CHAPTER 3

STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

1)Organization can undertake high-profile strategic initiatives including:

Ø  Supply chain management(SCM)

Ø  Customer relationship management(CRM)

Ø  Business process re engineering(BPR)

Ø  Enterprise resource planning(ERP)

       I) Supply Chain Management(SCM)

         -involves the management of information flows between and among stages in a supply chain to

          Maximize total supply chain effectiveness and profitability.

        -4 basic components of include:-

o   Supply chain strategy>strategy for managing all resources to meet customer demand.

o   Supply chain partner>partners throughout the supply chain that deliver finished products, raw materials and services.

o   Supply chain operation>schedule for production activities

o   Supply chain logistics>product delivery process

        -Effective and efficient SCM systems can enable an organization to:-

o   Decrease the power of its buyers

o   Increases its own supplier power

o   Increases switching costs to reduce the threat of substitute products or service

o   create entry barriers thereby reducing the threat of new entrants

o   Increase efficiency while seeking a CA through cost leadership

       -Effective and efficient SCM systems effect on Porter’s Five Forces

              Decreases   =buyer power

                                   = Threat of substitute products or service

                                   =threat of new entrants

              Increases    =Supplier Power

     2) Customer relationship management (CRM)

§  Involves managing all aspects of a customer relationship with an organization to increases customer loyalty and retention and an organization profitability

§  Many organizations such as Charles Schwab and Kaiser Permanente have obtained great success through the implementation of CRM systems.

§  IT is just not technology but a strategy process and business goal that an organization must embrance on an enterprise wide level.

§  CRM can enable an organization to:-

                             >Identify types of customers

                             >Design individual customer marketing campaigns

                             >Treat each customer as an individual

                             >Understand customer buying behavior

 3)Business Process Reengineering

ü  Business process=A standardized set of activities that accomplish a specific task such as processing a customer order

ü  Business process reengineering(BPR)=the analysis and redesign of workflow within and between enterprises

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

     ü7 principles of business process reengineering

               (1)Organize around outcomes not tasks

               (2)Identify all the organization process and prioritize them in order of redesign urgency

               (3)Integrate information processing work into the 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

    ü  Finding opportunity using BPR

              -the ways it travel the road by moving from foot to horse and then horse

              -BPR look at taking a different path such as airplane which ignore the road completely

              -types of change an organization can achieve along with the magnitudes of change and the potential      business benefit.

  4)Enterprise Resource Planning

·         Integrates all departments and functions throughout an organization into a single IT system so that employees can make decision by viewing enterprise wide information on all business operations.

·         Keyword in ERP is “enterprise

·         ERP systems collect data across an organization and correlate the data generating an enterprise wide view.