5th Mozaik - Summary

INFORMATION SYSTEMS, ORGANIZATIONS, AND STRATEGY

From the previous meeting with sir Poan, we learnt several key points especially about what is actually organization and information systems, how information systems impact organizations and Business Firms, and the use of information systems to achieve competitive advantage.

In my opinion, the interesting part is when sir Poan explained us about the understanding Business environment, that also can call as 5 key forces in an industry.

First, is the threat of new entry. Obviously, for the organization that want to come to the industry, they will face with the threat of entry such as: cost of entry, specialist knowledge (on how they can invest their money to employee that can call also as people is an asset), the economic scale, cost advantages (such as whose vendor will lead to cost advantage and also it is about the efficiency cost inside the company), technology protection (on how our technology of product will not easily to be imitated), and also several barriers when try the new entry. For example, in the airline industry, the threat of entry is low, in which new entrants need to invest tremendously as a substantial amount of money is needed for the production of commercial airplanes.

Second, it is about supplier power. When starting the business, we really need to consider about who are actually our vendors. If we just have one vendor, we can not survive. At least we need to have the other vendor to back up the first vendor while the first vendor can not do their operation. For example, in the airline industry the supplier power is low, because the company has the power to negotiate the price of supplies due to global economics of scale.

Third, is about the threat of substitution. Which tell us about the substitution performance and cost of charge. Which one will lead us to the efficiency production. For example, in the airline industry, the threat of substitution is high, because the passenger of airplain can be substituted with a train, a ship, a car, etc.

Fourth, about the buyer power. Some of important things such as what is size of the order, the differences from our product to the competitor (value added product) that make our customers choose our product rather that competitor’s product, the competitive price, and also about the ability to substitute. For example, in the airline industry, the buyer power is low, because for many years boeing has been one of the leading aviation manufacturers in the worldwide commercial airline industry.

Fifth, the last but not least, and the important one, is about the competitive rivalry. Knowing your competitor, so that you can compete with them in terms of the quality of production, and another differences that make a value added to your product. For example, in the airline industry, the competitive rivalry is high due to the commercial airplane marketplace is a duopoly market, largely airbus and boeing, resulting in lowprofit margins in the airline industry.