Chapter 3 :Strategic Initiatives for Implementing Competitive Advantages

Holla..! Today's chapter is talk about the strategic initatives.What is strategic initatives?

Strategic initatives is an organizations can undertake high-profile strategic initiatives including:

Supply chain management (SCM)
Customer relationship management (CRM)
Business process reengineering (BPR)
Enterprise resource planning (ERP)

The first one is supply chain management.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.

There have four basic components of supply chain management including:

Supply chain strategy – strategy for managing all resources to meet customer demand
Supply chain partner – partners throughout the supply chain that deliver finished products, raw materials, and services.
Supply chain operation – schedule for production activities
Supply chain logistics – product delivery process

Wal-Mart and Procter & Gamble (P&G) SCM


Effective and efficient SCM systems can enable an organization to:

1)Decrease the power of its buyers
2)Increase its own supplier power
3)Increase switching costs to reduce the threat of substitute products or services
4)entry barriers thereby reducing the threat of new entrants
5)Increase efficiencies while seeking a competitive advantage through cost leadership

Effective and efficient SCM systems effect on Porter’s Five Forces


CUSTOMER RELATIONSHIP MANAGEMENT

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

Many organizations, such as Charles Schwab and Kaiser Permanente, have obtained great success through the implementation of CRM systems

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:

Identify types of customers
Design individual customer marketing campaigns
Treat each customer as an individual
Understand customer buying behaviors

CRM Overview


BUSINESS PROCESS REEINGINEERING

Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s order

Business process reengineering (BPR) – 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


finding opportunity using BPR:

A company can improve the way it travels the road by moving from foot to horse and then horse to car

BPR looks at taking a different path, such as an airplane which ignore the road completely


Progressive Insurance Mobile Claims Process


Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit



ENTERPRISE RESOURCE PLANNING

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 enterprisewide information on all business operations

Keyword in ERP is “enterprise”

Sample data from a sales database


Sample data from an accounting database


ERP systems collect data from across an organization and correlates the data generating an enterprisewide view