1.7 Strategies to Compete

Question 1

(7) Strategies to Establish Competitive Advantage over Competitors

Answer 1

1. Reduce Costs
2. Differentiate Products/Services
3. Focus
4. Lock in Suppliers/Customers
5. Create Alliances
6. Raise Barriers to Entry in the Market
7. Create New Products/Services

Question 2

Reduce Costs

Answer 2

lower the price or increase profit margin, using the value chain model

Value Chain model: Primary Activities & Support Activities

Question 3

Primary Activities

Answer 3

Add product value that customers are willing to pay (anything that adds value, real/perceived)

Supply Chain:
Info Systems can optimize inventory levels (reducing costs)

Operations:
IT has led to automation

Distribution:
Info systems can optimize delivery schedules

Sales & Marketing:
Big data, cloud computing, social media, loyalty programs

Service:
Info systems make it easier to stay in contact with customers post-sales

Question 4

Support Activities

Answer 4

Do not add value; they support primary activities to better use their competitive advantage

• combo of tech development that support infrastructure+research for new/improved products
• human resources management
• general administration

Question 5

Differentiate Products/Services

Answer 5

Info systems have added tech to products ie. GPS

• offering something for free to increase repeat customers, increasing profits and reducing advertising costs ie. a free book/song

Question 6

Focus

Answer 6

Adapting product/service to a niche

Info systems can provide in-depth customer information (CRM), twitter, facebook

Question 7

Lock-in Suppliers/Customers

Answer 7

The idea of making it more difficult for customers/suppliers to switch to another (using the same POS system)

Question 8

Create Alliances

Answer 8

With others to increase market share

ie. a coupon for purchasing multiple products

Question 9

Raise Barriers to Entry in the Market

Answer 9

First movers (early adopters) can create barriers to entry
ie. Walmart used IT to better understand customers buying habits, then created pricing strategies, decided what products to carry where, and how to promote them while optimizing the distribution network

Question 10

Create New Products/Services

Answer 10

Info systems can be used to create new products ie. Uber