Session3 INFS1000 S1 2016 Preview [Slides Format]

8/17/2019 Session3 INFS1000 S1 2016 Preview [Slides Format]

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INFS1000: Digital Business InnovationSession 3: Competitive Advantage


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Before we start...

› Lab workshops

- Lab workshops start THIS WEEK. See information on Blackboard and downloadthe files from the Learning Resources section.

› Group project

- Assignment text have been uploaded to the Assessment section on BlackBoard;

we will explain more during TBL session next week.

› No stream or group changes

- You need to attend this stream for the rest of the semester and work in yourassigned group; even if your stream might be changed in your timetable, you

need to stay here, unless there is an actual time clash between your INFS1000stream and another UoS!

› Group conflict

- In case of any (serious) group conflict, please let your tutor or stream lecturer

know of the issue as early at possible

Some admin matters...


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Agenda for today

1. Repetition W2: Business processes

2. Activity: Multiple choice exercise

3. Competitive advantage and strategy

4. Activity: Analyse market structures

6INFS1000: Digital Business Innovation


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Q2: What Is a Business Process?

› “A Business Process (BP) is a structured network ofactivities supported by resources, facilities, and

information that interact to achieve some business

function.”

- BPs turn input into higher value output.

- A business process is a system; sometimes businessprocesses are referred to as business systems



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Characteristics of well-designed

Business Processes

› Complete

- Well‐designed BPs include all activities necessary to achieve the business goal.

› Minimal

- Well‐designed BPs do not include unnecessary activities (cost efficiency).

› Well‐structured

- Activities in a well‐designed BP are structured in a logical sequence

› Embedded

- Well‐designed BPs connect and interact with other BPs in the organisation ineffective and efficient ways.

› Outcome of a well‐designed business process is:

- increased effectiveness (value for the customer)

- increased efficiency (less cost for the company)



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Agenda for today







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Activity W3(1): Multiple Choice practice



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Agenda for today







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Q1: How does Competitive Strategy affect IS?

› IS help organisations achieve business objectives. Butwhere do objectives come from…?

1. Organisations examine industry structure to understandopportunities and risks

2. Devise a competitive strategy to leverage opportunitiesand respond to risks

3. Design organisational structures and processes toimplement strategy

4. Design (or buy) and implement IS (features,applications) to execute processes



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Q2: Which Five Forces Determine Industry

Structure?

› Porter’s five competitive forces:

- Bargaining power of customers

- Bargaining power of suppliers

- Threat of new entrants

- Rivalry among existing firms

- Threat of substitutes› Ok, what is a substitute?

- A substitute provides same or similar utility for customer, but with different technology

- Some substitutes have the potential to change markets

- A competitor’s product is NOT a substitute!

- “This is a , which is a type of ”

- Same but different = substitute



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Porter ’s Five Forces Model

Rivalry among

Industry

Competitors BuyersSuppliers

New

Entrants

Substitutes

Bargaining Power of Buyers:

These factors tend to increase buyer power:

•Concentrated

•Low switching costs (standardized products or

services)

•Buyer has all relevant information

Bargaining Power of Suppliers:

These factors tend to increase supplier power:

•Dominated by a few suppliers

•Suppliers more concentrated than buyers

•No substitutes•Supplier input to quality of products critical

Threat of new entrants:

Depends on: Entry barriers.

Typical barriers are:

•Capital requirements

•Economies of scale•Customer switching costs

•Expert knowledge

•Government policies

•Access to suppliers and distributers

Threat of substitutes:

Depends on:

•Availability of similar products

•Customer switching costs

•Aggressiveness of Producers

Rivalry among competitors:

Depends on:

•Number of rivals

•Level of differentiation

•Height of customer exit barriers



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Examples of Porter’s Five Competitive

Forces

1

4 5

2

3

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Copyright © 2014 Pearson Australia (a division ofPearson Australia Group Pty Ltd) –9781442561779/Kroenke/Experiencing MIS/3e


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Q3: How Does Analysis of Industry Structure

Determine Competitive Strategy?

› Porter identified four competitive strategies:

- Cost Leader1. Broad cost leadership across industry (most efficient)

2. Narrow cost leadership focused on particular industry segment (mostefficient)

- Differentiation

3. Broad differentiation across industry (most effective)

4. Narrow differentiation focused on particular industry segment (mosteffective)

› Which competitive strategy is depicted in the following video?

- https://www.youtube.com/watch?v=lBUJcD6Ws6s



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Q4: How Does Competitive Strategy Determine

Value Chain Structure?

› Businesses need to organise internally to create and deliverproducts and services.

› A value chain is:

- A network of value‐creating activities that consist of:

- Primary activities: add value directly to customers

- Support activities: assist primary activities

› This is a generic model that mainly fits manufacturing organisations



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Porter ’s Value Chain Model

The generic, top-level business process of a manufacturing-focused business!


Primary Activities

Support Activities


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Activities in Value Chain

› Each primary activity clearly adds value to the product

› Three support activities- Human resources

- training, recruiting, compensation

- Accounting and infrastructure

- general management, finance, accounting, legal

- Procurement and Technology- finding vendors, negotiating prices

- R & D, new techniques, methods and procedures

- These contribute to production, sales, and service- They indirectly contribute to value creation for the customer



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Q5: 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.



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EXAMPLE: High-Value Bike Rental

› Bike rental company uses a computer system to maintain customer data in thecustomer database and bike data in a bike inventory database.

Two strategic options: cost strategy or differentiation (value) strategy

1.Reducing costs: Eliminate rental personnel.

Bicycles could be placed on racks with locks that customers can open with hotelroom keys;

The bike would be rented until customer places the bike back on the rack

2.Increase value of the process:

The rental agency could decide to rent additional types of equipment or to sell

clothing or food and beverages.

Personalised services increase value and experience for customers.



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Bicycle Rental Competitive Strategies

K r o e n k e , B u n k e r , W

i l s o n : E x p e r i e n c i n g M I S ©

2 0 1 0 P e a r s o n A u s t r a l i a


T w o d i f f e r e n t

s t r a t e g i e

s

Sameactivities

D i f f e r e n t B P s


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Q6: How Do Information Systems Provide

Competitive Advantage?

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Copyright © 2014 Pearson Australia (a division ofPearson Australia Group Pty Ltd) –

9781442561779/Kroenke/Experiencing MIS/3e


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Competitive Advantage via

Business Process Design

1. Lock in customers

- By creating high switching costs

- E.g. automated ordering process

2. Lock in suppliers

- Make it easy to connect to and work with your organisation

- E.g. cross‐organisational just‐in‐time delivery process

3. Create entry barriers

- Make it difficult (expensive) for new competitors to enter a market

- E.g. Ecomonies of scale through process optimisation

4. Establish alliances with competitors

- Standardise processes, share costs, develop joint processes

- E.g. Airline alliances, such as Star Alliance, OneWorld



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Agenda for today







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Activity W3(2): Strategic Analysis



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The key‘

take-aways’

for today

› Porter’s Five Forces Model

› 4 Generic Strategies

› Value Chain Model

- Difference between value chain, primary activities and businessprocesses

› Link between strategy and business process design

› Competitive advantage through business process design



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Homework activity W3(3):

Strategic analysis of $RU case› This is a ungraded assignment


Documents

Session3 INFS1000 S1 2016 Preview [Slides Format]