Discussion: Chain Model Addresses

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Discussion: Chain Model Addresses

Discussion: Chain Model Addresses

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FIGURE 2.4 Application of five competitive forces model for Zara.

Competitive Force IT Influence on Competitive Force

Threat of New Entrant Zara’s IT supports its tightly knit group of designers, market specialists, production managers, and production planners. New entrants are unlikely to be able to provide IT to support such relationships that have been built over time at Zara. Further, it has a rich information repository about customers that would be hard to replicate.

Bargaining Power of Buyers Recently, Zara has employed laser technology to measure 10,000 women volunteers so that it can add the measurements of “real” customers into its information repositories. This means that the new products will be more likely to fit Zara customers.

Industry Competitors Zara tracks breaking trends and focuses on meeting customer preferences for trendy, low‐cost fashion. The result is the highest sales per square foot in its industry, virtually no advertising, only 10% of stock remaining unsold, very low inventory levels, new products offered in 15 days from idea to shelves, and extremely efficient manufacturing and distribution operations.

Threat of Substitute Products IT helps Zara offer extremely fashionable lines that are expected to last for approximately 10 wears. IT enables Zara to offer trendy, appealing apparel at hard‐to‐beat prices, making substitutes difficult.

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41How Can Information Resources Be Used Strategically?

over time. The changing forces drive both the business strategy and IS strategy, and this model provides a way to think about how information resources can create competitive advantage for a business unit and, even more broadly, for the firm. The forces also can reshape an entire industry—compelling general managers to take actions to help their firm gain or sustain competitive advantage.

Using Information Resources to Alter the Value Chain A second lens for describing the strategic use of information systems is Porter’s value chain. The value chain model addresses the activities that create, deliver, and support a company’s product or service.

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