Laudon, Kenneth and Laudon, Jane
Management Information Systems: Managing the Digital Firm, 11e, Prentice- Hall Review Questions page 33
How does Porter’s competitive forces model help companies develop competitive strategies using information system? •
Define Porter’s competitive forces model and explain how it works. •
List and describe four competitive strategies enabled by information system that firms can pursue. •
Describe how information system can support each of these competitive strategies and give examples. •
Explain why aligning IT with business objectives is essential for strategic use of systems 1. This model provides a general view of the firm, its competitors, and the firm’s environment. Porter’s model is all about the firm’s general business environment. In this model, five competitive forces shape the fate of the firm: •
new market entrants
substitute products and services
Low-cost leadership: lowest operational costs and the lowest prices. •
Product differentiation: enable new products and services, or greatly change the customer convenience in using existing products and services. •
Focus on market niche: enable a specific market focus and serve this narrow target market better than competitors. •
Strengthen customer and suppliers: tighten linkages with suppliers and develop intimacy with customers. 1.3 Low-cost leadership: use information systems to improve inventory management, supply management, and create efficient customer response systems. Example: Wal-Mart. •
Product differentiation: use information systems to create products and services that are customized and personalized to fit the precise specifications of individual customers. Example: Google, eBay, Apple, Lands’ End.
Focus on market niche: use information systems to produce and analyze data for finely tuned sales and marketing techniques. Analyze customer buying patterns, tastes, and...
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