Professional Documents
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Competitive Strategy 1
Competitive Strategy 1
Jobless claims fell last week to the lowest level since Nov. 30
Reduced Increased
New
Technology Competition
Trade Standard of
Deficit Living
Figure 2-1
Possible Exam Questions
1. What are some ways that governments
serve as a catalyst and challenger to the
competitiveness of its companies?
Substitute
Products
and Services
TECHNOLOGY DEVELOPMENT
PROCUREMENT
PRIMARY ACTIVITIES
Adapted with the permission of the Free Press, an imprint of Simon & Schuster Inc.. from
COMPETITIVE ADVANTAGE: Creating and Sustaining Superior Performance by Michael Porter. Copyright Figure 3-6
© 1985 by Michael E. Porter.
Value Chain and IS
The Value Chain can be used to determine
where IS can strengthen the flow of primary
and support activities within an
organization.
Every segment of an organization needs IT
and IS to be competitive. So this model is
essential to visualizing the flow of activities
within segments through the use of IS and
IT.
Chapter 3
Michael E. Porter
Competitive Strategy
Porter Competitive Model
• Was not developed for IS use.
• Breaks an industry into logical parts,
analyzes them and puts them back together.
• Avoids viewing the industry too narrowly.
• Provides an understanding of the structure
of an industry’s business environment.
• Provides an understanding of competitive
threats into an industry.
Two Key Questions
Substitute
Products
and Services
Customer Strategy
Parents Young Time Leisure Senior
Teenagers Adults with Conscious Ethnic
with Adults Citizens Focus
Kids Social Focus Adults
Market Strategy
Local Regional National International
Company Structure Strategy
Suppliers Buyers
•Players Union •Die Hard 49er Fans
•City of SF Intra-Industry Rivalry •Die Hard Football Fans
•Transportation Services SBU: SF 49ers •Fair Weather Football Fans
•Food Service •Rivals: Oakland Raiders •Non-football Fans
•Sovereigns •Arena Football •Out of Town Visitors
•Police and Sanitation •S.F. 49ers •Opposing Team Fans
Service •Golden State Warriors •Age Group Segments
•Utilities •College Athletic Events •Groups Versus Individuals
•Stadium Employees •High School Athletic Events •Corporate Sponsors
•Movies, Stage Plays, etc. •Sports Writers and Media
•General Travel and Travel Packages Outlets
Layer 4
Application
Software
Layer 3
Operating
System
Software
Layer 2
Computing
Platforms
Layer 1
Basic
Circuitry
Figure 3-3
The New Computer Industry
Layer 5 Computer Super Mass Mail Value-add Direct
Distributors Clubs Sales Other
Dealers Stores Merchandisers Order Resellers
Force
Layer 4
Applications
•Spreadsheets Lotus 1-2-3 Microsoft Excel Quattro Pro
•Word Processors
•Database
Layer 3
Operating MS DOS Windows OS/2 Unix Apple
System
Novell Netware Banyan IBM Others
Software
Layer 2
Computer IBM Compaq Other Intel-Based PCs Apple Macs Other
Platforms
Layer 1
Microprocessor Intel X86 Motorola RISC Power PC
Figure 3-4
The Computer Industry
Layer 6 Direct
Sales and Computer Super Mass Mail Value-add
Sales
Internet
Distribution Stores Stores Merchandisers Order Resellers Direct
Force
Layer 5
Application
Desktop Suites Enterprise Resource Planning Supply Chain Management Other
Software
•Enterprise
•Specific Word Processors Spread Sheets Publishing Groupware Data Warehouse Other
Layer 4
Database & LAN, WAN and Internet Software Interfaces, Browsers and Search Engines
Networking
Hierarchical Database Relationship Database
Software
Layer 3
Operating
System Windows Unix Linux Apple
Software
Layer 2
Computer
Supercomputer Mainframe Midrange Workstation PC Handheld Device
Hardware
Platforms
Layer 1
Microprocessor Intel X86 Motorola RISC Power PC
Computer Industry
Hardware
Multiple processor
• Processors segments in the computer
• Input/Output Devices industry.
2000
1999
1998
Supercomputer
1997
Mainframe
Midrange
1996 Workstation
Personal Computer
1995
Source: Dataquest
1994
2002
PCs
2001
Total Hardware
Billions of $s
2000
1. Languages
2. Application Packages
3. Connectivity and Compatibility
4. Multimedia
5. Communication Device--Groupware
PC Industry Change
• Atari • Dell
• Cromemco • Gateway
• Fortune Systems • IBM
• Wicat Systems • HP (Compaq)
• Kaypro • NEC
• Morrow Designs
• Osborne Computer
• Victor Technologies
The Future Computer Industry
Basic Concept:
Partnering Marketing
Managing Distributing Operating
with Buying and
Inventory Inventory Stores
Vendor Selling
Value Chain Things to Remember
1. Value to customer objective is not clear.
2. Relay team concept is too time consuming and doesn’t
work in the current competitive environment.
3. Maximize the value-add activities and eliminate as
much as possible the things that do not add value.
4. Make sure that each step in the overall process (each
function) does things consistent with the overall
objective of value to customer.
SUPPORT ACTIVITIES
Generic Value Chain
FIRM INFRASTRUCTURE
TECHNOLOGY DEVELOPMENT
PROCUREMENT
PRIMARY ACTIVITIES
Adapted with the permission of the Free Press, an imprint of Simon & Schuster Inc.. from
COMPETITIVE ADVANTAGE: Creating and Sustaining Superior Performance by Michael Porter. Copyright Figure 3-6
© 1985 by Michael E. Porter.
Property and Casualty Industry Value Chain
FIRM
INFRASTRUCTURE
-Financial Policy -Regulatory Compliance - Legal - Accounting
HUMAN
RESOURCE
Actuary Agent Claims
MANAGEMENT Training Training Training
Actuarial Methods Product
TECHNOLOGY
Claims
Investment Development
DEVELOPMENT Procedures
Practices Market Research
I/T
PROCUREMENT Communications
Included with permission of Michael E. Porter based on ideas in Competitive Advantage: Creating and Sustaining
Superior Performance, copyright 1985 by Michael E. Porter.
Figure 3-7
Technologies in the Value Chain
Information System Technology
FIRM
Planning and Budgeting Technology
INFRASTRUCTURE
Office Technology
HUMAN Training Technology
RESOURCE Motivation Research
MANAGEMENT Information Technology
Product Technology
Software Development Tools
TECHNOLOGY Computer-Aided Design Information Systems Technology
DEVELOPMENT Pilot Plant Technology
Information Systems Technology
Communication System Technology
PROCUREMENT Transportation System Technology
Adapted with the permission of the Free Press, an imprint of Simon & Schuster Inc.. from
COMPETITIVE ADVANTAGE: Creating and Sustaining Superior Performance by Michael Porter. Copyright Figure 3-8
© 1985 by Michael E. Porter., p. 167.
Business Awareness Questionnaire
2. The world’s largest corporation based on annual revenue is
Wal-Mart.