Session 2: organizational strategy + competitive advantage Flashcards
Business pressures
Market/economic pressures
Technology pressures
Societal/political/legal pressures
Market/economic pressures
need for real-time operation
changing nature of workforce
powerful customers
globalization + strong competition
technology pressures
tech innovation/obsolescence
info overload
societal/political/legal pressures
social responsability
compliance with gov. regulations + deregulations
protection against terrorists attacks + homeland security
ethical issues
organizational responses
electronic commerce (e-business or e-commerce)
strategic systems
on-demand mass customization or make-to-order
customer focus and service
competitive strategy
statement that identifies a business’s approach to compete, its goals and plans as well as its policies to achieve those goals
Business - IT alignment
business drives IT
IT enables business
How we know a firm has a good Business-It alignment (6)
1) org. view IT as an engine of innovation that transforms business + create new revenue streams
2) view internal/external customers as VERY important
3) rotate business and IT professionals across departements + job function
4) provide overarching goals that are clears to IT + business employee
5) ensure IT employees understand how company makes or loses money
6) org create vibrand + inclusive company culture
5 Forces Porters model
threat of new entrants
threat of substitutes
bargaining power of buyers
bargaining power of suppliers
Threat of new entrants “me too” product
Lowers the prices firms can charge
factors that lower the threat of new entrants:
- economies of scale, high fixed costs, access to capital
- learning/experience curve
-limited access to distribution channels
barriers to entry
supply-side economies of scale (suppliers increase prod. thus cost of production drops)
Demand-side benefits of scale (Network effects)
Capital requirements
Incumbency advantages independent of size
Unequal access to distribution channels
Restrictive government policy
Bargaining power of suppliers
when suppliers has power => costs are higher
some factors that increase suppliers’ bargaining power:
- if there are a few large suppliers
- if your industry is a small part of these suppliers’ demand
-if firms find it difficult to switch from their existing suppliers
bargaining power of buyers
when your buyers have power => can’t rise prices
some factors that increase buyer’s power:
- if buyers purchase in large volume
- if buyers can easily switch to a competing firm
if buyers know a lot about your cost structure
how IT affects buyer power:
- IT-administered loyalty programs foster “stickiness”
- The Internet provides buyer with detailed info
intra-industry rivalry
it decreases prices
some factors that increase intra industry rivalry:
- lots of firms in the inddustry (especially of similar size)
- competing firms offer similar proiducts
- slow industry growth
ex of how IT affects rivarly between firms
- the internet globalizes commerce, increasing # of firms
- web-based personalization can reduce product similarity
threat of substitutes
lowers a firm’s ability to raise prices and may reduce demand
some factors that increae threat of substitutes:
-convergence of product/features
-changing tastes/preferences
-radical innovations
