Productivity paradox
Do computers really make us more productive?
Value chain
How an organization makes value (margin)
Primary activities
Activities that offer direct value to customers. ex: manufacturing of a shoe
Support activities
Activities that offer indirect value to a customer. ex: scheduling (behind the scenes), machinery
Upstream (value chain)
Closest to extraction of materials. ex: oil rigging, coffee shop getting own coffee beans, tire company manufactures own rubber
Downstream (value chain)
Closest to end consumer. ex: mining company cutting and finishing their own diamonds
Porter’s value chain model
- Inbound logistics (ex: digitize) (input)
- Operations
- Outbound logistics
- Marketing and sales
- Service (ex: integrate) (output)
Porter’s five competitive forces
- Customer power
- Threat of substitution
- Supplier power
- Threat of new entrants
- Competitive rivalry
Porter’s competitive strategies (4)
- Cost leadership across industry
- Cost leadership focused on particular industry segment
- Differentiation across industry
- Differentiation focused on particular industry segment
Sustaining technologies
Improvements in technologies that already exist; adding value. ex: wireless mouse
Disruptive technologies
Introducing a new technology. ex: the internet. Offers competitive advantage and disrupts industry
How to create competitive advantage (2)
- C.A via products
- C.A via business processes
Enterprise resource planning (ERP)
ERP integrates various functions into one system to streamline processes across an organization. Includes HR, sales, marketing, etc.
CRM
Customer relationship management
SCM
Supply chain management
Competitive advantage by implementing business systems
- Locking in customers
- Locking in suppliers
- Create barriers to entry
- Establish alliances
- Reduce costs
What to NEVER do
Outsource your core competence!!!!!!!!!!
