Business Analysis Porters Five Forces Model Information Technology Essay
An appropriate system is essential for Aalsmeer to support its e-business. Once the system is installed, Aalsmeer has to ensure the new system is stability, safety and suitable for all their business partners and customers. Additionally, the system security is important too. All the business processing, buyers and sellers’ information, financial information etc. should be protected. Lastly, must be sure that all these new system has already tested and always keep maintenance to improve and increase the business partner and customers’ confidence for their business dealings.
1.3 Business Analysis – Porter’s Five Forces Model
For many enterprises, they keep contend the problem of gaining profitability. Porter’s five forces role provides suggested points which we can extend a broad and sophisticate analysis of competitive position. This typically use for creating strategy, plans or making decisions in a business (Maxi-Pedia, 2011). Simultaneously, it is a useful way to conduct five forces analysis of an industry’s attractiveness to construct a checklist based on Porter’s seminal work. (Walker, Jr., O.C. & Mullins, J.W., 2008)
Porter’s Five Forces
A firm that supply the flowers and services to Aalsmeer.
A large number of suppliers provide more options to Aalsmeer and the end buyers-customers.
The size of supplier effect the ability of substitute.
The buyer’s willingness is affected by the affordable price and high quality service.
The elastic price affects the demand because the customers having the alternative of choices.
Similar product with different price will lead buyers change their buying substitute.
The competitors in the same industry provide the similar products and services.
The new market entrance in the same industry to share the market space.
Introduce the new or unique product to attract the customer.
A profitable company is depends in the large amount of customers and buying volume that affected by buyers.
Provide delivery service by using product differentiation strategy to attract the customers.
The price should be relatively elastic to buyers with the relatively elastic of demand. For example, charge high price during the peak season.
Expect the ability of buyer and potential buyer for Aalsmeer’s product to compete with same industry.
New Market Entrance
There are high barrier to entry in flower industry with traditional way of transaction.
It is better to maintain the high cost to compete with other new competitors. Also, the stability cash flow and profit of a firm can be reduced the risk.
New market using e-Business to enter the new market, so Aalsmeer might be knowledgeable for new market entrance.
A firm should be competed in order to improve their ability in the same industry.
Table 2: Porter’s five forces
Figure 2: Porter’s Five forces Model
(source from: http://www.maxi-pedia.com/Five+Forces+model+by+Michael+Porter)
2.1 Low-cost Leadership
Low-cost leadership strategy is useful for Aalsmeer Flower Auction which is achieves the lowest operational costs and the lowest prices. Low-cost leadership able to provide lowest-cost goods but high quality services meanwhile reduces problems towards the consumers. The key element of Aalsmeer’s low-cost leadership strategy is the interface to supply chain in order to respond to the change of customer requirements.
In order to gain competitive advantage, Aalsmeer has to change the traditional business way, it is because of the electronically driven flower market (FTMS college, n.d.). Firstly, its create innovation in Aalsmeer from traditional way. These strategies redefine value chain means that Aalsmeer do not need to go through middle man and will straight forward to customers, wholesalers or retailers. Meanwhile, retailer can straight away order the flower with the auction and do not have to pass through the process that transaction with cash and carry stores and others. Consequences, things would go on easier if retailers can access to their information to serve their needs and suppliers knowing stock availability to respond to their needs. In this case, Aalsmeer able to continuous replenish once receive order for new merchandise of fresh flowers from retailer when stock are limited. This enables the higher speed in production, order, and payment cycles meanwhile reduce operation and procurement cost and increase productivity.
Through the web site, the customers, wholesalers, exporters, importers, cash and carry stores or retailers can place their order through online. Because they are order with large amount of flowers, the auction can give them discount or offer in order to strengthen the link between wholesalers and retailer. So that they will have more resource and more capital to compete with each other with low-cost leadership strategy because once they change from traditional business way to internet, for sure the flower cost will be cheaper than market price. The competitive advantages with satisfy consumer tastes which are provided fresher flower compare with market and deliver it to door step in the shortest time.
In this case, the better example is Air Asia. Customers can book air flight ticket through Air Asia website with the requirements of personal details and make payment by credit card. The whole process will be done in 15 minutes. This is convenience, efficiency and effectiveness for the public.
By applying this strategy in Aalsmeer Website is able to deliver the highest customer satisfaction by adapt retailer trustworthy. Through Aalsmeer Web site, visitors gain equivalent advantage as the walk in shoppers in the sophisticated services, for example online customer support system that able to track the ordering from customers and disclose the time of delivery to the customers. Customers able to shop through their personal page, refer to the online catalogue, place orders and deposit into the shopping cart. In addition, it will enable the innovation of auction because website selling or e-business is very unfamiliar at the earth.
2.2 Product Differentiation
Product differentiation strategy can use to achieve the objective. Product differentiation means that use IS to enable the new services and products or even change the convenience of customers by using existing products and services (Laudon, K.C. & Laudon, J.P., 2009). Nowadays, people prefer online order flower rather than walk in (Articlesbase, 2005-2011). Through the internet, customers can ask to send flower to anyone who lives in the other side of world. It is amazing that technology can do nowadays. (Riversdale Flowers, n.d.)
Another example will be Dell Inc. They make sell directly to their customers using assemble-to-order manufacturing (SCM Focus, n.d.). Means that, customers can buy computers directly from Dell’s through the website or using a toll-free telephone number. Once Dell’s production received order, it will directs an assembly plant from an on-site warehouse to assemble the computer by using components based on the configuration specified, and then send to their customers.
Therefore, Aalsmeer has to start to use product differentiation strategy which is create service that is personalized and customized to fit the accurate specifications of individual customers and strengthen the link with wholesalers and retailers. They can get supply and purchase from growers and buyers by using toll-free telephone number or by accessing Aalsmeer’s web site. Customer will also surely experience great convenience when they order flowers online.
By using standard software to order tracking the product available, Aalsmeer would have the advantage to view through the inventory level from local growers or even growers from outside of the country by just one click without billing and traditional phone calls. In this case, the software able to ensure the supply fulfills the market demands especially during peak season like Valentine’s Day, Christmas’ Day etc. Apart from this, Aalsmeer can get the advantage to distribute flowers and plants to end customers. In the meantime, Aalsmeer can position itself to compete on the uniqueness of its products and services with characteristics of well-known brand image, a strong reputation.
Obviously, product differentiation and low-cost leadership strategies helps Aalsmeer to increase market share because it can non-stop operate, which means 24 hours a days, as long as the internet connection is on. Therefore, it can be the whole world business. Simultaneously, with the strategy, the auction can gain more customers and gain more order, they can manage to have a more accurate ordering system. Hence, it will be a good opportunities for the auction to try out the new strategy.
Information System (IS) and Information Technology (IT)
IS and IT are used by organisations to develop their business through the electronic. It is to complete new efficiency level, profitability and competitiveness. Although the terms are typically used interchangeable, they are different.
IS is interrelated components that manage information to support decision making and control and to help with analysis, visualization and product creation. It also more efficiency to tolerate and flourish, expand their reach to far-off locations, offer new products and services, reorganize jobs and workflow and significantly change the way they operated to reduce the expenditure.
Additionally, IT is the hardware and software a business uses to achieve objective. (Scribd, n.d)
2.3 Enterprise Resource Planning (ERP)
Nowadays, internet technology had created a highly synchronized industry value chain which called value web. This value web is a group of independent company, so Aalsmeer can use this IT to organize their value chain to online delivery service for their current market collectively. It will result in a less linear fashion that drives and operates by more customers than the Aalsmeer’s currently traditional value chain.
Figure 3 shows that value web synchronizes the Aalsmeer online business workflow of customers, trading partner, and supplier in florist industry.
Figure 3: Enterprise Resource Planning (ERP)
(Source from: http://joomlacenterng.com/beta/open-solutions/erp-solutions)
ERP is a system for Aalsmeer to easily keep tracking for wholesalers, importers, exporters, retailers and stock aging through internet. Moreover, when the customers place an order, the data will flow automatically to other parts of the auction. Meanwhile, wholesalers and retailers can get the latest Aalsmeer’s stock balance available and current prices through internet and also able to order on the spot.
Customer relationship management (CRM) system helps to establish a single tool for Aalsmeer website and also in everyday business processes with retailers and growers. The internal CRM able to lowering inventory cost which link with the growers. Key values of external CRM are improved understanding with the high bargaining power of customers and speed up on decisions making, which can shorten the project durations on delivering services using e-business.
The strategic necessity for front-office CRM and back-office, core-operation ERP comes from the differences in Aalsmeer vendors across the countries. Most of the companies used different systems but each system unconnected, thus CRM and EPR of enterprise application are chosen to close the gaps of suppliers and buyers. The essential of two systems is where it coax the independently front-office and back-office operations to work well together and incorporate as integrated suit to prompt replenishment of stock for the customers.
Moreover, Supplier chain management system is for Aalsmeer to insert supplier database. This included term and offer prices by supplier, supplier companies detail and also flowers’ purchase entry data, reference number and prices (Tech-FAQ, n.d). Furthermore, the accounting department will be notified and send invoice to the customers. The representatives of customer service will record the progress of order through every step to update their orders and then inform the customers.
Human resource management system is to manage the workers’ record. It offers benefits administration to workers by self-service for the contract information. The main objective of this system is to reduce the paper works once the Aalsmeer become wide transaction. (EXTOL, n.d.)
Additionally, the manufacturing resources planning system is a highly integrated and complex solution controlling the entire manufacturing management activities. It included supply chain planning, inventory management, sales order administration, claim processing, procurement planning, transportation and distribution. This system increases the plant utilization capacity and production rate. (EXTOL, n.d.)
ERP enable the auction the flexibility to respond rapidly to customer’s requests while producing and stocking inventory with what is needed to fulfill existing orders. Their ability to increase accurate and on-time deliver, reduce costs and increase customers satisfaction adds to firm profitability. Additionally, ERP provide company-wide information to help the manager of the auction to analyse the profitability or cost structures easily. (Laudon, K.C. & Laudon, J.P., 2009)
3.0 Applying Methodology on New System
In order to build up the ERP system, I would like to recommend Aalsmeer to use the alternative method which is System Development Life Cycle (SDLC) to build up the system. Indeed, SDLC is a sequential series of activities that structured step-by-step for the information system of development. It includes six key phases which from initial feasibility study to maintenance of completed application. Figure 4 below shows the traditional SDLC method which referred to as Waterfall methodology. (Haag, S. & Cummings, M., 2008)
3.1 System Development Life Cycle model (SDLC)
Figure 4: SDLC traditional method
(Source from: http://www.websoftwareqa.com/2011/01/applying-qa-to-waterfall-development-wait-what/)
Before the system approve, feasibility must be assessed which is the first stage of SDLC. Feasibility study is used to determine and produce a project plan and budget planning for the development future if the project will be proceed (Start vb dotnet, 2004-2010). Meanwhile, the auction should provide more detail description that required identifying the technical, economic and operational feasibility analysis. (Ambysoft, 2005-2010)
Typically, transaction’s benefits is gained from new system, technical concerns, related costs and development time, if these analyses are feasible, then the auction can be proceed to next stage. However, if the proposal is unfeasible then that should be abandoned and redo.
The analysis is the following stage, it is for Aalsmeer to verify how the system is processes, what kind of information and new systems are needed and where there are problems.
Indeed, Aalsmeer can pass through the existing documentation and questionnaire or interview with workers to determine the problems and then improve it. Meanwhile, business transaction details and standard of performance need to be specified and examined. After that, analyses the information and prepares a document which should include user requirements, managements and recommended plan to develop the new system. (Zwass, V., 1998)
The primary goal of design phase is to construct a technical blueprint based on the question of how the proposed system will work (Haag, S. & Cummings, M., 2008). This stage is for Aalsmeer to learn how the software should perform when they create a layout and the design will based on Aalsmeer needs like purchases and sales records. Moreover, analysis is constantly made from the layout because this is the first thing to show customers. And the final result and structure are typically based on the initial design.
Aalsmeer has to carefully explain each step and make sure everything is done because it is very crucial in the whole development cycle. Any glitch in the design phase could be very expensive in the implementation stage or perhaps the other developers will understand the software and then break it, so it will be threaten the Aalsmeer’s operation. (GeekInterview, 2005-2011)
The following phase will be the implementation system. This phase will take all the detail design documents from design phase and transform to an actual system. It is for the Aalsmeer to improve, integrate, and purify for several times until they are ready for testing. Software artifacts was build such as catalogs, ordering format, payment format with an online help system to guide customers in their connections with the systems.
In this phase the system is tested as a whole and to ensure that interfaces between modules work (integration testing), the system works integrated into the total system when function well and that the system does what the user requires (acceptance testing) (Haag, S. & Cummings, M., 2008). As a case study for Aalsmeer, it will be a test whether every data is converts from old system to new system. After that, Aalsmeer will use the new system directly. For sure, the old database have to keep as backup will be better.
Maintenance is the final phase of SDLC. It is necessary for the finished of successful project on a development to ensure the new system is supported and monitor for the business goal. But, it is clear that changes arise when the project is passed to the end user. So, the developers must find a way that can be adaptable to those changes when they implement the project. Lastly, Aalsmeer has to ensure that those changes are not influence the key operation of software.
This is the overall system methodology run which will help Aalsmeer to cope with the changing environment.
4.0 Impact and Effectiveness
Once a new system had developed, there will be some effect and impact to few parties, such as organisation, management and employees. And the impact can be advantages and disadvantages.
Systematic play a very important role because when an organisation without system, it will be in disorder, and everything will go confuse. Moreover, new system can increase efficiency of the whole organisation process, which means from the top to bottom of the organisation can communicate well with a systematic transaction process. It is sure that will be decrease on employee’s workload and increase in long-term profit for the decrease of number of employee caused, because everything will do through the new system automatically. For instance, manager can just through the system by one click to get the total sales immediately.
Beside, when starting a system, an unexpected cost will be needed at the first time. Of course, the system is difficult to maintain and changes if the system error was occurred. Moreover, Aalsmeer hard to verify the customers tastes and everything computerise that will estrange the customers.
On the management aspect, a new system will generate the statement, invoice, report or arrange document systematically time by using computer. The whole process will be more effectiveness and save time, because all can be done in shorter. The new system will organize the workload automatically to reduce the burden to the management. Furthermore, there will not have any excuse from employees when they do not perform well, this obviously can avoid argument between manager and employees. Additionally, there will a huge amount of orders from customers by using the new system and all business transaction data will be recorded clearly and quickly.
However, there are such of disadvantages for the applying new system too. It will very difficult to repair if the system process error occurs during the working hours and hard to continue the operation, because the system might down or even has to stop the operation for the repairing. Perhaps, they will get a lot of complains from their customers too.
Manpower will be affected too. Firstly, amount of employees will be decrease, because everything can be done by automatically with the new system. For the long-term, it can be save cost for Aalsmeer. Next, the quality and efficiency of employee increase because they just need to follow the system to do what they should be done without the confusing document processes. Obviously, the working flow will be more efficiency and reliable.
Otherwise, before the new system applying, Aalsmeer should train their employee in order to get use for the new system. Then there will be a large amount of training fees. Beside, senior staffs prefer old system because of well practice whether it’s complicated. Of course, the use of new system will decrease the job opportunity to the public.
In conclusion, although there are such advantages and disadvantages on the new system, the system is useful nowadays because the people habits are always changing with the new technology. Furthermore, the electronically had already driven to the flower market and the standing of electronically cannot be ignored in this world. Therefore, implement the new system into an organisation is very important and it is not only for increase of profit, and also can compete with the competitors with positive competition.Order Now