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Chapter 2

MGCR 331 Chapter 2: Chapter 2

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Management Core
MGCR 331
Richard Donovan

1. Information systems – Chapter 2: Strategy and technology; Frameworks for understanding what separates winners from losers 2.1 Introduction The danger of relying on technology - Operational effectiveness is critical. Firms must invest in techniques to improve quality, lower cost, and design efficient customer experiences - Perform different activities from those of rivals - Technology can be copied very easily Different is good: FreshDirect redefines the grocery landscape in New York city and Beyond - FreshDirect  Grocery shopping online, in-app orders and shopping list  Daily shipping  Located in Manhattan  Warehouses: Queens and Bronx  Expanded service to NY, NJ and PENN  Worker shifts are highly efficient  60% lower than at traditional grocers  Overall perishable inventory turns over 197X a year compared to 40X  Food waste is only about 1%  “Farm-to-fork” supply chain  Green choice for consumers (biodiesel, save on energy because of the fridges, delivery trucks, etc.)  Buys directly from suppliers  Prices that can undercut the competition  Strategic positioning  Entry costs for competitors are high But what kinds of differences - Resource-based view of competitive advantage  If a firm is to maintain sustainable competitive advantage, it must control a set of exploitable resources that have four critical characteristics: the resources must be valuable, rare, imperfectly imitable, Nonsubstitutable 2.2 Powerful resources The value chain - Value chain: Set of activities through which a product or service is created and delivered to customers - Primary components:  Inbound logistics: Getting needed materials and other inputs into the firm from suppliers  Operations: Turning inputs into products or services  Outbound logistics: Delivering products or services to consumers, distribution centers, retailers, or other partners  Marketing and sales: Customer engagement, pricing, promotion, and transaction  Support: Service, maintenance, and customer support - Secondary components:  Firm infrastructure: Functions that support the whole firm, including general management, planning, IS, and finance  Human resource management: Recruiting, hiring, training, and development  Technology/research and development: New product and process design  Procurement: Sourcing and purchasing functions Dell’s struggles: Nothing lasts forever - Super efficient vertically integrated manufacturing - Had a price advantage, could compete over price and still have a better margin - Abandoned its direct-only business model and now also sells products through third- party brick-and-mortar retailers - Gone private Brand - A firm’s brand: Symbolic embodiment of all the information connected with a product or service, and a strong brand can also be an exceptionally powerful resource for competitive advantage - Brands are used to lower search costs - A strong brand proxies quality and inspires trust Scale - Businesses benefit from economies of scale when the cost of an investment can be spread across increasing units of production or in serving a growing customer base  sc
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