INFORMATION TECHNOLOGY IN BUSINESS

CHAPTER 2 : IDENTIFYING COMPETETIVE ADVANTAGES

MICHAEL PORTER'S five forces model is useful tool to aid organization in challenging decision whether to join a new industry or industry segment.

The five forces are:
1. Buyer Power
2. Supplier Power
3. Threat of Subtitute products & services
4. Threat of New Entrance , and last but not least;
5. Rivalry among Existence Competitors

THE THREE GENERIC 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.

3. Focused Strategy
- target to a niche market
- concentrate on either cost leadership or differentiation.

THE VALUE CHAIN - Targetting Business Processes

Supply Chain - a chain or series of processes that adds value to product & service for customer.
Add value to its products and services that support a profit margin for the firm.