Chapter One Questions

Explain information technology’s role in business and describe how you measure success?

IT is everywhere in business, which is why it is essential to learn when, working within any business. Business IT is a support system for business and they therefore must align themselves with the goals of the business. Information technology effects the major functions of the business: accounting, finance, human resources, sales, marketing, operations management and management of systems.

IT is measured through the use of efficiency metrics and effectiveness metrics.

• Efficiency Metric: Measure the performance of the system itself including things such as speed, throughput and availability.
• Effectiveness measurements: Measure the impact IT systems have on the business and its activities including customer satisfaction and conversion rates.

List and describe each of the forces in Porter’s Five Forces Model?

• Buyers (Buyer power): Buyer power is high when there are many choices of where to purchase their products from and low when there are few choices.
• Suppliers (Supplier power): If supplier power is high, then they can greatly influence the industry by doing such things as charging higher prices.
• Threat of substitute products or service: High when there are many products or services available to buyers e.g. bread. Low when there are fewer options for buyers e.g. medical equipment
• Threat of new entrants: High threat when there are many opportunities for new businesses to enter the market. Low threat e.g. phone companies
• Rivalry: Competition is growing in all industries, so it is therefore becoming more difficult to avoid. Rivalary also makes industries less secure as there are many more substitutes.

Image Sourced from: http://kelas.wordpress.com/2009/10/03/strategi-industri-3/

Describe the relationship between business processes and value chains?

Business processes are a standardised set of tasks which or followed in order to accomplish a specific task. A value chains is when value is added to the product or service as is it goes through the various processes of the business.

Compare Porter’s three generic strategies?

1. Broad Cost Leadership: Reach a large market segment.

2. Broad differentiation: Has many products but promotes differences between them.

3. Focused strategy: Focuses on a niche market within the large market segment.

Image Sourced From: www.mindtools.com/pages/article/newSTR_82.htm