Discussion: Power of Buyers
Discussion: Power of Buyers
Bargaining Power of Buyers Recently, Zara has employed laser technology to measure 10,000 women volunteers so that it can add the measurements of “real” customers into its information repositories. This means that the new products will be more likely to fit Zara customers.
Bargaining Power of Suppliers Its computer‐controlled cutting machine cuts up to 1,000 layers at a time. A large number of sellers are available for the simple task of sewing the pieces together. Zara has great flexibility in choosing the sewing companies.
Industry Competitors Zara tracks breaking trends and focuses on meeting customer preferences for trendy, low‐cost fashion. The result is the highest sales per square foot in its industry, virtually no advertising, only 10% of stock remaining unsold, very low inventory levels, new products offered in 15 days from idea to shelves, and extremely efficient manufacturing and distribution operations.
Threat of Substitute Products IT helps Zara offer extremely fashionable lines that are expected to last for approximately 10 wears. IT enables Zara to offer trendy, appealing apparel at hard‐to‐beat prices, making substitutes difficult.
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41How Can Information Resources Be Used Strategically?
over time. The changing forces drive both the business strategy and IS strategy, and this model provides a way to think about how information resources can create competitive advantage for a business unit and, even more broadly, for the firm. The forces also can reshape an entire industry—compelling general managers to take actions to help their firm gain or sustain competitive advantage.
Using Information Resources to Alter the Value Chain A second lens for describing the strategic use of information systems is Porter’s value chain. The value chain model addresses the activities that create, deliver, and support a company’s product or service. Porter divided these activ- ities into two broad categories (Figure 2.5): support and primary activities. Primary activities relate directly to the value created in a product or service whereas support activities make it possible for the primary activities to exist and remain coordinated. Each activity may affect how other activities are performed, suggesting that information resources should not be applied in isolation. For example, more efficient IS for repairing a product may increase the possible number of repairs per week, but the customer does not receive any value unless his or her product is repaired, which requires that the spare parts be available. Changing the rate of repair also affects the rate of spare parts ordering. If information resources are focused too narrowly
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