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MP3 / MD740 Strategy

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  • 1. MP3 / MD740 Strategy & Information Systems Nov. 3, 2004 Technology & Industry Competition
  • 2. Topics Covered
    • Strategy & the Internet – a critical look
    • Tech’s impact on the five forces of industry competitiveness
    • Recognizing competitor threats
    • Information Systems and dealing with competitor threats
      • Readings discussions on mass-customization, brand, and scope, among others
    • Buyer / Supplier power
  • 3.  
  • 4. ICA: Industry & Competitive Analysis (Porter’s Five Forces) Industry Competitors Potential New Entrants Substitute products or services Power of Suppliers Power of Buyers
  • 5. Value Chain Inbound Operations Outbound Marketing Service logistics logistics & Sales Infrastructure: general mgmt, planning, finance, IS HRM: recruiting, hiring, training, and development Tech. Development: R&D Procurement
  • 6.  
  • 7. Competitor related threats
      • Growth industry w/above average profits
      • Fragmented industry - no clear leader / national brand
      • Low startup costs
      • Lack of scale economies
      • Low differentiation
      • Weak brands / low customer loyalty
      • Low customer switching costs
      • Available distribution networks
      • Technology & Regulatory shifts
      • Similar products/services/industries exist
  • 8.  
  • 9. Addressing Competitive Threats
      • Economies of Scale
      • Differentiation
      • Scope / Multiple Business Lines / Slack Resources
      • Develop / Strengthen Brand
      • Proprietary technology, learning curve/know-how, geography
      • Contrived Deterrence
        • over-capacity, pre-announcements
      • Government Regulation
      • Switching Costs and Network Effects
      • Create / secure distribution channels
      • Alliances (with complementary firms & competitors)
      • The Role of Timing
  • 10. IS as an Enabler
    • IS resource yields competitive advantage
      • (ex. Alcoa)
    Competitive Advantage Scale, World-leading mfg. & sales Integrated IS across plants / offices
  • 11. Creating / Enhancing Resources
    • Created when resources combine for additional benefit.
      • e.g. embedded technology
    Competitive Advantage Service Network Monitoring IS R & D Superior Service/ Switching Cost/ Inventory Efficiencies Superior Products
  • 12. Google Revenue Streams AdWords AdSense Google Search Appliance
  • 13.  
  • 14. Source: Fortune, Nov 15, 2004 Comparing Google $47.7 $49.8 $63.0 Market cap (10/26/04) $715 $542 $222 Net income latest four quarters in millions eBay ( EBAY ) Yahoo ( YHOO ) Google ( GOOG )
  • 15. Supplier related threats
    • Small number of suppliers
    • Suppliers sell highly differentiated products
    • Suppliers not threatened by substitutes
    • Cost to switch suppliers is high
    • Firm is not an important customer for suppliers
    • Suppliers threaten forward integration
    • Information asymmetries
  • 16. Addressing the supply-side
    • Foster relationships with more suppliers
    • Acquire & leverage information
    • Lower switching costs
      • Lower product complexity - turn supplier products into commodities
      • be less dependent on a given supplier
    • Integrate backwards
    • Tightly integrate suppliers into your operations
      • make suppliers more dependent on your firm
  • 17. Reduce Switching Costs & Enhance Choice Firms have a greater choice of suppliers Firms are limited to a few suppliers SWITCHING COSTS LOW HIGH
    • Examples
      • EDI, WebServices
      • Computer Aided Design (CAD), Computer Aided Engineering (CAE), Computer Aided Manufacturing (CAM)
      • Integrated Robotics
    Information Systems
  • 18. Buyer related threats
    • Small number of highly influential buyers
    • Buyers purchase commodity products
    • Products sold to buyers consume a high portion of the product’s final cost
    • Buyers are not earning significant economic profits
    • Buyers threaten backward integration
    • Information asymmetries
  • 19. Addressing the buy side
    • Seek or create new buyers / new markets
    • Acquire & leverage information
    • Reduce buyer costs / assist buyer in expanding markets
    • Differentiate products
    • Tightly integrate with buyers
    • Integrate forwards
  • 20. Differentiating Products Commodities Differentiated Goods LEVEL OF CUSTOMIZATION LOW HIGH
    • Examples
      • Customer-driven Ordering Systems
      • Mass-customization Systems
      • Just In Time (JIT) Manufacturing Systems
    Information Systems