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Module_3_with_narration_text - Module 3: IS for competitive...

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Module 3: IS for competitive advantage 1. Introduction In this lecture we consider competitive environment, competitive strategies, value chains and business processes, and their relevance to information systems. 2. Five forces model The five forces model accounts for the main competitive forces determining the attractiveness of an industry. The impact of the forces involved can be moderated by using information technology, which makes the five forces model a useful framework for considering the impact of information technology on business. 3. More choices for buyers mean more buyer power Buyer power in the Five Forces Model is high when buyers have many choices of product or service providers. As a supplier of goods or services, your organization is interested in reducing buyer power. Organizations may employ information technology to reduce buyer power. Loyalty programs, such as Fly Buys or AA Rewards, use IT to track customer behavior and to reward customers for repeat business. Customers involved in loyalty programs are less likely to switch suppliers. 4. Supplier power is high when buyers have few choices from whom to buy Supplier power is high when buyers have few choices of suppliers. As a customer, your organization is interested in reducing the supplier power.
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Module 3: IS for competitive advantage 2 To reduce supplier power, your organization can use e-marketplaces such as the one provided by GSB (http://www.gsb.co.nz) to reach more suppliers. 5. New entrants threaten the incumbents The threat of new entrants is high when it is easy for new competitors to enter the industry. Information technology can be used to create entry barriers products and services that customers come to expect, but that require knowledge and investment to provide. For example, modern postal service organizations, such as New Zealand Post, offer package tracking services. Establishing package tracking services requires an investment in IT infrastructure, and considerable IT-related knowledge throughout the organization. These are difficult to replicate for a new player attempting to enter the industry. 6. Substitute products or services
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Module_3_with_narration_text - Module 3: IS for competitive...

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