Competitive Advantage- Product or service that customer’s place a greater value on than similar offering of another competitor.
First-Mover Advantage- The first organization to market with a competitive advantage.
Environmental Scanning- Analysis of events and trends in the market external to the organization.
Organizations use 3 tools to analyze and develop competitive advantage: (1) the Five-Sources Model, (2) the three generic strategies, and (3) value chains.
There are 4 competitive forces that can hurt potential sales: (1) knowledgeable customers pitting rivals against each other, (2) suppliers charging higher prices for supplies, (3) new market entrants stealing capital, and (4) substitute products available to customers.
Five Forces Model
Buyer Power- The ability of buyers to directly impact the price they are willing to pay for an item. Factors include: number of customers, size of orders, difference between competitors, price, and availability of substitute products.
Supplier Power- The ability of suppliers to directly impact the price they are charging for supplies. Factors include: number of suppliers, size of suppliers, uniqueness of services, and availability of substitute products.
Threat of Substitute Products or Services- High when there are many products to choose from and low when there are fewer alternatives to choose from.
Threat of New Entrants- High when it is easy to enter the market and low when there are many entry barriers to entering the market.
Rivalry Among Existing Competitors- High when competition is fierce in a market and low when competition is more complacent.
Difference between rivalry among competitors and threat of substitute products is that the delivery mechanism must be different (Ice cream industry vs. candy industry- threat of substitute products).
The Three Generic Strategies
Broad Cost Leadership- Appeals to a broad audience
Broad Differentiation- Appeals to broad audience and offers distinct options to differentiate itself.
Focused- Target a specific market.
Views an organization as a series of processes, each of which adds value to the product of service offered
Primary Support Value Activities- acquires material and manufacture, deliver, market, and sell the product.
Support Value Activities- supports the primary value activities, such as infrastructure, human resource development, and technology development.
Disruptive Technology- A new way of doing things that initially doesn’t meet the needs of current customers.
Sustaining Technology- Produces an improved product customers are eager to buy.
Information Granularity- Extent of detail within information (fine and detailed or coarse and abstract).
Transactional Information- Information contained within a single business process or transaction.
Analytical Information- Includes transactional information along with market and industry information.
Timely Information- Real-time systems provide real-time, or immediate, information. A downfall of real-time information is that it is constantly changing, thus making it hard to interpret.
Five Characteristics of Quality Information- Accuracy, Completeness, Consistency, Uniqueness, Timeliness.
Four Primary Factors of Low Quality Information-
Online customers intentionally enter bad information to protect their privacy.
Different systems have different information entry standards and formats.
Call center operators enter abbreviated or bad information by accident or to save time.
Third party and external information contains errors and inconsistencies.
DBMS- Database management system; the computer program a company uses that accesses the database.
Schema- Structure of the database. Describes the objects that are represented in the database and the relationships among them. Relationship model is the most commonly used model today.
Hierarchical Database Model- Organized information into