Académique Documents
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Culture Documents
Criteria:
1. Quality of national business environment.
2. The set of institutions, market structures and economic
policies supportive of high level of prosperity.
3. Company operations and strategy ranking.
Business Competitive
Environment
The First of Three Perspectives:
The Business Environment
• Business Environment
Business
• Enterprise Environment
Success
• IT Environment
Important Factors to Understand the
BCE of a Company
Defining Competitiveness and a
Competitive Model
How a Company Gains a Competitive
Advantage.
The benefits to be gained from
understanding the Competitive Advantage
of Nations concepts.
The Company Agenda
The Role of Government
Competitiveness: A Definition
The degree to which a nation can, under free
and fair market conditions, produce goods and
services that will meet the test of international
markets while simultaneously maintaining or
expanding the real income of its citizens.
Summary of Competitive Model
Three primary inputs to improved domestic
performance
– Human Resources
– Capital
– Technology
Trade policy and new competition act as
possible barriers to go global
Trickle down effect for increased standard
of living
How Does a Company Gain
Competitive Advantage?
Providing value to customers is what
competitiveness is all about.
Factor Demand
Conditions Conditions
Related and
Supporting Government
Industries
The Competitive Advantage of
Nations
The home nation plays a major role in the
achieving and sustaining competitive
advantage among companies
The home nation acts a catalyst in creating
the right business competitive environment
“Perceive a new basis for competing or find
a better means of competing in old ways”
Michael Porter
The Company Agenda
– To Create Pressure for Innovation
– To Be Strong at Home
– To Go Global
Substitute
Products
and Services
• Low-Cost Strategy
• Leverage economies of scale, past experience, and
alliances to provide the cheapest prices.
• IS can play a key role.
Supporting Strategies
Augment Competitive Strategies
• Innovation – Can help contribute to product
differentiation and operational efficiency.
• Objective:
• Maximize value adding activities.
• Minimize non-value adding activities.
Porter Value Chain
• Nearly all of the pieces can benefit from the correct use
of IS, given the necessary talent and adequate funding.
In Closing
Michael E. Porter
Competitive Strategy
Porter Competitive Model
• Was not developed for IS use.
• Breaks an industry into logical parts,
analyzes them and puts them back together.
• Avoids viewing the industry too narrowly.
• Provides an understanding of the structure
of an industry’s business environment.
• Provides an understanding of competitive
threats into an industry.
Two Key Questions
Substitute
Products
and Services
Customer Strategy
Parents Young Time Leisure Senior
Teenagers Adults with Conscious Ethnic
with Adults Citizens Focus
Kids Social Focus Adults
Market Strategy
Local Regional National International
Company Structure Strategy
Layer 4
Application
Software
Layer 3
Operating
System
Software
Layer 2
Computing
Platforms
Layer 1
Basic
Circuitry
Figure 3-3
The New Computer Industry
Layer 5 Computer Super Mass Mail Value-add Direct
Distributors Clubs Sales Other
Dealers Stores Merchandisers Order Resellers
Force
Layer 4
Applications
•Spreadsheets Lotus 1-2-3 Microsoft Excel Quattro Pro
•Word Processors
•Database
Layer 3
Operating MS DOS Windows OS/2 Unix Apple
System
Novell Netware Banyan IBM Others
Software
Layer 2
Computer IBM Compaq Other Intel-Based PCs Apple Macs Other
Platforms
Layer 1
Microprocessor Intel X86 Motorola RISC Power PC
Figure 3-4
The Computer Industry
Layer 6 Direct
Sales and Computer Super Mass Mail Value-add
Sales
Internet
Distribution Stores Stores Merchandisers Order Resellers Direct
Force
Layer 5
Application
Desktop Suites Enterprise Resource Planning Supply Chain Management Other
Software
•Enterprise
•Specific Word Processors Spread Sheets Publishing Groupware Data Warehouse Other
Layer 4
Database & LAN, WAN and Internet Software Interfaces, Browsers and Search Engines
Networking
Hierarchical Database Relationship Database
Software
Layer 3
Operating
System Windows Unix Linux Apple
Software
Layer 2
Computer
Supercomputer Mainframe Midrange Workstation PC Handheld Device
Hardware
Platforms
Layer 1
Microprocessor Intel X86 Motorola RISC Power PC
The Computer (IT/IS?) Industry
as seen by IBM in 2002
1. Services
2. Applications Software
3. Middleware Software
4. Systems
The Computer Industry
IT Consulting
Systems Integration
Outsourcing
Training and Education Services
Financing
Maintenance
Operating System
Memory Networking Displays Systems
Processors Storage
2000
1999
1998
Supercomputer
1997
Mainframe
Midrange
1996 Workstation
Personal Computer
1995
Source: Dataquest
1994
2002
PCs
2001
Total Hardware
Billions of $s
2000
1. Languages
2. Application Packages
3. Connectivity and Compatibility
4. Multimedia
5. Communication Device--Groupware
PC Industry Change
• Atari • Dell
• Cromemco • Gateway
• Fortune Systems • IBM
• Wicat Systems • HP (Compaq)
• Kaypro • NEC
• Morrow Designs
• Osborne Computer
• Victor Technologies
The Future Computer Industry
Basic Concept:
Partnering Marketing
Managing Distributing Operating
with Buying and
Inventory Inventory Stores
Vendor Selling
Value Chain Things to Remember
1. Value to customer objective is not clear.
2. Relay team concept is too time consuming and doesn’t
work in the current competitive environment.
3. Maximize the value-add activities and eliminate as
much as possible the things that do not add value.
4. Make sure that each step in the overall process (each
function) does things consistent with the overall
objective of value to customer.
SUPPORT ACTIVITIES
Generic Value Chain
FIRM INFRASTRUCTURE
TECHNOLOGY DEVELOPMENT
PROCUREMENT
PRIMARY ACTIVITIES
Adapted with the permission of the Free Press, an imprint of Simon & Schuster Inc.. from
COMPETITIVE ADVANTAGE: Creating and Sustaining Superior Performance by Michael Porter. Copyright Figure 3-6
© 1985 by Michael E. Porter.
Property and Casualty Industry Value Chain
FIRM
INFRASTRUCTURE
-Financial Policy -Regulatory Compliance - Legal - Accounting
HUMAN
RESOURCE
Actuary Agent Claims
MANAGEMENT Training Training Training
Actuarial Methods Product
TECHNOLOGY
Claims
Investment Development
DEVELOPMENT Procedures
Practices Market Research
I/T
PROCUREMENT Communications
Included with permission of Michael E. Porter based on ideas in Competitive Advantage: Creating and Sustaining
Superior Performance, copyright 1985 by Michael E. Porter.
Figure 3-7
Technologies in the Value Chain
Information System Technology
FIRM
Planning and Budgeting Technology
INFRASTRUCTURE
Office Technology
HUMAN Training Technology
RESOURCE Motivation Research
MANAGEMENT Information Technology
Product Technology
Software Development Tools
TECHNOLOGY Computer-Aided Design Information Systems Technology
DEVELOPMENT Pilot Plant Technology
Information Systems Technology
Communication System Technology
PROCUREMENT Transportation System Technology
Adapted with the permission of the Free Press, an imprint of Simon & Schuster Inc.. from
COMPETITIVE ADVANTAGE: Creating and Sustaining Superior Performance by Michael Porter. Copyright Figure 3-8
© 1985 by Michael E. Porter., p. 167.