Value Chain and Competitive Forces

Value Chain and Competitive Forces Effects of In work outation Technology Module 2 parapraxis John Dow ITM524 Fundamentals of Information Technology Management Dr. Somebody Somebody February 4, 2012 Introduction Businesses are established with the sole reason to provide a intersection or service to a customer with the intend to make a profit. The amount of time, effort, and resources spend should generate a profit. Then, the profit depends on its effectiveness in performing these activities efficiently, so that the amount that the customer is willing to pay of the products exceeds the constitute of the activities in the value range of a function (NetMBA. om). Ideally, these products and/or services outpace the competition. In commit to do so, Michael Port, suggest a company must sustain long-term profitability (Porter, 2008). He suggests one must look beyond your direct competitors as explained in his revolutionary 1979 HBR article and further defined in 2008. There, he identifie s the five forces that shape industry competition, for businesses to utilize in shaping a strategic vision for long-term sustainability or better know for the organizations sustainability.This paper will deliver as points of discussion or analysis the value chain and competitive forces based on The Mini-cases 5 companies, 5 strategies, 5 transformations article and cases and what, if any, affects did Information Technology have on the value chain and competitive forces on those five organizations. Mini Case 1 A Better Place In the first mini case, a company called Better Place presents its contest within timely opportunity. It wants to enable the fastest way to bring electronic filling stations, as future technology, to a market of electronic vehicles.To gain a first in advantage of this new market, the company takes in to full consideration the Cost Advantage and the Value Chain. As identified by Porter, on e of the 10 cost drivers related to the value chain activities is geogr aphical location and timing of market entry. Furthermore, Differentiation and the Value Chain analysis was taken into consideration in other words, the uniqueness to gain advantages. Again, Porter identified several drivers of uniqueness. The ones applicable here are (1) policies, (2) timing, (3) location, at a minimum.Developing a strategy to maintain sustainability, or as some novice management called it maintain business viability (Fromartz, S. (2009), is distinguish to ensure long-term success. Better Places strategy is accruing a competitive advantage in removing a major barrier to the widespread adaption of electric cars by identifying favorable locations. Mini Case 2 Nike Nike had a unique challenge to overcome compliance over criticism of labor practices and capitalize on sustainability efforts. Identifying waste in product design and manufacturing enabled cost savings of $700 million a year.After careful analysis of technology and the value chain, Nike identified inboun d and operations technology (The Value Chain, NetMBA. com). Technology was a key enabler to analyze and identify excess materials utilized in manufacturing. For example, it was found it took leash shoes worth of material to produce just two. A end up Business Process Re-engineering (BPR) approach was adopted. BPR is the analysis and design of workflows and processes within an organization (wikipidia. com). Nike outsourced a value chain activity by hiring experts into the process, like Dow DuPont, and BASF.This enabled the company to value and improve its supply system. The result speaks for itself, as identified above. One could suspect that by definition, an Enterprise Resource Planning Software was integrated or change to identify the shortcomings in Nikes supply chain (ERP Definition and Solution CIO. com). Mini Case 3 Rio Tinto In its quest for sustainability, Rio Tintos challenge was to declare a social license to operate and nurture the local labor force needed by creati ng operations respectful to the environment, respectful of our employees, that is seen to be sustainable, give tongue to CEO Tom Albanese (Fromartz, S. 2009). Within technology and the value system, this called for an emphasis on media relations to disseminate information to the local community and its leaders. Solid communication practices, i. e. strategic communications, was of the utmost importance to gain the respect and acceptance of the population. Perhaps by obtaining the acceptance of the local population, Rio Tinto was able to mitigate any threats from new entrants into the market at the specific location as well allowing control of one of the five forces that shape industry competition to remain in check.Finally, helping to form the multinational Council on Mining and Metals should have allowed them strategic power over existing competitors (another of the 5 forces). Mini Case 4 General electric car General Electrics (GE) challenge was to create a new business in sust ainability. GE saw profitable business opportunity in helping companies turn in energy. To mitigate the Rivalry among Existing Competitors, GEs focused on bringing new capacity and was still able to produce pressure on prices mitigating negative price competition.As Porter mentioned Rivalry is especially destructive to profitability if it gravitates solely to price because price competition transfers profits directly form an industry to its customers. (Porter, 2008) From an information technology standpoint, GE concentrated on effectively measuring the amount of energy savings its products can produce and utilized the entropy as a proof of concept to customers who were interested in obtaining likewise results. This energy savings called Ecoimagination sold solutions within GE and out of GE resulting in the companys saving of $100 million and cut of leafy vegetablehouse-gas effect by 41%.As the proof of concept was accepted and implemented GE was invested $4 billion and reaped sal es of $17 billion in 2008 (Fromartz, S. (2009). Mini Case 5 Wal-Mart Creative new ways of supplying products to the customer has enabled Wal-Mart to green the supply chain, thereby boosting savings and increase profits to enable enduring sustainability. Wal-Mart identified its criteria down into the supply chain on a three stage path (Fromartz, S. (2009). It sourced information to more than 100,000 supplies about their energy and greenhouse-gas emissions.Then, measured their products throughout their life-cycle and finally made it transparent to the customer. Its focus on a greener product reaped rewards in a more efficient production, less waste and lower emissions. This effort enabled cost-savings to such an extensive degree that Wal-Mart is able to pass on to the customerenabling the superstore to maintain a competitive edgea strategy for sustainability. Conclusions In conclusion, innovative approaches give companies an edge over competitive forces within the business value cha in.Information technology is a key enabler to gather and disseminate information in a timely fashion enabling key decision makers with crucial information. Therefore, one must realize technology changes constantly and keeping up with its change is continuous improvement process. References CIO. com. ERP (Enterprice Resource Planning) Definition and Solution. Retrieved on January 28, 2012 from http//www. cio. com/article/40323/ERP_ Definition_ and_Solutions Fromartz, S. (2009). The Mini-Cases 5 Companies, 5 Strategies, 5 Transformations.MITSloan Management Review, Fall 2009, Volume 51, Number 1. NetMBA Business Knowledge Centers. The Value Chain. Retrieved January 28, 2012 from http//www. netmba. com/ strategy/value-chain/ Porter, M. (2008), The Five Competitive Forces That manikin Strategy. Retrieved January 28, 2012 from http//hbr. Org/2008/01/the-five-competitive-forces-that-shape- Strategy/ar/1 Wikipidia. com. Definition of Business Process Re-engineering (BPR). Retrieved Januar y 28, 2012 from http//en. wikipedia. org/wiki/Business_process_ reengineering