Question

1. Use the five competitive forces model as described in this chapter to describe how information technology might be used to provide a winning position for each of these businesses:
2. A global advertising agency
   1. A local restaurant
   2. A mobile applications provider
   3. An insurance company
   4. A web-based audio book service

Answer 1

These are some of the ways as of how information technology might be used to provide a winning position for each of these businesses:

1. A global advertising agency
2. A local restaurant
3. A mobile applications provider
4. An insurance company
5. A web-based audio book service

•           Global advertising agency – A substitute for a global ad agency could be the use of local ad agencies in various locations. Another possibility would be using in-house personnel to fashion ad campaigns. IT resources might provide better coordination among different global locations, or even automatic translation to other languages.

•           Local restaurant – Substitute services might be using a chain restaurant, or cooking at home. Information resources might be useful to create switching costs using a frequent customer card, or to provide customers with information about the ingredients in their foods with connections to their health monitoring device (such as a FitBit^TM). Note that these ideas might also be useful to reduce the threat of other forces, too.

•           A mobile applications provider - A substitute service might be employing a desktop/laptop application provider, or bringing applications development in house. The firm can reduce the threat of substitution by increasing the reliability and emphasizing the superior features of the mobile apps.

•           Insurance company – A substitute service that might threaten an insurance company is a trend with large firms to “self-insure.” More specifically, using health insurance as an example is quite interesting. A health insurance company substitute might be to make use of an HSA (Health Savings Account), which is another form of self-insurance, but tax authorities in the USA require putting money into a special savings account so that healthcare expenditures are covered. A partial substitute would be to concentrate resources on healthy living or eating practices, which would presumably reduce healthcare expenses later. Insurance firms might use their information resources to offer a larger variety of options to customers. The IT would be required to track all the chosen options right on the spot when service is required. Other services of value to the customer such as quick and easy plan application and approval, extra incentives for longevity in accounts, links with medical practitioners, and closer links with preferred providers.

• Web-based audio book service –A substitute service might be a brick and mortar audio book store where customers could actually listen to selected portions of any book prior to buying. Another might be placing a kiosk in a bookstore or department store where the customer has instant access to the books after listening to the sample (if desired). The web-based audio book service might use IS to offer a broader array of books with more helpful information on the background of the book or its author, and feedback from customers on each audio book along with expert recommendations. Also, the web-based retailer could create value by setting up discussion forums for customers where they could interact with others interested in their particular selections.

Hope it helps!