CHAPTER 3 STRATEGIC INITIATIVE FOR IMPLEMENTING COMPETITIVE ADVANTAGES




STRATEGIC INITIATIVES
Organizations can undertake high- profile strategic initiatives including;

• Supply Chain Management (SCM)

• Customer relationship management (CRM)

• Business Process Reengineering (BPR)

• Enterprise Resource Planning (ERP)

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:

1. Supply Chain Strategy - strategy for managing all resources to meet customer demand.



Suply Chain Partner - partners throughout the supply chain taht deliver finished products, raw materials, and services.





Supply Chain Operation - schedule for production activities.





Supply Chain Logistics - product delivery process.

↪Tesco and Procter & Gamble (P&G) SCM

 



↪ Effective and efficient SCM systems can enable an organization to;

↠  Decrease (↓) the power of its buyers
↠  Incerase (↑) its own supplier power
↠  Increase (↑) switchingcosts to reduce the threat of substitute products or services
↠  Create entry barriers thereby reducing the threat of new entrants
↠  Increase (↑) efficiencies while seeking a competitive advantage through cost leadership 





↪ Effective and efficient SCM systems effect on Porter's Five Forces

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.

↪For example;


    - CRM systems help organizations understand and manage their customer.
    
    - Charles Schwab recouped the cost of a multimillion - dollar CRM system in less than two years.
    
    -The system allowed Schwab to segment its customers in terms of serious and no serious investors. 




↪The CRM system looked for customers that had automatic withdrawal from a bank account as a sign of a serious investor.


↪The CRM system looked for stagnant balances as a sign of a no serious investor.


↪Charles Schwab could then focus efforts on selling to serious investors, and spend less time attempting to sell to no serious investors.

↪ CRM is not just technology, but a strategy, process, and business goal that an organization must embrace on an enterprise wide 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 Reengineering

↪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 oppportunity 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

↪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 enterprise wide information on all business operations.

↪Keyword in ERP is "enterprise"

↪ERP systems collect data from across an organization and correlates the data generating an enterprise wide view.