Info 102 Midterm review (Chapter 2,3,10 and Excel)
Chapter 2- Identifying Competitive Advantages
Competitive advantage – a product or service that an organization’s customers place a greater
value on than similar offerings from a competitor
First-mover advantage – occurs when an organization can significantly impact its market share
by being first to market with a competitive advantage
Environmental scanning – the acquisition and analysis of events and trends in the environment
external to an organization
Porter’s 5 forces
Buyer power – assessed by analyzing the ability of buyers to directly impact the price they are
willing to pay for an item
Ways to reduce buyer power include…
Switching costs – costs that can make customers reluctant to switch to another product or
service
Loyalty program – rewards customers based on the amount of business they do with a
particular organization
Threat of substitute products or services – high when there are many alternatives to a product
or service and low when there are few alternatives from which to choose
Threat of new entrants – high when it is easy for new competitors to enter a market and low
when there are significant entry barriers to entering a market
Entry barrier – a product or service feature that customers have come to expect from
organizations in a particular industry and must be offered by an entering organization to
compete and survive
Rivalry among existing competitors – high when competition is fierce in a market and low when
competition is more complacent
Product differentiation – occurs when a company develops unique differences in its products
with the intent to influence demand
• Although competition is always more intense in some industries than in others, the overall
trend is toward increased competition in just about every industry
Three strategies for creating business focus…
Broad cost leadership: Broad strategies reach a large market segment
Broad differentiation: Focused strategies target a niche market
Focused strategy: Focused strategies concentrate on either cost leadership or differentiation
Business process – a standardized set of activities that accomplish a specific task, such as
processing a customer’s order
Value chain – views an organization as a series of processes, each of which adds value to the
product or service for each customer
Chapter 3- Strategic Initiatives for Implementing Competitive Advantages
Supply Chain Management (SCM) – involves the management of information flows between
and among stages in a supply chain to maximize total supply chain effectiveness and
profitability
Supply chain strategy – strategy for managing all resources to meet customer demand
Supply chain partner – partners throughout the supply chain that deliver finished products, raw
materials, and services.
Supply chain operation – schedule for production activities
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 (CRM) – involves managing all aspects of a customer’s
relationship with an organization to increase customer loyalty and retention and an
organization's profitability
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 – 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
Enterprise resource planning (ERP) – 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
Chapter 10- Extending the Organization Supply Chain Management
The supply chain has three main links:
1. Materials flow from suppliers and their “upstream” suppliers at all levels
2. Transformation of materials into semi finished and finished products through the
organization’s own production process
3. Distribution of products to customers and their “downstream” customers at all levels
Supply chain: Plan, Source, Make, Deliver, and Return
Planning and Control Supply Chain Integration Examples: Supply Chain Planning, Collaborative
Product Development, Integrated Demand and Supply Management.
Information Integration Examples: Inventory Visibility, Performance Metrics, Business
Intelligence
Business Process Integration Examples: Commerce websites, Private Exchanges
Supply chain visibility – the ability to view all areas up and down the supply chain
Bullwhip effect – occurs when distorted product demand information passes from one entity to
the next throughout the supply chain
Demand planning software – generates demand forecasts using statistical tools and forecasting
techniques
Supplier-> Manufacturer -> Distributor -> Retailer -> Customer
SCM industry best practices include:
1. Make the sale to suppliers
2. Wean employees off traditional business practices
3. Ensure the SCM system supports the organizational goals
4. Deploy in incremental phases and measure and communicate success
5. Be future oriented