CHAPTER 3... Strategic Initiatives for Implementing Competitive Advantage

STRATEGIC INITIATIVES

# Organizations can undertake high-profile strategic initiatives including: 

• Supply Chain Management (SCM)
• Customer Relatiionship Management (CRM)
• Business Process Reengineering (BPR)
• Enterprise Resource Planning (ERP)

SUPPLY CHAIN MANAGEMENT 

• Supply Chain Management (SCM) - involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.

4 BASIC COMPONENTS OF SUPPLY CHAIN MANAGEMENT :

* Wal-Mart and Procter & Gamble (P&G) SCM

SUPPLY CHAIN MANAGEMENT

• Effectiveness and efficient SCM system can enable an organization to:

CUSTOMER RELATIONSHIP MANAGEMENT

• CRM - involves managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability.
• Many organizations, such as Charles Schwab and Kaiser Permanente, have obtained great success through the implementation of CRM systems.
• CRM is not just technology, but a strategy, process, and business goal that an organization must embrace on an enterprisewide level.

CRM OVERVIEW

REENGINEERING THE CORPORATION - book written by MICHAEL HAMMER and JAMES CHAMPY that recommends seven principles for BPR.

FINDING OPPORTUNITY USING BPR

• A company can improve the way it travels

CHAPTER 2... Identifying Competitive Advantage

WHAT IS COMPETITIVE ADVANTAGE??

A product or service that an organization's customers place a greater value on than similar offerings from a competitor. Unfortunately, competitive advantage(CA) is temporary because competitors keep duplicate the strategy. Then, the company should start the new competitive advantage(CA).

Michael Porter's Five Model is useful tool to aid organization in challenging decision whether to join a new industry or industry segment.

::PORTER'S FIVE FORCES MODEL::-->> Evaluating Industry Attractiveness

1. Rivalry among existing companies.( the power of competitors)
2. Buyer power (the power of customers to drive down prices)
3. Supplier power (the power of suppliers to drive up prices of materials)
4. Threat of substitute products or services (the power of customers to purchase alternatives)
5. Threat of new entrants (the power of competitors to enter a market)

1. BUYER POWER

• High - when buyers have many choices of whom to buy.
• Low - when choices are few.
• To reduce buyer power (and create CA), 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

::THE COMPETITIVE ENVIRONMENT::

Bargaining Power of Customers/ Buyer Power

• Customers can grow large and powerful as a result of their market share.
• Many choices of whom to buy from
• Low when comes to limited items
• E.g. Used loyalty program (jusco card, tesco card, -being a members to get the discount)

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 CA.
  * 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 there are many alternatives to a product or service.
• Low - when there are few alternatives from which to choose.
• Ideally, an organization would like to