Weekly Questions- WK 2

Ch 1.
1. Explain information technology’s role in business and describe how you measure success?

Information technology (IT) enables businesses to conduct a series of different operations using the one system to perform multiple tasks e.g. invoices for shipping goods, databases for customer details. IT ensures a business can run effectively and efficiently. IT gives businesses a competitive advantage by keeping up to date with everyday changes and advances in technology. It also provides ground for a competitive edge.

You measure the success by comparing and contrasting systems and practices in place against the businesses’ competitors gathering information on where your business in sitting in the competitive scale. The measure of success can be determined if IT makes the businesses’ practices more efficient and effective, reliable and simple to use. If it achieves all this it can be considered successful.

2. List and describe each of the forces in Porter’s Five Forces Model.

Buyer power; high when buyers have many sellers to choose from, low when choosers are few.

Supplier power; consists of all parties involved (direct or indirect) in the acquisition of a product or raw material.

Threat of substitute products or services; high when there are many alternatives to a product or service, low when there a few alternatives to choose from.

threat of new entrants; high when it is easy for new competitors to enter a market, low when there are barriers to entering a market.

rivalry among existing competitors; high when competitor is fierce in a market, low when competition is more complacent.

3. Compare Porter’s three generic strategies.

Cost leadership- reaches a large market segmentation. It describes a way to establish the competitive advantage. It is the lowest cost of operation in the industry.

Differentiation- attracting a niche market through offering a unique product and/or service.

Focussed strategy- concentrates on either cost leadership or differentiation.

These strategies can be compared to one another as they all offer the products and/or services to a speciality market. It is therefore up to the CEO to adopt the strategy that best suits his business. They differ as cost leadership is driven by company efficiency, size, scale, scope and cumulative experience, where as differentiation is driven by the specific needs of its niche market.

4. Describe the relationship between business processes and value chains.

Business processes focus on a set of activities that enable businesses to carry out specific tasks. The effectiveness of this process is then evaluated through a chain approach. This approach views an organisation as a series of processes, each adding value to the product or service. Through doing this the business can evaluate which products and services are being well executed and areas in which the business can improve on. E.g. lowering prices which gains customer rentention and therefore a competitive advantage for the business.