Chapter 1
1. Explain information technology’s role in business and describe how you measure success?
Technology has enhanced the workings of businesses all around the world. It works with efficiency of how the company runs so as they are able to reduce costs, improving productivity and generating growth within the company. The Growths of technology has not only improved efficiency but has improved effectiveness of things such as communication. Within companies the use of wireless Internet connections, smart phones and instant messaging communication has become simpler and the ability for work to be taken out of the office and begin before they arrive at the office.
2. List and describe each of the forces in Porter’s Five Forces Model?
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| Figure 1: Porters 5 forces model. |
Buyer power: Refers to the ability to impact the price that a product will cost. Loyalty programs are one way in which businesses can reduce the power the buyers have. They do this so as to encourage interaction between the buyer and the company by rewarding their ‘loyalty’ to the company.
Supplier power: Supplier power is highest when there is one main supplier has total power over a particular industry. For example when the supplier raises the price on a product the final price is generally risen so as the smaller business makes a profit. This also means that the suppliers have power over how much buyers will spend if they want to purchase a product.
Threat of substitutes: Highest when there are many different aspects of a product or service and low when there are alternatives to choose from.
Threat of mobility: becomes more possible when it is easy for new companies and products to enter a market. Different aspects of a company are added to create difficulty for new business. For example a company entering a particular market must be able to supply the same or better products and additional advantages to successfully enter the market area.
Threat of mobility: becomes more possible when it is easy for new companies and products to enter a market. Different aspects of a company are added to create difficulty for new business. For example a company entering a particular market must be able to supply the same or better products and additional advantages to successfully enter the market area.
Rivalry among existing competitors: This is high when there is an area, which is largely competitive and low when the need or want a particular product is low.
3. Describe the relationship between business processes and value chains?
Business process: by definition is a set of activities, which accomplish a specific task, e.g. processing a customers order.
Value chains: This approach attempts to enable the “organization to provide unique value to its customers.” To create a value chain the company must assess their organization within a series of process and identifying which facet of their business is of best value to the success of the company.
Value chains tend to be more focused on how to better the company where the business process is how a specific task is taken out. The value chain is often aligned with porter’s five forces model.
4. Compare Porter’s three generic strategies?
Each of these generic strategies are used by businesses that are beginning to break through in a specific industry. The three things porter specifies are cost leadership, differentiation or focus strategies when formulating a business focus. Broad strategies focus on a large market segment while focused strategies on smaller ‘niche’ markets. Focus strategies also focus on either cost leadership of differentiation.
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Figure 2:Model of porters Generic stratagies! |
Cost leadership: attempting to be the lowest price on the market so as to make the highest profit from sales. This refers back to the value chain, but focuses on cost reduction so as to lower pricing of products. Though this may benefit the company’s incoming funds the focus on cost leadership can diminish other areas of the business.
Differentiation: differentiation is an analysis and focus on one company’s service level to customers in comparison with other competitors. This type of focus though is effective in creating more successful processing compared to other business but it may lead to extra costs placed on the business, for example advertising the differentiated product.
Focus strategies: porter identified focus as a ‘mediator’ between cost leadership and differentiation. This section of the model focuses on a particular niche’ of society and aims to produce products that that particular area wants or needs. The use of the other strategies enhances the advantages of the focus strategy.
Each strategies works on their own and would probably not work when put together though each focuses on different aspects of the business that is using the strategy.
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