Chapter 3 : Strategic Initiatives for Implementing Competitive Advantages

There are basically 4 strategic initiatives for implementing competitive advantage. Organizations can undertake high-profile strategic initiatives including:

    Supply chain management (SCM)

·         Involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability

·         Four basic components of supply chain management include:

                                 i.            Supply chain strategy – strategy for managing all resources to meet customer demand

                               ii.            Supply chain partner – partners throughout the supply chain that deliver finished products, raw materials, and services.

                              iii.            Supply chain operation – schedule for production activities

                             iv.            Supply chain logistics – product delivery process

·         Effective and efficient SCM systems can enable an organization to:

                                 i.            Decrease the power of its buyers

                               ii.            Increase its own supplier power

                              iii.            Increase switching costs to reduce the threat of substitute products or services

                             iv.            Create entry barriers thereby reducing the threat of new entrants

                               v.            Increase efficiencies while seeking a competitive advantage through cost leadership

    Customer relationship management (CRM)

·         involves managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization's profitability.

·         CRM is not just technology, but a strategy, process, and business goal that an organization must embrace on an enterprisewide level

·         CRM can enable an organization to:

                                 i.            Identify types of customers

                               ii.            Design individual customer marketing campaigns

                              iii.            Treat each customer as an individual

                             iv.            Understand customer buying behaviors

   Business process reengineering (BPR)

·         A standardized set of activities that accomplish a specific task, such as processing a customer’s order

·         The analysis and redesign of workflow within and between enterprises

·         The purpose of BPR is to make all business processes best-in-class

·         Reengineering the Corporation – book written by Michael Hammer and James Champy that recommends seven principles for BPR :

1.0   Organize around outcomes, not task.

2.0   Identify all the organization’s processed and prioritized them in order of redesign energy.

3.0   Intergrate information processing work into the real work that produce the information.

4.0   Treat geographically dispersed resources as though as they were centralized.

5.0   Link parallel activities in the workflow instead of just intergrating their result.

6.0   Put the decision point where the work is performed and build control in the process.

7.0   Capture information at once and at the source.

       Enterprise resource planning (ERP)

·         integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprise-wide information on all business operations.

·         ERP systems collect data across an organization and correlates the data generating an enterprise-wide view.

That's all for chapter 3. Tata :)