INFORMATION TECHNOLOGY CANNOT REALLY GIVE A COMPANY A STRATEGIC ADVANTAGE BECAUSE MOST COMPETITIVE ADVANTAGES DON’T LAST MORE THAN A FEW YEARS AND SOON BECOME STRATEGIC NECESSITIES THAT JUST RAISE THE STAKES OF THE GAME. DISCUSS?
INTRODUCTION
The information technology (IT) revolution has had an enormous influence on how organizations/companies are managed. It can credibly be claimed that no other source of change has had more impact on the paradigms and practices that underline the management function. Though other developments such as the emergence of the global economy and the increasingly knowledge-based nature of modern organisations have significantly affected how organisations are managed, IT developments actually are an
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One of the most well-known frameworks for analyzing competitiveness is Porter’s competitive forces model. According to Porter a company must confront at least five competitive forces in the business environment. The five forces are generalized as follows:
1. The bargaining power of customers.
2. The bargaining power of suppliers.
3. The threat of new entrants to firm’s market.
4. The threat of substitute products and services.
5. The rivalry for competitors within the firm's industry.
Porter did not only come up with these competitive forces but also came up with competitive strategies to counter the competitive forces. It is how these competitive strategies have been used in combination with IT which will show whether a strategic advantage was achieved or it merely led to a strategic necessity.
PORTER’S COMPETITIVE STRATEGIES
Porter came up with five (5) competitive strategies to counter the competitive forces as follows:
Cost leadership strategy: Producing products/services at the lowest cost in the industry. There are examples of companies that became cost leaders by incorporating IT into their management information systems. Dell Computer Online build to order system resulted in Dell becoming the lowest cost producer of computers and thus dealing a heavy blow to rivalry competitors.
Differentiation strategy: This is a strategy whereby a company distinguishes its products and services from those of its
Porter’s Five Forces is a framework that consists of five competitive forces, threat of entry, power of supplier and buyer, threat of substitution and competitive rivalry. These forces facilitate the analysis of the task environment of an industry or company (Wheelen and Hunger, 2009).
Competitive environments are defined by the identity, track record, financial strength and market share of key competitors. Harvard Professor Michael Porter 's Five Forces model can be used to evaluate a company 's competitive position. These five forces are barriers to entry (the ability of new players to enter the market), buyer power (the ability of customers to influence price),
The task instruction is: Analyze Company G’s competitive environment utilizing Porter’s Five Forces Model of competitive forces. While headings below may provide some guidance for how to organize the paper, please refer to the recommended text (index topic: “Porter’s 5 forces model”), the learning community, and recommended web sites. As you will see from the reading, Porter’s 5-forces is a way to examine threats to a company’s success – which was competition imposes.
Differentiation strategy is generally reserved for companies with a clear competitive advantage. Companies such as Mercedes and Apple employ this strategy. Differentiation strategy is demonstrated when a company provides value to customers through unique unique features and characteristics of a company's products rather than by the lowest price (Open Learning World 2010).
This article was really interesting as it discussed a matrix developed for creating strategies by a professor at Harvard. Michael Porter the creator, discussed the notion of how powerful this tool is because companies or organizations look at competition too narrowly. The five competitive forces include:
4.7. Which of Porter’s four competitive strategies does apple engage in? Explain. Out of the four competitive strategies according to Porter, Apple engages in a focused differentiation strategy. Apple has been very successful by creating different products and services from competitors that are innovative, high quality, and user-friendly. From their unique product designs, to their state-of-art development of operating systems and software, Apple’s has continuously exceeded the evolving consumer demand in the current market. Furthermore, due to their open and inviting sales floor at their retail locations, genius help desk, and well trained sale peoples, Apple has welcomed more than a billion customer
2. How Porter's Five Forces of Competition impact the company Porter set out his famous Five Forces model in chapter 1 of his 1980 Competitive Strategy: Techniques for Analyzing Industries and Competitors, which has now become the dominant paradigm for the "Structural Analysis of Industries." The model places supply chain forces on the horizontal access and market structure vertically above and below industry competition, which they all point to as the center of potential profitability (Hitt, Ireland and Hoskisson,
Porter’s Five Competitive Forces Analysis is a framework developed by Michael E. Porter of Harvard Business School for study of industry analysis by analyzing five competitive forces which define industry and its business strategy. These five competitive forces determine the competitive advantages, disadvantages and attractiveness or profitability of industry.
According to Porter (1985) a company can apply three generic types of strategies to protect itself while competitive force is a key issue of the management. To achieve this position a strategy based on competency must be accomplished
“Porter’s five forces”: Introduction. “Porter’s five forces” is widely applied in today’s business world. Harvard Professor Michael E. Porter’s first HBR article “How competitive forces shape strategy” was published in 1979. It became revolutionary in the field of strategy. Porter’s subsequent work has brought big changes to the study of competitive strategy for corporations, regions, and nations. With assistance from his colleagues from Harvard Business School, Porter continues to update and extend his classic work, providing practical guidance for
Another strategy is Being defensive ; Defensive strategies are relatively close to Differentiation & Cost leadership . This method helps in keeping all the advantages in one place once they are attained . This strategy is considered as an actual one as it limit competitors ability to offer a business opposition .
1. What is competitive advantage, and how does it relate to a company’s business model?
Porter’s five forces analysis is a tool is useful for us to analyse the threat of competition in an industry. Porter believed that the industries were influenced by five forces; competitive rivalry, threat of new entrants, bargaining power of suppliers, bargaining power of buyers, and the threat of substitutes. Analysing these areas can allow you to see attractiveness of the market and find a competitive advantage.
The organizations that endeavour to wind up the least cost makers in an industry can be alluded to as those taking after a low cost procedure. The organization with the least expenses would gain the most elevated benefits in the occasion when the contending items are basically undifferentiated, and offering at a standard business market cost. Organizations taking after this methodology place accentuation on cost diminishment in each action in the value chain. Note that an organization may be a cost pioneer however that does not inexorably infer that the organization 's items would have a low cost. In specific occurrences, the organization can for occasion charge a normal cost while applying the low cost leadership strategy and put the earnings made back into the business
The manner in which firms are able to compete is most commonly categorized by implementing Michael Porter’s strategic typologies. Porter’s strategic theory has been the most widely accepted strategic approach used by fellow academics (Kim and Lim 1988; Bordean et al 2010). Porter proposed three generic strategies namely: cost leadership, differentiation and focus strategy. Warszawski (1996) later introduced a competitive strategy