Competitive Advantage with Information

Technology

Topic 2

Text MaterialsChapter 2 – Major Business Initiatives

Achieving Competitive Advantage with IT

Competitive Advantage

• Off-line (store) Retail• Online Retail• Automotive• Online music• Music players• Web search• Personal computers• Software

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Market Capitalization, February 2007

Lockheed Martin $43,000,000,000

Exxon Mobil $438,000,000,000

Walmart $196,000,000,000

General Motors $15,000,000,000

IBM $144,000,000,000

Dell $43,000,000,000

Google $157,000,000,000

Microsoft $265,000,000,000

eBay $38,000,000,000

Apple $107,000,000,000

1990DJI $5000 MSFT $5000

2008DJI MSFT

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Competitiveness

How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services.

Competitiveness

Our PhilosophyPFSweb is an outsourcing solutions design firm with an extensive offering of world-class logistics, fulfillment, customer care and technology infrastructure that can be leveraged to create unique, client-specific business solutions. Our philosophy is not to fit your business model into our pre-existing infrastructure, but rather to develop our infrastructure around your unique needs. We are flexible, scalable, and adaptable so we can keep pace with your ever-changing needs, whether you are adding new sales channels, marketing initiatives, vendor managed inventory (VMI) programs or special projects. We realize that no two clients face the exact same challenges, and for that reason, we are always extending our technology and operations capabilities based directly on client needs. Our philosophy is that there is absolutely no favorable argument for you to consider outsourcing with PFSweb unless we can execute at a greater performance level than what you could achieve in-house or through an alternative partner.

Competitiveness

Productivity

Measures how well an organization is utilizing its resources.

Productivity

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http://data.bls.gov/PDQ/servlet/SurveyOutputServlet

Productivity = Outputs

Inputs

Porter’s Competitive Advantage Model

NewEntrants

BuyerPower

Substitutes

SupplierPower

Rivalry AmongCompetitors

CustomersSuppliers

Porter’s Competitive Advantage Model

Impact of Internet on Competitive Forces

• Reduces barriers to entry • Enables new substitute products and services• Shifts bargaining power to customer• Raises firm’s bargaining power over suppliers• Suppliers benefit from reduced barriers to entry and

from elimination of intermediaries• Widens geographic market, increases number of

competitors, reduces differentiation among competitors

Porter’s Competitive Advantage Model

NewEntrants

BuyerPower

Substitutes

SupplierPower

Rivalry AmongCompetitors

CustomersSuppliers

Porter’s Competitive Advantage Model

BuyerPower

Rivalry AmongCompetitors

Customers

Porter’s Competitive Advantage Model

NewEntrants

Rivalry AmongCompetitors

Porter’s Competitive Advantage Model

Substitutes

Rivalry AmongCompetitors

Porter’s Competitive Advantage Model

SupplierPower

Rivalry AmongCompetitors

Suppliers

Porter’s Competitive Advantage Model

IT Systems can help in the areas of . . .

• Low-cost leadership• Product differentiation• Customer and supplier intimacy• Focus on market niches• Increase your market reach

The Value Chain Model

Basic Value Chain for Federal Express

Service Customers

Bill & Collect

Human ResourcesBuild and Improve Distribution CentersSupport Aircraft and TrucksOrder Supplies

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Collect Packages Sort Packages Ship Packages

(Hub)