Question

List down Porter's five competitive forces that can shape an organization AND four generic strategies for dealing with competitive forces, enabled by using IT Students are also required to explain how "Strengthen customer and supplier intimacy can be used as Information Systems strategy for dealing with competitive forces

Answer 1

Ans:Porter's five competitive forces are the ones that shape the fate of the firm.

• Traditional competitors:Existing firms that share a firm's market space.
• New market entrants:New companies have certain advantages,such as not being locked into old equipment and high motivation,as well as disadvantages,such as less expertise and little brand recognition.
• Substitute products and services:These are substitutes that the customers might use if the prices become too high.For example:Internet telephone service can substitute for traditional telephone service.
• Customers:The power of customers grows if they can easily switch to a competitor's product and services,or if they can force a business and its competitors to compete on price alone in a transparent marketplace where there is little product differentiation and all prices are known instantly(such as on the Internet).
• Suppliers:The more different suppliers a firm has,the greater control it can exercise over suppliers in terms of price,quality,and delivery schedules.

The four generic strategies used to manage competitive forces,each of which often is enabled by uisng information technology and systems.

• Low-cost leadership:Use information systems to achieve the lowest operational costs and the lowest prices.For example:a supply chain management system can incorporate an efficient customer response system to directly link consumer behavior to distribution and production and supply chains,helping lower inventory and distribution costs.
• Product differentiation:Use information systems to enable new products ans services,or greatly change the customer convenience in using your existing products and services.
• Focus on market niche:Use information systems to enable a specific market focus and serve this narrow target market better than competitors.Information system supports this strategy by producing and analysing data for finely tuned sales and marketting techniques.
• Strengthen customer and supplier intimacy:Use IInformation System to tighten linkages with suppliers and develop intimacy with customers.Strong Linkages to customers and suppliers increase switching costs (the cost of switching from one product to a competing product)and loyalty to the firm.
• The Internet has nearly destroyed some industries and has severly threatened more.The Internet has also craeted entirely new markets and formed the basis for thousands of new businesses.
• Because of the Internet,the traditional competitive forces are still at work,but competitive rivalry has become much more intense.
• Internet technology is based on universal standards.making it easy for rivals to compete on price alone and for new competitors to enter the market.
• Since information is available to everyone,the Internet raises the bargaining power of customers ,who can quickly find the lowest cost provider on the web.
• Some industries such as the travel industry and the financial services industry have been more impacted than others.
• Thus ,the Internet creates new opportunities for building brands and building very large and loyal customer bases such as Yahoo,Google.