Question

Use the five competitive forces model as described in this chapter to describe how information technology might be used to provide a winning position for each of these businesses:

1. A local restaurant
2. A mobile applications provide
3. A web-based audio book service

*****Porter's five forces include three forces from 'horizontal'competition--the threat of substitute products or services, the threat of established rivals, and the threat of new entrants--and two others from 'vertical' competition--the bargaining power of suppliers and the bargaining power of customers.

Answer 1

Answer:- The five forces are substitutes, supplier, buyer, new entrants, and inter-industry. The question asks the student to pick a force and describe how each of these 5 types of business might use information resources to reduce the threat of that force. An example of analyzing the substitute force is given below:

• A Global airline – It is difficult to think of what might be a substitute threat for a global airline. Perhaps it might be a cruise ship offering "offices at sea." In that case the global airline might use information resources to offer "offices in the air."

• A Local dry cleaner – Substitute services might be using a customer's own washer/dryer to be able to wash "dry clean only" clothes. In that case, information resources might be useful to create switching costs using a frequent customer card, or to provide customers with information about their garments such as how to extend the life of the material using the dry cleaner's services (note that these ideas might also be useful to reduce the threat of other forces, too).

• A mobile phone company - A substitute service might be the traditional phone company. The firm can reduce the threat of substitution by increasing the reliability and emphasizing the superior features of the mobile services. Mobility is the new expectation, and the majority of individuals own cellular devices.

• A Bank- A substitute service that might threaten a bank is a trend to keep money in a brokerage firm. Banks might use their information resources to offer other services of value to the customer such as instant on-line loan application and approval, extra incentives for longevity in accounts, and links with brokerage firm partners.