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TANGIBLE INTERRELATIONSHIPS - arise from opportunities to share activities in the value
chain among related business units. This leads to competitive advantage if
sharing lowers cost or enhances differentiation enough to exceed the costs
of sharing. [Source: M. Porter] (Examples: sharing a sales force to lower
selling cost or provide the salesperson with a unique package to offer the
buyer; also, when related business units cross-sell each other's products.) TECHNICAL QUALITY - refers to the I/S professional's perspective of how well
a system performs from a technical viewpoint (i.e., rating the system
performance, system maintainability, and operational resource consumption). TECHNOLOGY DEVELOPMENT - includes support activities meant to improve the product
and the process of building the product (or supplying the service) as well
as improving the process of any activity performed within the business.
[Source: M. Porter] Examples include: basic research (R&D); strategic
planning methodology development; office automation and document design;
product design; design of applications development standards; project
life-cycle methodology; procedures; service manuals; work-flow design; media
research; sales aids; and testing procedures. TECHNOLOGY ORIENTED DIVERSIFICATION STRATEGY - aims to develop or enter new industries based on similar
core technologies that involve products sold to either existing or new
markets. [Source: M. Porter] TECHNOLOGY TRENDS - a list of technology trends which are taking place and
directly impact the industry's structure. Some examples include: lower
hardware prices; lower communication costs; growth in use of expert systems;
growth in image technology; growth in non-traditional operating systems;
etc. The technology trends which affect the business unit, horizontal unit
and corporation are a small subset of the technology trends occurring
throughout the world. Although information technology affects most every
business, other technology trends are also occurring as well. THREAT OF FORWARD INTEGRATION RELATIVE TO THREAT OF
BACKWARD INTEGRATION BY FIRMS IN THE INDUSTRY - See Backward Integration and Forward Integration. THREAT OF NEW ENTRANTS - one of the five industry forces which defines industry
structure (and profitability potential). The fewer and less potent the
barriers to entry are, the easier it is for firms to enter the industry and
capture some of the industry's profitability, if any exists. Also see
Barriers to Entry. (For scoring Threat of New Entrants, use: Very Low (5);
Low (4); Moderate (3); High (2); Very High (1).) THREAT OF SUBSTITUTES - a measure of the likelihood that substitutes will lower
demand for the industry's products and services. (For scoring use: Very Low
(5); Low (4); Moderate (3); High (2); Very High (1).) TIMING - the timing of an activity can affect its costs. Sometimes a firm may gain first mover advantages. The first major brand may have lower costs of establishing and maintaining brand name. Late movers, on the other hand, may benefit from purchasing the latest equipment or avoiding the high product development costs experienced by early movers. [Source: M. Porter] TRADE UP STRATEGY - a variation of cross subsidization where product varieties (that are typically first purchases) are sold at a low price, in hope that the buyer will later purchase other more profitable items in the line as trade-up occurs. TRANSFER PRICING - refers to internal corporate pricing schemes used by business units within the same corporation. The goal, often forgotten, is to maximize the value of the corporation. It often helps to keep the process simple. Be aware of cross-border legal and tax issues. [See: Robert Eccles, The Transfer Pricing Problem: A Theory for Practice, Lexington, Mass.: Lexington Books, 1985.] |
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