E Business Planning, Strategy & Management part 3
Summary
TLDRThis video covers essential concepts in e-business planning, strategy, and management, with a focus on external analysis using Michael Porter's Five Forces model. The lecture explains how supplier and buyer power, competition, threats of new entrants, and substitutes shape a firm's competitive advantage. It also delves into e-business strategy, describing its integration with organizational and informatics strategies, and the importance of process redesign. Key ideas include strategic analysis, competitive positioning, and the role of information systems management in driving organizational success in the digital era.
Takeaways
- 💼 Michael Porter's Five Forces model is a well-known tool for assessing external factors influencing a firm's competitive advantage.
- 📊 The five forces include supplier power, buyer power, threat of new entrants, threat of substitutes, and the intensity of competition.
- ⚙️ The internet has both positive and negative effects on supplier power, providing greater access to customers but also reducing barriers to entry for competitors.
- 💡 Buyers gain more power when products are undifferentiated and switching costs are low, leading firms to lower prices to stay competitive.
- 🔗 The threat of new entrants increases when entry barriers are low, such as capital requirements, economies of scale, and brand differentiation.
- 📉 The threat of substitutes grows when alternative products meet or exceed customer expectations, which can erode brand loyalty.
- 🏷️ E-business strategy integrates organizational and informatics strategies and can be viewed as a corporate, unit, or process strategy depending on the business model.
- 📅 The planning horizon for e-business strategy is shorter (3 to 6 months) compared to traditional organizational strategy (3 to 6 years) due to rapid technological changes.
- 🔄 E-business management emphasizes the redesign of business processes through ICT, including activities like process mapping, specification, and implementation.
- 📚 Informatic management is divided into three areas: information management, information system management, and ICT management, each supporting different aspects of organizational activities.
Q & A
What is the primary focus of the video lecture series?
-The video lecture series focuses on business planning, strategy, and management, specifically external analysis using Michael Porter's model and e-business strategy.
What is Michael Porter's Five Forces Model?
-Michael Porter's Five Forces Model is a framework for analyzing the competitive forces that shape an industry. These forces are: the power of suppliers, the power of buyers, the threat of new entrants, the threat of substitution, and the intensity of competition.
How does the internet impact the bargaining power of suppliers?
-The internet affects the bargaining power of suppliers both positively and negatively. It provides suppliers access to larger markets, but it also reduces their power due to the increased competition and customer empowerment that the internet enables.
What factors contribute to the bargaining power of buyers?
-The bargaining power of buyers is influenced by factors such as buyer concentration, purchase volumes, product differentiation, switching costs, and the ability of buyers to integrate backward in the supply chain.
What are the key barriers to entry that affect the threat of new entrants?
-Key barriers to entry include high capital requirements, economies of scale, product differentiation, customer loyalty, switching costs, and access to distribution channels.
How does the threat of substitution affect an industry?
-The threat of substitution increases when alternatives to a firm's products or services are easily available. Brand loyalty can decrease if competitors offer better or more innovative options, especially with lower switching costs.
What is e-business strategy, and how does it integrate with organizational strategy?
-E-business strategy is the integration of organizational strategy with informatics strategy, focusing on the use of ICTs to improve both. It can either be the corporate strategy for businesses like Amazon, a business unit strategy, or a process strategy focusing on specific operations.
What is the difference between traditional organizational strategy and e-business strategy in terms of planning horizon?
-Traditional organizational strategy typically has a planning horizon of 3-6 years, whereas e-business strategy, due to rapid technological change, operates on a much shorter 3-6 month planning horizon.
How does process redesign play a role in e-business management?
-Process redesign, often called business process re-engineering, involves mapping and selecting key processes, specifying new processes, and implementing changes using ICT to improve efficiency and meet organizational goals.
What are the three generic competitive strategies proposed by Michael Porter?
-Michael Porter's three generic strategies for gaining competitive advantage are: cost leadership (becoming the low-cost leader), differentiation (offering unique products or services), and focus (targeting a specific market or niche).
Outlines
🔍 External Analysis Using Michael Porter's Five Forces Model
The paragraph introduces the external analysis using Michael Porter's Five Forces model in the context of e-business strategy and management. It contrasts this with the previously discussed internal analysis, particularly the value chain model by M. Porter. The Five Forces model assesses external factors that impact a firm's competitive advantage, such as supplier power, buyer power, the threat of new entrants, the threat of substitutes, and competitive intensity. The internet's role in altering the balance of these forces is emphasized, both enhancing and diminishing supplier and buyer power.
🏢 The Three Viewpoints of E-Business Strategy
This paragraph discusses e-business strategy as the integration of organizational and informatics strategies. Three viewpoints of e-business strategy are described: 1) E-business as the entire corporate strategy, particularly relevant for businesses like Amazon; 2) E-business as a business unit strategy, applicable to specific units within larger companies; and 3) E-business as a process strategy, focused on redesigning key organizational processes through ICT innovations. The differences in planning horizons, processes, and business focus between organizational strategy and e-business strategy are also explored.
⚙️ Strategic Analysis and Implementation in E-Business
This paragraph delves into the stages of strategy formulation: strategic analysis, strategic choice, and strategic implementation. Strategic analysis involves assessing the external environment, organizational resources, and goals. Strategic choice focuses on generating options and selecting the best approach. Strategic implementation revolves around organizing resources, restructuring the organization, and guiding decisions to achieve the strategic goals. The role of competitive positioning in e-business strategy is also discussed, with a focus on Michael Porter’s three generic strategies: cost leadership, differentiation, and focus.
🧠 Informatics Strategy and E-Business Management
This paragraph explains how informatics strategy supports organizational activities by ensuring alignment between an organization’s activities and its information systems. Issues such as fragmentation, redundancy, inconsistency, and interoperability are highlighted. The role of ICT in driving organizational change through business process re-engineering is emphasized, along with a focus on process mapping, selection, design, and implementation. Finally, three forms of informatics management—information management, information system management, and ICT management—are outlined, with a discussion of data administration, knowledge management, and content management.
Mindmap
Keywords
💡External Analysis
💡Michael Porter’s Five Forces
💡Power of Suppliers
💡Power of Buyers
💡Threat of New Entrants
💡Threat of Substitutes
💡E-Business Strategy
💡Competitive Advantage
💡Business Process Re-engineering (BPR)
💡Informatics Management
Highlights
Introduction to external analysis using Michael Porter's five forces model.
Explanation of the five forces: bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threat of substitutes, and competitive rivalry.
Discussion of the impact of the internet on supplier power, including access to more customers and the reduced power due to ease of entry into the industry.
Explanation of how buyers' bargaining power can erode industry profitability by forcing lower prices.
The role of competition intensifying due to price transparency and customer expectations in the internet era.
Barriers to entry are crucial in protecting existing firms from new competitors, including capital requirements, economies of scale, product differentiation, switching costs, and access to distribution channels.
Threat of substitutes is heightened due to the ease of entry into markets and availability of alternatives.
E-business strategy integrates both organizational and informatics strategies, which are essential for aligning business operations with technological innovations.
Three viewpoints on e-business strategy: corporate strategy, business unit strategy, and process strategy.
Organizational strategy typically has a long-term horizon, while e-business strategy requires shorter, more iterative planning cycles.
Strategic analysis includes understanding the environment, setting objectives, and leveraging internal and external resources.
Michael Porter's three generic strategies for competitive advantage: cost leadership, differentiation, and focus strategies.
Informatics strategy encourages closer alignment between business processes and information systems, reducing data fragmentation and inconsistency.
Business process re-engineering is essential for redesigning organizational processes using ICT to improve efficiency.
Three fundamental functions of information management: data administration, knowledge management, and content management.
Transcripts
thank you very much for watching the
third parts of video lectures on E
business planning strategy and
management in this video we will discuss
external analysis using Michael Portos
model U business strategy and management
and informatics
Management in the previous video we
discussed tool that used to assess
internal factors of a firm well known
tools is value chain developed by M
Water Michael pters also has the tool to
assess in the external factors that
influence firm especially the firm
competitive Advantage which is p Force
Michael pter P force model is very
wellknown model to assess external
factors those five forces are the powers
of suppliers the powers of buyers thread
of new entrance threat of substitutions
and intensities of
competition baining power of suppliers
or power of suppliers in short the power
of suppliers depends on the natures of
competition in an industry the internet
has both positive and negative effects
on Supply Power the positive effect is
the internet provide supplies with
access to larger numbers of customers
the negative one the internet is of
entry into the industry and the
empowerment of customers this will
reduce suppliers power suppliers can try
to increase their power by
discriminating on price to different
customers suppliers can also increase
power by differentiating their surface
as long as it cannot be easily imitated
by
repuls buning power of bias
profitability of an industry can be
eroded where buyer can accept power of
supplies is for for FM into selling at
lower prices Key issues include how
concentrated buyers are or if they buy
in a large volume if the product both
are undifferentiated buyer will seek to
ensure supplies compete on price
distance of switching cost lock in the
buyers and regist their beginning
position if firm have low profits they
will seek to lower the cost of buying if
firm who are buyers become integrated
backwards along the supply chain
then they can improve their beginning
position the intensities of refer or
intensities of
competition the internet has caused is
of Entry meaning that any firm can enter
the industry easily competition is
intense because of differentiation and
low cost are difficult to sustain over a
long term as refiles seek to match or
exceed customer expectation price
comparison sites make the market more
transparent and more difficult for firm
to sustains an advantage in the face of
increasing
competition threat of new entrance
threat of new entrance refer to the
possible reductions in profitability for
the existing swims in the industry due
to increased competition by news the
existing firm try to create a barrier of
Entry so that new entrance difficult to
penetrate there are five main entry
barriers discussed in the liter this
include Capital requirements and the
cost of entering industry if the capital
requirement is high it is difficult to
penetrate the industry economic upscale
where cost of Productions are spread
over a large numbers of unit produced
leading to low average cost this is also
create difficulty for new entrance to
penetrate the industry product
differentiation strong brand Image
Design or application this is also
create barrier entry for the new
entrance to ENT industry switching cost
time energy or money incurred by
customer wishing to switch loyalty to
rival firm this how to create bar rry
and finally access to destion channel
fulfillment depending on the assessing
of customer this one also create barrier
of
Entry threat of substitution ease of
entry into a business makes the threat
of substition products High the ease of
Entry LEDs to high competitions and the
great deal of consumer Choice brand
loyalty only exist exist until a Repel
offers a product of surface that exceeds
customer expectations suppliers need to
build a switching cost to deter customer
from switching to
arrival the internet has a great impact
to all forces this table give you the
ideas what the impact of the internet on
the five competitive
Force e bus strategy e business concerns
itself with the junctures of icts and
the organization therefore e business
must concern with the development of
both the strategy for the organizations
and the strategy for informatics e
business strategy is the Integrations of
both organizational and informatic
strategy at least there are three
different viewpoints as to what e
business strategy constitutes the first
one e business strategy is organization
or corporate strategy in this Viewpoint
there is little or no distinction
between organization strategy and E bus
strategy this is only appropriate if e
business is effectively the entire
corporation like Amazon the second one e
business strategy is business unit
strategy in many companies the E
business strategy may only be applicable
to a particular business unit for
example some companies run their e
business as a separate but parallel
operation with their traditional one for
the third one e business strategy as a
process strategy in this strategy a key
organization process or human activity
system or perhaps an integrated set of
such processes may be chosen for radical
redesign with ICT Innovation
organization and business strategy there
are a number of key differences between
organization strategy and E business
strategy in the planning Horizon
planning process and business purpose
the planning Horizon organization
strategy tend to work with a 3 to 6
years Horizon for planning because of
the technologial progress a business
stud may only be able to work with 3 to
6 month planning Horizon planning
process organizational strategy tends to
be produced in one off or periodic
manner a business strategy has to be
cyclical in Naturals reflecting
continuous interaction between Technical
and social infrastructures business
focus organizational strategy has
traditional focus on Productions of
goods or services a business strategy
focus on information and CM
Focus organization planning and
informatics planning organization
planning is the process of formulating
an organization strategy informatics
planning is the process of formulating
an informatics strategy an organization
strategy will critically affect the
directions of an informatic strategy
stry however in the modern business
World organizational and informatic
strategy are typically in a mutual cycle
of
reinforcements with the advancements of
Information Technology the formulations
of an informatic strategy is likely to
critically affect the formulation of
future business strategy a business
planning is therefore a socio technical
activity we are assuming of course that
such planning will include V
of not only internal but also external
process hence e-commerce strategy will
be subsumed by E bus
strategy strategic analysis strategic
choice and strategic implementation are
stages in formulations of strategy
strategic analysis involves analysis of
the environment expectation objective
power and culture in the organization
and organizational resources strategic
analysis inop determining the ionization
missions and goals strategic analysis
inop answering the questions what should
we be doing and where are we going
strategic Choice invols generating
strategic options evaluation of such
options and the selection of a suitable
strategy to achieve the selected option
strategic Choice involves answering the
question what Roots have we selected
strategic implementation involves
organizing resources restructuring
elements of the organization and
providing suitable people and systems
strategic implementation comprise
determining policies making decision and
taking actions strategic implementation
improves answering the questions of how
do we guide our collective decision to
get there what choice we have and how
shall we do
it organizational Strat stres in
commercials environments an organization
takes up a particular position in
relation to its competitor this we might
Define as a competitive positions of the
organization how we determine a
competitive position of an organization
at the beginning of this video we learn
about micop pipos so we use this pipos
model to determine a competitive
position of an organization according to
Michael berter a competitive advantage
can be gained by engaging in one or more
of the three generic organizational
strategies because the advantage
strategy this essentially aims to
establish organization as a low cost
leader in the market differentiation
strategy the organization's undertaking
the strategy aims to differentiate it
product or service from its competitor
location of focus strategy a location
strategy involves the organization
attempting to find a new market
informatic strategy and organizational
fit one of the propose benefits of
having an explicit informatic strategy
is to encourage a closer fit between an
organization's activities and its
information systems how do we measure
this fit fragmentation forit is evident
in the situation in which data is
fragmented redundancy for is evident
where large amounts of data are
unnecessarily replicated across
Information Systems usually because
interface do exist between systems
causing the same data to be entered many
times
inconsistency forit is evident when some
data are held differently in different
system or processed differently by
different systems leading to
inconsistency in the ways in which
information is produced
interoperability the reer to the level
to which system communicate and
cooperate within the infrastructures the
system which are fragmented redundant
and inconsistent are likely to suffer
from poor level of
interoperability e business management
in general the focus on organizational
change through ICT is critical a key
emphasis has been on the redesign of
so-called business processes with ICT
such process redesign sometimes called
business process re-engineering is
likely to infor the following activities
process mapping process selections
process specification process design and
process implementation process mapping
this involves the constructions of high
level map of organization processes
process connections and key processes
process selection from the process map
particular process or subprocess need to
be prioritize in terms of the importance
of redesign to them three set of
criteria may be used to rank process for
redesign the health of the process it's
important to organizational performance
and the visibility for
redesign process design will improve the
re-engineering team identifying the
problem with the existing process
challenging assumptions about ways of
doing things and the brainstorming of
new approaches to organizational
activities design Workshop will be held
in which various stakeholders will
participate process specification this
generally involves the modeling of both
existing processes and the design of new
processes using some agreed
representation prism such as some system
modeling rotation process implementation
this is probably the most difficult
piece of process redesign and invol in
using new work practices and Associated
technology into
organization informatics management
Michael ear has distinguished between
three forms of informatics management
information management which is
concerned with the off strategic
directions of the organization and the
planning regulation and coordinations of
information in support of this direction
information system management is
concerned with providing information
handling to support organizational
activities
and ICT management which is concerned
with providing the necessary technical
infrastructure for implementing desired
information
handling for many organizations
information system and ICT servfaces
will be organized in one functions the
department that responsible running is
and ICT will be improved in setting up
and managing development related project
it will also be critically involved in
evaluating ICT system for the
acquisation in various
ways these are three fundamental
functions of Information Management data
Administration Knowledge Management and
content management data Administration
is the administration of data resources
Knowledge Management is the management
of organizational memory content
management is the management of web
based
material we are reaching toward the end
of this video video lectures here are
some questions for you describe three
viewpoints of e business
strategy what are the five competitive
Force which force is the most important
in this internet era what are the three
Forest generic strategies for a
competitive Advantage explain briefly
each thank you very much for watching to
learn more please read the relevant
chapter in the text box
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