CHAPTER 3
STRATEGIC INITIATIVES FOR IMPLEMENTINGCOMPETITIVE ADVANTAGES

SUPPLY CHAIN MANAGEMENT (SCM)

Involve the management of information flows between and among stages in a supply chain to maximize total supply chain  effectiveness and profitability.

Components Of Supply Chain Management
Supply chain strategy : The strategy for managing all the resources required to meet customer demand for all products and services.
Supply chain partners : The partners chosen to deliver finished products,raw materials, and services including pricing, delivery, and payment processes along with partner relationship monitoring metrics.
Supply chain operation : The schedule for production activities including testing, packaging, and preparation for delivery. Measurements for this component include productivity and quality.
Supply chain logistics : The product delivery processes and elements including orders, warehouses, carriers, defective product returns and invoicing.

Effective and efficient supply chain management systems can enable an organization to :

1. Decrease the power of its buyers.
2. Increase its own supplier power.
3. Increase switching costs to reduce the threat of substitute products or services.
4. Create entry barriers thereby reducing the threat of new entrants.
5. Increase efficiencies while seeking a competitive advantage through cost leadership.

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

Involves managing all aspects of a customer's relationship with an organization to increase customer royalty and retention and an organization's profitability.
Allows an organization to gain insights into customers' shopping and buying behaviors in order to develop and implement enterprise-wide strategies.

Typical CRM System :
Customers contact an organization through various means including call centers, web access, email, faxes and direct sales. A single customer may access an organization multiple times through many different channels.
It tracks every communication between the customer and the organization and provides access to CRM information within different systems from accounting to order fulfillment.

CRM Strategy :
There are many technical components of CRM, which is actually a process and business goal simply enhanced by technology.
CRM system can help an organization identify customers and design specific marketing campaigns tailored to each customer, thereby increasing customer spending.
Also allows an organization to treat customers as individuals, gaining important insights into their buying preferences and behaviors and leading to increased sales, greater profitability, and higher rates of customer royalty.

BUSINESS PROCESS REENGINREERING (BPR)

Business Process
A standardized set of activities that accomplish a specific task, such as processing a customer's order.

Business Process Reengineering (BPR)
The analysis and redesign of workflow within and between enterprises.

The purpose of BPR is to make all business process the best-in-class.

Seven Principles Of BPR

1. Organize around outcomes, not tasks.
2. Identify all the organization's processes and prioritize them in order of redesign urgency.
3. Integrate information processing work into the real work that produces the information.
4. Treat geographically dispersed resources as though they were centralized.
5. Link parallel activities in the workflow instead of just integrating their results.
6. Put the decision point where the work is performed, and build control into the process.
7. Capture information once and at the source.

ENTERPRISE RESOURCE PLANNING (ERP)

Integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make desicions by viewing enterprise wide information on all business operations.

How can ERP improve an organization business?
Many organizations fail to maintain consistency across business operations.
If a single department decides to implement a new system without considering the other departments, inconsistencies can occur throughout the company.
Not all systems are built to talk to each other and share data, and if sales suddenly implements a new system that marketing and accounting cannot use or is inconsistent in the way it handles information, the company's operations becomes siloed.
The issue ERP intends to solve is that knowledge within a majority of organization currently in silos that are maintained by a select few, without the ability to be shared across the organization, causing inconsistency across business operations.

PAST YEAR QUESTION

MARCH2012

QUESTION 2
Porter's Five Forces Model is a one of common tools used in industry to analyze and develop competitive advantages. List and describe each of the five (5) forces in Porter's Five
Forces Model.
(20 marks)

ANSWER

• BUYER POWER.

Buyer power is a power of the customers or buyers that the price they are willing to pay to get an item. Buyer power also is called purchasing power.
When the buyer power is higher than supplier power, it means, the suppliers have to compete with themselves because in this situation the buyers are force the suppliers drives prices down.
But, the suppliers also can reduce buyer power by switching costs.

•  SUPPLIER POWER.

Supplier power is the opposite with the buyer power.
It means, a power of the suppliers is higher than the buyers. What ever it is, the buyers should or have to pay the price to get an item.
The suppliers give a charges about the product or services that they are going to supplies including materials, labor and also services.
A supply chain consist of all parties involved, direct or indirectly, in the procurement of a product or raw materials.
When the supplier power is high, they can influence the industry by charging higher price, limiting quality or services and shifting costs to industry participants.
Frequently, the suppliers will charges the product or services in high cost when it reach at the end-product.
Because it including the charges to produce the product or services.

•  THREAT Of SUBSTITUTE PRODUCTS OR SERVICES

The threat of substitute products or services is high when they are many alternatives to a product or services.
In this situation, the buyers have many products or services to choose.
If the price one product is quite expensive, the buyer can choose another product which is have a similar characteristic with that product.

•  THREAT OF NEW ENTRANTS

The threat of new entrants is high when it easier for new competitors to enter the market. When new competitors is easy to entry the market, the organization in the market will feels threat by new competitors.

•  RIVALRY AMONG EXISTING COMPETITORS

Rivalry Among Existing Competitors is high when competition is fierce in a market. It is because all the competitors try to fight in a market to seek good attention from the buyers.

OCTOBER 2012

 QUESTION 1 

a) Explain four (4) organizational information cultures.
(10 marks)

ANSWER

• Information-Functional Culture : 

Employees use information as a means of exercising influence or power over others.

• Information-Sharing Culture : 

Employees across departments trust each other to use information (especially about problems and failures) to improve performance.

• Information-Inquiring Culture : 

Employees across departments search for information to better understand the future and align themselves with current trends and new directions.

• Information-Discovery Culture : 

Employees across departments are open to new insights about crises and radical changes and seek ways to create competitive advantages. 

 

 

QUESTION 2
a) Describe three (3) Porter Generic Strategies. Support your answer with example.
(12 marks)

 

•  BROAD COST LEADERSHIP

- To maintain low cost of production.
- The price be low.
- When the cost of production is low, so get offer the lower price to customer.
- Example : TESCO (shelf book)

•  DIFFERENTATION

- The products or services have particular difference.
- Certain or only few people purchase the product instead thinking of the price.
- Example : The customer bought because of the brands of the product. They does not matter or bother if the price is high.
- i-care PROTON

• FOCUSED STRATEGY

- There are low and high cost.
- If the suppliers produce particular product with low cost, they still champion on the market.
- Some of the buyer still search of the product with low cost of production.

- Example : BATA(low cost), RAFFELESIA jewellery(high cost)