Chapter 3, Problem 1RQ

Explanation of Solution

Porter’s competitive forces:

• The model is used to provide a general view about the firms,the competitors of the frame and the environment of the firm.
• The firm’s general business environment is being brought out using the porter’s model.
• The model contains five competitive forces that are used in shaping the fate of the firm and they are:
  • Traditional competitors
    • There is chance where there may be an increase in the number of competitors.
  • Entry of the new marketers.
    • Differentiation in the product
  • Substitute of the products and services.
    • Differentiation in the product
  • Customers
    • Improved concentration of the buyers in relative with the industry level concentration.
  • Suppliers.
    • The bargaining power that gets raised.

Explanation of Solution

Four competitive strategies that is enabled by the information system:

The below are the four competitive strategies that are enabled using the information technology system and they are:

• Low cost leadership
  • The operational cost is lowered by also providing the lowest price.
• Differentiation in the product
  • The process of enabling new products and service for the convenience of the customer with the use of existing products and services.
• Focus of their position in the market place
  • Establishing a market focus and serving the market place with better features than the competitors.
• Customer and supplier relationship is being strengthened.
  • Establishing a strong relationship by providing a better bond with the suppliers and the customers.

Explanation of Solution

Support provided by the information system based on the competitive strategy:

The support that is provided by the information system for each of the competitive strategies is shown below:

• Low cost leadership:
  • The information system is used to improve the inventory management, supply management by creating a customer response system.
  • The best example for the system would be Walmart.
• Product differentiation:
  • The information system is used to create products and services that are being made personalized and customized for the precise use of the required customers based on the needs.
  • EBay, Google will be a good example for this system.
• Focus of their position in the market place:
  • The information system is used in obtaining an analysis of the data that is able to tune the sales and marketing techniques.
  • The patterns in which the customer buy the products is being watched and analyzed for obtaining a marketing campaigns even with small targeted markets.
  • Example of this usage will be Hilton hotels.
• Customer and supplier relationship is being strengthened:
  • The information system is used to provide a direct access to its buyer and suppliers which will provide a loyalty to the company with the increase of the switching cost.
  • Example is IBM and Amazon.com.

Explanation of Solution

Necessity of aligning the IT with the business objective is required for the use of the system:

• The main idea of using the IT strategy in a business is to guarantee whether the technology serves the needs of the business but not in the other way around.
• The business goals are being aligned with IT such that to make it more successful and making the business even profitable.
• The IT issues that arise cannot be ignored and the business people must take an active role in making the enterprise shaped up using the IT.
• The role of IT needs to be understood in the clear way on the basis of it working and measuring the impact that it creates with the revenues and profits it creates.

Explanation of Solution

Value chain model:

• The value chain model is used in highlighting the specific activities that are laid with the business.
• Using the value chain the best competitive strategies can be applied at its best and due to that the information system will likely considered having an impact that could be strategic.
• The model will help the firm in obtaining and identifying specific and critical leverage points and that can be utilized by information technology to improve their position among the competitors.
• The firm is viewed in the value chain model as sequence of basic activities that could improve the value of the products and service firm produces.
• The activities that are established by the mode are classified to be a primary activity or support activity.
  • Primary activities that are analyzed will be related to the production and distribution that is made direct with the services and product that is offered by the firm and this kind of activities will create a value to its customers.
  • The support enables the proper delivery of the primary activities and will also consider the infrastructure of the organization.
• The value chain of the firm is being linked up with suppliers, distributors and customers value chain.

Explanation of Solution

Identifying the opportunities of the value chain for information system:

• The information system is used at every stage of value chain in order to improve the operational efficiency, lowering the cost, promoting the profit margins and establishing a stronger relationship with the customers and with the suppliers.
• The activities that provide added value are being examined with the use of information system based on the activities that are being performed at every stage of the value chain.
• The information system are helpful in improving the relationship that is established with the customer and with supplier even they are present out of the value chain but may belong to the value chain that is extended.
• The benchmarks of the business organization can be tracked using the information system and it made by identifying the best business practices that are laid with the industries.
• An organization is capable of devising a candidate application for the information system by making analysis at various stages that are present in the value chain.

Explanation of Solution

Value web and its relation with the value chain:

• An independent collection of firms that utilizes the information technology for coordination the value chain for producing product and services in a collective form is called as value web.
• The value web is considered to be more customer driven and seems to be operated in the less linear order that that of the traditional value chain.
• The value web is system that is networked which can be used in the synchronization of the business process that is established with the customers, suppliers and with partners of trade that is laid with various companies of a particular industry or with similar industries.

Explanation of Solution

Change that is made by the internet on the competitive forces and competitive advantages:

• The internet has degrades some of the industries and become s threat to other business process.
• The internet paved a way for the new marketers and became the basic for most of the new businesses.
• With the help of internet may new products and services, new business model and new industries to develop in the faster rate.
• The internet has made the competitive edge between the industries become more intense.
• The technology of the internet is applied to all there is high possibility of competitors compete with their price and possibility of new entries entering into the market.
• The internet technology will improve the bargaining power of the customer and the customers can switch between the products when low cost price is provided in the web by other competitors.

Explanation of Solution

Information system promoting the interactions and core competencies that will improve the competitive advantage:

• collection of business which organized in the form of strategic business units is called as large corporation.
• The overall performance of the business units can be improved with the use of information system which will promote the interaction and core competencies that are related to the business process.
• The synergy is process where the output that is produced by one unit will be used as the input to the other units.
  • It is a process where two organizations can be grouped in markets and expertise and the relationship will be helpful to generate profit with the lower cost of operation.
• The information system is used to bring the operations that are being held with dissimilar business units being considered to act as a single unit.
• The core competence is considered to be an activity which makes the firm to be a world class leader.
• The core competency depends on the knowledge that is being gained through experience through many years and research organization that is to be at first class.
• The competency can be improved by sharing the knowledge across different business units and also when an information system promotes the sharing the knowledge.

Explanation of Solution

Business benefits of using the network economics:

The below are the benefits of using the network economics:

• The marginal cost of adding a new particular participant is considered to be zero and the gain obtained through this margin is considered to be high.
• When the number of participants is developed the value that is obtained with the number of participants will also be greater because the interaction will be made with more number of peoples.
• The availability of the internet and network technology encouraged the firm in taking advantage with the plan of creating the network among each other and creating a new network.
• The business models are being facilitated with the use of information system where large number of network users will obtain an advantage through the network economics.
• The firms uses the internet sites for the building the communities of users where it will be helpful in building a loyalty between the customers.
  • They are also used in building unique bond between the customers, suppliers and with the partners of the business.

Explanation of Solution

Virtual company:

When a network is used to link peoples, properties and innovation that are used to be associated with other companies in order of creating and distributing the service and products without getting limited with the boundaries of the organization or the boundaries of the physical location is called as virtual company.

Benefits of pursuing the virtual memory strategy:

• The company is capable of utilizing the capabilities that are laid with the other organization without being in bond in physical to the company.
• It is considered to be comparatively cheaper where in the products, services and capabilities can be acquired from an external vendor.
• They provide chance of being exploited with new market opportunities at easier range.

Explanation of Solution

Business ecosystem:

• When multiple collections of industries participate in sets in order to deliver services or products thus creating values to its customers is called as business ecosystem.
• It is considered to have an interdependent network of suppliers, distributors, organization that outsources, firms that provide transportation service along with the manufacturers of the technology.

Competitive advantage of business ecosystem:

The competitive advantage of the business ecosystem can be obtained by redefining the business process for becoming a key player in the business ecosystem that is platform based where multiple industries work combined to deliver value to its customers.

Explanation of Solution

Disruptive technologies create a strategic opportunity:

• The accessibility, storage and information distribution and knowledge about the organization has increased with the evolution of the internet.
• The information that is required is available whenever required and any data can be obtained at any point of time.
• The information and storage of knowledge has increased its scope, range and depth with the increased usage of the internet.
• The cost is lowered but the quality of the information and knowledge distribution is improved.
• The transaction cost and the cost of acquiring the information is lowered.
• The internet has helped the organization to communicate in a better way with the lower cost and quicker way between the higher level management and also with lower level managements.
• The disruptive technology created a technological change and impacted to create different effects with different companies and it is purely based on the firm will handle the change.
  • Firms try to adopt and create a new disruption and succeed along the way.
  • Firm try to learn in detail about the disruption and will in the process of adopting it.
  • Some of the companies try to eliminate the change that is not required and will process in the order of the way it processes.