the road completely

       Enterprise resource planning (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”

      Consolidating touchpoints for saab:

      Saab required a consolidated customer view among its three primary channels:

      Dealer network

      Customer assistance center

      Lead management center

chapter 2: identifying competitive advantages

CHAPTER 2: IDENTIFYING COMPETITIVE ADVANTAGES

       Competitive advantages is the product or services that an organization’s customer place a greater value on than similar offerings from a competitor

       Unfortunately, competitive advantages is typically temporary because competitors often seek ways to duplicate the strategy

       When organization is the first to market with a competitive advantage, it gains a first-mover advantage.

       The first-mover advantage occurs when an organization can significantly impact its market with a competitive advantage. Eg: FedEx

      Michael Porter’s Five Forces Model is useful tool to aid organization in challenging decision whether to join a new industry or industry segment

1.       BUYER POWER– is assessed by analyzing the ability of buyers to directly impact the price they are willing to pay for an item. If buyer power is HIGH they can force a company and its competitors to compete on price which price down. To reduce buyer power is by using switching costs which is can make customers reluctant to switch to another product or services. Loyalty program in travel industry (eg:  rewards on free airlines tickets or hotel stays)

2.       SUPPLIER POWER- is assessed by the suppliers’ ability to directly impact the price they are charging for supplies. If supplier power is HIGH the supplier can directly influence the industry by charging higher price, limiting quality or services and shifting costs to industry participants. Supply chain is supplier power is the converse of buyer power

3.       THREAT OF SUBTITUTE PRODUCTS OR SERVICES- is HIGH when there are many alternatives to a product or services and 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

4.       THREAT OF NEW ENTRANTS-is HIGH when it is easy for new competitors to enter a market and LOW when there are significant entry barriers to entering a market. Entry barrier is a product or services feature that customers have come to expect from organizations in a particular industry and must be offered by an entering organization to compete and survive

5.       RIVALRY AMONG EXISTING COMPETITORS- is HIGH when competition is fierce in a market and LOW when competition is more complacent. Best practices of IT is Wal-mart and its suppliers using IT enabled system for communication and track product at aisle by effective tagging system. Reduce costs by using effective supply chain. Existing competitors are not much of the treat: typically each firm has found its “niche”

       3 generics strategies :

      Cost Leadership: becoming a low cost producer in the industry allows the company to lower prices to customers. Competitors with the 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. Concentrate on either costs leadership or differentiation

      Relationship between business processes and value chain

      Business process is a standardized set of activities that accomplish a specific task such as processing a customer’s order. To evaluate the effectiveness of its business process

      Value chain approach view an organization as a series of processes each of which adds value to the product or services for each customers

chapter1 : business driven technology

CHAPTER 1: BUSINESS DRIVEN TECHNOLOGY

       Information technology (IT) – a field concerned with the use of technology in managing and  processing information

       Information technology is an important enabler of business success and innovation

      Management information system (MIS) – a general name for the business function and academic discipline covering the application of people, technologies, and procedures to solve business problems

      MIS is a business function, similar to accounting, finance, operation and human resources

      Data – are raw facts that describe the characteristics of an event. Characteristics for a sales event could include the data, item number, item description, quantity ordered, customer name, and shipping details.

      Information – data converted into a meaningful and useful context. Information from sales events could include best-selling item, worst-selling item, best customer, and worst customer.

      Business intelligence- refers to applications and technologies that are used to gather, provide access to, and analyze data and information to support decision-making efforts. Business intelligence helps companies gain a more comprehensive knowledge of the factors affecting their business such as metrics on sales, protection and internal operations  which help companies make better business decision

Functional organization – each functional area has its own systems and communicates with every other functional area and MARKETING communicate with all other areas in the organization

      PEOPLE, INFORMATION TECHNOLOGY to work with, INFORMATION (in order of priority) – are inextricably linked. If one fails, they are all fail. Most important, if one fails, then chances are the business will fail.

ORGANIZATIONAL INFORMATION CULTURES
Information-functional culture	Employees use information as a means of exercising influence or power over others.       Eg: 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
Information-sharing culture	Employees across departments trust each other to use information ( esp. problems and failures) to improve performance
Information-inquiring culture	Employees across department search for information to better understand the future and align themselves with current trends and new directions
Information-discovery culture	Employees across departments are open to new insights about crisis and radical changes and seek ways to create competitive advantages