Explain information technology's role in business and describe how you measure success?
Information technology is everywhere in business. Understanding information technology provides great insight to anyone learning about business. Information technology has become an important part to an organisation's strategy, competitive advantage and profitability.
In order to measure IT's success managers need to implement methods such as efficiency and effectiveness metrics and benchmarking. Efficiency and effectiveness metrics measure the performance of the IT system itself - throughput, speed and availability, whereas benchmarking is a process that continuously measures systems results, compares results and identifies improvements
List and describe each of the forces in Porter's Five Forces Model?
Bargaining Power of Customers: high when buyers have many choices of whom to buy from and low when their choices are few. One way to reduce buyer power is through loyalty programs. Loyalty programs reward customers based on the amount of business they do with a particular organisation.
Bargaining Power of Suppliers: is high when one supplier has a concentrated power over an industry. Buyers have few choices of whom to buy from and low when their choices are many. All parties involved in the procurement of a product or raw material are links in the supply chain. The power is often with the supplier.
Threat of Substitute Products: high when there are many alternatives to a product or service, for e.g. butter, spreads & margarine. Low when there are few alternatives for e.g. specific medicines or medical equipment.
Threat of New Entrants: high when it is easy for new competitors to enter a market e.g. online bike sales. Low when there are significant entry barriers e.g. - new telecommunications company.
Competitive Rivalry within an Industry: high when competition is fierce in a market and low when competition is more complacent. Although competition is always more intense in some industries than in others, the overall trend is toward increased competition in just about every industry.
Describe the relationship between business processes and value chains?
Once an organisation chooses its strategy, it can use tools such as the value chain analysis to determine the success or failure of its chosen strategy
Value creation is the result of effective business processes and efficient value chains
Business process – a standardised set of activities that accomplish a specific task
Value chain – views an organisation as a series of processes, each of which adds value to the product or service
