Exam 3: Organizational Strategy, Information Systems, and Competitive Advantage

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Some of the competitive strategies that are based on business processes include:
a.Establishing high switching costs-organizations can lock in customers by making it difficult or expensive for customers to switch to another product.
b.Lock in suppliers-organizations can lock in suppliers by making it difficult to switch to another organization,or,stated positively,by making it easy to connect to and work with the organization.
c.Creating entry barriers-competitive advantage can be gained by creating entry barriers that make it difficult and expensive for new competition to enter the market.
d.Establish alliances-another means to gain competitive advantage is to establish alliances with other organizations.
e.Finally,by creating better business processes,organizations can gain competitive advantage by reducing costs.

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Porter defined value as the amount of money that a customer is willing to pay for a resource,product,or service.A value chain is a network of value-creating activities.Organizations analyze the structure of their industry,and,using that analysis,they formulate a competitive strategy.They then need to organize and structure the organization to implement that strategy.If,for example,the competitive strategy is to be a cost leader,then business activities need to be developed to provide essential functions at the lowest possible cost.A business that selects a differentiation strategy would not necessarily structure itself around least-cost activities.Instead,such a business might choose to develop more costly systems,but it would do so only if those systems provided benefits that outweighed their risks.