STRATEGIC AND COMPETITIVE OPPORTUNITIES

1

• Chapter 2
• STRATEGIC AND COMPETITIVE OPPORTUNITIES
• Using IT for Competitive Advantage

2
Introduction

• Competitive advantage a company provides a
  product or service in a way that customers value
  more than what the competition is able to do.
• Application architect - information technology
  professional who can design creative
  technology-based business solutions.

3
Competitive Advantage ExamplesFederal Express

• FedEx lets you access information about your
  packages through your Internet connection and Web
  browser.
• Temporary advantage - whatever you do, sooner or
  later the competition duplicates what youve
  done.
• First mover - the company who is first to market
  with a new IT-based product or service.
• Advantages and Disadvantages?

4
Competitive Advantage ExamplesCharles Schwab

• Schwab was a first mover in offering stock trades
  over the Internet, along with other online
  brokers such as ETrade.
• 3,000,000 online customers manage more than
  350 billion in assets and trade more than 11
  billion in securities over www.schwab.com each
  week.
• Schwabs willingness to embrace the Internet
  early has made Schwab the largest online broker.

5
Competitive Advantage ExamplesDell Computer

• Dell computer has a direct sell model that gives
  the company a huge advantage over any competitor.
• Traditional model build/wholesaler/distributor/r
  etailer/customer
• Distribution chain - the path followed from the
  originator of a product or service to the end
  consumer.
• Alliance partner (Information partner) - a
  company you do business with on a regular basis
  in a cooperative fashion, usually facilitated by
  IT systems.
• Advantages Disadvantages? buy, hold, and sell
  vs. sell, source, and ship

6
Competitive Advantage Examples - Dell Computer
7
Developing A Strategy For The Internet Age

• Professor Michael Porter leading authority on
  competitive strategy and the competitiveness and
  economic development of nations, states, and
  regions
• Porters three frameworks for coming up with
  ideas on how IT can be used to create competitive
  advantage for organizations
• The Five Forces model
• The Three Generic Strategies
• The Value Chain

8
Developing A Strategy For The Internet AgeThe
Five Forces Model
Banks ATMs Online Transactions
Retail Auto Buyers have same info as dealers
Hotels Loyalty Program
CPA Tax software
9
Developing A Strategy For The Internet AgeThe
Three Generic Strategies

• Three generic strategies
• Cost leadership
• Differentiation
• Focused strategy

10
Developing A Strategy For The Internet AgeThe
Three Generic Strategies
Nordstrom
Wal-Mart
Walgreens
Dell
11
Developing A Strategy For The Internet AgeThe
Value Chain

• Business process - a standardized set of
  activities that accomplishes a specific task,
  such as processing a customers order.
• Value chain - views the organization as a chain
  or series of processes, each of which adds
  value to the product or service for the customer.

12
Developing A Strategy For The Internet AgeThe
Value Chain
13
Even Nations Can Gain Competitive Advantage with
Information Technology

• Singapore small, island nation with few natural
  resources
• Future People IT Trained a cadre of IT
  workers to focus on becoming the intelligent
  island
• Became renowned for the way it used IT to speed
  up the flow of goods through its port facilities
• Singapore will continue to reinvent itself and
  add value to businesses here as it develops into
  a vibrant and robust knowledge-driven global
  economy.

14
Developing A Strategy For The Internet
AgeLooking Beyond The Four Walls Of The Company

• Just-in-time - an approach that produces or
  delivers a product or service just at the time
  the customer wants it.
• Supply chain - consists of the paths reaching out
  to all of a companys suppliers of parts and
  services.
• Collaborative planning, forecasting, and
  replenishment (CPFR) - a concept that encourages
  and facilitates collaborative processes between
  members of a supply chain.

15
Key E-Commerce StrategiesDisintermediation

• Disintermediation using the Internet as a
  delivery vehicle, intermediate players in a
  distribution channel can be bypassed.