Understanding the Competitive Environment of a Company Companies do not exist in a vacuum: It is necessary to understand the competitive environment to assess the current competitive position of a company. It has become increasingly necessary to posture a company for challenges in its future.
Porter Competitive Model Intra-Industry Rivalry Strategic Business Unit Bargaining Power of Buyers Bargaining Power of Suppliers Substitute Products and Services Potential New Entrants
Competitive Model Forces Intra-industry Rivals: Strategic Business Unit (SBU) and major rivals. Buyers: Categories of major customers. Suppliers: Categories of major suppliers that play a significant role in enabling the SBU to conduct its business. New Entrants : Companies that are new as competitors in a geographic market or existing companies that through a major shift in business strategy will now directly compete with the SBU. Substitutes: An alternative to doing business with the SBU.
Porter Competitive Model Education Industry – Universities U.S. Market Intra-Industry Rivalry SBU: UCSC Rivals: UC campuses, CSU, Private universities, Community Colleges Bargaining Power of Buyers Bargaining Power of Suppliers Substitute Products and Services Potential New Entrants
Internet Distance Learning
Books and Videotapes
Company Education Programs
Shift in Strategy by Universities
Role of Technology through Porter perspective: Can we… 1. Build barriers to prevent a company from entering an industry? 2. Build in costs that would make it difficult for a customer to switch to another supplier? 3. Change the basis for competition within the industry? 4. Change the balance of power in the relationship that a company has with customers or suppliers? 5. Provide the basis for new products and services, new markets or other new business opportunities
Innovation —either with business strategies or use of
information systems or both.
Growth —deals with growth in revenue and other business volumes. Can be a key factor in establishing a market position. Can also be a major requirement to offset high fixed operating costs. Alliances —importance of establishing a strong relationship with suppliers and other business partners often on a contractual basis.
Dell, Inc. Strategies Primary Strategy: Differentiation Least Cost Supporting Strategies: Innovation Growth Alliances
IT Significance Information Technology can change the way that an organization (business or public sector) competes.
Strategic Positioning Through Process Structure
Degree of Complexity : Measured by the number of steps in the service blueprint. For example a clinic is less complex than a general hospital.
Degree of Divergence : Amount of discretion permitted the server to customize the service. For example the activities of an attorney contrasted with those of a paralegal.
Structural Alternatives for a Restaurant No Reservations Self-seating. Menu on Blackboard Eliminate Customer Fills Out Form Pre-prepared: No Choice Limit to Four Choices Sundae Bar: Self-service Coffee, Tea, Milk only Serve Salad & Entree Together: Bill and Beverage Together Cash only: Pay when Leaving TAKE RESERVATION SEAT GUESTS, GIVE MENUS SERVE WATER AND BREAD TAKE ORDERS PREPARE ORDERS Salad (4 choices) Entree (15 choices) Dessert (6 choices) Beverage (6 choices) SERVE ORDERS COLLECT PAYMENT Specific Table Selection Recite Menu: Describe Entrees & Specials Assortment of Hot Breads and Hors D’oeuvres At table. Taken Personally by Maltre d’ Individually Prepared at table Expand to 20 Choices: Add Flaming Dishes; Bone Fish at Table; Prepare Sauces at Table Expand to 12 Choices Add Exotic Coffees; Sherbet between Courses; Hand Grind Pepper Choice of Payment. Including House Accounts: Serve Mints LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE
Discuss the of technology in the service encounter.
Describe the emergence of self-service.
Place an example of service automation in its proper category.
Describe different Internet business models.
Understand the importance of scalability to e-commerce success.
Discuss the managerial issues associated with the adoption of new technology.
Role of Technology in the Service Encounter Technology Technology Technology Technology Technology Customer Customer Server Server Server Server Server Customer Customer Customer D. Technology-Mediated Service Encounter E. Technology-Generated Service Encounter A. Technology-Free Service Encounter B. Technology-Assisted Service Encounter C. Technology-Facilitated Service Encounter
Evolution of Self-service Service Industry Human Contact Machine Assisted Service Electronic Service Banking Teller ATM Online banking Grocery Checkout clerk Self-checkout station Online order/ pickup Airlines Ticket agent Check-in kiosk Print boarding pass Restaurants Wait person Vending machine Online order/ delivery Movie theater Ticket sale Kiosk ticketing Pay-for-view Book store Information clerk Stock-availability terminal Online shopping Education Teacher Computer tutorial Distance learning Gambling Poker dealer Computer poker Online poker
Economics of Scalability Dimensions High Scalability Low E-commerce continuum Selling information (E-service) Selling value- added service Selling services with goods Selling goods (E-commerce) Information vs. Goods Content Information dominates Information with some service Goods with support services Goods dominate Degree of Customer Content Self-service Call center backup Call center support Call center order processing Standardization vs. Customization Mass distribution Some personalization Limited customization Fill individual orders Shipping and Handling Costs Digital asset Mailing Shipping Shipping, order fulfillment, and warehousing After-sales service None Answer questions Remote maintenance Returns possible Example Service Used car prices Online travel agent Computer support Online retailer Example Firm Kbb.com Biztravel.com Everdream.com Amazon.com