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154 Cards in this Set
- Front
- Back
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porters 5 forces(definition) |
a framework/tool to analyze the competition within an industry and business strategy development
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what are the 5 forces |
1. potential entrants (threat of new entrants) 2. suppliers (bargaining power of suppliers) 3. buyers (bargaining power of buyers) 4. substitutes (threat of substitute product or service) 5. industry competitors (rivalry among existing firms) |
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Factors with effect in Existing competitors |
1. the product and service DIFFERENTIATION 2. customer SWITCHING COSTS |
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Factors with effect in threat of new entrants |
1. entry barriers (economies of scale, policy, technology protection) 2. customer SWITCHING COSTS |
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Factors with effect in threat of substitutes |
1. performance of substitutes (quality) 2. customer SWITCHING COSTS |
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Factors with an effect in power of buyers |
1. buyer information availability (a lot more power with more information available.. internet benefitting this bargaining power, prices can be compared fast, and read reviews)` 2. BUYER switching costs |
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factors with effect in the power of suppliers |
1. existence of substitute suppliers (searching the internet for cheapest suppliers - don't have to buy locally anymore, can buy anywhere in the world) 2. SUPPLIER switching costs (these are getting lower) |
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the internet's effect of the porter's competitors force |
- : reduces the differences among competitors as offerings are difficult to keep proprietary - : mitigates competition to price - : widens the geographic market, increase number of competitors -: lowers variable cost relative to fixed costs, increases pressures for price discounting |
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the internets effect on porters barriers to entry |
( - ) reduces barriers to entry such as the need for a sales force, access to channels, and physical assets - anything that internet eliminates or makes easier to do, reduces barriers to entry ( - ) internet applications are difficult to keep proprietary from new entrants ( - ) a flood of new entrants has come to many industries |
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the internet's effect on threat of substitutes |
(+) by making the overall industry more efficient, the internet can expand the size of the market ( - ) the proliferation of internet approaches creates new substitution threats |
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internet effect on bargaining power of channels |
(+) eliminates powerful channels or improves bargaining power over traditional channels |
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internet effect on the bargaining power of end users |
(-) shifts bargaining power to end consumers (-) reduces switching costs |
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internet effect on bargaining power of suppliers |
(+/-) procurement using the internet tends to raise bargaining power over suppliers, though it can also give suppliers access to more customers (-) the internet provides a channel for suppliers, to reach end users reducing the leverage of intervening companies (-) internet procurement and digital markets tend to give all companies equal access to suppliers and standardize products that reduce differentiation (-) reduced barriers to entry and the proliferation of competitors downstream shifts power to suppliers |
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Switching Costs |
impediment to a customer's switching of suppliers. In many markets consumers are forced to incur costs when switching from one supplier to another |
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the two general dimensions firms compete on: |
1. the source of competitive advantage (cost/uniqueness) 2. scope of operations (broad or narrow) |
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Cost Leadership |
large customer base by keeping broad prices low and by (target) buying massive quantities of goods from suppliers |
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Differentiation leadership |
offering designer merchandise and providing excellent service |
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Focused Cost leadership |
does not offer full array of goods but those that it does offer are priced to move (dollar general) |
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Focused differentiation leadership |
selling unique (and pricey) goods to a smaller market |
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Cost leadership strategy |
operation strategy: 1. reduce price 2. decrease supplier bargaining power (e-procurement) 3.reduce cost how: ask supplier to sell you products for cheaper, and when they say no threaten to get products from a cheaper supplier, so the supplier is forced to sell for less |
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Differentiation Strategy |
1. not just about quality 2. about MARKETING 3.companies spend a lot of $ to build superior brand 4. target smaller audiences who will pay the premium for brand awareness |
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operations strategy of Differentiation: |
1. increase brand power (online communication channels) 2. build loyal customers (customized services) 3. charge a premium |
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Strategic alignment |
a high degree of fit and consonance between the priorities and activities of the strategic direction and it/is strategy of the firm |
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what does a business strategy direct |
the operations (IT/IS) strategy |
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what does an IT/IS operation strategy support? |
the business strategy |
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Market |
the demand of a product or service |
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market place |
a location where products and services are exchanged |
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e commerce |
the process of distributing, buying, selling, marketing and servicing products and services over the internet |
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E-business (d-business) |
the use of the internet technologies and other advanced technologies to enable and support business processes and operations |
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transaction types of E-commerce |
1. b2b (premier pages of dell.com) 2. b2c (amazon) 3.c2c (kijiji) |
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E-commerce company structures (3) |
1. bricks and mortar 2. bricks and clicks 3. pure play |
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bricks and mortar |
companies that have a physical presence and offer face to face customer experience |
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bricks and clicks |
a company that integrates both online and offline presences |
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pure play |
only online presence |
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Disintermediation |
reduction of intermediaries between producers and consumers |
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Reintermediation |
the reintroduction of an intermediary between the end users (consumers) and a producer |
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some type of intermediaries with reintermediation |
CRS: computerized reservation systems GDS:global distribution systems Online Agents |
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Pay for Service revenue model |
1. a firm offers products and services for sale 2. whole sales and retailers of goods and services sell their products online 3.main benefits: convenience, time savings, fast info 4. prices more competitive eg. amazon |
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subscription revenue model |
1. customers pay for the right to access contents 2. users are charged a periodic fee to subscribe to a service 3. many sites combine fee content with premium 4. subscription fees fo not depend of transactions 5.subscribers use content as long and as often as they want eg. netflix |
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advertising support revenue model |
1. a firm provides contents or services fee for a large audience and then sells access to its audience to interested advertisers 2. fees are generated from advertisers in exchange for advertisements, which is ultimately the classic principal among the revenue model besides sales eg. youtube or Facebook |
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referral/ Affiliate revenue model |
1. a firm collects revenue from a third party based on traffic it sends to the partner website 2. online distribution solution which is based on the principle of commission 3. merchants advertise and sell their products and services through links to partner websites eg. google shopping |
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the long tail |
(in retail and marketing) used to refer to the large number of products that sell in small quantities, as contrasted with the small number of best-selling products. |
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what is the main reason people shop online? |
more variety |
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Pareto Principle (80/20 rule) |
1. states for many events, roughly 80% of effects come from 20% of the causes 2. suggested by Wilfredo Pareto in his study of wealth distribution |
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what is the pareto principle used in |
product sales distribution sales force management |
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what are the implications of the pareto principle for managers |
a few are vital, many are trivial identify and focus on the 20% that matter |
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Supply Side Drivers |
1. the decrease in cost of inventory storage and distribution: marginal cost of having one more item is reduced 2.the increase of size in the target market: marginal benefit of having 1 more item is increased |
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demand side drivers |
1. the decrease in search cost 2. the introduction of sampling tools and social media: consumers have more info about niche products |
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platform |
1. a two sided network 2. a delivery system that enables a third party complementary services to reach a customer |
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what creates the value of a platform |
value is extended by the complementary services provided by a third party provider |
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what if a platform does not have a third party complementary service? |
provides no value to the customer |
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physical network |
nodes connected to physical link - landline phone |
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virtual network |
nodes connected by virtual (intangible/invisible) link - MS office user network |
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Network effect |
a users value of using product A is affected by other user's decisions of using product A |
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Positive network effect |
a users value increases if a new user joins the network |
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negative network effect |
a users value decreases if a new user joins the network |
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tippy market |
subject to strong network effects - tips in favour of the firm that first reaches the critical mass |
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tipping point |
moment in market evolution when one organization or technology reachers the necessary critical mass to become dominant - winner take all perspective |
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how does the trip to the tipping point start |
a lot of marketing |
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two sided network |
a network that includes 2 distinct types of users and can have a direct network effect or indirect |
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Direct Network effect |
a users value of using product A is affected by others users decisions of using product A |
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Indirect network effects |
a users value of using product A is affected by other users decision of using product B |
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what is the main purpose of a platform |
to connect the two sides of a network |
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platforms are often what kind of market |
tippy market |
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the penguin problem |
no one moves unless everyone moves, so no one moves. |
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what is the solution to the penguin problem |
subsidize one side. because its a tippy market if you subsidize one side and reach tippy point first then you will be the winner |
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traditional marketing |
1. push advertising 2. pay for ad spot regardless of audience 3. major downside: hard to measure performance of the ad campaign 4. people spend far less time on traditional media |
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online marketing |
1. pull advertising - shows ads to consumers who are actively searching relevant key word 2. pay per impressions/clicks 3. ad campaings can be tracked and the performance can be measured |
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Google pay per click (PPC) advertising |
1. ppc advertising runs as an auction model 2. the advertisor chooses the maximum amount they are willing to pay per click and the budget 3. the advertising platform (google) determines the rank based on the advertisers maximum bid and the relevance of the advert 4. google displays the ad until the budget is used up |
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PPM (pay per thousand impressions) |
pay based on the number of times an ad is shown on the website |
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PPA (pay per action/conversion) |
pay based on user action |
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3 steps to big data analytics |
1. visualization 2. analytics 3. interpretation |
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big data |
extremely large data sets that may be analyzed computationally to reveal patterns, trends, and associations, especially relating to human behavior and interactions |
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quantum theory: big data |
if you have more data you can make better predictions |
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what is helping to make companies data bases larger |
the use of social media and people revealing a lot go things about themselves, and companies are using this to make their data base larger |
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what two elements = better predictions |
data + tools |
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netflix and big data |
netflix knows more about movies and tv shows than movie producers. they know the trends, what people are watching based on demographics and what is hot |
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target and big data |
analyzes data of what customers are purchasing and used to find their target customer of young family with baby |
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steps of data driven decision making |
1. recognize the problem/question 2. review previous findings 3. model the solution and select variables 4. collect the data 5. analyze the data 6. present and act on the findings |
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the 3 levels that decision making occurs on |
1. operational 2. managerial 3. strategic |
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2 ways decision making process can be structured |
1. structured 2. unstructured |
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most structured decision making |
operational - usually done with automated systems |
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least structured decision making |
strategic - usually augmented systems |
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decision making that is blended both structured and unstructured |
managerial - automated and augmented systems |
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primary business information systems |
1. reporting systems 2. data mining systems 3. knowledge management systems 4. expert systems |
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Data Mining |
the computational process of discovering patterns in large data sets (big data) involving methods at the intersection of artificial intelligence, machine learning, stats, and data base systems |
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overall goal of data mining |
extract info from a data set and transform it into an understandable structure for further use |
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unsupervised data mining (2) |
1. clustering 2. association detection |
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what is clustering |
similar records grouped together does not rely on predefined categories |
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supervised data mining |
1. classification 2. regression |
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what is classification |
arrange data into predefined groups (unlike clustering) |
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unsupervised data mining |
1. analysts do not create model before running analysis 2. hypothesis created after analysis as an explanation of results |
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supervised data mining |
1. model developed before analysis 2. hypothesis created before the analysis and model incorporates hypothesis 3. statistical techniques used to estimate parameters |
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Association detection |
market basket analysis |
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market basket analysis |
1.data mining technique for determining sales patterns 2. shows products that customers tend to buy together |
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support (definition) |
probability that certain products are bought together |
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Support count |
the number of times that certain products have been bought |
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equation for support |
support count/#transactions |
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confidence (definition) |
a conditional probability given a person bought product A, the likelihood they will also buy product B |
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equation of confidence |
[ (p(A&B)/#transactions) / (p(A)/#transactions) ] |
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Lift (definition) |
the ratio of confidence to the base probability of buying an item |
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Lift Equation |
P(b|A) / p(b) |
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Regression |
a function that models the data with the least error |
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regression equation |
Y(the predicted score) = Mx(slope) + B(the y intercept)
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meaning of Rsquared |
statistical measure of how close the data are to the fitted regression line Aka. Coefficient of determination = explained variation/total variation |
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Required high or low? |
want it to be high! close to 1 |
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meaning of P-value |
Tests the null hypothesis that the coefficient is equal to zero (no effect) - a low p value indicates you can reject the null hypothesis |
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meaning of a low p value |
a predictor with a low p value is likely to be a meaningful addition to your model, because changes in the predictors value are related to changes in the response variable you want P value to be low! |
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meaning of high p value |
suggests that changes in the predictor are not associated with changes in the response variable don't want it to be high! |
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Web analytics |
the measurement, collection, analysis, and reporting of internet data for the purpose of understanding and optimizing web usage |
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categories of web analytics (2) |
1. off site 2. on site |
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off site web analytics |
web measurement and analysis regardless of whether you own or maintain a website |
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on site web analytics |
measures a visitors behaviour once on your website |
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hits |
a request for a file from the web server each page includes its hits |
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page views |
a request for a file whose file type is defined as a page; on average a visitor looks at about 2.5 pages |
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visits/sessions |
a series of requests from the same uniquely identified client with set time out |
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click paths |
the sequence of hyperlinks one or more website visitors follow on a given site |
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Data vs info vs knowledge pyramid |
1. data -> context -> 2. info -> meaning -> 3. knowledge -> insight -> 4. wisdom |
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data |
is barely understandable facts or statistics collected together in reference or analysis |
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information |
data that has been processed and managed so we can understand it |
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knowlege |
the understanding of information. information has been processed and categorized and can see the characteristics of the info e.x play count of a song, song into genres |
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what 3 elements = a data base |
tables/file + relationships among rows in tables + meta data |
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columns aka |
fields
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rows aka |
records |
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characters aka |
bytes |
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relationships |
relational data bases store data in tables that represent relationships using primary keys and foreign keys |
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primary key |
1. column that makes each row unique in a table 2. ex student number 3. unique identifier of each table 4. can only be one in a table 5. must have one in a table 6. can consist of multiple columns but can only be one per table |
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foreign key |
1. Non key column or field in one table that links to a primary key in another table 2. a table can have one, multiple or no foreign keys 3. not a must, but if you have it there is a relationship. 4. multiple foreign keys if there are multiple relationships |
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Meta data |
1. data that describes data - contains description of its content 2. make data base more useful and easier to use - helps prevent guessing what is recorded in a data base |
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3 jobs of a data base |
1. preserves data integrity - assures that data is consistent, correct and accessible 2. eliminates data redundancy - unnecessary repetition of data that slows data processing 3. limits data views (query and report) - users only see what they need to see as cleanly and clearly as possible |
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what makes a good data base?
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if it can be used easily! |
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database management systems |
1.used to create, manage, and use to build data bases 2. licensed software that contains database MS access, SQL server, DB2, oracle, MySQL |
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what are the 4 functions of database management systems |
1. create 2. process 3. administer 4. maintain |
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ERD |
entity relationship diagram |
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what is in a table |
1. table name 2. primary key 3. attributes |
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relationships between entities |
1. 1 to 1 (1:1) 2. 1 to many (1:N) 3. many to many (N:M) |
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what is done to mitigate many to many relationships |
use join table - converts many to many to 1 to many and many to 1 |
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Enterprise systems |
each company has different ERP and defines it in a different way - ERP are evolving |
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ERP |
relationship resource planning |
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what is an ERP |
1. difficult to define because there are many variations of the term within the literature 2. a wide variety of software companies advertise versions of ERP systems with different modules and functionality configurations 3. the concept of ERP is quickly merging with e commerce, e-supply chain, and knowledge management |
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important perspectives of ERP |
1. integrated information systems (application) - system integration 2. software modules (applications) in the organization that share same data base - centralized data base 3. NOT A DATA BASE MANAGMENT SYSTEM 4. business process management - built base on the concept of business process |
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best practices for ERP implementation |
1. understand business process 2. define and prioritize key business requirements ( problem not the software but in the way companies are implementing software and get their organizations to adapt to it ) |
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5 things ERP supports |
1. supply chain and vendor management 2. projects and HR management 3. manufacturing production and service management and delivery 4. finance and accounting 5. customer relationship management |
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Advantages of ERP |
1. reduces dependency on decentralized legacy IT infrastructures 2. potentional to reduce direct and indirect costs 3. improve the firms ability to respond to customer and market demands 4. ERP embeds state of the art industry practices (best practices) 5. ERP can be used to update obsolete business processes (BPR) |
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limitations of ERP |
1. organizations are encouraged to implement a standard version of the software 2. limited flexibility - configuration choices difficult to change once configured 3. embedded "best practices" may not fit firms own practices |
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client |
your own, no one else has access to it |
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server |
gives access to many different people all info stored in the web server (client-server is old architecture) |
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Cloud computing |
differs from the classic client-server model by providing applications from a server that are executed and managed by a clients web browser, with no installed client version of application required |
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issues with cloud computing |
1. security 2. data 3. performance 4. cloud interoperability 5. pricing |
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knowledge in knowledge management |
builds over time, and based upon accumulation of experiences and understanding |
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Types of knowledge |
1. explicit 2. tacit |
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explicit knowledge |
knowledge that can be readily articulated codified and verbalized it can be easily transmitted to others |
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tacit knowledge |
knowledge that is difficult to transfer to another person by means of writing it down or verbalizing it |
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knowledge management systems: |
information systems developed to support and enhance the organizational knowledge processes of knowledge: 1. creation 2. storage 3. retrieval 4. transfer 5. application |
