1. STRATEGIES AND OPPORTUNITIES FOR COMPETITION
CHAPTER 3
STRATEGIES AND OPPORTUNITIES FOR COMPETITION

2. INTRODUCTION Why we need to compete? How can we compete?
So that we can get more customers on our side & gain more profit in our company.
How can we compete?
Using the technology in the most useful way, to gain more productivity in the business.
What is competitive advantage?
Providing products / services in a way that customers value more than the competitor’s.

3. Issues to be considered in getting competitive advantage
Objective – to solve a business problem in a creative way, & that means innovation.
Wrong concept – using the same technology that have been used by other organization wont help to solve the problems of competitive advantage.
Solution – coming up with creative technology based solution.

4. Elements need to be considered
CEO’s attitude towards information technology.
Bridging the gap between business & technical people.
Using the right business strategies.
Finding solution through developing a creative design.
Viewing the business problem from another perspective.

5. CEO’s attitude towards IT
Why it is needed? – competitive advantages from information technology are lower on the upper management priority list hence the initiatives will have difficult in getting favorable hearing.
Goal & objectives had been different from the beginning.
What’s causing it? – background of CEO can influence his/her perspective.

6. Bridging the gap between business & technical.
Why needed? – to build an information technology system that gives a competitive advantages requires at least 2 things;
Understanding the business problem you are trying to solve (Business).
Understanding the available technologies to know which to use in designing a creative solution for the business problem (Technical).
Problem solution – forming a project team to come up with the solution that draws the best knowledge of the business problem from the business people.
Project team – a team designed to accomplish specific one time goal & disbanded once the project is complete.
Objective – business people will learn more about the technology & technology people will learn more on the business issues, together they can come up with a better solution.

7. Viewing the business problem from another perspective
Why needed? – to find a better solution by:
Seeing the problem from the perspective of the people primarily designed to serve.
Finding the solution is not just to be served, but to be delighted by the system & will continue using it.

8. Finding solution through developing a creative design
Biggest mistake in designing new information system:
Coming up with something ordinary /similar to what other companies are doing = will not give competitive advantage!
Creative design – a design system that can solve the business problem in new & effective way rather than the way others used to solve it.
Solution – organization can appoint a project team to design a custom system & monitor their progress until they come up with a design that pleases you.

9. Using the right business strategies
Factors to achieve competitive advantage;
Delivering products / services at the time it is needed.
Delivering products / services at a low price.
Delivering at time it is needed
Just-in-time = an approach that produces / delivers a product/service just at the time the customer wants it.

10. Using the right business strategies
Delivering at a low price
Supply Chain = consists of the paths reaching out to all suppliers of parts/services to a company. Consists of suppliers & supplier’s supplier.
CPFR = (collaborative planning, research & replenishment) a concept that encourages & facilitates collaborative process among members of a supply chain.

11. Porter’s Framework PORTERS FRAMEWORK Five Force Model
To determine the relative attractiveness of an industry
Three Generic Strategies
Cost leadership, differentiation or a focused strategy
Value Chain
A tool that vies the organization as a chain/series of processes which adds value to the product/service to the customers

12. Five Force Model
Developed to determine the relative attractiveness of an industry.
Purpose : used as a tool for business manager in deciding whether to enter a particular industry / expand their operations.
Buyer Power – higher when buyers have more choices, low when choices are few = industry is less attractive to enter
Supplier Power – high when buyers have few choices & low when they have many choices = supplier have a lot of power hence less attractive

13. Five Force Model
Threats of substitute product/service – if there are few alternatives in using the product, the treat of substitute product is low
Threats of new entrants – high when easy for competitors to enter = less attractive
Level of competition among the competitors – high level of competition = less attractive.
Switching Cost – costs that can make customers reluctant to switch to another product / services

14. Three Generic Strategies
Cost leadership, differentiation or a focused strategy
Applied at the business unit level
TARGET SCOPE
ADVANTAGES
LOW COST
PRODUCT UNIQUENESS
BROAD
(WIDE INDUSTRY)
Cost Leadership Strategy
Differentiation Strategy
NARROW
(MARKET SEGMENT)
Focus Strategy (low cost)
Focus Strategy (differentiation)

15. Three Generic Strategies
Cost Leadership
Being the low cost producer & targets a broad market.
Sells its product either at average industry prices to earn higher profit than rivals or below the average to gain market share.
Firms that produces cheaper product will remain profitable for a longer period of time.
Internal strengths:
Big capital investment ; barrier to competitors
Skill in designing for efficient manufacturing
High level of expertise in manufacturing process engineering
Efficient distribution channel.

16. Three Generic Strategies
Differentiation
Development of a product/service that offers unique attributes that are valued by customers
Those customers perceive to be better / different from the product of competitors.
Value added by the uniqueness allows organization to charge a premium price for it.
Internal strengths:
Access to leading scientific research
Highly skilled & creative product development team
Strong sales team
Corporate reputation for quality & innovation

17. Three Generic Strategies
Focus
Concentrates of a narrow segment & within that segment attempts to achieve either a cost of advantage / differentiation.
The need of a group can be better serviced by focusing entirely on it.
Gain a high degree of customer loyalty
Due to narrow market, organization have lower volumes hence less bargaining power with the suppliers.

18. Value Chain
Purpose: to see how information technology can support important business processes.
Business process – standardized set of activities that accomplish a specific task, such as processing a customers order.
How to identify important process? – use Porters Value Chain.
Value Chain – views the organization as a chain/series of processes that adds values to the product/service for the customers
Purpose : identification of processes that adds value for customers can be done.

19. Competitive Advantage through E-Commerce
E-commerce gives the opportunity to compete based on these capabilities
Mass Customization & personalization
Disintermediation
Global reach

20. Mass Customization & Personalization
Business gives its customers the opportunity to tailor its product / services to the customer’s specification.
The main concept of personalization is Internet site can know enough about your likes & dislikes that it can fashion offers that are more likely appeal to you.
Collaborative Filtering – a technique that supports a personalization in web pages.

21. Disintermediation
Means that with Internet as a delivery vehicle, intermediate players in the distribution channel can be bypassed.
Clothing manufacturer
Clothing manufacturer
Wholesaler
Wholesaler
Distributer
Distributer
Clothing Retailer
Clothing Retailer
Clothing buyer

22. Global reach
Ability to expand their reach to customers anywhere there is Internet connection & at a much lower cost.
Better if product is digital as it can be sold & delivered via internet.