Course Notes
1.
How does Porter’s competitive forces model help companies develop competitive strategies using information systems?
In Porter’s competitive forces model, the strategic position of the firm, and its strategies, are determined by competition with its traditional direct competitors. This model provides a general view of the firm, its competitors, and the firm's environment. They are also greatly affected by new market entrants, substitute products and services, suppliers, and customers. Porter's model is all about the firm's general business environment. The model recognizes five major forces that could endanger a company’s position in a given industry, including the impact of government, affect all companies in the industry and therefore may have less impact on the relative success of a company within its industry. Although the details of the model differ from one industry to another, its general structure is universal. The five major forces can be generalized as follows. 1. The threat of entry of new competitors 2. The bargaining power of suppliers 3. The bargaining power of customers (buyers) 4. The threat of substitute products or services 5. The rivalry among existing firms in the industry Porter’s model identifies the forces that influence competitive advantage in the marketplace. Of greater interest to most managers is the development of a strategy aimed at establishing a profitable and sustainable position against these five forces. To establish such a position, a company needs to develop a strategy of performing activities differently from a competitor. Information systems help companies complete by maintaining low costs, differentiating products or services, focusing on market niche, strengthening ties with customer and suppliers, and increasing barriers to market entry with high levels of operational excellence. Information systems are most successful when the technology is aligned with business objectives. Four competitive strategies are: •
How does Porter’s competitive forces model help companies develop competitive strategies using information systems?
In Porter’s competitive forces model, the strategic position of the firm, and its strategies, are determined by competition with its traditional direct competitors. This model provides a general view of the firm, its competitors, and the firm's environment. They are also greatly affected by new market entrants, substitute products and services, suppliers, and customers. Porter's model is all about the firm's general business environment. The model recognizes five major forces that could endanger a company’s position in a given industry, including the impact of government, affect all companies in the industry and therefore may have less impact on the relative success of a company within its industry. Although the details of the model differ from one industry to another, its general structure is universal. The five major forces can be generalized as follows. 1. The threat of entry of new competitors 2. The bargaining power of suppliers 3. The bargaining power of customers (buyers) 4. The threat of substitute products or services 5. The rivalry among existing firms in the industry Porter’s model identifies the forces that influence competitive advantage in the marketplace. Of greater interest to most managers is the development of a strategy aimed at establishing a profitable and sustainable position against these five forces. To establish such a position, a company needs to develop a strategy of performing activities differently from a competitor. Information systems help companies complete by maintaining low costs, differentiating products or services, focusing on market niche, strengthening ties with customer and suppliers, and increasing barriers to market entry with high levels of operational excellence. Information systems are most successful when the technology is aligned with business objectives. Four competitive strategies are: •