Chapter 2 Strategy Technology 301 Final Review Operational effectiveness According to Porter firms suffer competition because they ve defined themselves according performing the same tasks better than rivals advantage that one firm has relative to competing firms performing different tasks than rivals or the same tasks in a different to operational effectiveness instead of strategic positioning Strategic positioning way Competitive advantage operational effectiveness helps but does not sustain Technology can be matched so easily so it is rarely a source of competitive advantage Sustainable competitive advantage Measure competitive advantage through accounting profits stock price Resource based view of competitive advantage consistently outperforming competitors in financial measures nonsubstitutable assumes that resources and capabilities are primary driver of competitive advantage and economic performance Fast follower enter with a comparable or superior product at a lower cost Imitation resistant value chain and most often involves technology rivals watch a pioneer s efforts learn from their mistakes and success then Resources for competitive advantage Brand symbolic connects all the information with a product or service consumers use brand to lower search cost a strong brand equals quality and inspires trust can use viral marketing getting consumers to spread the word to grow a way of doing business that competitors struggle to imitate valuable rare not easily imitated and Scale scale advantages economies of scale when the cost of an investment can be spread Differentiation can differentiate products based on tangible and intangible attributes the costs a customer incurs when moving from one product to another can across increasing units internet and tech leveraging businesses are highly scalable Switching costs involve actual money spent investments in time and data loss vertical product that differs in quality horizontal product is positioned in product space to be away from competitors used to appeal to different customers expands Value chain analysis model action an organization takes is either primary or support activity a transaction is an exchange of goods or services between 2 or more parties when the value of a product or service increases as its number of users primary and secondary working together to build value every Network effects Value chain is another way to view the organization as a system inputs processes outputs Primary activities directly related to the production and distribution of the organization s products and service ex inbound logistics operations outbound logistics marketing sales and service Support activities supports the creation of business value ex administration technology development HR procurement 75 of businesses fail to align their IT with their business objectives Competitive forces model 1 Potential new entrants high when it s easy for new competitors to enter 2 Rivalry among existing competitors high when competition is fierce 3 Threat of substitute products or services high when are many alternatives 4 Power of buyers high when buyers have many choices of whom to buy 5 Power of suppliers high when buyers have few choices of whom to buy from Run improve efficiency cut down cost layoff bottom line Porter s 3 strategies broad cost leadership large market segment broad differentiation and focused strategy target a niche market concentrate on either cost leadership or differentiation Business strategies improvement airline Grow improve performance top line improvement walmart Transform support innovation online banking top and bottom line Top line complementary products sales Bottom line capital minimize errors in a process expenses optimize manufacturing decrease transportation costs reduce cost of human Reach new customers offer new products cross sell services offer outbound marketing and sales service inbound logistics and operations Upstream Downstream Chapter 7 Understanding Network effects Network Effects Metcalfe s Law Network Externalities increases as its number of users grows value of a product or service Among the most important reasons you will pick one product or service over another Value from network effects come from three sources exchange every product or service subject to network effects fosters some kind of exchange like connecting plugging in etc staying power important for technology products the long term viability of a product greater n umbers suggest a stronger staying power and complementary benefits Total cost of ownership economic measure of the full cost of owning a product includes direct costs and indirect costs training support maintenance hardware and software account for only about 20 of TCO Chapter 8 Social Media Web 2 0 where initially undefined groups of users band together to solve problems when users collaboratively work to create content products and services internet services that foster collaboration and information sharing characteristics web based efforts that foster peer production content that is created shared that distinctly set Web 2 0 efforts apart from the static transition oriented web sites of Web 1 0 the most powerful feature is peer production Peer production leveraged to create much of the open source software that supports many of the Web 2 0 efforts Social media and commented on by a broader community of users Crowd sourcing create code and develop services is a type of peer production Blogs Wikis and video sharing sites and most social networking sites support the production and sharing of social media Blogs readers usually made in a reverse chronological order Trackback their content are links that refer readers back to cited sources Blogroll Peer produced services of servers storage and bandwidth is derived from both technical and social features Feed the most powerful feature of most social networks an update on an individual s activities that are broadcast to a member s contacts or friends they are inherently viral allows a blogger to see which and how many other bloggers are referring to a type of short message blogging often made via mobile device a list of a blogger s favorite blogs not all blogs include this provide comment mechanisms where users can post feedback for authors and other a website that can be modified by anyone from directly within a web browser value services have the ability to save their sponsors the substantial cost Wiki Microblogging the idea that a
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