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MIS300_Midterm_Ch3 - MIS300 Study Guide Chapter Three-An...

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MIS300 – Study Guide – Chapter Three -An organization’s goals and objectives are determined by its competitive strategy . -Competitive Strategy: Determines the structure, features, and functions of every information system. The strategy determines value chains, which in turn determine business processes. The nature of business processes determines the structure of an information system. Ex: Industry Structure Competitive Strategy Value Chains Business Processes Information Systems -Porter’s FIVE FORCES MODEL: A model used to assess an industry structure. Five competitive forces determine industry profitability: - Bargaining power of customers -Threat of substitutions -Bargaining power of suppliers -Threat of new entrants -Rivalry among existing firms Organizations examine these five forces and determine how they intend to respond to them. The intensity of each of the five forces determines the characteristics of the industry, how profitable it is, and how sustainable that profitability will be. FORCE EXAMPLE OF STRONG FORCE EXAMPLE OF WEAK FORCE Bargaining Power of Customers Toyota’s purchase of auto paint Your power over the procedures and policies of your university Threat of Substitutions Frequent-traveler’s choice of auto rental Patients using the only drug effective for their type of cancer Bargaining Power of Suppliers Students purchasing gasoline Grain farmers in a surplus year Threat of New Entrants Corner latte stand Professional football team Rivalry Used car dealers Internal Revenue Service
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-According to Porter, firms engage in one of these four competitive strategies: Cost Differentiati on Industry Wide Lowest cost across the industry Better product/servic e across the industry Focus Lowest cost within an industry segment Better product/servic e within an industry segment -If a competitive strategy is to be a cost leader , then business activities need to be developed to provide essential functions at the lowest possible cost.
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MIS300_Midterm_Ch3 - MIS300 Study Guide Chapter Three-An...

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