STRATEGIC AND COMPETITIVE

OPPORTUNITIES
Using IT for Competitive Advantage

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Overview
Competitive Advantage Examples
Developing A Strategy For The
Internet Age
Key E-Commerce Strategies
The U.S. Airline Industry
Summing It Up

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Opening Case Study

Zara Fashion Fast Forward
Zara sets itself apart with its
computerized network that ties
stores to design shops and companyowned factories in real time.
How can technology be used to
respond quickly to shifts in consumer
tastes?
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Introduction
Competitive advantage a company
provides a product or service in a way that
customers value more than what the
competition is able to do.
Application architect - information
technology professional who can design
creative technology-based business
solutions.
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Competitive Advantage
Examples
Federal Express
FedEx lets you access information about
your packages through your Internet
connection and Web browser.
First mover - the company who is first to
market with a new IT-based product or
service.
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Competitive Advantage Examples

Federal Express

Enter your tracking

number here.

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Competitive Advantage Examples

Charles Schwab

Charles was a first mover in offering

stock trades over the Internet, along

with other online brokers such as
E*Trade.
Charles Schwabs willingness to hold

the Internet early has made Schwab

the largest online dealer.
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Competitive Advantage Examples

Dell Computer
Dell computer has a direct sell model that gives
the company a huge advantage over any
competitor.
Distribution chain - the path followed from the
originator of a product or service to the end
consumer.
Association partner - a company you do
business with on a regular basis in a cooperative
fashion, usually facilitated by IT systems.
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Competitive Advantage Examples

Dell Computer

Information
partnership - lets
two or more
companies
cooperate by
integrating their IT
systems.
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On Your Own

Looking for
Opportunities
Close to Home

Competitive Advantage
Examples - Dell Computer

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Competitive Advantage Examples

Cisco Systems

Cisco Systems - a leader in utilizing the

direct sell model over the Internet.
Business to Business (B2B) companies whose customers are primarily
other businesses.
Business to Consumer (B2C)
-companies whose customers are primarily
2-11individuals.

Developing A Strategy For

The Internet Age

Porters three frameworks are:

1. The Five Forces model
2. The Three Generic Strategies
3. The Value Chain

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Developing A Strategy For The Internet

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The Five Forces Model

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Developing A Strategy For The Internet

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The Five Forces Model

Five forces model - determines the relative

attractiveness of an industry.
Buyer power - high when buyers have many
choices of whom to buy from, and low when the
choices are few.
Supplier power - high when buyers have few
choices of whom to buy from, and low when there
are many choices.
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Developing A Strategy For The Internet

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The Five Forces Model

Threat of substitute products or services low if there are very few alternatives to using the
product or service.
Switching costs - costs that can make customers
unwilling to switch to another product or service.

Threat of new entrants - high when it is easy

for competitors to enter the market.
Challenge among existing competitors high
when the industry is less attractive.
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THREE STRATEGY
Porter identified 3
generic business
strategies for
beating the
competition
1. Overall cost
leadership
2. Differentiation
3. Focus

THREE STRATEGY
Focus - focusing on offering products or services to
a particular segment or buyer group, within a
segment of a product line, to a specific
geographic market,

Differentiation offering a product

or service that is
perceived as
being unique in
the marketplace

Cost leadership offering the same or

better quality product
or service at a price
that is less than what
any of the competition
is able to do

Developing A Strategy For The Internet

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The Three Generic Strategies

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Developing A Strategy For The Internet

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The Three Generic Strategies

Three generic strategies

1. Cost leadership
2. Differentiation
3. Focused strategy

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Developing A Strategy For The Internet

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Using the Five Forces Model

Buyer power
Loyalty programs.

Supplier power
B2B marketplace - an Internet-based service
which brings together many buyers and sellers.

Threat of substitute products or services

IT-based alternatives.
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Developing A Strategy For The Internet

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Using the Five Forces Model

Threat of new entrants

Entry barrier - a product or service feature
that customers have come to expect from
companies in a particular industry.

Rivalry( challenge ) among existing

competitors
Using IT systems to be more efficient.
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Developing A Strategy For The Internet Age

Bridging the Gap Between Business People and Technical
People

Project team - a team designed to

accomplish specific one-time goals,
which is disbanded once the project is
complete.
Form a team that draws the best
knowledge of the business problem
from the business people and the best
technical solution from the technology
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Developing A Strategy For The Internet

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Viewing the Business Problem from Another Perspective

Take the point of view of a customer

of the company.
Design the information system so it
enhances the customers experience.
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Developing A Strategy For The Internet

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Using the Three Generic Strategies

Use the three generic strategies to

change the basis of competition.
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

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Developing a Creative Design

Creative design solves the business

problem in a new and
highly effective way
rather than the same
way others have done
it.
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Team Work

Finding the Best

IT Strategy
For Your Industry

Developing A Strategy For The Internet

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The Value Chain

Business process - a standardized

set of activities that accomplishes a
specific task, such as processing a
customers 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

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The Value Chain

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Developing A Strategy For The Internet

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The Value Chain

Talbots used the value chain to:

Plan for a better way of meeting
customer demands.
Identifying processes that add value.
Identifying processes that reduce value.

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Developing A Strategy For The Internet

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The Value Chain

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Developing A Strategy For The Internet

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The Value Chain

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Developing A Strategy For The Internet

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Looking Beyond The Four Walls Of The Company (CPFR)

Just-in-time - an approach that produces or delivers a

product or service just at the time the customer wants it.
Supply chain - consists of the paths reaching out to all of a
companys suppliers of parts and services.
Collaborative planning, forecasting, and replacement
(CPFR) - a concept that encourages and facilitates
collaborative processes between members of a supply
chain.
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