TUTORIAL CHAPTER 2

True/False:

1. A competitive advantage is typically temporary, unless its a first-mover advantage. (True)

2. An entry barrier is typically used to influence the threat of new entrants. (True)

3. Switching cost are typically used to influence the threat of substitute products or services. (True)

4. The Five Forces Model helps to determine the relative attractiveness of an industry. (True)

5. Organizations can add value by offering lower prices or by competing in a distinctive way. (False)

6. An entry barrier is typically used to influence the rivalry among existing competitors. (False)

7. Competitive advantage occurs when an organization can significantly impact its market share by

    being first to market with an advantage. (True)

8. Buyer power, supplier power, threat of products or services, threat of new entrants and rivalry   

    among existing competitors are all included in Porter's Five Forces Model. (True)

9. Switching costs are typically used to influence the threat of substitute products or services. (True)

Long Essay

1. Describe three (3) Porter Generic Strategies. Support your answer with examples. (12 marks)

Answer:

The three Porter Generic Strategies are Cost Leadership, Differentiation and Focused Strategy. Cost Leadership. Have broad market and narrow market. Cost leadership is 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. Next, differentiation is create competitive advantage by distinguishing their products on one more features important to their customers. Unique features or benefits may justify price differences or stimulate demand. Example i-care by Proton. Lastly, focused strategy, target to a niche market , concentrates on either cost leadership or differentiation.

2. Porter's Five Forces Model is a one of common tools used in industry to analyze and develop competitive advantages. List and describe each of the five (5) forces in Porter's Five Forces Model (20 marks)

Answer: 

There are five forces in Porter's Five Forces which is Buyer power, Supplier power, Threat of substitute products and services, Threat of new entrants and Rivalry among existence competitors. Buyer power is high when buyers have many choices of whom to buy from and low when their choices are few. Way to reduce buyer power is an organization must make it more attractive to buy from the company not from the competitors. Next, supplier power is  high when buyers have few choices of whom to buy from and low when their choices are many. Business to business (B2B) an internet based services that brings together many buyers and sellers. Two types of business to business private exchange is a single buyer post its needs and then opens the bidding to any supplier who could care to bid. Reverse auction, price is low. Threats of substitute products or services is high when there are many alternatives to a product or services and low when there are few alternatives from which to choose is switching cost. In addition, threat of new entrants is high when it is easy for new competitors to enter a market and low when there are significant entry barriers to entering market. Lastly, rivalry among existing competitors, high when competition is fierce in a market and low when competition is more complacent.

3. Michael Porter's Five Forces Model is one of the tools used by the organization to analyze and develop competitive advantages. Explain how information technology can develop a competitive advantage for each force in Five Forces Model. (20 marks)

Answer:

Firstly , buyer power , by using information technology , the buyer can seek and search optionally depending on their need and wants . They will have a lot of scope to be search and decide . Secondly , supplier poiwer , the supplier can use the IT as one of their source to promote and attract people . All supplier will do the same and the best wins and this will cause a lot of competitive advantages . Thirdly , threat of substitute products and services . When there are a lot of subtitute products and services , the competitive advantage will occur because of the different brand but same function . Next , threat of new entrants . normally this type of forces model are easy for new competitors to enter a market . The IT will help to promote the new entrants and it will be much easier because people need their product or service . Lastly , rivalry among existence competitors . It is wal-mart and its suppliers using IT enabled system for comunication and track product at aisles by effective tagging system . All company will compete to get names in market . 

CHAPTER 2 - IDENTIFYING COMPETITIVE ADVANTAGE

Hello guys , i'm back =) good to see you all again . Okay so today , i will talk about a chapter 2 ' identifying competitive advantage ' .

First of all , we must know the meaning of competitive advantage , what is competitive advantage ? A product or service that an organization’s customers place a greater value on than similar offerings from a competitor or in a simple way we can say that the benefit of a product or service that can wins customer attraction in order to fullfill their needy . This competitive advantage are really good in business and the company will keep changing their business strategy to gain customer . They will keep duplicate the strategy and then make a new one .

Michael Porter’s Five Forces Model is useful tool to aid organization in challenging decision whether to join a new industry or industry segment .

Professor Michael Porter

1. Buyer Power

High – when buyers have many choices of whom to buy.

Low – when their choices are few.

To reduce buyer power (and create competitive advantage), an organization must make it more attractive to buy from the company not from the competitors.

Best practices of IT-based:

-Loyalty program in travel industry (e.g. rewards on free airline tickets or hotel stays)

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. Supplier power is the converse of buyer power. 

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

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 market.

-Entry barriers is a product or service feature that customers have come to expect from organizations  and must be offered by entering organization to compete and survive.

Best practices of IT:

-E.g. new bank must offers online paying bills, acc monitoring to compete.

5. Rivalry among existence competitors

High – when competition is fierce in a market

Low – when competition is more complacent

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.

The Three 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.

-Example: i-care by Proton

3. Focused Strategy

-Target to a niche market

-Concentrates on either cost leadership or differentiation.

The Value Chains - Targeting Business Processes

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

A chain or series of processes that adds value to product & service for customer . 

That's all for today , i will update again soon . =)  

CHAPTER 1 - Business Driven Technology

     Basically , the chapter one is about the relationships among people , information and technology . Sounds weird , but this is what we will learn . We will learn how to identify four different departments in a typical business and explain how technology helps them to work together .
This subject will also teach us how to compare the four different types of organizational information cultures and decide which culture applies to your school . 

    So,as we know information technology (IT) is everywhere in business . We can't run from it and that's why we need to understand it. All level in the company involved in the IT and a few impacts of it on the business operation is reduce costs , improve customer satisfaction and generate growth . IT is an important enabler of business success and innovation or in the simple words , IT is a ' key' for business to success nowadays . 

Customer service have the highest advantage from information technology and the highest percentage among all. This is because customer services need to solve customer's problems, wants and needs. Hence, with the help of IT, customers problems can be solved easily and effectively.

INFORMATION TECHNOLOGY BASICS

Information technology (IT) - A field concerned with the use of technology in managing and processing information. Information technology is an important enabler of business success and  innovation.


Management information system (MIS) – A 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.

When beginning to learn about information technology it is important to understand

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

INFORMATION

·         Data - raw facts that describe the characteristics of an event
·         Information - data converted into a meaningful and useful context.
·         Business intelligence - applications and technologies that are used to support decision making             efforts.

IT Resources

·         People use

·         Information technology to work with

·         Information

IT Cultures

Organizational information cultures include:

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 manager’s input each time a new sales strategy is developed.

Information-Sharing Culture: Employees across departments trust each other to use information (especially about problems and failures) to improve performance.

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 insight about crisis and radical changes and seek ways to create competitive advantages. 

Bismillahirrahmanirrahim ...

     Assalamualaikum , My name is Muhammad Akbar Bin Ariffin . People normally call me 'akbar' , 'gemok' or 'handsome' . Same person with different name . :) This is my first blog and i hope you guys will give support , attention and comments  to my next writing . That's all for now .