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CCT225H5 Study Guide - Quiz Guide: Switching Barriers

Communication, Culture and Technology
Course Code
Gordon Lucas
Study Guide

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The 5 forces model- Evaluating Business Segments
-Five Forces Model: helps determine the relative attractiveness of an industry
- Buyer Power
oBuyer Power: When buyers have many choices of whom to buy from
and low when their choices are few
oTwo situations in supply chain where organizations need to be
concerned about buyer power:
1. In their relationship with customers
Creating a competitive advantage with customers when
they have (since organizations are suppliers)
Must be more attractive than competition
Ex. Loyalty Programs: reward customers based on the
amount of business they do with a particular
Ex. Frequent Flyer Programs
Not possible without large scale IS systems
2. In their relationship with suppliers
Prefer to work with large group of suppliers to get best
- Supplier Power
oSupplier Power: high when buyers have few choices to buy from and
low when they have many choices
Want high supplier power with customers
Want low supplier power with suppliers (as company is the
oAs a buyer, organization can get competitive advantage by locating
alternative supply sources using:
B2B marketplace
Private Exchange: a B2B marketplace in which a single buyer
posts its ends and then opens the bidding to any supplier who
cares to bid
Reverse Auction: Where the bidding is carried out,
increasingly lower bids are solicited from organizations willing
to supply the desired product or service at an increasingly
lower price
Lowest bid wins
Excellent way to show how IS can reduce supplier power for an
- Threat of Substitute Products or Services
oThreat of Substitute products or services: high when there are
many alternative to a product/service, low when there are few
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