Value Chain and Competitive Forces:
Effects of Information Technology
Module 2 Case
John Dow
ITM524: Fundamentals of Information Technology Management
Dr. Somebody Somebody
February 4, 2012
Introduction Businesses are established with the sole reason to provide a product or service to a customer with the intend to make a profit. The amount of time, effort, and resources spend should generate a profit. Then, the profit depends “on its effectiveness in performing these activities efficiently, so that the amount that the customer is willing to pay of the products exceeds the cost of the activities in the value chain” (NetMBA.com). Ideally, these products and/or
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(2009). Within technology and the value system, this called for an emphasis on media relations to disseminate information to the local community and its leaders. Solid communication practices, i.e. strategic communications, was of the utmost importance to gain the respect and acceptance of the population. Perhaps by obtaining the acceptance of the local population, Rio Tinto was able to mitigate any threats from new entrants into the market at the specific location as well; allowing control of one of the five forces that shape industry competition to remain in check. Finally, helping to form the International Council on Mining and Metals should have allowed them strategic power over existing competitors (another of the 5 forces).
Mini Case # 4 – General Electric General Electric’s (GE) challenge was to create a new business in sustainability. GE saw profitable business opportunity in helping companies save energy. To mitigate the ‘Rivalry among Existing Competitors’, GE’s focused on bringing new capacity and was still able to produce pressure on prices; mitigating negative price competition. As Porter mentioned: “Rivalry is especially destructive to profitability if it gravitates solely to price because price competition transfers profits directly form an industry to its customers.
Customers want the business to produce quality products at reasonable price. You have different types of customers. There are different types of customers there are loyal ones, young ones, elderly, family or one-time customers.
The value chain, made by Michael Porter, is really important to see how a company structure is created. The value chain is constituted by two parts: support activities (firm infrastructure, human resource management, technology development, procurement) and primary activities (inbound logistic, operations, outbound logistic, marketing and sales, service). (Johnson et al. 2011, p.97-99)
Analyzing GE’s corporate-level strategy from 2001 – present with Jeff Immelt as CEO, GE focuses on the growth and development platforms. Technology is the key driving force for GE’s future and growth. Advancements in industries such as energy, health and aviation fueled demand for cleaner and more efficient energy production. GE identified new markets with potential high-growth that offered attractive returns through strategic mergers and acquisitions. As CEO, Jeff Immelt established a process for identifying projects that offered attractive growth potential which were then nurtured and treated as special projects or initiatives that were not subject to strict budget constraints. Immelt introduced GE’s three strategic imperatives as: (1) sustaining its strong business model, (2) strengthening the business portfolio, and (3) driving its growth initiatives. www.ge.com
Within any industry the fiscal or economic goals are to increase revenue; determine the fixed and variable costs for the business; and determine how to maximize profit. In order to reach those goals an organization needs to establish the pricing structure, product differentiation, and how to minimize the costs for the product. In this proposal will layout the strategies to reach those goals in order to make a more economic successful organization.
Steve Denning (2011), states that customer delight is the firm’s new bottom line and delighting the customer from outsets to outcomes. By focusing on delighting the customer the firm makes a lot more money than they would if they set out to make money. Delighting the customers make a lot of money. Customer delight = providing a continuous stream of additional value to customers and delivering it sooner. It is measurable and means a different way of running the company.
Costco is among the leading global retailers which provide customers a wide range of merchandise, ranging from small to well-known brands. The company began operations in 1983. Over the years, Costco has been a retailer in low cost membership-only leader, in warehouse club of merchandise. Moreover, Costco does not offer frills warehouse business models as its competitors do. Costco’s major competitors are BJ’s Wholesale Club and Sam Club (Costco, 2010).
| AbstractAn analysis of GE's sustainability efforts and missteps, from the years in which the company was under the leadership of Jack Welch to ongoing activities today.
Additionally, building strong relationships with local media staff members is a way to open communication lines in the community. It is wise to over communicate and re-communicate key messages frequently, since the audience is diverse and likely has different preferences.
Increase customers’ value by adding value to features of the products, improve customer service by being more responsive, increase the range of complementary products and modify as per orders. Differentiation should promote long-term profit and growth. Moreover to benefit from cost advantage, identify both primary and support activities are clearly identify, required a strong know1egde of organization value if value chain will disrupt. Analyse how to create customer value, recognize cost drivers from each activity and identify between link activities by reducing cost from one to
General Electric is a well-known company in many regions of the world, but what people aren’t particularly aware of are the steps that General Electric has taken to get to where it is at today. When I think of General Electric the first thing that comes to mind is the role that the company plays in the production of household appliances, but General Electric is a much bigger contributor to people’s lives than is most people realize. People aren’t familiar with the internal business decisions that General Electric makes to ensure that the company continues to grow and run as smoothly as possible, allowing the company to continue to provide people with the services that they have grown to recognize as being a trademark of General Electric.
I chose to look into General Electric for this project because they are an energy supplier and multi-national company. Energy providers have a reputation as a money hungry companies that care about the bottom line more than people and the planet. It is easy for a person to assume that a corporation of GE’s size, money would be its only concern. What I learned was that GE has a public image problem more than a Corporate Social Responsibility (CSR) problem. The company has been working to make the people of the planet more Earth friendly by creating technology that has higher efficiency with fewer emissions and lower resource demands. GE has a well-established strategy for Corporate Social Responsibility. As a result of CSR the company
Background Information- General Electric Company, known as GE the world over, is an American-based, multinational corporation headquartered in Connecticut. In 2010, the company reported in excess of $150 billion in revenues, net income of over $12 billion, and almost 300,000 employees. It operates through four basic segments: Energy, Technology Infrastructure, Capital Finance and Consumer and Industrial Production. In 2011, GE was ranked the 6th largest firm in the United States as well as the 14th most profitable. Since its founding by Thomas Edison in 1990, and becoming one of the original 12 companies listed on the Down Jones Industrial Average in 1986, GE has been iconic in its relationship as an American innovator. In fact, GE founded RCA in 1919 to further the use and disbursement of international radio, just one example of their early commitment to innovation (GE Fact Sheet, 2012).
“Competitive strategy involves positioning a business to maximize the value of the capabilities that distinguish it from its competitor’s” (Porter 1980:47). A successful business plan requires first and foremost the formation of an appropriate strategy. Through the implementation of a suitable strategy, the company is able to obtain its own industry niche and gain an understanding of its customers (Porter 1985). Whichever strategy is adopted it must be adequately integrated within the firms goals and missions to achieve a competitive advantage (Parker and Helms 1992).
EXISTING PROBLEMS AND WEAKNESSES IN THE CURRENT PROCESSES AND ADDITIONAL CAPABILITIES NEEDED TO BE DEVELOPED:
This will help the company to deliver product and services that satisfy customers, hence increasing profitability.