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PORTER’S FIVE FORCES MODEL; SCOTT MORTON’S FIVE FORCES MODEL; BAKOS AND …. (Indra Gamayanto)
PORTER’S FIVE FORCES MODEL; SCOTT MORTON’S FIVE
FORCES MODEL; BAKOS & TREACY MODEL ANALYZES
[STRATEGIC INFORMATION SYSTEMS MANAGEMENT]
Indra Gamayanto
Lecturer IT Departement, Maranatha Christian University, Bandung
email: indra_gamayanto@yahoo.com.sg
ABSTRACT: Wollongong City Council (WCC) is one of the most progressive and
innovative local government organizations in Australia. Wollongong City Council use
Information Technology to gain the competitive advantage and to face a global
economy in the future. Porter’s Five Force model is one of the models that can be
using at Wollongong City Council because porter’s five Forces model has strength in
relationship between buyer and suppliers (Bargaining power of suppliers and
bargaining power of buyers). Other model such as Scott Morton’s Five Forces model
has strength to analyze the social impact factor, so to gain competitive advantage in
the future and have a good IT/IS strategic planning; this model can be use also.
Bakos & Treacy model almost the same as Porter’s model but Bakos & Treacy model
can also be applying into Wollongong City Council to improve the capability in
Transforming organization, efficiency, and effectiveness.
Keywords: porter’s five forces model, scott morton’s five forces model, bakos, treacy
model analyzes.
1. INTRODUCTION information, data, and computing services
to all customers” (WCC case notes, 2003,
Organizations compete for customers, p.5).
for access to raw materials, for access to The purpose of this report is to
new markets, for the right to develop new analyze WCC (Wollongong City Council)
products. Not-for-profit organizations using Porter’s Five Forces Model to gain a
compete for donations and grants; competitive advantage. Some alternative
political parties compete for votes; model will be given to this report, some
government agencies compete for funding conclusion, and some recommendation for
from general fund budgets. Competition is WCC (Wollongong City Council) to
a part of everyday existence for most of increase the profitable. The Porter’s Five
organizations, and, when viewed from a Forces Model includes Bargaining power
longer-term perspective, it is a fact of life of suppliers, bargaining power of buyers,
for all organizations. Within this com- threat of new entrants, and threat of
petitive environment, many organizations substitutes.
have successfully used IT (Information
Technology) to help them compete
(Thomson, 1997, p.327).
WCC (Wollongong City Council) is
one of government organization, which is
using IT (Information Technology) to gain
a competitive advantage in the future.
WCC has a vision “To be a community
focused local authority of excellence” and
mission “To enhance our community’s
lifestyle and environment through
effective leadership, community involve-
ment and commitment to service”. (WCC
case notes, 2003, p.1) The mission of WCC
IT Department is “Provide reliable
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JURNAL INFORMATIKA Vol. 5, No. 2, Nopember 2004: 127 - 134
2. METHODS, ANALYZE AND 2.2 Bargaining Power of Suppliers
IMPLEMENTATION A strong supplier force is generated
2.1 Bargaining Power of Buyer by suppliers with necessary, unique
Customer forces or buyer is generated products/services and a concentrated
by a well informed buyer, a price sensitive supplier market. (Dawkins, Cummings &
buyer, and similar product or service Haag, 1998,p.308). WCC (Wollongong City
alternatives. (Dawkins, Cummings & Council) is a strong supplier to commu-
Haag, 1998, p.308). WCC (Wollongong nity especially in Wollongong. WCC has a
City council) has a buyer from community corporate standard to gain the com-
or resident from Wollongong. Customer petitive advantage such as suitability for
satisfaction is one of the principles that purpose, cost effectiveness, reliability, and
WCC focus. WCC try to improve the ease of use, functionality, compatibility,
quality in service. Community has to ease of support, price, legislative requi-
support also the WCC strategic planning rement, and contractual requirement. The
with giving the opinion about the negative entire corporate goal is using to increase
and positive impact of service to WCC the quality in the market. WCC, for
(Wollongong City Council). instance, changes the corporate systems
Buyers (Community of Wollongong) especially in database systems (from
also will apply some suggestions for Oracle to SQL server 2000). For library
business implication such as the flexi- systems, WCC still use the same system
bility service, demand in higher quality, because WCC think it still good system.
and encourage the competition. For Other Systems need to change because it
instance, WCC (Wollongong City Council is very important to increase and improve
has some service to community such as the performance systems. Focus on the
infrastructure (Public building, engi- one market make WCC can drive the
neering structure), City planning and IT/IS strategic planning become flexible
development (quality of environment) and and WCC will have the capability of T-
some important aspect to be examined. Organization (Transforming Organiza-
WCC (Wollongong City Council) from tion) to face the global market in the
the IT (Information Technology) per- future.
spective has some facilities to improve the 2.3 Threat Of New Entrants
performance, give the community (buyers)
to make a selection into some products, Threat of new entrance or a strong
and increase switching costs of commu- new competition force is generated by low
nity (buyers). barriers to market entry, nonproprietary
WCC (Wollongong City Council) products or raw materials, and little
provide cost effective support services to government regulation. (Dawkins, Cumm-
the organization that will provide the ings & Haag, 1998,p.309). Although, WCC
performance indicators. WCC make a is a government organization, WCC is
survey to the buyer to know about the trying to increase the operation support
satisfaction of community. For instance, system. The operation support systems
Library systems in WCC (Wollongong can change the process of supply and
City Council) give the community to have reduce the value of inventory and increase
some information that is very significant the stock. WCC identify to enable and
with the service of WCC, especially for increase the process of supply and
Wollongong community. A library system demand management to gain profit.
is using the database system that is Furthermore, WCC try to more analyze in
giving some crucial information such as the cost effectiveness, so only the good
environment. Another example, WCC give strategic planning can be applied into
much information about other library organization.
such as Warrawong library.
128 Jurusan Teknik Informatika, Fakultas Teknologi Industri – Universitas Kristen Petra
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PORTER’S FIVE FORCES MODEL; SCOTT MORTON’S FIVE FORCES MODEL; BAKOS AND …. (Indra Gamayanto)
2.4 Threat of Substitutes delivery in all services. (WCC Case
Threat of substitutes or a strong notes,2003,p.2). IT Department, for
substitute is generated by the existence of instance, try to help customer with giving
price competitive product or service a customer a good service. When the
alternatives. (Dawkins, Cummings & problems come, there are some help desk
Haag, 1998,p.308) WCC, for instance, has or administration in every level, so the
a good planning for IT in the future. WCC flexibility in service will be effective and
apply some new systems in Information efficient. Library system is upgraded to
Technology area (IT system upgrade). It is increase the performance and capability of
very useful because with upgrading information to customer or community in
system, the fault management will Wollongong.
decrease and the performance of service 3.2 Can IT Changes The Basis of
will increase. WCC is presenting some Competition?
new IT technology into library system. In industries where competition is
For instance, customer can get much intense, the basis for competition tends to
information in the library such as service be price. Competing on price can be a
WCC to the community, information bruising proposition. In those industries,
detail about IT planning in the future for IT offers firm opportunities to compete
WCC. Therefore, community will get the effectively either by dramatically increas-
most important information about service ing productivity such as higher machine
before they use it. efficiencies or by adding features to their
products or service. WCC, for instance,
3. THE IMPACT OF IT IN WCC make some upgrading system in the
(DRIVING STRATEGIC) computer system to gain a competitive
advantage with the customer and other
3.1 Can IT Builds in Switching Cost? City Council in Australia. WCC upgrading
This question addresses ways to the Local Area Network and Library
increase the dependence of the firm’s system to increase the performance
customers on its product and services. management and decrease the fault
Management should be encouraged to management. The most crucial thing is
think of ways to link the customer into WCC try to serve the customer by adding
the firm’s operation so that the customer a new feature that other City Council does
will find switching to another supplier not have it.
difficult. Such difficulties are known as 3.3 Can IT Generate New Products?
switching costs. Clearly, the linkage to a
vendor needs to have a specific value for Not only can IT support the faster
customer. (Thomson, 1997,p.333). For delivery of better and cheaper products,
instance, WCC has some department to but sometimes IT can help the strategy of
control the strategic planning. IT the firm by generating products on its
department has a responsibility to make own. (Thomson, 1997,p.333). WCC, for
an evaluation in the IT Strategic instance, has to upgrade the IT system
Planning. Planning is very significant to every year. It is very important because
gain competitive advantage in WCC. with the development of new technology of
Another example, WCC has a risk IT can drive WCC in gaining the
management policy that can reduce the competitive advantage. Compare with the
damage of reputation in WCC. WCC uses system of WCC in 2002 and 2003. WCC
CAPS (Corporate Assets Protection must change the database system from
Systems) procedure to decrease the gap. Oracle to SQL server 2000. It can be
The WCC also try to ensure that value for increasing the efficiency of the perfor-
money can be effective and efficient mance. WCC use the competitive intelli-
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JURNAL INFORMATIKA Vol. 5, No. 2, Nopember 2004: 127 - 134
gence process such as planning, gathering 5. SCOTT MORTON’S FIVE FORCES
information, and analysis to reach the MODEL
right direction in the competitive advan-
tage and capability organization.
4. THE STRENGTH AND WEAK-
NESSES PORTER’S FIVE FORCES
MODEL
4.1 The Strength Porter’s Five Forces
Model
Porter’s five forces model has
strength’s to gain a competitive advan-
tage. Porter’s model can make an Five forces influence the Organisation’s objective
organization to increase the performance
management between buyers and Organizations are facing the recon-
suppliers. Buyers are powerful if they are ceptualisation of the role of information
concentrated with the significant market, technology in business. Scott Morton
Buyers purchase significant proportion of proposes five levels of complexity at which
output distribution of purchases or if the reconfiguration can be applied (www.anu.
product is standardized, buyers possess a edu.au/people/roger.clarke/SOS/StratISTh
credible backward integration threat. .html)
Suppliers are powerful if there is credible Compare with Porter’s five forces
forward integration threat by suppliers. model, Scott Morton’s model focus on two
Suppliers have to concentrate, significant level first that is very important to
cost to switch suppliers, and customer analyze.
powerful. (www.quickmba.com).
4.2 The Weaknesses Porter’s Five
Forces Model
Although Porter’s model has
strength’s to gain a competitive advantage
and to increase the relationship between
supplier and buyer, Porter’s model can not
examine some gap in the organization.
Significant buyers switching cost-products
not standardized and buyer can not easily • Evolutionary levels:
to another product. Buyers are frag- v Localized exploitation within
mented (many, different) - no buyer has individual business functions. The
any particular influence on product or primary objectives addressed are
price. Suppliers are weak if there is many local efficiency and effectiveness.
competitive suppliers-products is stan- v Internal integration between
dardized. Suppliers also weak if they are different systems and applications,
purchase commodity products, customer generally involving not just auto-
weak, concentrated purchasers, and credi- mation, but also rationalization, and
ble backward integration threat by using a common IT platform. Coor-
suppliers themselves. (www.quickmba. dination and corporation within
com). enterprise enhance efficiency and
effectiveness.
130 Jurusan Teknik Informatika, Fakultas Teknologi Industri – Universitas Kristen Petra
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