INFS1000 Lecture Notes - Lecture 3: Switching Barriers, Bike Rental, Competitive Advantage
4 Jun 2018
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WEEK 3: STRATEGY AND COMPETITIVE ADVANTAGE
How does competitive strategy affect IS?
1. Orgs examine industry structure to
understand opportunities + risks
2. Devise competitive strategy to
leverage opportunities and respond to
risks
3. Design org structures + processes to
implement strategy
4. Design/buy + implement IS to execute
processes
Competitive strategy determines IS –
(“Business First”)
PORTER’S FIVE FORCES
Which five forces determine industry structure?
• Bargaining power of customers
• Bargaining power of suppliers
• Threat of new entrants
• Rivalry among existing firms
• Threat of substitutes
• E.g. Porter’s five competitive forces: **HIGH**
o Bargaining power of customers à
Toyota buying auto-paint
o Bargaining power of suppliers à
Sydney Opera House
o Threat of new entrants à Café on King St
o Rivalry among existing firms à PCs
o Threat of substitutes à DVDs v Netflix
• E.g. Porter’s five forces: **LOW**
o Bargaining power of customers à Sydney Opera House tickets to me
o Bargaining power of suppliers à stationary supplies to Sydney Uni
o Threat of new entrant à ATO
o Rivalry among existing firms à Café in ABS (prices increase)
o Threat of substitute à Harbour front apartments (prices increase)
INDUSTRY STRUCTURE ANALYSIS AND COMPETITIVE STRATEGY
How does analysis of industry structure determine competitive strategy?
• Cost Leader: most efficient
o Broad = across industry
o Narrow = focused on industry segment
• Differentiation: most effective
o Broad = across industry
o Narrow = focused on industry segment
• Businesses need to organise internally to create and deliver products
and services
Document Summary
Which five forces determine industry structure: bargaining power of customers, bargaining power of suppliers. Threat of new entrants: rivalry among existing firms. Porter"s five competitive forces: **high*: bargaining power of customers . Toyota buying auto-paint: bargaining power of suppliers . Sydney opera house: threat of new entrants caf on king st, rivalry among existing firms pcs, threat of substitutes dvds v netflix. The value chain: a network of value-creating activities, primary activities: add value directly to customers, marketing and sales. Inbound logistics: operations or manufacturing, outbound logistics. How do value chains relate to business processes and information systems: business processes, describe how to execute value creation (work) within or across parts of the value chain. Link together different parts of the value creation (e. g. integrated manufacturing planning) Cross functional processes: an is may then be designed to support the business process.
