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Thursday, September 25, 2008

Porter's Competitive Forces

In Porter’s Competitive Force’s Model, we look at how substitutes might be used throughout different industries. There are many reasons that a substitute may be used. One example is the quality of the substitute. The question that comes to mind with this threat of a product is, "Is the substitute better?" After you reach that potential reason for change, you look at the buyers’ willingness to change and whether the price and performance of the substitute matches or exceeds that of the original product. Lastly, you look at the cost effectiveness to change to the substitute. Is it going to be easy and cost little to no money to change or is it going to be an expensive endeavor that will not pay off over time or may just simply not be affordable for most households. Substitutes tend to cause a lot of hassle with businesses. If you have a product to sell that no one else does, you are the sole determinant of the price and quantity that is put on that product. When substitutes come into place, prices must get much more competitive because you have to be able to keep up with the ‘best new thing.’ Look at how different computer companies are constantly upgrading, changing, and improving pricing structure so much to stay competitive to each other.

The power of customers is how much pressure they can place on a business. When the buyer’s power is significant, they can force prices down, demand higher quality products or services and play competitors against one another. Then you have the suppliers. Suppliers can make or break a firm. The only way for a firm to bargain with a supplier is to have many suppliers that can supply them with the same product. These market inputs are responsible for supplying raw materials, mechanisms, components, and services. The fewer number of suppliers for any given product means more power the supplier will have over the firm. They will also have more power over the firm if they are the only supplier that makes specific products for a firm. One thing that has helped firms gain more power over suppliers is the internet. Firms are able to contact suppliers much easier. They have easier access to many different manufacturers that produce many different materials all over the world. Distribution of these materials is made much easier and faster. Internet helps firms keep up with changing prices that in turn will help them make a better profit.

The threat of new market entrants is the possibility that new firms will enter the industry. New market entrants bring a desire to gain market share and often have significant resources. Their presence may force prices down and put pressure on profits. The threat of new entrants is highest when: Processes are not protected by regulations or patents, customers have little brand loyalty and etc. Without strong brand loyalty, a potential firm has to spend little to overcome the advertising and service programs of existing firms and is more likely to enter the industry. Enhancing your marketing/brand image, utilizing patents and creating alliances with associated products can minimize the threat of new entrants. Setting a price that earns positive but not excessive profits could reduce the threat of new entry in your industry because competitors may enter the industry if there are excess profits.

Traditional competitors are existing businesses in an industry. Rivalries naturally develop between companies competing in the same market. Competitors use means such as advertising, introducing new products, more attractive customer service and warranties, and price competition to enhance their standing and market share in a specific industry. To Porter, the intensity of this rivalry is the result of factors like equally balanced companies, slow growth within an industry, high fixed costs, lack of product differentiation, overcapacity and price-cutting, diverse competitors, high-stakes investment, and the high risk of industry exit.

Monday, September 22, 2008

Hardware and Software

Fifteen years ago, the word “blog” didn’t mean very much to most of us. Hardware and software were just really starting to enter the language of every day users. Sales of the word processor began dwindling. It doesn’t take long for things to change. It is rare to find someone now who does not own a PC or a Mac or at least use one for work on a daily basis. Even children as young as two are being trained on how to control a mouse and type their names on a personal computer. In the business world, it seems that it would be difficult to make a profit without some type of computer.

The type of computer used by a particular business depends on their size and the type of business they are. Personal computers, likely not networked, are used with smaller businesses most likely because of the small number of employees. On the other hand, a company with multiple locations or many employees may have a need for compiling data from various locations in which they would all be networked using a centralized server. A retail chain with multiple stores would be a great example of this. Being able to transfer sales data, inventory changes, employee hours, etc is a huge advantage for retailers. Information polling on a daily basis will help the main office monitor the business on a regular basis. A server would also allow managers from the different stores to share data.

The software that companies use to operate their businesses also plays a crucial role in how profitable they may be. Some rely solely on programs in each department. Accounting, finance, marketing, human resources and engineering each have programs that enable them to complete their daily tasks. In the end, all of the information generated from these programs combines to keep the business going and relay to the public what they are trying to accomplish.

Now imagine yourself fifteen years ago, where you lived, how you dressed and what was going on in your life. Your friends living 200 miles away want to know what’s going on with you. Did we ever think it would be as simple as logging onto our personal computers, accessing the internet and posting a blog?

Thursday, September 18, 2008

Cell Phones & Handhelds

Technology keeps changing so fast it is incredible. Cell phones and wireless handhelds have come so far compared to what they started out as. Just look 5 years ago to now. It is just amazing the process that has happened. If you go back a little farther to 10 years ago it is like comparing the stone ages to present times. Does anyone remember the bag phone? When the first flip phone came out it was so big it wouldn’t even fit in your back pocket. Now there are phones out there that are so small it is amazing people can actually see the numbers on them to place a call.
At this day and age there aren’t many people that don’t have a cell phone or a wireless handheld. In fact just today on the news they did a poll to see how many people couldn’t live without their BlackBerry. They even asked the question “Which would you rather be with, your BlackBerry or your spouse?” There were actually a lot of people that stated they would rather spend more time with their BlackBerry. This just goes to show how important technology is to people.
As our book says, “90 million (cell phone subscribers) are business subscribers.” Cell phones are a big part of companies these days. It is much easier to stay connected with everyone involved in any business. Cell phones give people access to the office when they are out of the office. People are able to send data and receive data from the office as if they were sitting in front of their computer. Also, cell phones and wireless handhelds help with international business, where before time zones created a communication barrier. Now you can reach people outside of the 9 to 5 work schedule. These digital devices have given us the flexibility to work on the go and since we have become so dependent on them if we had to go without them our world would probably come crashing down around us. We wouldn’t know what to do.

Monday, September 15, 2008

IT's Ease of Employee Recruitment

Business operations seek employees who are skilled, effective and resourceful, which are necessary components in building a competitive advantage. These employees are not only top notch managers, researchers, specialists, customer service representatives and salespeople. Whatever position that is held, employees must understand the company’s vision, be self-starters, have exceptional communication skills and must be creative in providing innovation to the organization.
However, these employees are hard to come by since not many prospective and current employees’ posses these skills. Businesses must research to determine what skill sets exist in their geographical location and what the company is willing to pay to entice these workers in addition to forecasting future employment needs. Often businesses have to go outside of its geographical location to discover these workers. Information systems (IS) and technology (IT) provide the needed provisions to gain such data needed to make the decisions that will lead an organization closer to its critical goals. IT makes this task more efficient by providing the ability to research and attract job seekers across the globe through various internet and extranet sites. Here they can see who is available and job searching, when they are willing to begin working, where they will work or relocate to, what skill sets exist and what pay is competitive among job markets in order to present a figure that will attract these workers.
IT allows instant access from remote locations and instant communication. All this is available within seconds and provides immediate data used to make sound decisions. IT is definitely a competitive advantage over shuffling papers, word of mouth or any other system as IT provides quick and easy results. Further, these benefits often result in employers gaining great selective power as information gained from business competitors through IT is available as well.
Because of the ease of use and efficiency in employee selection, the trend of IT usage extends to how people look for jobs. A huge number of electronic job resources are currently available: resume posting sites, job vacancy databases, employer websites, discussion boards and newsgroups, industry salary and information sites, general career information sites and networking organizations. Although, many of today’s job seekers go directly to a company’s web site to search for job openings where they can also research the organization’s growth prospectus, available employee benefits and get an idea of the company’s culture. Therefore, any company that has a well-designed and user friendly website has a significant advantage in recruiting employees. Consequently, a company that doesn't take full advantage of a website in recruiting risks losing qualified candidates to a business competitor who does.

More and more companies have begun to use IT in assisting with employment recruitment to simplify the selection process by outsourcing on-line employer advertising agencies. These agencies post and cross post an organization’s available positions to reach a wide and diverse range of potential employees. Such websites as Monster.com, Gojobs, CareerBuilder.com and Yahoo hotjobs are leading online recruiting agencies. One can enter his information via these websites and submit it using IT and the result is as if he were actually submitting it at the place of employment. An important difference is that using such a service may increase the chances of one’s information be reviewed by the hiring authority. IT also provides ease in applying to a position in a separate state from where one resides as one gain and sends information remotely. The Internet gives job seekers access to vast amounts of information about vacancies and employers, 24-hour availability, broader geographic reach, networking, career development advice, simplified resume distribution and the goals and prospected growth of the organization. For recruiters and employers, the Internet can speed up the hiring process, provide a large pool of qualified applicants, and reduce advertising and operational costs that had previously been spent in large sums of employee management.

However, one must proceed with caution when submitting personal information because if a website is unknown, then researching it to ascertain its credibility is critical. Submitting personal information should not be viewed lightly as security should be one’s main priority.

Thursday, September 11, 2008

Streamlining Corporate Communication

Gone are the days of paper memos and corporate mail outs. Electronic communication has replaced the paper form of communication in most corporate settings. Intranets now allow employees to communicate much quicker and with less chance of the message being lost under a pile of papers on a desk. Some companies only allow access at work but other companies allow access through the internet. The intranets have many benefits. It can consolidate corporate data into a central location allowing the proper employees quicker access to the needed information. All employees can get email about a meeting. It can allow all employees to share resources, improve customer service, and reduce paperwork. The intranets help save time and money.

Extranets have also helped streamline corporate communication. An extranet is an external area of a company's intranet. Only people that the company allows to see the extranet can view it. This could include suppliers, customers, employees, and even business partners. By using an extranet, efficiency is increased and time is reduced on tasks such as ordering and invoicing. This lowers the costs and gives customers better quality service. For companies with international locations, an extranet can provide consistency and collaboration because extranets allow all the different locations of the same company to see the same information. More people are able to work from home because they can view the company extranet from their home and do the same work that they could do in the office. This allows a person with a family to stay at home with their children which is a major plus in a benefit package. Think of all the companies with daycares within the company and this is even better than company daycares.

Customers can also benefit from extranets. For example, USPS customers save time by going online and tracking packages and shipments. This cuts down on the time spent on the phone the USPS or the company that uses USPS for shipping to try and “find” the package. Customers can also place orders online day or night without having to worry about whether they are open. Using the extranet of companies saves time on both sides of the coin, the buyer and the supplier. Less time is used on the phone, the orders are more accurate, and employees can multi-task while on the computer.