MGT 300 Chapter 2

Chapter 2 Identifying Competitive Advantage

• What is competitive advantage ? 

* It is a product or service that an organization’s customers place a greater value on than similar offerings from a competitor.
* Competitive advantage is temporary because competitors keep duplicate the strategy.
* then, company should start the new competitive advantage.

Michael Porter's Five Forces

* useful tool to aid organization in challenging decision whether to join a new industry or industry segment.

1. Buyer Power.

• HIGH - when buyers have many choices of whom to buy
• LOW 😄 - when their choices are few
• to reduce buyer power, an organization must make it more attractive to buy from the company not from the competitors.
• BEST practices of IT-based

Bargaining Power of Customers./Buyer power 

• Customers can grow large and powerful as a result of their market share.  
• Many choices of whom to buy from 
• Low when comes to limited items
• E.g.: used loyalty programs (jusco card, tesco card, - being a members to get the discount) 

2. Supplier Power

• HIGH 😄 - when buyers have few choices of whom to buy from
• LOW - when their choices are many
• BEST practices of IT to create competitive advantage
• E.g. B2B marketplace – private exchange allow a single buyer to posts it needs and then open the bidding to any supplier who  would care to bid. Reverse auction is an auction format in which increasingly lower bids. 

An organization within the Supply chain

3. Threat of Substitute products & Services

• HIGH - when there are many alternatives to a product or service
• LOW 😄 - when there are few alternatives from which to choose
• Ideally, an organization would like to be on a market in which there are few substitutes of their product or services. 
• BEST practices of IT 
• E.g. Electronic product -same function different brands

Threat of Substitutes.  

• To the extent that customers can use different products to fulfill the same need, the threat of substitutes exists.
• E.g: electronic product -same function different brands
• Switching cost- costs can make customer reluctant to switch to another product or service

4. Threat of new entrants

• HIGH - when it is easy for new competitors to enter a market
• LOW 😄 - when there are significant entry barriers to entering a marke
• Best Practices of IT
• Wal-mart and its suppliers using IT-enabled system for communication and track product at aisles by effective tagging system. 
• Reduce cost by using effective supply chain.

Rivalry Among Existing Firms.  

• Existing competitors are not much of the threat:  typically each firm has found its "niche".  
• However, changes in management, ownership, or "the rules of the game" can give rise to serious threats to long term survival from existing firms .
• E.g: the airline industry faces serious threats from airlines operating in bankruptcy, who do not pay on the debts while slashing fares against those healthy airlines who do pay on debt. (MAS & AIR ASIA)

Porter's 3 generics strategies

1. Cost Leadership

• Becoming a low-cost producer in the industry allows the company to lower prices to customers.  
• Competitors with higher costs cannot afford to compete with the low-cost leader on price.

2. Differentiation

• Create competitive advantage by distinguishing their products on one or more features important to their customers.  
• Unique features or benefits may justify price differences and/or stimulate demand.
• Ex: i-care by Proton 

3. Focused Strategy

• Target to a niche market
• Concentrates on either cost leadership or differentiation.

Cost strategy

Competitive Scope		Low cost	High cost
	Broad Market	Cost leadership	Differentiation
	Narrow Market	Focused Strategy

Example 3 Generics Strategy

Relationship between business process and value chain

• Supply Chain - a chain or series of processes that adds value to product & service for customer.

• Add value to its products and services that support a profit margin for the firm

Supply chain diagram

THE END CHAPTER 2 😃

MGT 300 Chapter 1

Chapter 1 Business Driven Technology

Information technology is everywhere in business ~
Business function = Department

Customer service department receiving the greatest benefits from IT.

IT project goals is to reduce costs and to improve productivity.












~Information technology is a field concerned with the use of technology in managing and processing information

~important enabler of business success and innovation.

~Management information systems (MIS) is general name for the business function and academic discipline covering the application of people, technologies, and procedures  to solve business problems.

~MIS is a business function, similar to Accounting, Finance, Operations, and Human Resources.

~Beginning to learn about information technology it is important to understand :

• Data, information, and business intelligence IT resources
• IT cultures

Differences between Data, Information and Business Intelligent

 ~What is Data ? Data is a raw facts that describe characteristic of event

 ~What is Information ? Information is when a data converted into a meaningful and useful context

 ~What is Business Intelligent ? Business Intelligent is an applications and technologies that are used to support decision-making efforts

Example of Data, Information and Business Intelligent

Data in Excel Spreadsheet

Data turned into Information

Information turned into Business Intelligent

IT Resources

IT Cultures

• Information-Functional Culture - Employees use information as a means of exercising influence or power over others. For example, a manager in sales refuses to share information with marketing. This causes marketing to need the sales manager’s input each time a new sales strategy is developed.
• Information-Inquiring Culture - Employees across departments search for information to better understand the future and align themselves with current trends and new directions.
• Information-Discovery Culture - Employees across departments are open to new insights about crisis and radical changes and seek ways to create competitive advantages.
• Information-Sharing Culture  - Employees across departments trust each other to use information (especially about problems and failures) to improve performance.

THE END OF CHAPTER 1 😁