CHAPTER 03
Strategic Initiatives for
Implementing Competitive
Advantages
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
LEARNING OUTCOMES
1. Explain supply chain management and its role
in business.
2. Explain customer relationship management
systems and how they can help organizations
understand their customers.
3. Summarize the importance of enterprise
resource planning systems.
4. Identify how an organization can use business
process reengineering to improve its business.
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STRATEGIC INITIATIVES
• Organizations can undertake high-profile
strategic initiatives including:
–
–
–
–
Supply chain management (SCM)
Customer relationship management (CRM)
Business process reengineering (BPR)
Enterprise resource planning (ERP)
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SUPPLY CHAIN MANAGEMENT
• 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
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SUPPLY CHAIN MANAGEMENT
The 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
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SUPPLY CHAIN MANAGEMENT
• 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
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CUSTOMER RELATIONSHIP
MANAGEMENT
• 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
• Many organizations, such as Charles Schwab
and Kaiser Permanente, have obtained great
success through the implementation of CRM
systems
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CUSTOMER RELATIONSHIP
MANAGEMENT
• CRM is not just technology, but a strategy,
process, and business goal that an organization
must embrace on an enterprise-wide 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
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CUSTOMER RELATIONSHIP
MANAGEMENT
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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
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BUSINESS PROCESS REENGINEERING
• Reengineering the
Corporation—Book
written by Michael
Hammer and James
Champy that
recommends seven
principles for BPR
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FINDING OPPORTUNITY USING BPR
• Types of
change an
organization
can achieve,
along with the
magnitudes of
change and the
potential
business
benefit
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PITFALLS OF BPR
• One hazard of BPR is that the company
becomes so wrapped up in fighting its
own issues that it fails to keep up with its
competitors in offering new products or
services
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ENTERPRISE RESOURCE PLANNING
• 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
• Keyword in ERP is “enterprise”
• ERP systems collect data from
across an organization and
correlates the data generating
an enterprise-wide view
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ENTEPRISE RESOUCE PLANNING
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