Management and Entity Resource Planning Using Porter's Five Forces Model - Essay Example

 Porter's Five Forces Model is a tool that is used to analyze business environments. It takes into consideration five business strategies involving suppliers, customers, new entrants, substitute products, and competition. These forces work hand in hand to influence the attractiveness of businesses (Porter, 1998). Relevance of Porter's Model to Bill Bill needs to use Porter's Five Forces Model to get a clear understanding of his current business and the possibility of expanding it. Each of the five factors will play a pivotal role in helping him come up with the best strategies for his shoe business. He could use the factors in the following ways: a) New Competition and Barriers to entry Bill has to study the possibility of new firms opening businesses similar to his. While no other businesses handle abnormal shoe designs, which works in his favor, Bill has to be prepared to handle the new competition he will face while selling regular shoes at Sassy Shoes. b) Bargaining power of clients Bill is the only supplier for customized shoes against a large number of buyers. This puts him in a good position to determine the prices that will earn him maximum profit. In addition, Bill's clients determine the category of products he sells; hence they have a direct influence on the costs incurred in the business and prices of shoes. He should ensure that his prices are fair to him and customers. c) Bargaining power of suppliers Unique Shoes orders shoes from suppliers, meaning that the suppliers are in a position to determine market prices, and hence, profit levels, by controlling the prices of raw materials used to manufacture the shoes. The business will be attractive to him if the suppliers' powers to control the prices of raw materials are limited d) Substitute products and services Even after buying Sassy Shoes, Bill's Unique Shoes is still under no threat from new products; in fact, he is the one who possess a threat to other regular shoe stores. However, while considering Sassy Shoes, he should identify potential substitute shoes that his competition could introduce into the market. e) Level of competitive business rivalry The level of rivalry that Sassy Shoes faces from other stores is average, keeping the profits Bill will be able to make at acceptable levels. On the other hand, there is no much rivalry in selling customized shoes; this provides a good business environment for Bill's investments to thrive. 1. The fact that Bill is the only entrepreneur that deals in unusual shoes and custom fittings provides him an opportunity to maximize on his monopoly. As he continues to acquire new businesses, he should incorporate the unusual shoes in all of them to make sure he retains his dominance. This will not only provide his customers with a wide range of shoes to choose from, but also guarantee him continuous profits, since he will have sole control over retail prices. 2. a. Customer order making b. Receipting/Invoicing c. Stalk taking 3. a. Networking Bill needs to ensure that his stores operate using a centralized system. In order to achieve this, he needs to make sure that his stores' systems are connected to each other. It is, therefore, necessary for him to invest in networking infrastructure. b. Hardware and Software Acquisition The shift from paper oriented management to the use of electronic tools will require him to acquire relevant equipment and software. He could either opt to buy generic hardware and software, or choose to develop software that will be unique to his business. c. Security The success of Bill's business will depend on the security of his systems. He will, therefore, have to invest in systems that will guarantee the security of the business. As such, he should consider developing firewalls, subscribing to anti-virus products, and the physical security of his business information systems. 4. a. Networking This will make it possible for Bill's businesses to be managed from a central location. This will reduce the expenses incurred in managing the business premises individually. b. Hardware and Software Acquisition The acquisition of appropriate software and hardware will make management of the businesses an easy task by automating and linking business processes. The new systems will be able to track stock, generate instant reports, and make recommendations (Couie, 2010). This will ensure that the business runs efficiently. c. Security Securing the systems at Bill's premises will ensure that his business systems operate efficiently, and with minimal interruption. This will, in turn, ensure the business runs continuously, and efficiently, gaining the confidence and trust of customers, suppliers, and even staff members. This is crucial to the success of any business employing the use of information technology in its activities as Bill wants to do. 5. Going by the nature of his business, Bill should employ a Business to Customer model since he deals with requests that are unique to his clients (Frei & Morriss, 2012). A customer oriented business strategy will lead to customer satisfaction, a factor that is necessary for the success of Bill's business ventures; especially in the delivery of unusual shoe designs and custom fittings. 6. If Bill implements a Supply Chain Management solution, he will not only save on expenses meant for managing the individual businesses, but also make it efficient. An SCM solution would make it possible to access products from suppliers easily, ensuring that customers never miss what they need. In addition, such a system would assist in record keeping, a process that is key to the success of the business. 7. An Entity Resource Planning, ERP, solution would integrate the business' internal and external information sources, making it possible to synchronize activity across its outlets. In addition, an ERP solution would be able to forecast shoe sales based on an array of factors that it picks from the business environment; this could allow Bill and his employees to optimize their inventories to ensure maximum profits are realized. The ERP solution would also track shoe orders Bill makes from suppliers while also being able to track revenue from sales. The fact that the ERP will be able to track and produce the history of every product, from the supplier to the customer, will make it easy for Bill's managers to track the performance of their products. This will help them establish the best goods for their shops. 8. A relational database would enable Bill to establish a customer loyalty scheme by keeping records of customer expenditure against customer ID. This scheme would enable Bill to make analyses of his customer's spending habits, their preferred shoe types, as well as their location. Using this information, Bill will be able to determine the right shoes to sell in his stores. In addition, a relational database will assist in the management of stock data. New stock will be fed into the system, and each time a purchase is made, the item will be deducted from the available stock. The system could be designed to raise an alarm when the stocks reach a certain minimum level, either sending an automatic message to suppliers to bring new supplies, or alerting management. Implementing a relational database would, therefore, make it possible to automate business. 9. a. He could hire security firms to provide physical security to the premises where the data and systems are located. b. Bill could employ the use of anti-virus programs to protect the software from virus and malware attacks. c. The IT systems should be protected, by a strong firewall, to protect them from unauthorized attacks by hackers and other people with malicious intentions. d. Bill should have a backup server located in a location external to his business premises. e. Bill should hire IT security specialists to provide training to his staff on the dos and don’ts of data and system protection. References Couie, W. C. (2010). The IT handbook for business, managing information technology support costs. Seattle, WA: CreateSpace Independent Publishing Platform. Frei, F. & Morriss, A. (2012). Uncommon service: How to win by putting customers at the core of your business. Boston, MA: Harvard Business Review Press. Porter, M. E. (1998). Competitive strategy: Techniques for analyzing industries and competitors. New York, NY: Free Press. Read More