Porters Five Forces & Value Chain

 Porters Five Forces  Value String Essay

Day time #2

Porter's Strategic Models:

The Five forces plus the Value Sequence

CIS Division

Professor Duane Truex 3

The Information Systems Strategy Triangular

Business Strategy

Organizational Design Strategy

ICT/Information Strategy

Teacher Truex




Professor Truex


Aiming IS/ICT strategy (Infrastructures) with business technique • Employing multiple approaches to evaluating the strategic surroundings is helpful in determining proper opportunities. • Here, we look at three such strategies: – Porter's five causes model of the competitive benefit of firms – Porter's benefit chain model of internal company operations – Wiseman's theory of ideal thrusts and strategic alternative generator Teacher Truex E-CommercePrinciples


The Five Pushes Model and IS

• The Five Causes Model offers a way to take into account how data resources can create competitive advantage. • Using Porter's Model, Standard Managers may: – Identify key types of competition they face. Recognize uses details resources to improve their competitive position against competitive dangers – Consider likely within competitive threats over time Teacher Truex E-CommercePrinciples

Five Causes Model

Teacher Truex



Porter's competitive makes with potential strategic usage of information Tactical use •Cost effectiveness •Market access •Differentiation of products or services

Potential menace •Switching costs of new entrants •Access to distribution programs •Economics of scale

Tactical use

Bargaining power of suppliers

Strategic work with •Selection of supplier •Threat of in reverse integration Mentor Truex

Market competitors Danger of alternatives

Bargaining power of buyers

Ideal use •Buyer selection •Switching costs •Differentiation

Strategic work with •Redefine product or service •Improve price/performance E-CommercePrinciples

Teacher Truex



Porter's Value Sequence Model

• Porter's Worth Chain Model looks at increasing competitive advantage by reorganizing the activities associated with create, support and deliver a firm's product or service. • These types of activities may be divided into two broad classes – Primary activities that relate right to how benefit is created for a product or service. Support activities that make the primary activities possible which manage the coordinate of different activities. Professor Truex E-CommercePrinciples

Value Cycle of the Firm

Firm System Human Resource Management Technology Development Procurement Inbound Strategies Materials managing delivery Professor Truex

Support Activities

Operations Outbound Promoting Logistics & Sales Mfg. & assemblage


Merchandise Customer Purchase Pricing assistance processing Promotion Repair Shipping Place E-CommercePrinciples

Primary Activities


Increasing competitive benefit

• The Value Chain model suggest that competition can come by two sources: – Cutting down the cost to accomplish an activity and – Adding value to a product or service thus buyers will probably be willing to pay more.

• Lowering costs just achieves competitive advantage in the event the firm offers information on the competitor's costs • Adding value is a strategic edge if a organization possesses exact information regarding its buyer such as: which in turn products are valued? Exactly where can advancements be made? Teacher Truex E-CommercePrinciples

The Value Program

• The model may be extended by simply linking a large number of value organizations into a value system. • Much of the advantage of supply string management comes from understanding how information is used within each benefit chain from the system. • This can bring about the formation of entire new businesses designed to replace the information component of value-added activities. Professor Truex E-CommercePrinciples


The value system: interconnecting...

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