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Leveraging IT Applications for Competitive Advantage: SCM, CRM, BI, and Collaboration - Pr, Study notes of Introduction to Business Management

How organizations can use it applications such as supply chain management (scm), customer relationship management (crm), business intelligence (bi), and integrated collaboration environments (ice) to gain a competitive advantage. The importance of understanding business problems and available technologies, the benefits of each it application, and real-life examples of companies like federal express, charles schwab, and dell. The document also introduces the five forces model to help organizations determine the attractiveness of an industry.

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Uploaded on 08/07/2009

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Competitive Advantage
September 7 – September 13
Introduction to Competitive Advantage :
oOrganizations may use information technology in creative ways to gain a competitive
advantage. A company gains a competitive advantage by providing a product or service
in a way that customers value more than what the competition is able to do.
oThe textbook reiterates a point it made in the first chapter. Technology is not nearly as
important as what you do with it.
oTo gain a competitive advantage, you need to:
understand the business problem.
understand the available technologies capable of solving a problem.
oA temporary advantage simply means that whatever you do, sooner or later the
competition duplicates what you’ve done, or even passes you with a better system.
oThe fist mover is the company who is first to market with a new IT-based product or
service, may well capture new customers it never gives up, and it often gains additional
benefits by being viewed as an innovative market leader.
Gaining Competitive Advantage with IT Applications:
oBusinesses use four types of important IT applications to gain a competitive advantage
(p. 72):
Supply chain management (SCM)
Customer relationship management (CRM)
Business intelligence (BI)
Integrated collaboration environments (ICE)
oSupply chain management (SCM) tracks inventory and information among business
processes and across companies. An SCM system is an IT system that supports supply
chain management activities by automating the tracking of inventory and information
among business processes and across companies (p. 72).
A well-designed supply chain optimizes the following (p. 74):
Fulfillment – ensuring the right quantity of parts for production or
products for sale arrive at the right time.
Logistics – keeping the cost of transporting materials as low as possible
consistent with safe and reliable delivery.
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Competitive Advantage September 7 – September 13

 Introduction to Competitive Advantage:

o Organizations may use information technology in creative ways to gain a competitive

advantage. A company gains a competitive advantage by providing a product or service in a way that customers value more than what the competition is able to do.

o The textbook reiterates a point it made in the first chapter. Technology is not nearly as

important as what you do with it.

o To gain a competitive advantage, you need to:

 understand the business problem.  understand the available technologies capable of solving a problem.

o A temporary advantage simply means that whatever you do, sooner or later the

competition duplicates what you’ve done, or even passes you with a better system.

o The fist mover is the company who is first to market with a new IT-based product or

service, may well capture new customers it never gives up, and it often gains additional benefits by being viewed as an innovative market leader.  Gaining Competitive Advantage with IT Applications: o Businesses use four types of important IT applications to gain a competitive advantage (p. 72):  Supply chain management (SCM)  Customer relationship management (CRM)  Business intelligence (BI)  Integrated collaboration environments (ICE)

o Supply chain management (SCM) tracks inventory and information among business

processes and across companies. An SCM system is an IT system that supports supply chain management activities by automating the tracking of inventory and information among business processes and across companies (p. 72).  A well-designed supply chain optimizes the following (p. 74):

 Fulfillment – ensuring the right quantity of parts for production or

products for sale arrive at the right time.

 Logistics – keeping the cost of transporting materials as low as possible

consistent with safe and reliable delivery.

 Production – ensuring production lines function smoothly because high

quality parts are available when needed.

 Revenue and profit – ensuring no sales are lost because shelves are

empty.

 Spend – keeping the cost of purchased parts and products at acceptable

levels.

o A customer relationship management (CRM) system uses information about customers to

gain insights into their needs, wants, and behaviors in order to serve them better (p. 78).

 A front office system is the primary interface to customers and sales channels;

they send all the customer information they collect to the database (p. 81).

 A back office system is used to fulfill and support customer orders and they also

send all their customer information to the database (p. 81).

o Business intelligence (BI) is knowledge about your customers, your competitors, your

business partners, your competitive advantage, and your own internal operations. It gives your business the ability to make effective, important, and often strategic business decisions (p. 82).

 BI systems are the IT applications and tools that support the BI function within an

organization (p. 82).

o An integrated collaboration environment (ICE) is the environment in which virtual teams

do their work.

 Virtual teams are teams whose members are located in varied geographic

locations and whose work is supported by specialized ICE software or by more basic collaboration systems (p. 88).

 Competitive Advantage Examples:

o Federal Express created a tracking system that allowed customers to access their

database through the Internet and obtain up-to-date information about the packages.

o Charles Schwab offered its customers 24 hour-a-day services over the Internet in addition

to online stock trades.

o Threat of substitute products or services is high when there are many alternatives to your

product or services, and low when there are few choices.

 In many ways, IT actually is a hindrance because it makes easier for others to

create new products or services (p. 243).

o The threat of new entrants is high when it is easy for competitors to enter the market, and

low when it is hard for competitors to enter the market.

 IT can be used to create an entry barrier. An entry barrier is a product or service

feature that customers have come to expect from companies in a particular industry. An entry barrier is a product or service feature that customers have come to expect from companies in a particular industry (p. 244).

o High rivalry among existing competitors make an industry less attractive and low rivalry

among existing customers make an industry more attractive.

 Try to use IT to lower costs so that you can offer your products and services

cheaper than your competitors (p. 244).