Week 2 Questions

Q1
Information Technologies role in business is to provide support to other areas of the business. It is a relatively new form of support however has lead to great increases in productivity and lower costs in businesses. In modern times the most important aspect of IT is its ability to process data quickly and across various global markets.

There are two ways to measure the success of IT. These are efficiency IT metric and effective IT metric. Efficiency IT metric measures the IT systems performance based on throughput, speed, response time and availability. Effective IT metric measures the how much of an impact IT is having on business processes and activities, measures that the IT system is achieving the goals set out.

Q2
The 5 forces in Porter's Five Forces Model are: Buyer power, Supplier power, Threat of substitute products or services, Threat of new entrants and Rivalry among existing competitors. Each factor determines how attractive a certain type of industry is.

Buyer power represents the power that buyers have in the industry, higher buyer power will lead to a less attractive industry. Supplier power represents the power suppliers have in the buying process, higher supplier power is more attractive. Threat of substitute products or services represents the threat posed by products or services that can be used a direct alternative to the product or service provided in an industry, increased substitute products or services in an industry will make it less attractive.Threat of new entrants represents the threat of possible new competitors coming into the industry, if there is a higher chance of new competitors the industry is less attractive. Rivalry among existing competitors represents the competitiveness between the existing competitors, the other 4 factors listed above will determine the rivalry among existing competitors.

Q3
To achieve value creation there must be a result of effective business processes and efficient value chains. Business process is the standardised set of activities that are used to achieve a specific task. Value chain views organisations as a series of processes and the value each process adds to a service or product. The link between these two is that the more effective and efficient a business process is the more value each process will add onto a product therefore increasing its value chain.

Q4
When a product is entering a market it will most probably follow one of Porter's three generic strategies, which are as follows.

1. Broad Cost Leadership: is where a new entrant uses the price of their service or product as the main way entry into the market, typically setting their product or service price lower than the existing competitors to try and 'steal' customers away from existing competitors.

2. Broad Differentiation: is where a new entrant will try use the fact their product is different in a positive way and a way that will enhance the consumers consumption compared to existing competitors.

3. Focused Strategy: Where a new entrant will have a clear and defined strategy that they believe will allow their product to enter a new market, even though it is not different nor costs less than the existing competitors. Generally associated with high demand goods.