Value Chain and Competitive Forces

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Value Chain and Competitive Forces:
Effects of Information Technology

Module 2 Case

John Dow

ITM524: Fundamentals of Information Technology Management

Dr. Somebody Somebody

February 4, 2012

Introduction
Businesses are established with the sole reason to provide a product or service to a customer with the intend to make a profit. The amount of time, effort, and resources spend should generate a profit. Then, the profit depends “on its effectiveness in performing these activities efficiently, so that the amount that the customer is willing to pay of the products exceeds the cost of the activities in the value chain” (NetMBA.com). Ideally, these products and/or services outpace the competition. In order to do so, Michael Port, suggest a company must sustain long-term profitability (Porter, 2008). He suggests one must look beyond your direct competitors; as explained in his revolutionary 1979 HBR article and further defined in 2008. There, he identifies “the five forces that shape industry competition”, for businesses to utilize in shaping a strategic vision for long-term sustainability; or better know for the organizations’ sustainability. This paper will deliver as points of discussion or analysis the value chain and competitive forces based on ‘The Mini-cases: 5 companies, 5 strategies, 5 transformations article and cases; and what, if any, affects did Information Technology have on the value chain and competitive forces on those five organizations.

Mini Case # 1 – A Better Place
In the first mini case, a company called Better Place presents its challenge within timely opportunity. It wants to enable the fastest way to bring electronic filling stations, as future technology, to a market of electronic vehicles. To gain a “first in” advantage of this new market, the company takes in to full consideration the Cost Advantage and the Value Chain. As identified by Porter, on e of the 10 cost drivers related to the value chain activities is geographical location and timing of market entry. Furthermore, ‘Differentiation and the Value Chain’ analysis was taken into consideration; in other words, the ‘uniqueness’ to gain advantages. Again, Porter identified several drivers of uniqueness. The ones applicable here are (1) policies, (2) timing, (3) location, at a minimum.

Developing a strategy to maintain sustainability, or as some novice management called it “maintain business viability” (Fromartz, S. (2009), is key to ensure long-term success. Better Place’s strategy is accruing a competitive advantage in removing a major barrier to the widespread adaption of electric cars by identifying favorable locations.

Mini Case # 2 – Nike
Nike had a unique challenge to overcome compliance over criticism of labor practices and capitalize on sustainability efforts. Identifying waste in product design and manufacturing enabled cost savings of $700 million a year. After careful analysis of technology and the value chain, Nike identified inbound and operations technology (The Value Chain, NetMBA.com). Technology was a key enabler to analyze and identify excess materials utilized in manufacturing. For example, it was found it took three shoes’ worth of material to produce just two. A complete Business Process Re-engineering (BPR) approach was adopted. BPR is the analysis and design of workflows and processes within an organization (wikipidia.com). Nike outsourced a value chain activity by hiring experts into the process, like Dow DuPont, and BASF. This enabled the company to evaluate and improve its supply system. The result speaks for itself, as identified above. One could suspect that by definition, an Enterprise Resource Planning Software was integrated or modified to identify the shortcomings in Nike’s supply chain (ERP Definition and Solution CIO.com).

Mini Case # 3 – Rio Tinto
In its quest for...
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