E Business Planning, Strategy & Management part 3

Summary

This 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).