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Competitive Advantage

Providing a product or service in a way that customers value more than what the

competition is able to do.

Chapter 2

STRATEGIC AND COMPETITIVE OPPORTUNITIES

Using IT for Competitive Advantage

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Its not the IT, it’s the People

It is not the information technology that gives a company the competitive advantage; it is

the way people use the technology that makes the difference.

In perspective (do not be fooled) …In perspective (do not be fooled) …

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Competitive Advantage Examples FedEx Schwabs Dell Cisco

Developing A Strategy For The Internet Age The five forces model The three generic strategies The value chain

Key E-Commerce Strategies Mass customization Disintermediation Global reach

The U.S. Airline Industry

… … Main Chapter Menu…Main Chapter Menu…

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Competitive Advantage Examples

Federal Express

FedEx Package Tracking Screen

23 159 867 632  www.canadapost.ca 

fedex message

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Competitive Advantage Examples

Charles Schwab

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Competitive Advantage Examples

Dell Computer

Sell ----source -----ship

Buy ---hold--- sell

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Competitive Advantage Examples

Dell Computer

Information partnership - lets two or more companies cooperate by integrating their IT systems.

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Competitive Advantage Examples

Cisco Systems

Cisco Systems - a leader in utilizing the direct sell model over the Internet.

Business to Business (B2B) - companies whose customers are primarily other businesses.

Business to Consumer (B2C) -companies whose customers are primarily individuals.

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Developing A Strategy For The Internet Age

Porter’s three frameworks are: The Five Forces model The Three Generic Strategies The Value Chain

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Developing A Strategy For The Internet AgeThe Five Forces Model

Video: porter

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Developing A Strategy For The Internet AgeUsing the Five Forces Model

Buyer power Giving choices to the buyer For example: hotel chains

Give points Other loyalty programs Cash the points for free hotel stays at one of their

resort hotels Such programs have the effect of increasing the

likelihood that a traveler will stay at a single chain.

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Developing A Strategy For The Internet AgeUsing the Five Forces Model

Supplier power The objective is to ___________

supplier power. B2B marketplace - an Internet-based

service which brings together many buyers and sellers.

Find a way to put more information into the buyer’s hands

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Developing A Strategy For The Internet AgeUsing the Five Forces Model

Threat of substitute products or services Consider the introduction of alternative IT

products such as income tax preparation software.

Consumers now use it. Accountant has less clients. Accountant livelihood is threatened.

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Developing A Strategy For The Internet AgeUsing the Five Forces Model

Threat of new entrants Entry barrier - a product or service feature that

customers have come to expect from companies in a particular industry.

A good example is what banks did: Introduce the bank card and as many ATMs around the

world as possible. Banking on the internet to pay bills, transfer funds and

print reports.

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Developing A Strategy For The Internet AgeUsing the Five Forces Model

Rivalry among existing competitors Using IT systems to be more ___________ and

compete more strongly with others. An example would be PRICE.

Computer systems can be bought from two different stores but one is cheaper than the other.

This is possible when one company uses IT in such a way to reduce its price.

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Developing A Strategy For The Internet AgeThe Three Generic Strategies

Figure 2.5

The Three Generic Strategiespage 52

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Developing A Strategy For The Internet AgeThe Value Chain

Once you understand how IT can help you develop business

strategy, you can ensure that IT supports all important business

___________ .

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Developing A Strategy For The Internet AgeThe Value Chain

The Components of a Value Chain

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Manufacturing Value Chain

Where has information system added value in the value chain?

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Key E-Commerce Strategies

Three capabilities made possible by the Internet are could help firms gain competitive advantage: Mass ___________ and ___________ ___________ Global reach

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Key E-Commerce StrategiesMass Customization and Personalization

___________ - a business gives its customers the opportunity to tailor its product or service to the customer’s specifications.

___________ - a Web site can know enough about your likes and dislikes that it can fashion offers that are more likely to appeal to you.

___________ - a method of placing you in an affinity group of people with the same characteristics.

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Key E-Commerce StrategiesDisintermediation

Disintermediation – using the Internet as a delivery vehicle, intermediate players in a distribution channel can

be bypassed.

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Key E-Commerce StrategiesGlobal Reach

___________ - the ability to extend a company’s reach to customers anywhere there is an Internet connection, and at a much lower cost.

___________ - when you have given a merchant your permission to send you special offers.

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The U.S. Airline IndustryAirline Reservation Systems

Reservations systems

Frequent flyer programs

Yield management systems

Disintermediating the Travel Agent

Show porter video

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Chips system from earlier

What kinds of information systems could be beneficial? Why?

What kinds of information products would be helpful? Why?