Key Concepts - Week Eleven

Question 1

Porter’s Competitive Forces Model

Answer 1

1. Traditional competitors
2. New market entrants
3. Substitute products and services
4. Customers
5. Suppliers

Question 2

Traditional competitors:

Answer 2

All firms share market space with competitors who are continuously devising new products, services, efficiencies, and switching costs

Question 3

New market entrants:

Answer 3

Some industries have high barriers to entry

New companies have new equipment, younger workers, but little brand recognition

Question 4

Substitute products and services:

Answer 4

Substitutes customers might use if your prices become too high

Question 5

Customers:

Answer 5

Can customers easily switch to competitor’s products?

Can they force businesses to compete on price alone in transparent marketplace?

Question 6

Suppliers:

Answer 6

Market power of suppliers when firm cannot raise prices as fast as suppliers

Question 7

Four generic strategies for dealing with competitive forces, enabled by using IT:

Answer 7

1. Low-cost leadership
2. Product differentiation
3. Focus on market niche
4. Strengthen customer and supplier intimacy

Question 8

Low-cost leadership:

Answer 8

Produce products and services at a lower price than competitors

Question 9

Product differentiation:

Answer 9

Enable new products or services, greatly change customer convenience and experience

Mass customization; customer experience management

Question 10

Focus on market niche:

Answer 10

Use information systems to enable a focused strategy on a single
market niche

Question 11

Strengthen customer and supplier intimacy:

Answer 11

Use information systems to develop strong ties and loyalty with customers and suppliers

Increase switching costs

Question 12

The Business Value Chain Model:

Answer 12

Firm as series of activities that add value to products or services

Highlights activities where competitive strategies can best be applied

At each stage, determine how information systems can improve operational efficiency and improve customer and supplier intimacy

Question 13

Primary activities (Firm value chain):

Answer 13

1. Inbound logistics
2. Operations
3. Sales and Marketing
4. Service
5. Outbound logistics

Question 14

Support activities (Firm value chain):

Answer 14

1. Administrative and Management
2. Human Resources
3. Technology
4. Procurement

Question 15

Industry value chain:

Answer 15

Suppliers’ suppliers > Suppliers > Firm > Distributers > Customers

Question 16

Value web:

Answer 16

Collection of independent firms using highly
synchronized IT to coordinate value chains to produce product or service collectively

More customer driven, less linear operation than traditional value chain

Question 17

Firm’s value chain is linked to value chains of ________, _________, __________

Answer 17

suppliers, distributors, customers