MARCH 2012
PART C
QUESTION 2
Michael Porter’s Five Forces Model is useful tool to
aid organization in challenging decision whether to join a new industry or
industry segment. They are rivalry
among existing competitors, buyer power,
supplier power, threat of new entrants and threat of substitude product.
Rivalry among competitors have four :
1) Threat of new entrant
2) Bargaining power of customers
3) Threat of subtitutes
4) Bargaining power of supplier
Rivalry among competitors have four :
1) Threat of new entrant
2) Bargaining power of customers
3) Threat of subtitutes
4) Bargaining power of supplier
1.Buyer
Power
·
High – when
buyers have many choices of whom to buy.
·
Low – when
their choices are few.
·
To reduce
buyer power (and create competitive advantage), an organization must make it
more attractive to buy from the company not from the competitors.
·
Best
practices of IT-based
·
Loyalty
program in travel industry (e.g. rewards on free airline tickets or hotel stays
)
2.
Supplier Power
·
High – when
buyers have few choices of whom to buy from.
·
Low – when
their choices are many.
·
Best
practices of IT to create competitive advantage.
·
E.g. B2B
marketplace – private exchange allow a single buyer to posts it needs and then
open the bidding to any supplier who
would care to bid. Reverse auction is an auction format in which
increasingly lower bids.
3.
Threat of Substitute products & Services
·
High – when
it is easy for new competitors to enter a market.
·
Low – when
there are significant entry barriers to entering a market.
·
Entry
barriers is a product or service feature that customers have come to expect
from organizations and must be offered by entering organization to compete and
survive.
·
Best
practices of IT
·
E.g. new
bank must offers online paying bills, acc monitoring to compete.
4.
Rivalry among existence competitors
·
High – when
competition is fierce in a market
·
Low – when
competition is more complacent
·
Best
Practices of IT
·
Wal-mart and
its suppliers using IT-enabled system for communication and track product at
aisles by effective tagging system.
·
Reduce cost
by using effective supply chain.
OCTOBER 2012
PART C
QUESTION2 (A)
Porter’s 3 generic strategies are cost
leadership, differentiation and focused strategies.
1 ) Cost leadership
•
Becoming
a low-cost producer in the industry allows the company to lower prices to
customers.
•
Competitors
with higher costs cannot afford to compete with the low-cost leader on price.
2 ) Differentiation
•
Create
competitive advantage by distinguishing their products on one or more features
important to their customers.
•
Unique
features or benefits may justify price differences and/or stimulate demand.
•
Ex:
i-care by Proton
3 ) Focused strategy
•
Target
to a niche market
•
Concentrates
on either cost leadership or differentiation
Example of brand of cars
1)
Broad market, cost leadership
strategy : HYUNDAI
2)
Broad market, differentiation strategy
: AUDI
3)
Focused market, cost leadership
strategy : KIA
4)
Focused market, differentiation
strategy : HUMMER
MARCH 2013
PART C
QUESTION 1 (A)
Five primary value activities are inbound logistics, operations, outbound logistics, marketing and sales and customers service.
Inbound logistics are include the
receiving ,warehousing,and inventory control of input materials.Operations are the value-creating activities that
transform the inputs into the final product.Outbound logistics are the activities required to get the
finished product to the customer,including warehousing,order
fulfillment,etc.Marketing and sales are
those activities associated with getting buyers to purchase the
product,including channel selection,advertising,pricing,etc.Service activities are those that maintain and enhance
the product's value including customer support,repair services,etc.
