Bargaining Power of Customers, Threat of Substitutes, Bargaining Power of Suppliers, Threat of New Entrants, Rivalry
An organization responds to the structure of its industry by choosing a competitive strategy.
Poter defined value as the amount of money that a customer is willing to pay for a resource, product, or service.
The difference between the value that an activity generates and the cost of the activity is called the margin.
The margin of the business process is the value of the outputs minus the cost.
A value chain is a network of value-creating activities. That generic chain consists of five primary activities and four support activities.
Porter's model of business activities includes linkages, which are interactions across value activities.
A business process is a network of activities that generate value by transforming inputs into outputs. A business process is a network of activities; each activity transforms inputresources into output resources. Resources flow between or among activities.
The cost of the business process is the cost of the inputs plus the cost of the activities.
Facilities store resources; some facilities, such as inventories, store physical items. Other facilities, such as databases, hold data. You can think of facilities as resources at rest. The organizations bank accounts are the facility of cash at rest.
Business Process Management
Business processes vary in cost and effectiveness. In fact, the streamlining of business processes to increase margin (add value, reduce costs, or both) is key to competitive advantage.
1. Create a new product or service
2. Enhance products or services
3. Differentiate products or services
1. Lock in customers and buyers
2. Lock in suppliers
3. Raise barriers to market entry
4. Establish alliances
5. Reduce costs
Organizations can lock in customers by making is difficult or expensive for customers to switch to another product. This strategy is sometimes called establishing high switching costs.
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