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MASTER IN MANAGEMENT PROGRAM PPM - School of Management DEC 05 2009 - Week I 0CT 11 2008 Lecturer : JONATHAN SOFIAN LUSA Reading materials : Applegate.

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Presentation on theme: "MASTER IN MANAGEMENT PROGRAM PPM - School of Management DEC 05 2009 - Week I 0CT 11 2008 Lecturer : JONATHAN SOFIAN LUSA Reading materials : Applegate."— Presentation transcript:

1 MASTER IN MANAGEMENT PROGRAM PPM - School of Management DEC 05 2009 - Week I 0CT 11 2008 Lecturer : JONATHAN SOFIAN LUSA Reading materials : Applegate chapter 2 IT IMPACT ON BUSINESS MODEL Session 02

2 Chapter Outline The Search for Opportunity Analyzing IT Impact 3333 3333 GPA Case Study 2222 2222 1111 1111

3 ANALYZING IT IMPACT CASE STUDY : BORDERLESS MANUFACTURING AT LI & FUNG Assembly CHINA Shell KOREA Lining TAIWAN Filler CHINA Zipper JAPAN Label, elastic, studs, toggle and string HONG KONG Made in Hong Kong by

4 LI & FUNGS BUSINESS PARADIGM Supply Chain Management Local Forwarding Consolidation Consumer Retailer Wholesale Importer Consumer Needs Product Design Factory Sourcing Mfg Control Export Docu- mentation Forwarder Consolidation Customs Clearance Raw Material Sourcing Supply Chain Financing Raw Material Mill Supply Chain Factories Financing Shipping Airlines Financing Product Developmt

5 THE CHANGING ROLE OF THE TRADING COMPANY Level of Value Added Buying Agency Sourcing Borderless Manufacturing Virtual Manufacturing Supply Chain Management

6 ANALYZING IT IMPACT 1.IT impact on strategy Determining product, market, business network, and boundary positioning 2.IT impact on capabilities. Building processes, infrastructure, people, partner, organization & culture, leadership, governance

7 ANALYZING IT IMPACT IBM Path to Business transformation

8 Goal: Use IT to improve local operating performance Business Sponsor: Local Manager, team, individuals. Business Value: Reduce cost & Improve local operating performance. Risk & Uncertainty: Low to moderate Investment: Local Budgeting Goal: Use IT to improve end to end operating processes Business Sponsor: Business Unit & Shared service Leaders ( suppliers, customer, partner) Business Value: Reduce cost, decrease cycle time, improve org or extended enterprise operating performance, improve total cost of IT Ownership. Risk & Uncertainty: moderate to high, business & tech complexity and volatility, org change, required integration. Investment: Corporate Budgeting, steering committee. Goal: Pursue opportunities that enable launch of new products / business, entry into new market Business Sponsor: Executive Committee, business unit leadership. Business Value: Grow Revenue, launch new product, enter high growth industries and market Risk & Uncertainty: High, new business model needed Investment: Staged commitments and investments base on milestones, base on business plan, new venture risk management Goal: Transform organization n industry, differentiate strategy, develop proprietary asset. Business Sponsor: BOD, strong project leadership. Business Value: Enable sustained capital efficient profitable growth, improve market share, deliver sustainable competitive advantage. Risk & Uncertainty: High, new business model needed, new tech needed, organizational change, integration of new business. Investment: Integrated with corporate strategy, Review by committee, change control process n system

9 BASIC QUESTIONS Five key questions can be used to guide executives as they search for value creating opportunities to use IT to support and drive the business strategy 1. Can IT change the basis of competition? 2. Can IT change the nature of relationship and the balance of power among buyers and suppliers 3. Can IT build or reduce barriers to entry? 4. Can IT increase or decrease switching costs? 5. Can IT add value to existing products and services or create new ones?

10 Impact of IT: questions 1 of 5. Can IT change the basis of competition? Uses IT not just to automate but also to transform and to inform Benefits of conducting business online AHSC American Hospital Supply Corporation American Airlines Internet to reengineer value chain and the basis of competition

11 Impact of IT: questions 2 of 5. Can IT change the nature of relationships and the balance of power among buyers and suppliers? AHSC Customers recognized the value of a multivendor marketplace but were unwilling to put up with the problems of using multiple different supplier systems AHSC became channel manager Electronic market places: Oracle, CommerceOne, Ariba, …

12 Impact of IT: questions 3 of 5. Can IT build or reduce barriers to entry? Consultancy companies: knowledge technology Technology based advantage: AHSC, AA, … The internet can decrease the impact: low cost, ease of penetration Knowledge and community barriers are more sustainable Proprietary infrastructure and channels to market are at a particular disadvantage relative to new entrants when they attempt to create second-order barriers to entry (Amazon.com as new entrant with transaction, information and community infrastructures)

13 Impact of IT: questions 4 of 5. Can IT increase or decrease switching costs? Switching to another system might become difficult and costly in proprietary systems With the internet switching costs are substantially reduced difficult to achieve customer loyalty Intuit increased the switching cost Provided easy to use inexpensive financial service software Won users via ease-of-use Hooked via simple ways of storing the information that should be reentered if the customer switches to a different product

14 Impact of IT: questions 5 of 5. Can IT add value to existing products and services or create new ones? Grocery stores are also in the business of selling information (client profiles) Information content of existing products (cars) Digital distribution of books, music, and video will dramatically alter existing publishing and entertainment industries. Manure and fertilizer company provides information.

15 GROUP PURCHASING ALLIANCE New concept for health care industry CASE STUDY

16 FACT

17

18 350% 18 X 24474% 24 X 30243% 30 X 40259% 35 X 35249% D5W138% D10W164% SALINE140% RINGERS164% 1ml347% 2ml337% 5ml334% 10ml247% GLOVE FILM I.V.SOLNS DISP SYRINGES % COST DIFFERENCES

19 SOLUTIONS ?

20 CONSEPT Infomediaries

21 GPA Components Hospitals: Power Force of GPA Bank: Financial support GML: Representer of Hospital Distributor/Manufacturer: Product supplier

22 GPA Components

23 Transaction Scheme GML

24 BENEFIT HOSPITALBANKGMLDISTRIBUTOR

25 OUR LEARNING POINTS FOR TODAY … ______________________________

26 THANK YOU


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