week 2 weekly I.T. questions

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

Information technology is relevant to business because it is present in many aspects of business. An understanding of I.T. within the business environment is highly important to individual success and rewards the person with a competitive advantage. Secondly, determining return on investment (R.O.I) of I.T equipment is relatively difficult; this is because the effectiveness of the equipment must be calculated first in order to establish whether it was successful investment or not. For example if a company pays a web developer to build an effective and well structured intranet, and the end result is a mess of confusing links and untidiness then the overall R.O.I. for that particular project will be low.

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

Michael Porters 5 forces model consists of (a) buyer power; (b) supplier power; (c) threat of substitute products or services; (d) threat of new entrants; and the last of the five forces model, (e) rivalry among existing competitors. The first of the 5 forces model, buyer power refers to when buyers have many sellers to choose from which is known as high buyer power, and when there are few choices is known as low buyer power. Secondly, supplier power is high when a supplier has concentrated power over an industry. Alternatively, supplier power is low when there are many suppliers in a particular industry. Thirdly, threat of substitute products or services, this particular threat is high when there are many alternatives to a product or service, and low when there are few substitutes or alternatives to an organisations product or service. The fourth element of the five forces model, threat of new entrants, this is high when it is easy for new competitors to enter a market and low when there are significant barriers to entering a market. Lastly, the fifth force in porters model, rivalry among existing competitors is high when competition is fierce in a market and low when competition is more complacent.

Describe the relationship between business processes and value chains?

A business process is a standardised set of activities that accomplish a specific task, such as processing a customer’s order. To evaluate the effectiveness of its business processes, an organisation can use Michael Porter’s value chain approach. An organisation creates value by performing a series of activities that Porter identified as the value chain. The value chain approach views an organisation as a series of processes, each of which adds value to the product or service for each customer.

Compare Porter’s three generic strategies?

An organisation can follow one of porter’s three generic strategies when entering a new market: (1) broad cost leadership, (2) broad differentiation, or (3) focused strategy. Broad strategies reach a large market segment, while focused strategies target a niche market. Porter recommends organisations choose only one of the listed strategies, not all three.