Bargaining Power Of Suppliers

Bargaining Power Of SuppliersThis report serves a cast of major(ip) purposes. First of all in all, it seeks to understand the development of Information Systems IS/ Information Technology IT theory. Secondly, it narrows the scope to first step pry drawing string to evaluate the current practice in this empyrean. Finally, it seeks to evaluate and analyze the future of the companies studied in relation to IS/ IT.1.2 comment of Key ConceptsThe terms e- vocation and e-commerce ar often economic consumptiond interchangeably besides they do not mean the same issue. E-commerce means using IT to debauch and sell goods and services. E- ain credit line is a broader term, c everywhereing not just goods and services exchanges, tho likewise all forms of business conducted using electronic transmission of selective information and information.E-business began when customers and suppliers recognise the returnss of exchanging documents such as purchase orders and invoices electr onically, rather than by the postal service. This electronic data interchange EDI could speed ordering and fulfillment dramatically. The orgasm of the meshing allowed businesses, organizations, and individuals to publish World Wide Web pages and make known to broader audiences.At first, web pages were mirrors of paper documents. But as they increased in sophistication, users recognized that in that location were things that they could do with Web pages that were not possible with paper media. As internet usage and Web development evolved, managers learned to take advantage of the internets unique nature in many an(prenominal) focuss. For example, retailers realized changing the expenditure of an item required a few key strokes on the internet versus reprinting promotional materials and price lists in an offline environment. The transp bency of the internet, or the business leader for mass instantaneous sharing of information likewise created an almost dead efficient marke tplace for goods and services.The next stage in the evolution of e-business was to black out its use throughout an organization. This came in the form of intranets. Businesses created these internal internets to allow employees to communicate with virtuoso an other(a)(a) and exchange information. Once enterprises mastered internal dialogue through their intranets, they turned outwards. The link to customers occurred early on. The rest of the impart chain linkage took place in the next stage of the evolution as businesses began expanding on their connection to suppliers, customers and distributors. These included adding supply chain centering and customer relationship management functionality. Portals allowed customers and suppliers to link more closely with an enterprise.The current advance of e-business is really c-business where the c stands for collaborative. In c-business, the boundaries among enterprises become blurred. Businesses up and down the supply chain work togethe r to achieve objectives that maximize profitability for all of them.1.3 Overview of the ReportSection 1 IntroductionObjective of the report explanation of key conceptsOverview of the reportSection 2 Review of belles-lettres2.1 Literature review2.2 General theory2.3 Research argona2.4 Rationale2.5 grandeur of research argona2.6 Example of e-business applicationSection 3 shield Analysis3.1 cuticle rent 13.2 fiber depicted object 23.3 gaffe Study 3Section 4 Evaluation of the campaigns4.1 parity4.2 RecommendationSection 5Executive SummarySECTION 2 REVIEW OF LITERATURE2.1 Literature ReviewIT/ IS has been used by companies for all over forty years. signly, their usage was primitive by todays standards, but over time, rectifyments in computer technology have rendered IS/ IT to be an intact part of the business. Yet, the shoot of IS/ IT in relation to management is a somewhat recent discipline.Initial research on IT/ IS tended to be more descriptive than empirical since the postonical models that ar currently used were not yet formulated. These research paper also tended to be overly optimistic about the future of IT/ IS in terms of the benefits they bring to business enterprises. Later on, research in the bea took on a more balanced tone as the limitations of IS/ IT were also highlighted. It has also during this time than various strategical management models were incorporated into the fashion model for IS/ IT.2.2 General TheoryNow let us fancy common chord theories that relate to e-business.2.2.1 Porters five dollar bill ForcesAccording to Michael Porter (1990), an industry is influenced by 5 major forces and he developed this idea into a comprehensive model. Termed the Five Forces Model, it has massively influenced strategic management thinking for the past two decades. These five forces ar the bargaining power of vendees, the bargaining power of suppliers, the new entrants, the nemesis of substitutes, and rivalry.Bargaining Power of BuyersThe bargaining power of buyers refers to the influence consumers have on an industry. Generally, if consumers have very high bargaining power, thither are many suppliers competing for a very limited number of buyers (Porter, 1990). As a result, it is the buyer who will dictate the price of goods and services. Buyers have greater power when at that place are few of them and they command a signifi squirtt market share, or when they purchase a sizeable proportion of the goods produced in an industry (David, 2009). Also, buyers are powerful when they can panicen to buy products from rival firms. This is called backward desegregation (Griffin, 2001). On the other hand, buyers are weak if manufacturers threaten forward integration in which the manufacturers take over the distribution and retailing channels (Eitman et al, 2007). Buyers are also in a weak position if there is great difficulty in switching to alternative products and switching be are high.Bargaining Power of Suppl iersThe randomness force is the bargaining power of suppliers (Porter, 1990). totally companies that manufacture goods need to obtain raw materials from external parties or suppliers. Hence, it is imperative mood that companies establish good relationships with their suppliers so as to get favourable prices and a steady supply of raw material. Yet, the supplier-manufacturer relationship is rarely one of equals (Griffin, 2001). Normally, one party has the upper hand. Suppliers have greater bargaining power if there are few of them so they can dictate terms to the customers who are at their mercy (David, 2009).Threat of New EntrantsThe third force is the threat of new entrants (Porter, 1990). New entrants to a market can badly arrogate the market share of existing members and this is a constant source of concern for companies. In an ideal free market system, a gild can enter and exit a market with the greatest ease and that pay will be nominal. However, in the real world, ther e are legion(predicate) barriers to entry, some of which are the result of economics, while others are the outcome of organisation intervention (Rugman and Hodgetts, 1995).Threat of SubstitutesThe fourth is the threat of substitutes, which refers to products in other industries (Porter, 1990). If the costs of the products in a particular industry are too high, customers susceptibility switch to products in other industries. Price is not the only versatile but changes in technology have the potential to make users clump to rivals (David, 2009).rival Among FirmsThe final force in Porters framework is rivalry among firms (Porter, 1990). Rivalry is very high when there are a large number of firms in a saturated market, high fixed costs, high store costs and low switching costs (Barney, 2007).According to Porter, an enterprise can guide one of four strategies to deal with the five forces in its industry. They are cost leadership, contrastiveiation, cost focus and focused diverse iation. IT can assist a firm in achieving these strategies. For example, to attain low cost, the high society can adopt production engineering systems whereas to achieve differentiation, it can use computer help design.2.2.2 Value ChainThe survey chain is defined as a sequence of activities that should contribute more to the ultimate rate of the product than to its costs. Products produced by an organization rely on different activities of the organization and use different resources along the value chain depending on their specifications. Essentially, all products flow through the value chain, which begins with research, development and engineering and then moves through manufacturing and continues on to customers.The companys value chain is used to identify opportunities that befuddle war-ridden advantage. Basically, there are two broad categories of a firms activities. They are primary activities, consisting of the creation, marketing and lecture of products and support a ctivities which provide support for primary activities. IT is used to transform the way value activities are conducted and to improve linkages throughout the value chain to give the company greater flexibility. According to Porter and Miller 1985, IT plays a strategic role in an industry that has high information intensity in the product and value chain itself.2.2.3 Scott Mortons ModelMorton improvises and refines Porters model. Morton asserts that the five forces that influence an organizations objectives are its structure, management processes, individuals and roles, technology and strategy. These in turn contribute to five takes of IT-induced reconfiguration. At the lower degree of business transformation, they are termed evolutionary levels. At the terminal level, there is localized exploitation in which the main objectives are national effectiveness and efficiency. At level two, there is internal integration surrounded by different applications and systems. Cooperation and coordination enhance efficiency and effectiveness here. At a higher(prenominal) degree of business transformation, they are termed revolutionary levels. Level three involves business process redesign which consists of a rigorous change in the company value chain. Level four concerns business profit redesign for the reconfiguration of the tasks and scopes of the enterprise network involved in the creation and delivery of products and services. The final and highest level is business scope redefinition in which there is a migration of functions across the companys borders that at long last change the very nature of the business.2.3 Research AreaThis paper focuses on the enterprise value chain of three very different companies. They are Tupperware, Toyota and Facebook.2.4 RationaleThe rationale for the selection of these three companies is to explain how e-business is applied to different industries. Tupperware is a well known manufacturer of high note malleable containers, Toyota is the worlds largest railway car maker and Facebook is the biggest online social network site on earth. They are all very different businesses, yet they share one thing in common the usage of e-business in their value chain. The degree of triumph each business experiences through e-business vis--vis their value chain will be discussed in the analysis section.2.5 Importance of Research AreaE-business has become an integral part of the modern corporation and is a means of achieving competitive advantage. anyways that, it also creates opportunities for many third party services. For these reasons, it is vital to critically examine what exactly e-business can do for an enterprise. To demonstrate, the following SWOT analysis is make2.5.1 StrengthsAround the clock business operationConvenient, fast and effective orbiculate outreachLower operation costLower initial investment2.5.2 WeaknessesNo direct interaction between buyer and sellerLow customer penetration2.5.3 OpportunitiesThe nu mber of battalion using the internet is increasing passing(a)Over time, people will grow accustomed to doing transactions online2.5.4 Threats gigantic risks such as privacy issues, security concerns, transaction processing and business policy issues.2.6 Examples of e-business ApplicationsThere are many examples of e-business applications, the most common world EDI which is the computer-to-computer exchange of business documents. Another example is in collaborative commerce. For example, airlines have partnered to create Orbitz, an online travel service that searches the partner airline database for flights. The site also allows users to purchase hotel rooms, rent cars and other services.SECTION 3 CASE synopsis3.1 Case Study 1 TupperwareTupperware is a multi-billion dollar United States found manufacturer of plastic food storage containers that has a presence in over 100 countries worldwide. Recently, the company altered its distribution model to a multilevel compensation struct ure. This inevitably increased the volume of paperwork faced by multilevel gross sales consultants who found less time to do demonstrable sales. In addition, the order entry system was insufficient to cope with pourboire sales demands.To overcome these problems, the company implemented MyTupperware which is a web- ground order management system. The first problem was solved because the task of entering orders was shifted from distributors to sales consultants. The second problem was solved because the integrated and streamlined communications between the relevant parties and provided better support in the promotion and sales of products.3.2 Case Study 2 ToyotaFrom its humble beginnings in Japan, Toyota Motors emerged as the worlds largest and most profitable car maker in April 2007. It accomplished this major feat through unequaled excellence in its production process, and indeed throughout its entire value chain.Central to this success was the Toyota Production System TPS. Init ially, Toyota faced the same problems as other automobile makers including slow product design time, uneven quality of production, wastage and obsolescence. These factors hampered the companys ability to achieve competitive advantage.Consequently, Toyota critically examined its strengths weaknesses, though not in the way Western companies do. Toyota adopted the Japanese approach of kaizen, which is a philosophical system of continuous improvement by eliminating wastage. By harnessing the power of IS/ IT in its e-business, the company created the TPS as a means to achieve competitive advantage. Consequently, the company achieved awesome success and its manufacturing process was deemed the gold standard in quality manufacturing at low cost.Unfortunately, this was not to last. In the last two years, Toyota suffered its worst disaster in years. Cars produced by its U.S. plant suffered from faulty brakes and there were defects in cars produced by other plants. Consequently, the company do a massive recall, which seriously eroded the reputation of the company. Perhaps the company overextended itself or was lulled into a anomalous sense of complacency. Regardless, the very much vaunted TPS has come under scrutiny as people question how a system that was deemed close to perfection could cause such egregious errors. It remains to be seen how Toyota will remedy the situation.3.3 Case Study 3 FacebookBy now, the story of Facebooks founding is well known, thanks to a number of books and the Hollywood movie The Social Network. A Harvard student named match Zuckerberg founded the site in 2004 as an online social network for Harvard students before establishing it as a company. Though there are other online social network sites, the secret to Facebooks success lies not just in the features it provides, but the drop user interface which makes it appealing and easy to use. From its humble origins, Facebook has now over 500 million users and has been valued at US50 billi on. period the company is phenomenally successful, it is constantly plagued by issues concerning its privacy. Since Facebooks business model is such that it does not drive out users for the services it provides, its source of revenue comes from advertising and data mining. This has led to tell concerns about the violation of users privacy by selling their personal information to advertising companies who everydayly share such private information. In addition, there are concerns that users private information is accessible to the public with very grave consequences like identity theft.One major error that Facebook made was its beam advertising service which informed users when their friends made purchases and were involved in other activities outside of Facebook. Users did not agree to share this information and this caused a public resile and the company had to rescind the service.Similarly, when Facebook launched its password feed feature, users baulked at the invasion of pr ivacy. They did not want Facebook to post updates whenever they updated their profile, added friends or changed their settings. However, Zuckerberg addressed this problem much better by making a public apology and explaining the merits of this system. While some users were save resistant, the explanation won over many and today, the news feed is one of Facebooks most popular services and is emulated by other online social network sites.A third problem Facebook has is the handling of users personal information when they want to delete their profiles. Unlike other network sites, Facebook made it almost impossible for users to delete their accounts and copies of their personal information were stored indefinitely. This caused a backlash and Facebook has since made it much easier for users to delete their accounts.SECTION 4 EVALUATION OF CASESCaseSecurityEase of using siteTransparencyEffectiveness of e-businessCase 1HighAverageLowHighly effectiveCase 2HighAverageModerateHighly effectiv eCase 3ModerateEasyHighHighly effective4.1 semblanceOverall, it appears that of the three, Facebook has been the most successful in applying e-business since its entire business model is based on it. The other two are examples of traditional firms that employ e-business to improve their value chain. Tupperware uses the least extensive form of e-business as it is confined to its sales and after sales services rather than the manufacturing process. Toyota uses e-business extensively throughout its value chain as can be seen in the TPS. However, recent developments destine that its e-business application may not be as successful as was previously thought. Hence, Facebook is the most successful of the three in harnessing e-business to gain competitive advantage though it must be reminded here that the company still struggles with some security issues.4.2 RecommendationIt is recommended that Tupperware uses e-business more extensively throughout its value chain to include the planning and design and manufacturing process. Toyota should reevaluate its TPS to identify weaknesses in the current system and improve them. Facebook on the other hand should use e-business to gather more feedback from its customers about its services, particularly privacy issues and take them seriously.