Discussion: Wireless Trust‐Buster

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Discussion: Wireless Trust‐Buster

Discussion: Wireless Trust‐Buster

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Search engine optimization (actions that a firm can take to improve its prominence in search results) has served as a barrier to entry for some businesses. Consider the Web site that has the number one position in a user’s search. There is only one number one position, making it an advantage for the company enjoying that position and a barrier for all other Web sites seeking that position.

Bargaining Power of Suppliers

3

Bargaining Power of Buyers

2

Strategic use • Cost effectiveness • Market access • Differentiation of product or service

Strategic use • Switching costs • Access to distribution channels • Economies of scale

Strategic use • Selection of supplier • Threat of backward integration

Strategic use • Buyer selection • Switching costs • Differentiation

Strategic use • Redefine products and services • Improve price/performance

Potential Threat of New Entrants

1

Threat of Substitute Products

4

Industry Competitors

5

FIGURE 2.3 Five competitive forces with potential strategic use of information resources. Sources: Adapted from M. Porter, Competitive Strategy (New York: The Free Press, 1998); and Lynda M. Applegate, F. Warren McFarlan, and James L. McKenney, Corporate Information Systems Management : The Issues Facing Senior Executives, 4th ed. (Homewood, IL: Irwin, 1996).

6 “Viewed as a Monopoly in Europe, Google Takes on Role as a Wireless Trust‐Buster in U.S.,” New York Times (May 8, 2015), B1, B6.

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39How Can Information Resources Be Used Strategically?

Bargaining Power of Buyers Customers often have substantial power to affect the competitive environment. This power can take the form of easy consumer access to several retail outlets to purchase the same product or the opportunity to purchase in large volumes at superstores like Walmart. Information resources can be used to build switching costs that make it less attractive for customers to purchase from competitors. Switching costs can be any aspect of a buyer’s purchas- ing decision that decreases the likelihood of “switching” his or her purchase to a competitor. Such an approach requires a deep understanding of how a customer obtains the product or service. For example, Amazon.com’s patented One Click option encourages return purchases by making buying easier. Amazon.com stores buyer information, including a default credit card number, shipping method, and “ship‐to” address so that purchases can be made with one click, saving consumers the effort of data reentry and further repetitive choices. Similarly, Apple’s iTunes simple‐to‐use interface and proprietary software for downloading and listening to music makes it difficult for customers to use other formats and technologies, effectively reducing the power of the buyers, the customers.

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