Embed Size (px)
Citation preview
Global Competitiveness RankingGlobal Competitiveness RankingCriteria:
1. Quality of national business environment.
2. The set of institutions, market structures and economic
policies supportive of high level of prosperity.
3. Company operations and strategy ranking.
Michael Porter, Institute for Strategy and Competitiveness, Harvard Business School
World Economic Forum web page.
1998 Rankings1998 Rankings1. Singapore
2. Hong Kong
3. US
4. UK
5. Canada
6. Taiwan
7. Netherlands
8. Switzerland
9. Norway
10. Luxembourg
11. Ireland
12. Japan
13. New Zealand
14. Australia
15. Finland
16. Denmark
17. Malaysia
18. Chile
19. Korea
20. Austria Source: World Economic Forum
Global Competitiveness RankingGlobal Competitiveness Ranking20022002
1. US (2)
2. Finland (1)
3. UK (7)
4. Germany (4)
5. Switzerland (5)
6. Sweden (6)
7. Netherlands (3)
8. Denmark (8)
9. Singapore (10)
10. Canada (11)
11. Japan (15)
12. Austria (13)
13. Belgium (14)
14. Australia (9)
15. France (12)
16. Taiwan (21)
17. Iceland (16)
18. Israel (17)
19. Hong Kong (18)
20. Ireland (22)
21. Norway (19)
22. New Zealand (20)
23. Korea (26)
24. Italy (24)
25. Spain (23)
26. Malaysia (37)
27. Slovenia (32)
28. Hungary (27)
29. South Africa (25)
30. Estonia (28)
Global Competitiveness RankingGlobal Competitiveness Ranking
33. Brazil (30)
37. India (36)
38. China (47)
48. Poland (42)
55. Mexico (52)
61. Philippines (53)
58. Russia (58)
60. Vietnam (62)
79. Bolivia (75)
80. Haiti
2004 Ranking2004 Ranking
Country Country 2004 rank 2004 score 2003 rank2004 rank 2004 score 2003 rank Finland Finland 1 1 5.95 5.95 11 United States United States 2 2 5.82 5.82 22 Sweden Sweden 3 3 5.72 5.72 33 Taiwan Taiwan 4 4 5.69 5.69 55 Denmark Denmark 55 5.66 5.66 44 Norway Norway 6 6 5.56 5.56 99 Singapore Singapore 7 7 5.56 5.56 66 Switzerland Switzerland 8 8 5.49 5.49 77 Japan Japan 9 9 5.48 5.48 1111 Iceland Iceland 10 10 5.44 5.44 88
United Kingdom 11 5.30 15Netherlands 12 5.30 12Germany 13 5.28 13Australia 14 5.25 10Canada 15 5.23 16New Zealand 18 5.18 14France 27 4.92 26Korea 29 4.90 18China 46 4.29 44Italy 47 4.27 41Mexico 48 4.17 47India 55 4.07 56Brazil 57 4.05 54Poland 60 3.98 45Indonesia 69 3.72 72Russian Federation 70 3.68 70Philippines 76 3.51 66Vietnam 77 3.47 60Kenya 78 3.45 83Chad 104 2.50 101
Country 2004 rank 2004 score 2003 rank
Major PointsMajor Points
It is no longer possible for a country to insulate itself from the rest of the world.
Within the current industrialized world there is a narrowing of the gap between it and third world countries.
The accelerated pace of change is what disturbs the pessimists, because they can see it happening.
It took Britain 60 years to double its output, the US 50 years but developing countries are doubling output every 12 years. China has actually doubled its GDP in seven years.
In many respects the developing world is unknown economic and financial territory.
ConclusionsConclusions• The diamond of national advantage makes sense as a means of understanding global economic success.
• Domestic success does prepare companies to compete globally.
• Major European and an increasing number of Asian countries are capable of competing on a global basis.
• The global marketplace is only going to get tougher based on more, tougher competitors.
• The diamond can help to anticipate and understand new competitors.
Chapter 2 SummaryChapter 2 Summary
Business Competitive Business Competitive EnvironmentEnvironment
The First of Three Perspectives: The First of Three Perspectives: The Business EnvironmentThe Business Environment
• Business Environment
• Enterprise Environment
• IT Environment
Business Success
Important Factors to Understand the Important Factors to Understand the BCE of a CompanyBCE of a Company
Defining Competitiveness and a Defining Competitiveness and a Competitive ModelCompetitive Model
How a Company Gains a Competitive How a Company Gains a Competitive Advantage.Advantage.
The benefits to be gained from The benefits to be gained from understanding the Competitive Advantage understanding the Competitive Advantage of Nations concepts.of Nations concepts.
The Company AgendaThe Company Agenda The Role of GovernmentThe Role of Government
Competitiveness: A DefinitionCompetitiveness: A Definition
The degree to which a nation can, under free The degree to which a nation can, under free
and fair market conditions, produce goods and and fair market conditions, produce goods and
services that will meet the test of international services that will meet the test of international
markets while simultaneously maintaining or markets while simultaneously maintaining or
expanding the real income of its citizens.expanding the real income of its citizens.
Summary of Competitive ModelSummary of Competitive Model
Three primary inputs to improved domestic Three primary inputs to improved domestic performanceperformance– Human ResourcesHuman Resources– CapitalCapital– TechnologyTechnology
Trade policy and new competition act as Trade policy and new competition act as possible barriers to go globalpossible barriers to go global
Trickle down effect for increased standard Trickle down effect for increased standard of livingof living
How Does a Company Gain How Does a Company Gain Competitive Advantage?Competitive Advantage?
Providing Providing valuevalue to customers is what to customers is what competitiveness is all about.competitiveness is all about.
A Good Competitor Knows:A Good Competitor Knows:– Its Products and ServicesIts Products and Services– Its CustomersIts Customers– Its CompetitorsIts Competitors
The Diamond of National The Diamond of National AdvantageAdvantage
Firm Strategy, Structure and
Rivalry
Related and Supporting Industries
Demand Conditions
Factor Conditions
Chance
Government
The Competitive Advantage of The Competitive Advantage of NationsNations
The home nation plays a major role in the The home nation plays a major role in the achieving and sustaining competitive achieving and sustaining competitive advantage among companiesadvantage among companies
The home nation acts a catalyst in creating The home nation acts a catalyst in creating the right business competitive environmentthe right business competitive environment
““Perceive a new basis for competing or find Perceive a new basis for competing or find a better means of competing in old ways” a better means of competing in old ways” Michael PorterMichael Porter
The Company AgendaThe Company Agenda– To Create Pressure for InnovationTo Create Pressure for Innovation– To Be Strong at HomeTo Be Strong at Home– To Go GlobalTo Go Global
The Role of GovernmentThe Role of Government– Should Act Like A RefereeShould Act Like A Referee– Should Act Like A CoachShould Act Like A Coach– Create an environment that challenges Create an environment that challenges
companies to compete successfully.companies to compete successfully.
Clusters are PrevalentClusters are Prevalent
The diamond of National Advantage The diamond of National Advantage promotes promotes
industry clusters and the presence of strong industry clusters and the presence of strong
industry rivals within the same host nation.industry rivals within the same host nation.
DisagreementDisagreement
Kenichi Ohmae disagrees on the importance Kenichi Ohmae disagrees on the importance
of the role of the nation. of the role of the nation.
He believes successful companies transform He believes successful companies transform
themselves into truly global firms.themselves into truly global firms.
Possible Exam QuestionsPossible Exam Questions
Define and defend the basic concepts of the Define and defend the basic concepts of the Diamond of National Advantage.Diamond of National Advantage.
Use the Diamond of National Advantage to Use the Diamond of National Advantage to analyze a dominant industry in a specific analyze a dominant industry in a specific countrycountry
Chapter 3Chapter 3
The Porter Competitive Model
for
Industry Structure Analysis
Key Chapter ObjectivesKey Chapter Objectives• Introduce the structure and use of the Porter Competitive Model.
• Introduce the structure and use of Porter’s Value Chain.
• Illustrate how these models can be used to evaluate a company and its competitive ability within an industry.
• Draw conclusions between the use of Information Systems, and the two Porter models.
The Porter Competitive ModelThe Porter Competitive Model• Used to understand and evaluate the structure of an industry’s business environment, and the threats of competition to a specific company.
• Breaks an industry into small parts to avoid defining an industry too narrowly.
• The model was not designed to assess a companies use of Information Systems, yet it can pinpoint strategic areas to deploy Information Systems.
Porter Competitive ModelPorter Competitive Model
Intra-Industry Rivalry
Strategic Business Unit
BargainingPower
of Buyers
Bargaining Power
of Suppliers
Substitute Products
and Services
PotentialNew Entrants
Figure 3-1
Source: Michael E. Porter“Forces Governing Competition in IndustryHarvard Business Review, Mar.-Apr. 1979
Competitive StrategiesCompetitive StrategiesCountering Competitive ForcesCountering Competitive Forces
• Create effective links with consumers and suppliers.
• e.g. Improving your supply chain and locking in customers.
• Build barriers to new entrants and substitutes.
Basic Objectives
Two Strategies to AccomplishTwo Strategies to AccomplishThe Basic ObjectivesThe Basic Objectives
• Differentiation Strategy• Provide a superior product.• If done correctly allows for premium pricing.• Usually more costly to implement.
• Low-Cost Strategy• Leverage economies of scale, past experience, and alliances to provide the cheapest prices.• IS can play a key role.
Supporting StrategiesSupporting StrategiesAugment Competitive StrategiesAugment Competitive Strategies
• Innovation – Can help contribute to product differentiation and operational efficiency.
• Growth – Certain industries reward firms exhibiting explosive growth (ex. Federal Express).
• Alliance – Allows strategies to be used which would be impossible to implement alone (ex. Airlines sharing routes to expand reach).
The Porter Value ChainThe Porter Value Chain
• Focuses on a companies INTERNAL operations, specifically efficiency and added value.
• Identifies sources of competitive advantage.
• Objective:• Maximize value adding activities.• Minimize non-value adding activities.
Porter Value ChainPorter Value Chain
Service Sales and
Distribution Marketing
Production and
Manufacturing Engineering
Manufacturing Industry Value Chain
Research and
Development
Value Chain & Information SystemsValue Chain & Information Systems
• Value chain breaks business operation into functional pieces.
• These pieces can be analyzed to see if IS may add efficiency.
• Nearly all of the pieces can benefit from the correct use of IS, given the necessary talent and adequate funding.
In ClosingIn Closing
• Porter’s models have become standard analysis tools.
• Combined they provide both external and internal visibility.
• Both must be used carefully to avoid negative results or misdirection.
Chapter 3Chapter 3
Porter Competitive Model
for
Industry Structure Analysis
The Plan for TodayThe Plan for Today
• Address the Concepts of the Porter Competitive Model.
• Provide some industry examples using the
Competitive Model.• Address the Value Chain conceptually and with
industry examples.• Gain necessary understanding so can revisit each
of these using the airline industry as the example in Chapter 4.
Awareness of competitive forces can
help a company stake out a position
in its industry that is less vulnerable
to attack.
Michael E. Porter
Competitive Strategy
• Was not developed for IS use.• Breaks an industry into logical parts, analyzes them and puts them back together.• Avoids viewing the industry too narrowly.• Provides an understanding of the structure of an industry’s business environment.• Provides an understanding of competitive threats into an industry.
Porter Competitive ModelPorter Competitive Model
Two Key QuestionsTwo Key Questions
1. How structurally attractive is
the industry?
2. What is the company’s relative
position within the industry?
Why Do You Care?Why Do You Care?
The collective strength of the industry forces determines the ultimate profit potential of an industry.
The strongest competitive forces are of greatest importance in formulating competitive strategies.
Every industry has an underlying structure, or a set of fundamental economic and technical characteristics that gives rise to these competitive forces.
Why Do You Care?Why Do You Care?
This view of competition pertains to industries selling products and those dealing in services.
A few characteristics are often key to the strength of each competitive force.
Key Industry Analysis FactorsKey Industry Analysis Factors
• Collecting the data.
• Determining which data is important.
• Selecting an appropriate overall approach.
• Deciding on the logical starting point.
1. To create effective links with buyers and suppliers.
2. To build barriers to new entrants and substitute products.
Basic Objective of the SBUBasic Objective of the SBU
Porter Competitive ModelPorter Competitive Model
Intra-Industry Rivalry
Strategic Business Unit
BargainingPower
of Buyers
Bargaining Power
of Suppliers
Substitute Products
and Services
PotentialNew Entrants
Figure 3-1
Source: Michael E. Porter“Forces Governing Competition in IndustryHarvard Business Review, Mar.-Apr. 1979
DefinitionsDefinitionsNew Entrant:
An existing company or a startup that has not previously competed with the SBU in its geographic market. It can also be an existing company that through a shift in business strategy begins to compete with the SBU.
Substitute Product or Service:
An alternative to doing business with the SBU. This depends on the willingness of the buyers to substitute, the relative price/performance of the substitute and/or the level of the switching cost.
Rivalry Likelihood?Rivalry Likelihood?
• Profit margins.
• Industry growth rate and potential.
• A lack of capacity to satisfy the market.
• Fixed costs.
• Competitor concentration and balance.
• Diversity of competitors.
• Existing brand identity.
• Switching costs.
• Exit barriers.
A Buyer Has Power If: A Buyer Has Power If:
1. It has large, concentrated buying power that enables it to gain volume discounts and/or special terms or services.2. What it is buying is standard or undifferentiated and
there are multiple alternative sources.
3. It earns low profit margins so it has great incentive
to lower its purchasing costs.
4. It has a strong potential to backward integrate.
5. The product is unimportant to the quality of the
buyers’ products or services.
A Supplier Has Power If: A Supplier Has Power If:
1. Its product is unique or at least differentiated.
2. It has built up switching costs.
3. It provides benefits through geographic proximity to
its customers.
4. It poses a definite threat to forward integrate into
its customers’ business.
5. A long time working relationship provides unique
capabilities.
Possible Barriers to EntryPossible Barriers to Entry
• Economies of scale.
• Strong, established cost advantages.
• Strong, established brands.
• Proprietary product differences.
• Major switching costs.
• Limited or restrained access to distribution.
• Large capital expenditure requirements.
• Government policy.
• Definite strong competitor retaliation.
Substitute ThreatsSubstitute Threats
• Buyer propensity to substitute.
• Relative price/performance of substitutes.
• Switching costs.
Competitive StrategiesCompetitive Strategies
• What is driving competition in my current or future industry?
• What are my current or future competitors likely to do and how will we respond?
• How can we best posture ourselves to achieve and sustain a competitive advantage?
Strategy OptionsStrategy OptionsAccording to Michael PorterAccording to Michael Porter
Primary Strategies
1. Differentiation
2. Least Cost
Supporting Strategies
1. Innovation
2. Growth
3. Alliance
Can Information Systems:Can Information Systems:
1. Build barriers to prevent a company from entering an industry?
2. Build in costs that would make it difficult for a customer to switch to another supplier?
3. Change the basis for competition within the industry?
4. Change the balance of power in the relationship that a company has with customers or suppliers?
5. Provide the basis for new products and services, new markets or other new business opportunities?
Porter Competitive ModelHeavyweight Motorcycle Manufacturing Industry
North American Market
Bargaining Power of Buyers
• Recreational Cyclist• Young Adults• Law Enforcement• Military Use• Racers
Potential New Entrant
Substitute Product or
Service
Intra-Industry RivalrySBU: Harley-Davidson
Rivals: Honda, BMW, Suzuki, Yamaha
• Foreign Manufacturer
• Established Company Entering a New Market Segment• New Startup
• Parts Manufacturers• Electronic Components• Specialty Metal Suppliers• Machine Tool Vendors• Labor Unions• IT Vendors
Bargaining Power of Suppliers
• Automobiles• Public Transportation• Mopeds• Bicycles
Business Strategy Model Business Strategy Model Asks Fundamental QuestionsAsks Fundamental Questions1. What products and/or services do we intend to offer?
2. What price range of products do we intend to offer?
2. What customer targets do we intend to pursue?
3. What geographic markets do we intend to address?
4. How will we obtain products to sell to our customers?
5. How will we deal with sales to our customers?
6. What company structure do we intend to create?
7. What information systems approach will we take?
Engineering Product Design Manufacturing Sales/Distribution Business
Information Systems
Company Structure
Independent Alliances Joint Ventures/Subsidiaries
Sales/Distribution Strategy
Distributors Independent Dealers Franchised Dealers
Manufacturing Strategy
Vertically Integrated Vendor Emphasis Outsource
Market Strategy
North American Europe Japan/Asia Latin America
Law Enforcement Military Recreational Professional Young Adult
Product StrategyType/Purpose/Size
Heavyweight Off-Road Dual Purpose Road Racing Café Racer Price Strategy
Entry Level Moderate Premium
Business Strategy Model - Motorcycle Manufacturing Industry
Product StrategyLimited
Specialized Products
Broad Range of Specialized
Products
Wide Range of Non-specialized
Products
Health Conscious Products
Parents with Kids
Ethnic FocusTeenagers
Young Adults with Social Focus
Time Conscious
Adults
Leisure Adults
Senior Citizens
Customer Strategy
Store Format Strategy
Dine InWait Service
Dine In Counter Service
or BuffetTake Out
Drive Through
Vendor StrategyCompetitive
BidsVertically Integrated
Long Term Contracts
Alliances
Market Strategy
Local Regional National International
Business Strategy Model – Food Service Industry
Company Structure Strategy
Independent Alliances Franchises Subsidiary
Information Systems Strategy
Customer Systems
Store Logistical Systems
Business Systems
Product Analysis System
Strategy OptionsStrategy OptionsAccording to Michael PorterAccording to Michael Porter
Primary Strategies
1. Differentiation
2. Least Cost
Supporting Strategies
1. Innovation
2. Growth
3. Alliance
Porter Competitive Model Porter Competitive Model TipsTips
1. To incorrectly define the industry can cause major
problems in doing Section I of the analysis term paper.
2. You must identify the specific market being evaluated.
3. Your analysis company is the Strategic Business Unit.
4. Identify rivals by name for majors, by category for minor
rivals if needed to present the best possible profile of
rivals.
Porter Competitive ModelPorter Competitive Model
5. Be sure to address the power implications of both
customers and suppliers. Power buys them what?
6. Identify buyers and suppliers by categories versus
companies.
7. Summarize your Porter Model analysis.
Computer IndustryComputer Industry
Why is this industry more of a challenge to evaluate using the Porter Competitive Model?
Old Computer IndustryOld Computer IndustryLayer 5Distribution
Layer 4ApplicationSoftware
Layer 3OperatingSystemSoftware
Layer 2ComputingPlatforms
Layer 1Basic Circuitry
IBM DEC HP Fujitsu NCR
Figure 3-3
The New Computer IndustryThe New Computer Industry
Layer 1Microprocessor Intel X86 Motorola RISC Power PC
Layer 2ComputerPlatforms
IBM Compaq Other Intel-Based PCs Apple Macs Other
Layer 3OperatingSystem Software
MS DOS Windows OS/2 Unix Apple
Novell Netware Banyan IBM Others
Layer 4Applications•Spreadsheets•Word Processors•Database
Lotus 1-2-3 Microsoft Excel Quattro Pro
Layer 5Distributors
ComputerDealers
SuperStores
Mass Merchandisers
Clubs MailOrder
Value-addResellers
DirectSalesForce
Other
Figure 3-4
The Computer IndustryThe Computer Industry
Layer 1Microprocessor Intel X86 Motorola RISC Power PC
Layer 2Computer HardwarePlatforms
Supercomputer Mainframe Midrange Workstation PC Handheld Device
Layer 3OperatingSystem Software
Windows Unix Linux Apple
Layer 5Application Software•Enterprise•Specific Word Processors Spread Sheets Publishing Groupware Data Warehouse Other
Layer 6Sales andDistribution
ComputerStores
SuperStores
Mass Merchandisers
MailOrder
Value-addResellers
DirectSalesForce
Internet Direct
Layer 4 Database & Networking Software
Hierarchical Database Relationship Database
Desktop Suites Enterprise Resource Planning Supply Chain Management Other
LAN, WAN and Internet Software Interfaces, Browsers and Search Engines
The Computer (IT/IS?) Industry The Computer (IT/IS?) Industry as seen by IBM in 2002 as seen by IBM in 2002
1. Services
2. Applications Software
3. Middleware Software
4. Systems
IT Consulting
Systems Integration
Outsourcing
Training and Education
Financing
Maintenance
The Computer Industry
Services
Applications Software
Web Sites Personal Productivity
E-Commerce Engineering & Design
Supply Chain
Human Resources
CRM*
Business Intelligence
*Customer Relationship Management
Middleware Software
Systems Management
Application and Transaction Servers
Collaboration & Messaging
Database
SystemsOperating System
Memory Networking Displays
Processors Storage
Source: Who Says Elephants Can’t Dance by Louis Gerstner
Computer IndustryComputer IndustryHardware
• Processors
• Input/Output Devices
• Storage Devices
Networking Equipment?
Multiple processor segments in the computer industry.
Processor companies versus specialized hardware companies.
Software
• Systems Software
• Operating Systems
• Database Systems
• Network Systems
• Utility Software
• Performance and
Security Software
• Development Software
• Programming Languages
• CASE Software
• Applications Software
Hardware vendors versus independent software companies.
Applications SoftwareSpecific application software to do numerous things.
Running on a range of processors.
Applications suites (integrated applications) Some call these integrated enterprise applications
Is game software from Sony a part of the computer industry?
Is software to run numerical control machine tools part of the computer industry?
Is software to analyze automobile smog tests part of the computer industry?
Worldwide Computer Hardware Sales
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000
1993
1994
1995
1996
1997
1998
1999
2000
Supercomputer
Mainframe
Midrange
Workstation
Personal Computer
Source: Dataquest
Millions of Dollars
Billions of $s
Worldwide Hardware Sales
0 100 200 300
2000
2001
2002
PCsTotal Hardware
Billions of $s
Source: Dataquest
What is a PC?What is a PC?
1. A desktop tool—word processor, spreadsheet, publishing tool, data store.
2. An entertainment device.
3. Communication device—email.
4. Information source—Internet sources.
5. A collaboration tool.
PC Industry SegmentPC Industry Segment
1. Passed $100 billion in sales in the first ten years.
2. Growth and competition was based on industry standards
like never before.
3. This has spawned thousands of niche companies.
4. The PC has fundamentally restructured the Computer
Industry.
5. Industry pioneers believe the revolution is no more than
half over.
Change Relative to Selling PCsChange Relative to Selling PCs
1. Languages
2. Application Packages
3. Connectivity and Compatibility
4. Multimedia
5. Communication Device--Groupware
PC Industry ChangePC Industry Change• Atari
• Cromemco
• Fortune Systems
• Wicat Systems
• Kaypro
• Morrow Designs
• Osborne Computer
• Victor Technologies
• Dell
• Gateway
• IBM
• HP (Compaq)
• NEC
The Future Computer IndustryThe Future Computer Industry
1. Traditional US Companies (large).
2. Asian Electronic Companies.
3. The New Strategy Companies.
Why has the US continued to be the world leader in the computer industry?
Porter Value ChainPorter Value Chain
Basic Concept:
1. Deals with core business processes.
2. Enables tracking a new idea to create a new
product and/or service from origination all the
way to customer satisfaction.
Porter Value ChainPorter Value Chain
Service Sales and
Distribution Marketing
Production and
Manufacturing Engineering
Manufacturing Industry Value Chain
Research and
Development
Retail Industry Value ChainRetail Industry Value Chain
Marketing and
Selling
Operating Stores
Distributing Inventory
Managing Inventory
BuyingPartnering
withVendor
Value Chain Things to RememberValue Chain Things to Remember
1. Value to customer objective is not clear.
2. Relay team concept is too time consuming and doesn’t
work in the current competitive environment.
3. Maximize the value-add activities and eliminate as
much as possible the things that do not add value.
4. Make sure that each step in the overall process (each
function) does things consistent with the overall
objective of value to customer.
Generic Value ChainGeneric Value Chain
INBOUNDLOGISTICS
OPERATIONS OUTBOUNDLOGISTICS
MARKETING AND SALES
SERVICE
PRIMARY ACTIVITIES
PROCUREMENT
TECHNOLOGY DEVELOPMENT
HUMAN RESOURCE MANAGEMENT
FIRM INFRASTRUCTURE
SU
PP
OR
T A
CT
IVIT
IES
Figure 3-6Adapted with the permission of the Free Press, an imprint of Simon & Schuster Inc.. from COMPETITIVE ADVANTAGE: Creating and Sustaining Superior Performance by Michael Porter. Copyright © 1985 by Michael E. Porter.
Property and Casualty Industry Value ChainProperty and Casualty Industry Value Chain
INBOUNDLOGISTICS
OPERATIONS OUTBOUNDLOGISTICS
MARKETING AND SALES
SERVICE
PROCUREMENT
TECHNOLOGY DEVELOPMENT
HUMAN RESOURCE
MANAGEMENT
FIRM INFRASTRUCTURE
-Financial Policy -Regulatory Compliance - Legal - Accounting
Actuary Training
Agent Training
Claims Training
Claims Procedures
•Claims Settlement•Loss Control
•Policy Sales•Policy Renewal•Agent Manage- ment•Advertising
•Independent Agent Network•Billing and Collections
• Underwriting• Investment
•Policy Rating
Actuarial MethodsInvestment Practices
I/TCommunications
Product DevelopmentMarket Research
Figure 3-7
Included with permission of Michael E. Porter based on ideas in Competitive Advantage: Creating and Sustaining Superior Performance, copyright 1985 by Michael E. Porter.
Technologies in the Value ChainTechnologies in the Value Chain
INBOUNDLOGISTICS
OPERATIONS OUTBOUNDLOGISTICS
MARKETING AND SALES
SERVICE
PROCUREMENT
TECHNOLOGY DEVELOPMENT
HUMAN RESOURCE
MANAGEMENT
FIRM INFRASTRUCTURE
Information System Technology
Planning and Budgeting TechnologyOffice Technology
Training TechnologyMotivation Research
Information Technology
Product TechnologyComputer-Aided DesignPilot Plant Technology
•Diagnostic and Testing Technology•Communications Technology•Information Technology
•Transportation Technology•Material Handling Technology•Storage and Preservation Technology•Communication System Technology•Testing Technology•Information Technology
Information Systems TechnologyCommunication System TechnologyTransportation System Technology
Software Development ToolsInformation Systems Technology
•Basic Process Technology•Materials Technology•Machine Tools Technology•Materials Handling Technology•Packaging Technology•Testing Technology•I/nformation Tech.
•Transportation Technology•Material Handling Technology•Packaging Technology•Communications Technology•Information Technology
•Multi-Media Technology•Communication Technology•Information Technology
Figure 3-8Adapted with the permission of the Free Press, an imprint of Simon & Schuster Inc.. from COMPETITIVE ADVANTAGE: Creating and Sustaining Superior Performance by Michael Porter. Copyright © 1985 by Michael E. Porter., p. 167.
