Learning Objectives

information systems.
IT

information technology



4
information
systems information sy
stems plans business plans
Chapter 12 1
 IT alignment.
IT architectures

information architecture.
major issues information
systems planning.
Web-related IT
planning application
portfolio

Chapter 12 2
Dells direct path to success
The Problem:
(make-to-forecast
strategy)
(value chai
n) inbound logistics outbound logistic
s

( )

(lost sales) (inadequate supply)
(over supply) pro
fit

Chapter 12 3
 The solution:
make-to-forecast strategy direct business model
()
Dell mass-customi
zation build-to-order (BTO)
strategy

Dell
Dell

BTO Dell
Dell 1


1-5
Chapter 12 4


Dell
e-commerce Web 1996
Dell Web 1 USD
build-to-order







Chapter 12 5
 Results:
Dell


BTO strategy



Dell 40 BUSD

Chapter 12 6
 12.1) Strategic Information
System
Strategic Information System
EIS, OIS, TPS, KMS
goals, processes, products, environmental relationships


(Competitive Advantage)



Value Chain Data
(Improving Core Competency)


Chapter 12 7
 Strategic Management
maps crafts

SWOT Analysis
Product Life Cycle
Quality Preference

Chapter 12 8
 SWOT Analysis
Product Life
Cycle
Quality Preference

 Competitive forces model

Michael Porter

5

Michael E. Porter

Competitive Strategy Competitive Advantage M

Chapter 12 10










(force)

(Perfect
competitive)



Chapter 12 11



( )










Chapter 12 12
 Porters Competitive 5
Forces Model
Porter


(Competitive forces) 5
1)
2)

3)

4)
5)
Chapter 12 13
 Porter's Five Forces Model

Industry competitors

()

Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
 Porter's Five Forces Model

Industry competitors

1 Rivalry among
existing firms

Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
 Porter's Five Forces Model

Potential
2
entrants

Threat of
new entrants

Industry competitors

1 Rivalry among
existing firms

Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
 Porter's Five Forces Model

Potential
2
entrants

Threat of
new entrants

Industry competitors

1 Rivalry among
existing firms

Threat of
substitutes

3 Substitute
products

Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
 Porter's Five Forces Model

Potential
2
entrants

Threat of
new entrants

4 Bargaining power Industry competitors

of suppliers
Suppliers
1 Rivalry among
existing firms

Threat of
substitutes

3 Substitute
products

Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
 Porter's Five Forces Model

Potential
2
entrants

Threat of
new entrants

4 Bargaining power Industry competitors Bargaining power 5

of suppliers of buyers
Suppliers Buyers
1 Rivalry among
existing firms




Threat of
substitutes

3 Substitute
products

Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
..
5 ()

()

()
Chapter 12 20
Porters five forces Model

Chapter 12 21
1)
(Threat of New Entrance)










?

Chapter 12 22
 (1)
1) Economies of scale



2) Proprietary product differences



3) Brand identity



Chapter 12 23
 (2)
4) Switching cost



5) Capital requirement



6) Access to distribution



Chapter 12 24
 (3)
7) Absolute cost advantage
(Vertical Integration)
CP ()


8) Proprietary learning curve



9) Access to necessary inputs


Chapter 12 25
 (4)
10) Proprietary low-cost product design



11) Government policy



12) Expected retaliation

Chapter 12 26
Porters five forces Model

Chapter 12 27
 2)

(1)
2.1) Differentiation of inputs
Supplier

2.2) Switching costs of suppliers and firms in the
industry

supplier

2.3) Presence of substitute inputs

Supplier
2.4) Supplier concentration
Supplier
Supplier Chapter 12 28



(2)
2.5) Importance of volume to supplier
Supplier
2.6) Cost relative to total purchases in the industry
()

2.7) Impact of inputs on cost or differentiation



2.8) Threat of forward integration relative to threat of
backward integration by firms in the industry.
Chapter 12 29
Porters five forces Model

Chapter 12 30
3)

(1)
3.1)

1) Buyer concentration versus firm concentration




2) Buyer volume

3) Buyer switch costs relative to firm switching costs


4) Buyer information

Chapter 12 31


(2)
5) Ability to backward integrate



6) Substitute product


7) Pull-through
()

Chapter 12 32


(3)
3.2) (Price Sensitive)
1) Price total purchase

2) Product differences



3) Brand identity



4) Impact on quality/performance
/

Chapter 12 33


(4)
5) Buyer profits
( )

6) Decision makers incentives

Chapter 12 34
Porters five forces Model

Chapter 12 35
4) (1)
4.1) Relative price/performance of substitutes
/

4.2) Switching costs


4.3) Buyer propensity to substitute

Happy

Chapter 12 36
Porters five forces Model

Chapter 12 37
5)
(1)
5.1) Exit barriers


5.2) Industry concentration


5.3) Fixed costs/Value added
/ (
)
5.4) Industry growth


Chapter 12 38

(2)
5.5) Intermittent overcapacity

()

5.6) Product difference
( )

5.7) Switching cost


5.8) Brand identity
()
Chapter 12 39

(3)
5.9) Diversity of rivals
()


5.10) Corporate stakes

Chapter 12 40
 Competitor
Analysis ?

5 Porters five forces
Model 5

Chapter 12 41
 Competitor
AnalysisFirst
Competitive
?Force
First Competitive Force
1) (


)
2) ()
( )
3) ( SWOT Analysis)
4) (

)
Chapter 12 42
 We Analyze the Entry
Barriers
Second Competitive
Force
1) Force

? (

)
2) ? (

)
3) () ? (

Promotion )
4) ? (
)
Chapter 12 43
 We Analyze the Substitute
Products
Third Competitive
Force
1)
? (

)
2)
? (

)
3)
? (Chapter

12
44
 We Analyze the Supply
Chain
Fourth & Fifth Competitive Forces
1)

?
2) ?
3) (transaction) ?
4)
(capture) ?

Chapter 12 45
 Wal-Mart
List the players in each competitive force.
Relate the major determinants of each force to each player listed.
With regard to the e-commerce substitution threat we can check
the price / performance of e-shopping, the cost of switching to e-
shopping and the buyers propensity to use the internet for shoppi
ng.
Devise a strategy with which the company can defend itself
against each competitive pressure. Wal-Mart have set up Wal-Ma
rt Online; they could also provide playgrounds for Children, hand
out free samples and recognise frequent shoppers personally.
Look for supportive information technologies such as a system to
recognise frequent shoppers through the use of OLAP technologies
to analyse shoppers activities. Develop
Chapter 12 an e-commerce site . 46
Wal-Mart case study
Rivals
Kmart, Target, Toys R
Us
New Entrants
Foreign general retailers
Established retailers
changing to discounting or
megastores
Substitutes
Mail order catalogues
Home shopping (TV)
E-commerce
Telemarketing
Purchasing clubs
Door-to-door sales
Chapter 12
Suppliers
US product manufacturers
Foreign manufactures
Local governments
IT product and service
suppliers
Business partners (e.g.
McDonalds)
Buyers
Small-town consumers
Metropolitan consumers
Canadian / Mexican
consumers
Other foreign consumers
Corporate buyers
47
Porters Competitive Forces
Model
Competitive
Forces

Chapter 12 48


(Web-based)


5 Porter

Chapter 12 49
 Internet and its effect on
Industry Structure







(-) (+)

Strategy and Internet Michael E. Porter)

Chapter 12 50
 Internet and
its effect on
industry struct
ure

Chapter 12 51
 1)

1)



(-)
2) (
)

(-)
3) (-)



Chapter 12 52
 2)

1)
(-)
2) (-)
3) (
)
(-)
4)
(-)

( - )

Chapter 12 53
3)

1)



(+)
2)

(-)
+ -




Chapter 12 54
 4)
/

1)
Supplier Supplier
(+/-)
2) Supplier
(, Broker)
(-)
3)


(-)
4)
(-)
(-) (+) Supplier
Chapter 12 55
5)

1)

(+)
2)
(end consumers)
(-)
3)
( Supplier) (-)

Chapter 12 56
.

(-)


IT IT

Chapter 12 57
 Strategies for Competitive
Advantages (1)



()

1) (Cost leadership strategy)


2) (Differentiation strategy)
product feature

Chapter 12 58
Strategies for Competitive
Advantages (2)
3) (Niche strategy)



4) (Growth strategy)


5) (Alliance strategy)

partnership, alliance, joint
venture virtual company
6) (Innovative strategy)
feature
Chapter
12 ( Table 12.1)
59


Full Package Services

Chapter 12 60
Strategies for Competitive
Advantages (3)
7) (Operational
effectiveness strategy)

8) (Customer orientation strategy)
happy

9) (Time strategy)


10) (Entry-barrier strategy)

Web Chapter 12 61
Strategies for Competitive
Advantages (4)
11) Supplier Buyer

(Lock-in customer or supplier
strategy)
/


12)
(Increase switching cost
strategy)


Chapter 12 62

(1)
12


) Supplier Buyer
)
)
)
) ()
)

Chapter 12 63

(2)

Chapter 12 64
 12.2) Porters Value Chain
Model
(value chain model
(Porter, 1985))
2 : (primary activities)
(support activities)




Inbound logistics (inputs)
Operations (manufacturing and testing)
Outbound logistics (storage and distribution)
Marketing and sales
Service
Chapter 12 65
 The Value Chain (Continued)

()
The firms infrastructure (accounting, finance, management)
Human resources management
Technology development (R&D)
Procurement






Chapter 12 66
 The Value Chain (Continued)

Secondary
Activities

Valu
e

Primary Activities
Chapter 12 67
 The Airline Industry Value
Chain
Secondary
Activities

Valu
e

Primary Activities
Chapter 12 68
 The Value Chain (Continued)

Phone Fax Transactional

Internet Systems

Item Retrieval
Brand & Model EDI/ XML

Internal
UPC
Model No. POS
Order Entry
MFG No. Service Cash
SKU EDI
Construction
Internet
Check
Charge(Bank, T&E, House, Finance)
Alternate Units Transm
issions
Transaction Posting Cash Posting
Automatic
Accessories Invoice/Credit Memo

Cash Receipts
Generic Items Order Entry Screen
Item Key 1
Text 199.95
Windows POS Deposits
Instructions item2
189.99
2
Retrieval
Order Entry Deposits
Service Deposits
Trade-in's Construction Deposits
Internet Deposits
Catalog Items End of Month
Statements

Ticket
Pricing Exception
Packages Tables YES Customer Stmt
Ticket Customer Accepts NO
Pre-Built (actual) To Delivery
Customer Stmt
Customer Stmt
Pre-Built (phantom) Accounting

Selling Tools Out of Stock Accounts Receivable

Features Substitution

E-Billing
Messages Hot Items
Hot Items Special Order
Best Sellers Alternate Locations
Notes Open Order
Drop Ship Customer History Backorder
Standard Orders

E-Payments
Installation WO's
Blanket Orders

Receiving Operation
(Wholesale Division)

Catalog, Phone, Internet Sales Merchandise Invoice

Received Uncosted File

Customers
Delivery Ticket Marked Pick
Ticket Expense Invoice
Three-way
Match

Picking Ticket
Order Fulfillment

PickTicket
MIT^%T$$
Accounts Payable File

Scheduling

From POS
Disbursement File
Delivery Ticket sent to
Delivery Department
DeliveryProcess
Chapter 12 Accounts Payable
69
The Value System

Porter (value system)





interorganizational information sy
stems (IOSs)
Internet-based EDI systems strategic benefits
(PO to Receiving)
(Automated Replenishment)

Chapter 12 70
Sustaining a Strategic Information
System (SIS)
Strategic information systems







(inward
systems)

value chain

Chapter 12 71