Strategic Initiatives for Implementing Competitive Advantages.

STRATEGIC INITIATIVES

1. Organizations can undertake high-profile strategic initiatives including:

#Supply chain management (SCM)

#Customer relationship management (CRM)

#Business process reengineering (BPR)

#Enterprise resource planning (ERP)

SUPPLY CHAIN MANAGEMENT.

---> involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.

Four basic components of supply chain management include:

1.Supply chain strategy – strategy for managing all resources to meet customer demand

2.Supply chain partner – partners throughout the supply chain that deliver finished products,  raw materials, and services.

3. Supply chain operation – schedule for production activities

4. Supply chain logistics – product delivery process

Effective and efficient SCM systems can enable an organization to:

* Decrease the power of its buyers

* Increase its own supplier power

* Increase switching costs to reduce the threat of substitute products or services

* Create entry barriers thereby reducing the threat of new entrants

* Increase efficiencies while seeking a competitive advantage through cost leadership 

CUSTOMER RELATIONSHIP MANAGEMENT

# involves managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization's profitability

# CRM is not just technology, but a strategy, process, and business goal that an organization must embrace on an enterprisewide level

# CRM can enable an organization to:

* Identify types of customers

* Design individual customer marketing campaigns

* Treat each customer as an individual

* Understand customer buying behaviors

BUSINESS PROCESS REENGINEERING

•Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s order

•Business process reengineering (BPR) – the analysis and redesign of workflow within and between enterprises

–The purpose of BPR is to make all business processes best-in-class

•Reengineering the Corporation – book written by Michael Hammer and James Champy that recommends seven principles for BPR

ENTERPRISE RESORCE PLANNING

- integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprise wide information on all business operations.

- ERP systems collect data from across an organization and correlates the data generating an enterprisewide view

PAST YEAR QUESTION ANSWER.

OCTOBER 2013

1. 4 organizational information cultures are information-functional culture, information-sharing culture, information-inquiring culture and lastly information-discovery culture. For Information-Functional Culture the employees use the information as a means of exercising influence or power over others. As an example the sales manager does not want to share the information that they had with marketing department, As a results the marketing department need the sales manager's information each time a new sales strategies is developed. Next, Information-Sharing Culture the employees across departments trust each other to use information  especially about problem and failures in order to improve the company performance. Then, for Information-Inquiring Culture the employees across the departments search for information to better understand the future and align themselves with current trends and new direction. Lastly, Information-Discovery Culture the employees across the departments are open to new insights about crisis and radical changes and ways to create competitive advantages.

2a. 3 Porter Generic Strategies are cost leadership, differentiation and focused strategy. For cost leadership, becoming a low-cost producer in the industry allows the company to lower their prices to customers. Competitors with higher costs cannot afford to compete with the low-cost leader on price. Meanwhile in 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. For example Proton I-Care. Lastly, for the focused strategy, it will target to a niche market and concentrates on either cost leadership or differentiation.

MAR 2012

QUESTION 2.

5 forces in Porter's Five Forces Model are :

• Buyer Power 

           - High = When buyers have many choices from whom they want to buy
           - Low = When their choices are few.

In order to reduce buyer power and create a competitive advantage, an organization must make it to be more attractive in order to attract customer to buy from them and not from their competitors.
The best practices of IT- based is through the loyalty program in travel industry. As an example a reward on free airline tickets or hotel stays.

• Supplier Power 

          - High = when buyers have few choices of whom to buy from.
          - Low = when their choices are many.
The best practices IT to create a competitive advantage is :
     
          - B2B Marketplace  = a 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 = an auction format in which increasingly lower bids will win.

• Threat of Substitute Products and Services 

          -  High = when there are many alternatives to a product or services
          - Low = when there are a few alternatives from which to choose.
Usually, an organization would like to be on a market in which there are a few substitutes of their product or services. As an example is an electronic product that has the same function but they come from different brands. In order to overcome this obstacles is by implementing the switching cost that is a costs that can make the customer to feel reluctant to switch to another product or service. 
   

• Threat of New Entrants

          - High = when it is easy for new competitors to enter a market.
          - Low = when there are significant entry barrier ( a product or service feature that the customers have come to expect from an organization and it must be offered by entering organization in order to compete and survive ) to entering a market. As an example a new bank must offers online paying bills, account monitoring in order to compete with the other existing bank.

• Rivalry among existence competitors

          - High = when competition is fierce in a market
          - Low = when competition is more com placement
Existing competitors are not much of the threat as each of them has found their "niche". However , if there is changes in management,ownership, or " the rules of the game " it can give a serious threat to long term survival from existing firms.
          - Example : the airline industry faces serious threat from airlines operating in bankruptcy, who   do not pay on the debts while slashing fares against those healthy airlines who  do  pay on debt.

CHAPTER 2

IDENTIFYING COMPETITIVE ADVANTAGES.

What is competitive advantage?

#Is a Product or service that an organization’s customers place a greater value on than similar offerings from a competitor.

#Unfortunately, CA is temporary because competitors keep duplicate the strategy.

#Then, the company should start the new competitive advantage.

 The Five Forces Model

 

  

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

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.

COMPETITIVE ENVIRONMENT

bARGAINING pOWER oF cUSTOMER / 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) 

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.

 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.

THE COMPETITIVE ENVIRONMENT

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.

 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.

Porter's 3 generic strategies

•  Cost Leadership.

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

•  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. 

• Focused Strategy

          - Target  to a niche market.
          - Concentrates on either cost leadership or differentiation. 
 Relationship Between Business Process and Value Chain

•  Supply Chain -  A chain or series of processes that adds value to product and service for customer

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