Chapter 2
STRATEGIC AND COMPETITIVE
OPPORTUNITIES
Using IT for Competitive
Advantage
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What’s up this week?
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Read chapters 2 and XLM B for quiz 2 (posted
on Tuesday)
Take second quiz
Read chapter 4 and XLM … for quiz 3
Take third quiz (posted on Thurs)
Install SAM/TOM
Try to make a chat session (see calendar for
schedule of times)
Get next Excel assignment for over the weekend
Chapter Overview
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Competitive Advantage Examples
Developing A Strategy For The Internet
Age
Key E-Commerce Strategies
The U.S. Airline Industry
Opening Case Study
Zara – Fashion Fast Forward
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Zara sets itself apart with its computerized
network that ties stores to design shops
and company-owned factories in real time.
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How can technology be used to respond
quickly to shifts in consumer tastes?
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Introduction
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Competitive advantage – a company provides
a product or service in a way that customers
value more than what the competition is able to
do.
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Application architect - information technology
professional who can design creative
technology-based business solutions.
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Competitive Advantage Examples
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Temporary advantage - whatever you do, sooner or
later the competition duplicates what you’ve done.
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First mover - the company who is first to market with
a new IT-based product or service.
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Distribution chain - the path followed from the
originator of a product or service to the consumer.
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Alliance partner - a company you do business with
on a regular basis in a cooperative fashion.
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Competitive Advantage
Examples
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Information partnership - lets two or more
companies cooperate by integrating their IT
systems.
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Business to Business (B2B) - companies
whose customers are primarily other
businesses.
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Business to Consumer (B2C) -companies
whose customers are primarily individuals.
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Competitive Advantage
Examples
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Federal Express
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Charles Schwab
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Direct sell model
Cisco Systems
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Stock trades over the Internet
Dell Computer
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Access information over the Internet
On Your Own
Direct sell model over the Internet
Looking for
Opportunities
Close to Home
Developing A Strategy For
The Internet Age
The Five Forces Model
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Developing A Strategy For
The Internet Age
The Five Forces Model
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Five forces model - determines the relative
attractiveness of an industry.
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Buyer power
Supplier power
Threat of substitute products or services
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Switching costs - costs that can make customers reluctant
to switch to another product or service.
Threat of new entrants
Rivalry among existing competitors
Developing A Strategy For
The Internet Age
The Three Generic Strategies
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Three generic
strategies
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Cost leadership
Differentiation
Focused strategy
Developing A Strategy For
The Internet Age
Using the Five Forces Model
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Buyer power
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Supplier power
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Loyalty programs.
B2B marketplace - an Internet-based service which
brings together many buyers and sellers.
Threat of substitute products or services
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IT-based alternatives.
Developing A Strategy For
The Internet Age
Using the Five Forces Model
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Threat of new entrants
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Entry barrier - a product or service feature
that customers have come to expect from
companies in a particular industry.
Rivalry among existing competitors
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Using IT systems to be more efficient.
Developing A Strategy For
The Internet Age
Bridging the Gap Between Business
People and Technical People
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Project team - a team designed to accomplish
specific one-time goals which is disbanded once
the project is complete.
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Developing A Strategy For
The Internet Age
Using the Three Generic Strategies
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Use the three generic strategies to change
the basis of competition.
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Amazon.com makes the buying
experience a pleasure by using
sophisticated software to personalize the
site for each individual.
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Developing A Strategy For
The Internet Age
Developing a Creative Design
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Creative design solves the business
problem in a new and
highly effective way
rather than the same way
others have done it.
Team Work
Finding the Best
IT Strategy
For Your Industry
(p. 83)
Developing A Strategy For
The Internet Age
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The Value Chain
Business process - a standardized set of
activities that accomplishes a specific task,
such as processing a customer’s order.
Value chain - views the organization as a
chain – or series – of processes, each of
which adds value to the product or service
for the customer.
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Developing A Strategy For
The Internet Age
The Value Chain
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Developing A Strategy For
The Internet Age
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The Value Chain
Talbott used the value chain to:
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Plan for a better way of meeting customer
demands.
Identifying processes that add value.
Identifying processes that reduce value.
Developing A Strategy For
The Internet Age
The Value Chain
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Developing A Strategy For
The Internet Age
The Value Chain
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Developing A Strategy For
The Internet Age
Looking Beyond The Four Walls Of The
Company
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Just-in-time - an approach that produces or delivers a
product or service just at the time the customer wants it.
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Supply chain - consists of the paths reaching out to all
of a company’s suppliers of parts and services.
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Collaborative planning, forecasting, and
replenishment (CPFR) - a concept that encourages and
facilitates collaborative processes between members of
a supply chain.
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Key E-Commerce Strategies
Mass Customization and Personalization
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Mass customization - a business gives its customers
the opportunity to tailor its product or service to the
customer’s specifications.
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Personalization - a Web site can know enough about
your likes and dislikes that it can fashion offers that are
more likely to appeal to you.
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Collaborative filtering - a method of placing you in an
affinity group of people with the same characteristics.
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Key E-Commerce Strategies
Disintermediation
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Disintermediation
– using the Internet
as a delivery
vehicle,
intermediate
players in a
distribution
channel can be
bypassed.
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Key E-Commerce Strategies
Global Reach
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Global reach - the ability to extend reach
to customers anywhere there is an Internet
connection, and at a much lower cost.
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The U.S. Airline Industry
Airline Reservation Systems
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The airlines really began using IT in a
significant way when American Airlines
and United Airlines introduced the first
airline reservations systems.
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SABRE
APPOLO
The U.S. Airline Industry
Frequent Flyer Programs
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Frequent flyer programs are a great example of
using IT to alter Porter’s five forces.
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They reduced buyer power by making it less likely a
traveler would choose another airline.
They reduced the threat of substitute products or
services by increasing switching costs.
They erected entry barriers by making a frequent flyer
program a practical necessity for any airline to
compete effectively.
The U.S. Airline Industry
Disintermediating the Travel Agent
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Expert surveys have
estimated that the
number of travel agents
in the U.S. will be
sharply reduced as a
result of
disintermediation.
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Team Work
Helping the Little
Guy Compete
(p. 93)
The U.S. Airline Industry
Utilizing Emerging Technologies
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Permission marketing - when you have
given a merchant your permission to send
you special offers.
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Summing It Up
On Your Own
Building on the
State of the Art
(p. 95)
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Closing Case Studies
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GM Tries to Lure Customers with OnStar
 Did the OnStar system give GM a competitive
advantage?
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Speedpass: Throw Away Your Plastic?
 Speedpass is an alternative to a credit card.
 How is Speedpass an example of a first mover?
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Hang in there!
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