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Bus 119B Ch 1-6
5 Forces Model,
99
Business
Undergraduate 4
03/05/2014

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Cards

Term
Porter’s 5 Core Forces
Definition
Rivalry Between Existing Players
Threat of New Entrants
Threat of Substitutes
Bargaining Power of Suppliers
Bargaining Power of Buyers
Term
The Eight Enhanced Forces
Definition
Globalization
Technological
Economic
Ecological
Political
Standards
Laws/Regulations
Financial
Social/Cultural
Term
Rivalry Between Existing Players
Definition
generally not passive and will fight for survival, finding new ways to be competitive.
Rivalry can be more intense when there are many players of the same relative size.
hanges in the ecosystem can also cause rivalry to intensify.
Term
Rivalry Between Existing Players -- Strategies (7)
Definition
1 Changing Prices
2 Product/Service Differentiation
3 Increase Switching Costs
4 Creative use of Channels
5 Exploit Relationships with Suppliers
6 Exploit Relationships with Buyers
7 Eliminate the competitor
Term
Changing Prices
Definition
Rebates, Coupons, and outright price reductions can give a firm an advantage.
Prices so low as to be considered “predatory” legal action may be taken by effected firms or by government agencies.
Term
Product/Service Differentiation
Definition
Offering better value from non-price product attributes
Term
Increase Switching Costs
Definition
Attach future benefits with frequent flier programs
Term
Creative use of Channels
Definition
Changing how a product eventually gets to the end consumer
Term
Exploit Relationships with Suppliers
Definition
Block competitors through the use of long term contracts
Term
Exploit Relationships with Buyers
Definition
Block competitors from serving key buyers through the use of long term contracts
Term
Eliminate the competitor
Definition
Purchase them or drive them out of the market by reducing prices below their pain point.
Term
Threat of New Entrants -- Strategies (6)
Definition
1. Operational Scale
2. Loyalty
3. Image
4. Intellectual Property
5. Linking
6. Channel Control
Term
Operational Scale
Definition
Increase minimum efficient scales of operations
Term
Loyalty
Definition
Create a marketing / brand image creating loyalty as a barrier
Term
Image
Definition
Create a socially positive use image
Term
Intellectual Property
Definition
Protection with patents
Term
Linking
Definition
Alliances with related products / services
Term
Channel Control
Definition
Control the access to the customer
Term
Threat of New Entrants
Definition
high when it is easy for new competitors to enter a market
Term
Threat of Substitutes
Definition
high when there are many alternatives to a product or service

When __________ is high, profit margins will tend to be low.
Term
Threat of Substitutes -- Generic Strategies
Definition
When dealing with ___________ companies may aggressively price their products, provide a socially positive use image, or create brand loyalty to keep customers from switching.
Term
Bargaining Power of Suppliers
Definition
Supplier-buyer relationship.

_____________ is high when the businesses they supply have few choices of whom to buy from and low when the choices are many.
Term
Determinates of Supplier Power:
Definition
 Differentiation of Inputs  Switching Costs of Suppliers  Presence of Substitute Products  Supplier Concentration.  Importance of Volume to Supplier  Cost Relative to Total Purchases in the Industry  Impact of Inputs on Cost or Differentiation
Term
Bargaining Power of Buyers
Definition
______________ is high when they have many choices of whom to buy from and low when their choices are few.
Term
“monopsony”
Definition
When buyer power is very strong
Term
Bargaining Power of Buyers EXAMPLE
Definition
Target and Wal-Mart.... big box retailers
Term
Bargaining Power of Suppliers EXAMPLE
Definition
Diamonds and De Beers
Term
Threat of Substitutes EXAMPLE
Definition
Plan paper from any copier (free) can substitute for a planner ($15 to $50)
Term
Threat of New Entrants EXAMPLE
Definition
Arm & Hammer
Term
Rivalry Between Existing Players
Definition
Extensive variety of products offered .... #2 yellow pencil isn’t yellow anymore.
Term
Globalization
Definition
is the increasing connectivity,
integration, and interdependence of the
technological, economic, ecological, political,
standards, regulatory, financial and
social/cultural dimensions of the world’s regions.

availability of information has increased
Term
Technological
Definition
broad concept that covers the usage and knowledge of tools and crafts, and how it affects the ability to control and adapt to the environment.
Term
Economic
Definition
A region’s ___________ ability to produce, distribute, exchange, and consume goods and services
Term
Ecological
Definition
concerned about global warming and the ecological footprint of business in their region... consequences of not being proactive can be dire including, bad publicity, consumer boycotts, fines / tax levies
Term
Political
Definition
Tariffs may exist or be enacted to protect local businesses. The stability of the government and the ability to maintain law and order may itself be a concern.
Term
Standards (3)
Definition
three types of standards: official, defacto, and custom
Term
Laws/Regulations
Definition
rules and regulations
Copyrights and protection of intellectual property (IP) may also be an issue.
Term
Financial
Definition
some type of ___________ infrastructure that supports monetary or barter exchange for goods and services. Tax laws, inflation, and exchange rates affect the attractiveness of a market as will GDP and the labor rates.
Term
Social/Cultural
Definition
ethno/demographic and norms.
Term
Official standards
Definition
standards set by recognized industry, social, or government bodies.
Term
Defacto standards
Definition
not official but are so strong that they are in general accepted use – “It’s always been done that way.”
Term
Standards of custom
Definition
generally social in nature and are often very hard to discern.
Term
Ethno demographics
Definition
focuses on population growth rates, language, health and welfare, income distribution, educational distribution, age distribution as well as other key demographics.

COLOR, MORAL JUDGEMENTS...
Term
Norms
Definition
society's web of rituals, traditions, and routines that are socially enforced. Violations of ________ can be punished with sanctions or in some cases enforced by law.
Term
Strategic IS Planning
Definition
A partnership between
Those with technical skills
The information systems group
General and functional managers
Term
Strategic Alignment
Definition
A high degree of fit and consonance between the priorities and activities of the IS function and the strategic direction of the firm
Term
clear understanding of the firm
Definition
What makes it successful
The business strategy
Its future goals and objectives
Term
Advantages of IS Planning Process
Definition
Plans enable communication
Plans enable unity of purpose
Plans simplify decision making over time
Term
Plans enable communication
Definition
To support intra-organizational communication
To create a shared mental image of team members’ role
Term
Plans enable unity of purpose
Definition
To specify the objective of IS deployment
Clear responsibilities are agreed upon
Term
Plans simplify decision making over time
Definition
To create a context for decision making
Term
Strategic IS Planning Process
Definition
Gathering information about the current state of IS resources

Providing a roadmap for decision-making about information systems
Term
Strategic Business Planning
Definition
An organization's mission and future direction, performance targets, and strategy
Term
Effective IS planning can only occur....
Definition
when there is a clear understanding of the firm
Term
What makes it successful?
The business strategy?
Its future goals and objectives?
Definition
Effective IS planning
Term
Know Who You Are
Definition
An organization's mission and future direction, performance targets, and strategy
Term
Information Systems Assessment
Definition
The process of
Taking stock of the firm’s current IS resources
Evaluating how well they are fulfilling the needs of the organization

IS resources x=x IT resources
Term
Technical resources
Definition
hardware, software and networking components of the IT infrastructure
Term
Data and information resources
Definition
databases and other information repositories
Term
Human resources
Definition
skills, attitudes, preconceptions, reporting structures and incentive systems of IS professionals and the user community
Term
Know Where You Start
Output:
Definition
a snapshot of the current “state of IS resources” in the organization
Term
Information Systems Vision
Definition
Know Where You Want To Go
Term
Information Systems Assessment
Definition
Know Where You Start
Term
Strategic Business Planning
Definition
Know Who You Are
Term
Information Systems Vision
Definition
Defines the ideal state the firm should strive for, in its use and management of its resources
Term
More IT-intensive firms
Definition
IS may play a strategic role
Term
Less IT-intensive firms
Definition
IS may be a “necessary evil”
Term
Analytical toolsssss
Definition
Critical Success Factors (CSF) methodology
Strategic Impact Grid
Term
CSF
Definition
Critical Success Factors
Term
KPI
Definition
Key Performance Indicators
Term
Critical Success Factors (CSF) / Key Performance Indicators (KPI)
Definition
The limited number of areas which managers must effectively control to ensure that the firm will survive and thrive
Ensures that the planning team is able to prioritize
Focuses on business objectives, not on information systems
Term
KPI
Definition
The quantifiable metrics a company uses to evaluate progress toward critical success factors (and are benchmarked)
Term
Metrics
Definition
Detailed measures that feed KPIs
Term
Value Drivers
Definition
Elements that drive metrics
Term
Efficiency IT metric
Definition
measures the performance of the IT system itself including throughput, speed, and availability
Term
Effectiveness IT metric
Definition
measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases
Term
benchmarked
Definition
Baseline values the system seeks to attain
Term
Benchmarking
Definition
a process of continuously measuring system results, comparing those results to optimal system performance, and identifying steps and procedures to improve system performance
Term
The Strategic Impact Grid
Definition
It enables simultaneous evaluation of the firm’s current and future information systems needs
Term
Current need for reliable information systems
Definition
Focuses on current day-to-day operations and the functionalities of the existing systems
Term
Future needs for new information system functionalities
Definition
Focuses on the strategic role that new IT capabilities play for the organization
Term
The strategic impact grid
Definition
defines what the use of information systems resources should be going forward
Term
Support Quadrant
Definition
IS are not mission critical for current operations

New systems promise little strategic differentiation
Term
Factory Quadrant
Definition
Even a small disruptions to IS infrastructure can endanger the firm’s well-being and future viability.
A limited potential for new systems and functionalities to make a substantial contribution
Term
Support Quadrant The firm:
Definition
Views IS as a tool to support and enable operations
Considers IS to offer little potential to significantly benefit the organization
Is generally conservative in IS investments
Term
Factory Quadrant The firm:
Definition
Closely monitors its current systems
Needs to be willing to fund their maintenance and upgrade.
But takes a conservative stance toward future investments.
Term
Turnaround Quadrant
Definition
IS are not mission critical for current operations
New IS or new functionalities of existing systems will be critical for the business’ future viability and success
Term
Turnaround Quadrant The firm:
Definition
Is readying to change its information systems posture
Needs to engage in some reorganization
Term
Strategic Quadrant
Definition
IS are critical to the firm’s current operations
New IS or new functionalities of existing systems is critical for the future viability and prosperity of the business
Term
Strategic Quadrant The firm:
Definition
should be extremely proactive with respect to information systems and IT investments
Term
Information Systems Guidelines
Definition
Know How You Are Going To Get There
Term
Information systems architecture
Definition
A set of statements specifying how the firm should use its technical and organizational IS resources to achieve the IS vision
Term
Information systems architecture Purposes
Definition
Enable communication
Establish responsibility
Guide future decision making
Term
Purposes of IS Guidelines
Definition
Communication

Identify responsibilities

Long range decision support
Term
Communication
Definition
To simplify tactical and operational decision-making
To ensure that future decisions are aligned with the information systems vision
Term
Identify responsibilities
Definition
To set expectations for behavior
Term
Long range decision support
Definition
Must be general enough to provide direction over a number of years
Must be actionable
Term
Technical IS Guidelines
Definition
Address future decisions pertaining to
The hardware and software infrastructure
Networking services
The storage and protection of organizational data and information
Term
Organizational IS Guidelines
Definition
Address those decisions that pertain to....
Human resources
The organization of the IS function
Reporting and hierarchical structures
Focus on .....
IT governance issues
Outsourcing and vendors relationships
Human resource decisions
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