Sonu Mori

September 30, 2018

BUS 381

Professor Weiqi Li

Assignment 3

1. Read the chapter and then answer the following questions:

a. Describe Porter’s competitive forces model.
Porter’s Five Five/ Competitive Forces model analyzes the competitive forces within the

environment in which a company operates to assess the potential for profitability in an

industry. The model consists of:

 Threat of new entrants - the power of competitors to enter a market. Barriers to

entry include: supply side economies of scale, demand Side benefits of scale,

capital requirement, customer switching costs, access to distribution channels,

incumbency advantage, and government policy.

 Threat of substitutes - the power of customers to purchase alternatives. Product

substitutes are strong threat when: customers face few switching costs, substitute

product's price is lower, substitute product's quality and performance capabilities

are equal to or greater than those of the competing product.

 Bargaining power of suppliers - the power of suppliers to drive up prices of

materials. A supplier group is powerful when: more concentrated than who it sells

to, not dependent on one industry for its revenues, satisfactory substitute products

are not available, industry firms are not a significant customer, suppliers' goods

are critical to buyers' marketplace success, high switching costs to change

suppliers, and suppliers can credibly threaten to integrate forward into the buyers'

industry.

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  Bargaining power of buyers - the power of customers to drive down prices.

Buyers are powerful when: there are few buyers, they purchase a large portion of

an industry's total output, the products they purchase account for a significant

portion of the sellers annual revenues, they could easily switch to another product,

the products they purchase are undifferentiated or standardized, they are a

credible threat to integrate backward into the seller's industry, and pull-through.
 Competitive rivalry - the power of competitors. Intensity of rivalry is strong when

competitors: competitors are numerous or equally balanced, industry growth is

slow, competitors have high fixed costs or high storage costs, they lack

differentiation or low switching costs, they face high exit barriers, and diverse

approaches to competing.
b. Explain why aligning IT with business strategies is essential for strategic use of

information systems.
The basic principle of IT strategy for a business is to ensure the technology serves the

business and not the other way around. The research on IT and business performance has

found that the more successfully a firm can align its IT with its business goals, the more

profitable it will be, and only about one-quarter of firms achieve alignment of IT

business. Successful firms and managers understand what IT can do and how it works,

take an active role in shaping its use, and measure its impact on revenues and profits.

They cannot ignore IT issues. They cannot tolerate failure in the IT area as just a nuisance

to work around. They must understand what IT can do, how it works, and measure its

impact on revenues and profits.

c. Describe how the Internet has changed competitive forces and competitive advantage.

The internet is transforming the competitive advantage because now there is much more

rivalry. The rivals that exist are competing on who has the better prices. Profits have also

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 suffered because of the internet. Many industries have been nearly destroyed because of

this. Although the internet has led to negative impacts it has also led to new inventions,

such as the formation of new products, services, and business models leading to

opportunities for building brands with trusty customers.

The impact that the internet has had on competitive forces has affected 5 areas.
 Substitutive products or services: New substitutes can find better approaches in

order to meet the needs and perform functions.

 Customers' bargaining power: There are shifts that are made in which the

bargaining power can transfer over to the customer because of the availability of

global prices and product information.

 Suppliers' bargaining power: There could be an increase in bargaining power over

suppliers which affects the products and services. Although many benefits can

come from the elimination of distributors and other barriers that separate them

from the users.

 Threat of new entrants: By reducing the barriers to entry such as needing a sales

force, access to channels, and physical assets. Technology can be used to help

businesses make things easier to complete.

 Positioning and rivalry among existing competitors: Competitive prices exists

within a wide geographic market. Which increases the number of competitors and

reduces the differences among them.

2. Case Study: “Carter’s Redesigns Its Business Processes”
a. How did Carter’s previous business processes affect its business performance?
This case study is a clear example of no matter how big a company is at a certain point

they need to upgrade their functions with technology and information systems. Carter’s

previous business processes heavily affected their business performance as they

processed all the transactions manually or paper based. As the company was growing,

these processes could no long keep pace with the growth and the increasingly digital

business environment. Just like other companies in the past, Carter’s had relied on 20

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 legacy financial systems where some were homegrown and anti-quated. For instance, if

the systems did not function or integrate well with each other, Carter’s back up plan is to

use manual processes to keep everything working efficiently. This process created several

hiccups that resulted in slowing down processing and increased chances of human error.

Moreover, it became more time consuming where going through spreadsheets, emails and

folders to find a specific entry was no longer the best and efficient option.
b. Describe the role of technology in Carter’s business process changes.
Apart from transforming the role of the finance function from preoccupation with

transaction planning, Carter’s took it upon themselves to replace outdated systems with

more up-to-date technology. This technology included a centralized enterprise resource

planning (ERP) system which would provide an opportunity to modernize financial

processes. Carter’s selected SAP S/4HANA to fulfil their purpose and worked with

Deloitte Consultants for assistance with implementation and integration. This ultra-high-

speed data management and computing platform is designed to support Carter’s day-to-

day processes. The new system goes beyond financial such as order management systems

and point-of-sale systems.

c. How did Carter’s redesigned business processes change the way the company worked?

Explain.
The redesigned of the company worked in their favor because the business process

redesign was as crucial to the success of the project as new technology. Adapting the new

technology helped Crater’s transform older and inefficient processes into modern

processes reflecting best practices for its line of business and its industry. Due to the

incorporating of the SAP software, benchmarking Carter’s financial processes was

thorough as it required questioning the rationale behind every core financial process.

Carter’s also examined weather the process would be better served by remaining on a

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 legacy system rather than migrating to SAP S/4HANA. They choose to keep a process on

their existing systems instead of transferring it to a new one only if it provided clear

benefits. Efficiency would definitely increase with Carter’s examining their options and

choosing the one with the most benefits. This time Carter’s is smart to balance the pros

and cons of the new technology and how it would benefit the business and its industry.

3. Video Case 1: GE Becomes a Digital Firm: The Emerging Industrial Internet

1) What does Immelt mean by the “digitization of the industrial world” and “the

industrial Internet?” What are the four central elements of the industrial Internet?
General Electric is an advisory that is headed by chief executive Jeffrey Immelt that is

dedicated to finding new ways to boost economic growth, hiring and the education and

training of US workers by digitization of the industrial world. Immelt speaks of

“digitization of the industrial” as adding technology and the changes that makes on

business models and how a business must be run. They needed to evolve to technologic

changes over time in each of their industries. The focus became more on analytics. The

Industrial Internet brings the power of “big data” together with machine-based analytics.

Traditional statistical approaches use historical data gathering techniques where often

there is more separation between the data, the analysis, and decision making. The four

elements of industrial internet are sensing-The sensing can be biometric, biological,

environmental, visual or audible. Communication- IoT devices require a means for

transmitting the information sensed at the device level to a Cloud-based service for

subsequent processing. Delivery of Information and Cloud Based Capture &

Consolidation
2) What were the three alternatives GE had for developing the hardware and software

capabilities to become a digital firm?

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 The alternatives GE had for developing the hardware and software capabilities to become

a digital firm are as follows:

 Acquiring the companies or making its own digital firm.
 Having partners who can do the task or do it by ourselves.
 Outsourcing the project to someone else.
Among these alternatives GE choose to develop its own new digital capabilities within

the company to capture the full value of the digital firm. If GE had chosen to have other

organization do the task, then it could have cost a lot more in the long run.
7) Why does Immelt believe GE will need to hire thousands of new people to achieve its

goals of becoming a digital firm?

The existing labor force of the company is trained to do manufacturing work and they do

not have the right skills needed to become a digital firm. For this GE has to recruit

differently and create different teams. Different project managers have to be hired,

different sales person have to be hired, different on sight support have to be hired and so

on. Company also needs to hire data scientists and work into analytics while not ignoring

its industrial origins or manufacturing base.

4. Access:
Please find the Access document attached with this Assignment Folder.

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