1. CHAPTER 2 IDENTIFYING COMPETITIVE ADVANTAGES CIS 429: Business Information Systems

2. Identifying Competitive Advantages Competitive advantage:  A product or _________that is more valuable than a similar product of service of a competitor. First-mover advantage:  Improving market ______ by being first with a competitive advantage. Environmental scanning:  Acquisition and _________ of information from the environment external to the organization.

3. Porter’s Five Forces Model The Five Forces model helps determine the attractiveness of an industry:  Buyer power: ______ when buyers have many choices.  Buyer power can be reduced through loyalty programs, enabled by IT.  Supplier power: _____ when buyers have few choices.  A supply chain consists of all parties involved in material procurement.  A B2B marketplace is an __________-based service that brings many buyers and sellers together.  A private exchange is a B2B marketplace where one buyer posts its needs and opens the bidding to any supplier.  A ________ auction is where suppliers bid lower and lower.

4. Porter’s Five Forces Model (cont’d) Threat of substitutes  High when there are many alternatives to a product or service.  Switching cost is the cost to switch to an alternative. Threat of new entrants  High when it is easy for new _____________ to enter a market  An entry _________ is an expected product or service feature that must be offered. Rivalry among competitors  High when competition is fierce in a market.

5. Three Generic Strategies Broad cost leadership  Large market segment Broad differentiation  Large market segment Focused strategy  _______ market  Cost leadership or  Differentiation Compare Hyundai, Audi, Kia, Hummer in terms of these strategies.

6. Value Creation Business process  Standardized set of activities to complete a task Value chain  Series of processes, each adding ______ to the product or service The goal is to create more value than your competitors. Value chain _________  Customers can be surveyed to find out what they value. IT can support the value chain.