Management Information Technology - Teletape - Case Study Example

Management information technology Contents Contents 2 Executive summary 3 Introduction 3 Analysis 4 Porter’s 5 forces 5 Porter’s value chain 9 Conclusion 14 References 15 Executive summary Information system has been the cornerstone for businesses these days. It has become a tool to gain competitive advantage. The following report analyses the statement from a small company namely Teletape’s perspective. The report analyzes the competitive environment of the company. The next step is to analyze the value addition process of the company and to find out how the company is using or should use information system to gain competitive advantage in the market place over its competitors. Introduction The company chosen for this particular case study is Teletape. Teletape is a small e commerce company that is located In England. The company sells basic phones. The founder of the company previously worked in a mobile selling shop and found that people have problems using these simpler phones. They found that people having complains with this niche phones. The owners also found that there are many people around who face problems using smart phones and are not comfortable using the same. It is here that they designed their new product to fit in. The company first started with a particular model. The basic features that has been common to all the models that the company has developed since the initial model that it designed has focussed on making the buttons large, making the phones with loud volume, big display. Additionally they included a side button to lock and unlock the screen. The feature of the side button was to help those individuals who found it difficult to remember the sequence that would be useful to lock and unlock the screen. Every aspect of the design focuses on customer feedback. The main criteria of Mr. Ravi the founder of the company and the team that works at the company is to design phones that are intuitive and easy to use. To make the dream come true the company has also included their suppliers in the designing process because the company recognized the fact that in order to make their products applicable to the consumer demands they needed to design products that had the proper and best combination of hardware and software. Most of the phones that the company markets; are either owned by the old people or the disabled. However the company is careful to not make the market stereotype. The company uses the services of Amazon to sell most of its products through online market place. Analysis Teletape is one of the new entrants in the e-commerce market place. The company sells most of its products through Amazon. The company sells 800 of its phone per week through Amazon and clocked sales of £20,000 in its first year of operating through selling its phone on Amazon (Bearne, 2015). The Amazon has helped the company go global and has spread its market place to countries such as France, Italy and Spain. The company has witnessed people from different countries across the globe picking up its products. The company is set to reach sales of £2.1 million. The company has immensely benefitted through listing itself on Amazon as the site has given the company great deal of exposure in the world market. Another benefit that the company gets through listing on the Amazon is the customer service and warehousing facility. These two benefits are very useful for the company as the company in itself operates from a pretty small shop in King’s cross so it does not have all the space and capabilities to manage all the facilities by it. Thus when the Amazon which is such a large website helps the company in this regard it is an added competitive advantage for the company. The company’s founder acknowledges the fact that the company has been able to grow at such a rapid pace due to the fact that the company is listed on a website like Amazon and is selling through Amazon. The listing on Amazon has actually helped the company is getting to a worldwide audience, limiting its costs in certain non core business functions and provided it an opportunity to turn up its sales revenue quickly. However there are downsides that are associated with the company’s listing in a site like Amazon that is top follow the guidelines that the company like Amazon issues from time to time. Porter’s 5 forces In order to understand the competitive environment that a company like Teletape faces one way is to study the environment of the external environment of the company through Porter’s 5 forces. Competitive rivalry: In the ecommerce sector there are various players that exist with their own offerings. There are many companies in the mobile industry too. With the boom of internet the no. of companies in this sector is going to increase further in future. That means the competitive rivalry is going to increase further in future (Hill, and Jones, 2009). The particular company or for that matter any company in this sector faces increased competition either from online retailers or from offline retailers. Customers can buy products from a wide range of retailers, distributors, auctioneers, directories, etc. so the competition is intense. There are various factors that influence a consumer’s decision are price, product range for selection and service that a particular company offers. Different companies in the internet space compete with each other on the basis of price and the service that they offer to the customers. Another problem is that due to the booming of the internet there are companies that are emerging on a daily basis or certain established market players in the offline market who are entering in to the online space to sell their products. Bargaining power of customers There is a large no. of companies in the ecommerce space. This is a huge advantage for the buyers as the e commerce companies have to keep competing amongst them so as to attract buyers to their sites (Ahlstrom and Bruton, 2009). The huge competition that exists in the ecommerce space causes the companies to indulge in price war amongst them so as to attract the largest no. of customers towards their company or their website. The companies also have to maintain their product quality, service level, largest selection of product offerings along with best prices so as to attract the customers to their websites. Since the customers demand not only low prices but a range of services and since the company needs to provide services along the lines of meeting the customer demands and ensuring customer satisfaction, so the customers have huge bargaining power in this industry. Threat of new entrants Since the market is characterised by low entry barriers any other player can easily enter the market and pose to be a competitor for the company (Smith, 2013). It is relatively easy for a new player to enter the market and start selling products. However, since a mobile phone requires that it should be reliable as the customer is spending quite a sum in acquiring the product it will be difficult for the new entrant to build a market place and a brand name. The companies which do not have a strong brand name and strong market presence and brand recognition will find it difficult to sell its products through online medium. The new players who want to enter in the market will require spending a good sum of money in creating brand recognition for the brand of products that the new company thinks to offer. However the threat of new entrants is high from those market players who already have a strong market presence and brand recognition in offline market. In addition to these companies threat can also come from the established players who have strong market presence in manufacturing sophisticated phones and they decide to enter this market as well. Bargaining power of suppliers The company is seen manufactures the phones in collaboration with the suppliers. So it can be said that suppliers are an integral part of the company as the right combination of hardware and software is what gives the phone the much needed competitive advantage (Magretta, 2013). However, although the suppliers are an integral part of the superior performance of the phones that the company manufactures as because the right combination of the hardware and software is what makes the phones unique and makes the customers happy with the product offerings, it does not mean that the bargaining power of the suppliers is very high in this situation. This is because of the fact that there are many companies which can provide the parts that the company may require to produce the phone. However there is another source that can exert a high degree of bargaining power on the company. That is Amazon itself. Amazon provides valuable services to the company in terms of customer service, warehousing and gaining the product an access to the worldwide market. However on the flipside this makes the company and its products vulnerable to the pressures of Amazon. Amazon can charge the company much higher if it wants in order extract greater profit for the service that Amazon provides to the company. However Amazon won’t do it most probably as there are other large e commerce companies such as E-bay. Threat of substitute products The company manufactures products that cater to a niche market place. As such the threat of substitutes to the products that the company designs is very minimum (Sekhar, 2009). However due to the fact that technology is evolving day by day and new products are being designed every day there can come products in future that are better suited to the customer specifications and more adaptive to the customers demand. So the threat of substitutes in this particular respect can be considered to be moderate. So the analysis of the competitive environment by Porter’s 5 forces can be summarized in the form of following table Porter’s 5 forces Intensity Competitive forces High power of suppliers Low to medium power of customers High risk of new entrants medium risk of substitute products low After analyzing the competitive environment of the company, the next important step is to understand the value chain of the company. Each and every company brings in inputs and combines them to form output so that the value that the output gives is greater than the cost of creating these outputs. This is not a simple and dry philosophical question. Answering this question fundamentally answers the question why the company exists in the first place or the success factors due to which the company can be differentiated from its competitors. For a manufacturing company the value is encapsulated in the manufacturing process by which the company combines raw materials in order to produce something useful. The value that is added by the company can be identified by the company in the profit that the company charges for a product. Value created-Cost of creating the value= Profit margin Porter’s value chain In order to analyze the particular process in which the company adds value to the product that the company produces Porter’s value chain analysis is performed on the company. Figure 1 Porters value chain (Sorce: Kannegiesser, 2008) Instead of looking at the departments or the types of accounting cost, value chain centres on the systems and analyzes in what way inputs are transformed to outputs that are purchased by the customers (Bidgoli, 2004). If this viewpoint is considered, porter’s value chain describes activities that are common to all the business and Porter divided the activities into primary and support activities. The various primary activities according to the porter’s value chain are Inbound logistics The company maintains special relation with its suppliers and involves them in the design process of the phone, The Company believes in the fact that both the hardware and software aspects of a phone are equally important in creating the perfect phone. So the inbound logistics along with the suppliers play a major role in the value creation process for the company. Operations The main value that the company creates for its customers is through its unique design of phones by which the company attracts the customers who find it troublesome using the conventional smart phones (TTfone, 2015). The company creates phones that are unique in their features such as big display, big buttons, loud volume, easy to lock and unlock through a special key that is located at one side (TTfone, 2014). As the next step forward the company is thinking of ways in which it can take in the feedback and reviews of the customers at Amazon to go back to the drawing board and design new products or to improve newer products. Thus Amazon or in other words e commerce and information system will be the key tool that will be used by the company in future to design new breeds of products or to improve the current products based on the recommendations of the customers. Outbound logistics The company is a small one with only one shop. The company thus sells most of its products through Amazon. This helps the company as because be selling through Amazon the company is able to access a far wider market space that is impossible for the company to access by itself. Amazon also helps the company in warehousing the products of the company. Marketing and sales Since the company sells most of the products through Amazon so automatically it has access to a wide market place through the help of Amazon. In fact Amazon has helped the company turn global and clock such high figures of sell so quickly. Selling through Amazon especially the fulfilled by Amazon service helps the company in taking advantage of the brand value and brand recognition of Amazon. The additional benefit is that the company can access the customers globally without having to open a shop in that country. Service The company benefits from selling with Amazon in this respect too. The Amazon provides customer service to the customers due to the fulfilled by Amazon service that the company avails. Thus all consumer complaints or queries are handled by the Amazon with no additional cost to the company. This is particularly beneficial for the company in dealing with foreign customers as the foreign customers are more familiar with Amazon than with the company and so are more likely to trust Amazon while making the purchase decision or in their post purchase behaviour. The fulfilment by Amazon service that Amazon offers is quite beneficial for the company. This is because the company is experiencing huge growth in sales figure and are bursting to the brim of their capacity. However they operate out of a small shop. So in this regard Amazon helps to take the burden off the shoulders of the little company at some extra cost. The company can now use the warehouse of the Amazon and can send its products to Amazon which the Amazon can pack and sell to its customers. This is the reason why the company has been able to sell its wares to the customers of France, Italy and Spain. The company sells about 800 phones per week or the lion’s share of its total sales through Amazon. The applications of secondary activities of Porter’s value chain are: Firm infrastructure: The firm or the company that is chosen for the case study is a small firm and operates only from a small shop in UK. The physical infrastructure of the company is very less. The company has to fill up this deficiency through the use of information system (Bearne, 2015). Since the physical infrastructure of the company is less, so the company has to take the help of Amazon to outsource the warehouse and customer service departments thus saving valuable space and using the advantage of reputed service delivery by Amazon. Human Resource management The company does not involve much human resource and is a small group of dedicated individual who forms part of the team. The group believes in the strategic goal of the company and works dedicatedly to achieve the same. Technology Development For developing technology further and to develop new models of phones the company takes advantage of the feedback provided by customers on their products listed at Amazon or the customer feedbacks on other products (Bidgoli, 2004). Thus Information system helps the company in developing new products and in technology development. Procurement In the procurement department the company maintains close relationship with the suppliers in order to design new products (Magretta, 2013). The company believes that both hardware and software are equally important in designing of a new product and to satisfy the customer. After analyzing the competitive environment of the company and the Porter’s value chain of the company, it seems the company has been using and can use Information system and Information technology in a lot of ways to gain competitive advantage over its rivals. 1. The company can reduce the cost that it has to face in selling the products through selling them through an e-commerce site so that the non core business functions of the company can be outsourced to the e commerce company in order to benefit from the scale of operation of the e-commerce giant. 2. The company can take the idea to design new products by following what the customers want through the reviews that they offer on the products that the company sells. Additionally the company can engage in direct communication with its customers through emails in order to understand what are thing that the customers really want. 3. Since the threat of competitors and the bargaining power of the customers are high in this industry, therefore the right strategy of the company would be to provide value in each of its offerings so that the customers are satisfied with the products and never consider switching. The company can achieve this through taking the feedback of the customers to understand what the customers really want and give them the exact thing. Conclusion After analysis of the competitive market place and the value added by the company, it can be arrived at the decision that the company has been using information system very efficiently to gain competitive advantage in the market or segment of its operation. The company manufactures and sells mobile phones. The mobile phones that the company sells are mainly designed for the customers who are not comfortable with using the smart phones. The phones that the company manufactures have some special features like large buttons, large di8splays etc. The company operates in a marketing environment where the threat of new entrant and the bargaining power of the buyer loom large. In order to survive in such a market place and to retain into customers in such an environment and to expand its market place in future the company has to and is using several value addition strategies in its manufacturing process. Some of the strategies are 1. The company has to keep expanding its market place. Till now the company has been selling its products mainly through Amazon and has gained a global foot print through this strategy in very less time. Going forward the company can think of listing in other sites too or create a website of its own in order to generate and keep better margins. 2. The customer’s bargaining power is high. So the products must apply to the customer’s intuition and liking. The company can achieve this by conducting virtual surveys in order to understand the demands of customers and design products that apply to customer’s insight. 3. The company can further the use of Information system in designing its own website or take help of an e-commerce giant’s website to reach more countries. 4. The company can outsource the non core business operations in order to boost margins and increase profitability. References Ahlstrom, D., and Bruton, G., 2009. International Management: Strategy and Culture in the Emerging World. Oh: Cengage Learning. Bearne, S., 2015. Meet the small businesses making millions from online marketplaces.[Online]. Available at < http://www.theguardian.com/small-business-network/2015/mar/19/businesses-millions-online-marketplaces-amazon-ebay > [Accessed 25 March 2015] Bidgoli, H., 2004. The Internet Encyclopedia. NJ: John Wiley & Sons. Hill, C., and Jones, G., 2009. Strategic Management Theory: An Integrated Approach. OH: Cengage Learning. Kannegiesser, M., 2008. Value Chain Management in the Chemical Industry: Global Value Chain Planning of Commodities. Berlin: Springer Science & Business Media. Magretta, J., 2013. Understanding Michael Porter: The Essential Guide to Competition and Strategy. Harvard: Harvard Business Press. Sekhar, G. V. S., 2009. Business Policy and Strategic Management. New Delhi: I. K. International Pvt Ltd. Smith, M. H., 2013. The Natural Advantage of Nations: Business Opportunities, Innovation and Governance in the 21st Century. London: Earthscan. TTfone., 2014. About Us. [Online]. Available at < http://www.ttfone.com/index.php/about-us > [Accessed 25 March 2015] TTfone., 2015. Barclays Bank case study. [Online]. Available at < http://www.ttfone.com/ > [Accessed 25 March 2015] Read More