COMPETITIVE ADVANTAGE
Competitive advantage refers to a firm's ability to select and implement a generic strategy that enables it to achieve and maintain superiority in the market This advantage can stem from either cost leadership or differentiation, as well as the breadth of the firm's operations The value chain serves as a fundamental tool for assessing competitive advantage and identifying opportunities for improvement Ultimately, competitive advantage is realized when a firm effectively translates its generic strategies into actionable practices.
Cost leadership can be achieved through various sources of advantage, including lower input, production, and delivery costs However, this advantage may diminish in the face of rising expenses In contrast, differentiation provides a competitive edge by offering superior performance through multiple dimensions that enhance a product or service's appeal compared to competitors.
Competitive advantage can stem from various sources, with each advantage linked to specific activities and their relationships with one another, as well as with suppliers and customers Advantages based on a limited number of activities are typically easier to identify and replicate In contrast, the interconnectedness of numerous activities creates a competitive edge that is much harder to imitate.
INFORMATION TECHNOLOGY AND COMPETITIVE
The information revolution is reshaping the economy, impacting every company with significant reductions in the costs of acquiring, processing, and transmitting information This technological transformation is altering products, processes, industries, and the competitive landscape To thrive, businesses must grasp the extensive implications of these advancements and leverage them to establish sustainable competitive advantages.
In today's competitive landscape, organizations leverage Internet technology to enhance their processes and strengthen their competitive advantages Historically, the costs associated with communication, information gathering, and transactions were prohibitively high, but the Internet has revolutionized these aspects by enabling the reconfiguration of industries Companies can now seamlessly integrate their value chain activities, connecting suppliers, customers, and distribution channels both within and across industries As technological advancements accelerate in the global economy, information and technology have become as essential as traditional success drivers like capital and marketing To thrive in this global marketplace, Vietnamese firms must recognize and harness the significant impact of information technology for local and international success.
Businesses can achieve sustainable competitive advantages through operational effectiveness and strategic positioning The Internet impacts these two areas differently; while it complicates the maintenance of operational advantages, it opens up new avenues for enhancing distinctive strategic positioning Simply improving operational effectiveness does not guarantee a competitive edge, as companies must consistently outperform their rivals in this area This is increasingly challenging, as best practices are quickly imitated, leading to competitive convergence where many firms adopt similar strategies The Internet's openness, along with advancements in software and modularity, further complicates the sustainability of operational advantages Many companies have lost sight of their core values, hastily adopting popular Internet applications and mimicking dot-com offerings.
The "value chain" is a crucial concept that underscores the significance of information technology in gaining a competitive edge To outperform rivals, a company must either reduce costs in its operations or differentiate its offerings to command a premium price Information technology plays a vital role in enhancing competitive advantage, influencing both cost efficiency and product differentiation By optimizing value activities and leveraging shifts in competitive scope, companies can effectively harness technology to strengthen their market position.
Information technology significantly impacts a company's costs throughout the value chain, enabling cost reduction Additionally, a company's role and its product within the buyer's value chain are crucial for achieving differentiation Modern information technology facilitates product customization, allowing companies to enhance their offerings By integrating more information into the physical product package, technology strengthens a company's ability to stand out in the market.
The Internet has revolutionized technological platforms, enabling companies to implement distinctive strategies and tailor their activities more effectively Unlike traditional packaged software, which often required businesses to adapt their processes to fit standard practices, Internet-based applications allow for greater customization to align with a company's unique strategic positioning Moreover, advancements in Internet architecture and software development tools facilitate seamless integration of various applications, creating a unified IT delivery platform across the value chain This integration fosters the development of customized systems that enhance the alignment of activities within the value chain, ultimately empowering organizations to leverage IT as a powerful strategic tool.
The advancement of technology enhances a company's capability to coordinate activities on regional, national, and global scales The Internet enables businesses to respond more effectively to customer needs, while e-commerce marketers can boost their competitive edge by leveraging the dual strategies of cost leadership and product differentiation through customization.
As companies increasingly adopt Internet technology, it will become a standard requirement rather than a competitive advantage Basic Internet applications are essential for survival but won't differentiate businesses Instead, competitive advantages will stem from traditional strengths like unique products, proprietary content, and superior customer service While Internet technology can enhance these advantages by integrating activities into a cohesive system, it will not replace them Ultimately, the Internet offers improved opportunities for establishing distinctive strategic positions compared to earlier information technologies.
VALUE CHAIN
What is value chain?
The value chain is a crucial tool for identifying competitive advantages and exploring opportunities for improvement By breaking down a firm into its key activities, it helps analyze cost behaviors and recognize sources of differentiation A company achieves a competitive edge by executing these activities more efficiently or effectively than its rivals Since each firm operates within unique market conditions and supplier relationships, their value chains are distinct, even within the same industry.
Value chain analysis examines the various activities within an organization and their impact on competitive strength, assessing the value each activity contributes to products or services This concept emphasizes that an organization is not merely a collection of resources but a system where these elements must be organized effectively to create offerings that customers are willing to pay for According to Michael Porter, the capacity to execute specific activities and manage the connections between them is a key source of competitive advantage.
1998 Competitive Advantage: creating and sustaining Superior Performance New York: Free Press)
Porter identifies primary activities, which focus on the creation or delivery of products and services, and categorizes them into five key areas: inbound logistics, operations, outbound logistics, marketing and sales, and service These primary activities are complemented by support activities that enhance their efficiency and effectiveness, which include procurement, technology development (such as R&D), human resource management, and infrastructure encompassing systems for planning, finance, quality, and information management.
The basic model of Porters Value Chain is as follows:
Figure 2.1 Porter’s Generic Value Chain
The value chain is an integral component of a broader value system, encompassing all activities that add value from raw materials to final assembly and distribution to buyers Suppliers contribute to the upstream value chain by providing essential inputs that not only deliver products but also impact a firm's overall performance Additionally, products often navigate through various channel value chains before reaching the buyer, where channels perform crucial activities that influence both the buyer's experience and the firm's operations Ultimately, a firm's product becomes part of the buyer's value chain, and by understanding how its value activities align with those of suppliers and customers, a firm can enhance its design and distribution strategies effectively.
Value-chain partnerships are strategic alliances where companies establish long-term relationships with key suppliers or distributors for mutual benefit These partnerships are increasingly popular as businesses outsource functions that were once handled internally For instance, Dupont collaborates with Morrison Knudsen for project engineering and design, AT&T outsources credit card processing to Total System Services, Northern Telecom relies on Comptronix for electronic component manufacturing, and Eastman Kodak partners with Businessland for computer support services.
A prime example of a value-chain partnership is the strategic, long-term collaboration between businesses and their suppliers or distributors In the automotive industry, companies are enhancing the quality of their purchased parts by forming closer relationships with a select number of suppliers, actively involving them in product design decisions These partnerships not only improve product quality but also enable firms to acquire new technologies that can be integrated into their own offerings.
Figure 2.2 - The Value System (Porter)
Value chain analysis helps companies identify the most effective segments, distribution channels, pricing strategies, and product differentiation to achieve a competitive edge By evaluating the full spectrum of activities that contribute to the final product, businesses can assess their strategic advantages and disadvantages, ultimately enhancing their market position.
What is the function of Value Chain
Porter's value chain model illustrates how each value activity utilizes purchased inputs, human resources, and technology to fulfill its functions These activities generate and utilize information, including buyer data and product failure statistics, while also creating financial assets like inventory and accounts receivable, as well as liabilities such as accounts payable Porter categorizes these activities into primary and support activities, with primary activities focused on the physical creation, sale, and delivery of products or services.
There are five generic categories of primary activities, as shown in Figure 1,
Primary activities encompass several key stages, starting with inbound logistics, which involves the handling and warehousing of raw materials This is followed by the operations process where products are manufactured Next, outbound logistics takes place, focusing on warehousing and distribution The cycle continues with marketing and sales efforts, culminating in service activities that include installation, repair, and the sale of parts.
Includes receiving, storing, inventory control, transportation scheduling
Includes machining, packaging, assembly, equipment maintenance, testing and all other value-creating activities that transform the inputs into the final product
The activities required to get the finished product to the customers: warehousing, order fulfillment, transportation, distribution management
The activities associated with getting buyers to purchase the product including channel selection, advertising, promotion, selling, pricing, retail management, etc
The activities that maintain and enhance the product's value, including customer support, repair services, installation, training, spare parts management, upgrading, etc
Support activities, including procurement, technology development, human resource management, and firm infrastructure, play a crucial role in enhancing the effectiveness and efficiency of primary value-chain activities Each product line within a company possesses a unique value chain that contributes to its overall success.
Procurement of raw materials, servicing, spare parts, buildings, machines, etc
Includes technology development to support the value chain activities, such as Research and Development, Process automation, design, redesign
The activities associated with recruiting, development (education), retention and compensation of employees and managers
Includes general management, planning management, legal, finance, accounting, public affairs, quality management, etc
Value activities are essential for building competitive advantage, but they function as interdependent elements within the value chain, rather than isolated tasks According to Porter, linkages represent the relationships between how one value activity is executed and the impact it has on the cost or performance of another These linkages can create competitive advantages through optimization and coordination For instance, a higher-cost product design may lead to lower service costs, illustrating the trade-offs involved in achieving overall efficiency To secure a competitive edge, firms must optimize these linkages in alignment with their strategy Additionally, effective coordination of activities can lower costs and enhance differentiation, further solidifying a company's competitive position.
Advantage: creating and sustaining Superior Performance New York: Free Press)
Linkages are essential in understanding a firm's value chain, particularly between support and primary activities, as well as among primary activities themselves Additionally, there are significant linkages between a firm's value chain and those of its suppliers and distribution channels, which can impact the firm's cost and performance By optimizing the configuration of these external value chains and enhancing coordination, firms can improve their competitive advantage while benefiting their suppliers and channels The effective exploitation of these vertical linkages is facilitated by modern information systems, which not only create new opportunities but also enhance existing connections through advancements in information technology.
Linkages within the value chain are essential for achieving competitive advantage, yet they are frequently overlooked To effectively exploit these linkages, organizations need robust information systems that facilitate optimization and coordination Despite the challenges in identifying and managing these linkages, mastering them can provide a sustainable competitive edge in the marketplace.
Effective linkages are essential for corporate success, encompassing the flow of information, goods, and services, as well as the systems and processes that adjust activities For instance, timely and accurate sales forecasts from the Marketing & Sales department enable procurement to order necessary materials on schedule Furthermore, when procurement efficiently communicates order details to inbound logistics, operations can effectively schedule production to ensure timely product delivery, as outlined by marketing.
In the result, the linkages are about seamless cooperation and information flow between the value chain activities
In today's industries, it is uncommon for a single company to handle every aspect of product development, from design and component production to assembly and delivery Typically, organizations function as part of a broader value system or supply chain Therefore, conducting a value chain analysis requires an examination of the entire value system in which the organization is embedded.
Impact of Information Technology on Value Chain
In today's competitive landscape, businesses operate in both the tangible physical world and the intangible virtual realm of information This duality has given rise to electronic commerce, a novel avenue for value creation Therefore, it is essential for managers to focus on generating value in both the physical and virtual environments to thrive in this dynamic marketplace.
Information technology has significantly influenced both primary and support activities within organizations, as illustrated by Michael Porter's model in his 2001 article, “Strategy and the Internet,” published in the Harvard Business Review.
Web-based, distributed financial and ERP systems
Online investor relation (e.g information dissemination, broadcast conference calls)
Self-service personnel and benefits administration
Internet-based sharing and dissemination of company information
Electronic time and expense reporting
Collaborate product design across locations and among multiple value-system participants
Knowledge directories accessible from all parts of the organization
Real-time access by R&D to online sales and service information
Internet-enabled demand planning, real-time available-to- promise/capable-to promise and fulfillments
Other linkage of purchase, inventory, and forecasting systems with suppliers
Direct and indirect procurement via marketplaces, exchanges, auctions and buyer-seller matching
Rea l time integrated scheduling, shipping, warehouse management and planning and advanced planning and scheduling across the company and its suppliers
Dis semination throughout the company of real-time inbound and in-progress inventory data
Inte grated information exchange, scheduling, and decision making in in-house plants, contract assemblers and components suppliers
Rea l-time available-to- promise and capable-to- promise information available to the sales force and channels
Real-time transaction of orders whether initiated by an end consumer, a sales-person, or a channel partner
Automated customer-specific agreements and contract terms
Customer and channel access to product development and deliver status
Collaborative integration with customer forecasting systems
Integrated channel management including information exchange, warranty claims, and contract management (versioning, process control)
Online sales channels including Web sites and marketplaces
Real-time inside and outside access to customer information, product catalogs, dynamic pricing, inventory availability, online submission of quotes, and order entry
Customer- tailored marketing via customer profiling
Real-time customer feed-back through Web surveys, opt-in/opt-out marketing, and promotion response tracking
Online support of customer service representative through e-mail response management, co- browse, chat, “call me now”, voice-over IP, and other uses of video streaming
Customer self-service via Web sites and intelligent service request processing including updates to billing and shipping profiles
Real-time field service access to customer account review, schematic review, parts availability and ordering, work-order update, and service parts management
Recent advancements in software have enabled web-based EDI systems to connect seamlessly with traditional EDI systems, allowing businesses of all sizes to engage in transactions with each other This integration broadens the pool of potential electronic business partners, including those located at significant geographical distances The Internet enhances the ability to select from a diverse range of global partners for electronic commerce.
Traditional EDI systems help lower procurement costs by consolidating purchases, fostering supplier relationships, negotiating volume discounts, and enhancing manufacturing integration In contrast, internet electronic commerce offers even greater cost reduction potential for companies of all sizes by facilitating electronic transactions, reducing data transmission costs, and expanding supplier search options This shift particularly benefits small and mid-sized companies, allowing them to engage with larger firms and reduce processing costs through integrated electronic systems For instance, GE achieved a 30% reduction in procurement processing costs and a 20% decrease in purchase costs, with estimates suggesting potential savings from its internet procurement system could reach significant levels by 2000.
$ 500 - $700 million (Source: Greenstein, Feinman, 2000, “Electronic Commerce:
Security, Risk Management and Control” New York: The McGraw-Hill Companies, Inc.)
Reducing inventory is beneficial as it lowers storage, handling, insurance, and administrative costs Internet e-commerce facilitates optimal inventory ordering by connecting suppliers and purchasers, enabling them to share updated production forecasts and inventory levels, which helps align production and delivery schedules Additionally, businesses can quickly offload unwanted inventory or sell excess capacity at minimal marketing costs For instance, American Airlines and USAir identify flights with excess capacity weekly and offer last-minute deals to email subscribers, effectively reducing excess capacity while generating extra revenue.
The production cycle time refers to the duration from product design to completion E-commerce is streamlining this process by enabling engineers and production teams to share design specifications electronically for faster approval and refinement This reduction in cycle time not only shortens the design and production phases but also decreases fixed overhead costs per unit, allowing businesses to either pass savings on to customers or enhance their net earnings.
Enhancing customer service through Internet electronic commerce allows customers to access vital information at every stage of their purchasing journey Prior to making a purchase, customers can easily retrieve product specifications, quantities, and pricing details online During the fulfillment process, they can track their orders electronically, as seen with Federal Express, which enables package tracking without human interaction Additionally, electronic services improve support by providing notifications for returned items and offering downloadable documentation and shipping labels for returns This results in increased convenience and lower processing costs for both buyers and sellers.
The widespread accessibility of the Internet enables businesses to connect with a vast customer base at minimal costs Many companies are transitioning their sales and marketing functions to digital platforms, which not only lowers overhead expenses but also allows them to optimize their workforce This shift empowers firms to focus on enhancing customer relationships instead of getting bogged down by repetitive sales processing tasks.
The Internet is a unique, decentralized infrastructure that is not owned by any single entity, functioning as a vast network of interconnected networks Remarkably, it took only four years for the Internet to reach 50 million users after becoming publicly accessible, a significantly shorter time frame compared to the decades it took for radio, television, and personal computers to achieve the same milestone This rapid growth highlights the Internet's transformative impact on communication and information sharing.
Figure 2.4 - Comparison of Transmission Mediums
Electronic commerce transcends mere technology; it fundamentally transforms business operations and influences every element of a company's value chain To fully harness the innovative potential of e-commerce, management teams must adopt a broader perspective of the marketplace that extends beyond traditional physical limits.
For electronic commerce applications to succeed, they must be aligned with the overall business strategy and placed in the appropriate business context This alignment is crucial, as a lack of coherence can lead to failure Therefore, developing new business models that integrate e-commerce initiatives with overarching business objectives is essential for achieving success.
Figure 2.5 - Traditional view of the value chain
The traditional view of the value chain, as shown in Figure 5, fails to accurately represent the dynamic relationships between a firm, its customers, and suppliers, as it depicts a linear flow of information In contrast, the modern value chain, illustrated in Figure 6, places the customer at the center, emphasizing a customer-oriented approach This new model highlights the firm's information system as the crucial link that integrates all processes, allowing customers to access real-time information on inventory, pricing, and availability before making a purchase Additionally, customers can electronically receive design specifications and shipping updates, and track their order status throughout the entire process.
Figure 2.6 - The Value Chain with the customer
Customers can easily track the shipping status of their completed orders through the supplier's information system, enhancing post-sale customer service For instance, if a customer needs to return a defective item, they can access the system to request a return slip, which they can print and use for the return at the supplier's expense This proactive communication benefits suppliers by providing advance notice of defective goods being returned and when to expect them Overall, the collaborative use of the supplier's information system fosters a mutually beneficial relationship between customers and suppliers.
To enhance the customer-oriented value chain, it is essential to connect the procurement information systems of a firm with those of its suppliers This integration allows suppliers to access critical information about their own suppliers, enabling them to better serve their customers By treating their suppliers as customers, suppliers can effectively interface their procurement systems with those of their suppliers, ensuring they receive the same valuable information they provide to their own clientele.
The Internet is enabling companies to fully integrate their supply chains, and this integration has a dramatic influence on the structure of participating companies to fully integrate their supply chains
Albert Angehrn developed the model called the Information, Communication, Distribution and Transaction (ICDT) as a basis for discussing the Internet strategy of business (Source: Greenstein, Feinman, 2000, “Electronic Commerce: Security,
Risk Management and Control” New York: The McGraw-Hill Companies, Inc.)
The model is based on four virtual spaces:
The Virtual Information Space serves as a platform for businesses to showcase essential details about their organization, products, and services It represents the most accessible entry point for companies looking to establish a presence in the virtual marketplace, often marking the initial step in their digital journey.
DIFFERENTIATION
To gain a competitive advantage, companies must strengthen their strategies by employing unique activities that set them apart Differentiation is essential for effective strategy implementation According to Porter, strategic positioning is defined by three key sources: variety-based positioning, needs-based positioning, and access-based positioning.
Variety-based positioning allows companies to concentrate on fulfilling a specific subset of customer needs, enabling them to refine their strategies around a particular service rather than spreading themselves too thin across multiple offerings This focused approach often results in superior service quality compared to competitors that attempt to provide a broader range of services, which can dilute their effectiveness A prime example of this strategy is an automobile glass repair shop, which specializes in a niche market and excels in delivering targeted solutions.
Needs-based positioning targets distinct customer groups with varying needs, allowing for tailored solutions Service Merchandise aims to provide comprehensive home furnishings at competitive prices Their products are more affordable compared to competitors, and the store adopts a do-it-yourself approach with minimal sales staff Electronic kiosks are strategically placed throughout the store, enabling customers to check inventory, place orders, and make electronic payments, ensuring that their purchases are ready for pickup just minutes after payment.
Access-based positioning involves strategically aligning marketing efforts to effectively reach customers through various channels As noted by Porter, this approach may depend on factors such as customer geography or scale, necessitating distinct activities to optimize customer access.
In today's digital landscape, the integration of Information Technology (IT) with competitive advantage and strategy remains relevant, as highlighted by Porter's concepts IT empowers businesses to enhance their strategic planning, optimize marketing efforts, and cultivate innovative ideas, ultimately driving competitive advantage in the marketplace.
Sources of Differentiation within the Value Chain
Michael Porter emphasizes that while differentiation is crucial, its sources are often misunderstood, with firms typically focusing on physical products or marketing rather than considering the entire value chain A successful differentiation strategy arises from the coordinated efforts of all departments within a firm, as virtually any value activity can create uniqueness For instance, the procurement of raw materials can enhance the final product's performance, while technology development can yield unique designs Operations influence product appearance, specifications, and reliability, while outbound logistics affect delivery speed and consistency Additionally, marketing and sales play significant roles in differentiation Even when a product is a commodity, various activities across the value chain, including indirect ones like maintenance and scheduling, can lead to substantial differentiation.
A firm may also differentiate itself through the breadth of its activities, or its competitive scope A number of other differentiating factors can result from broad competitive scope:
- Ability to serve buyer needs anywhere
- Simplified maintenance for the buyer if spare parts and design philosophies are common for a wide line
- Single point at which the buyer can purchase
- Single point for customer service
Most of these require consistency of coordination among activities of a firm is to achieve them
Porter highlights that a company's channels can serve as a unique asset, enhancing its reputation and improving services, customer training, and various other activities This strategic approach contributes to a competitive advantage in the marketplace.
Selective distribution through carefully chosen outlets is a crucial strategy for differentiation Companies can strengthen the impact of their distribution channels by implementing targeted actions that enhance their unique market position.
- Channel selection to achieve consistency in facilities, capabilities, or image
- Establishing standards and policies for how channels, must operate
- Provision of advertising and training material for use by channels
- Providing funding so that channels can offer credit
Differentiation encompasses a wider scope than just quality, as it goes beyond the physical attributes of a product While quality often refers to tangible aspects, differentiation strategies focus on enhancing value for buyers across the entire value chain.
A firm’s uniqueness in a value activity is determined by a series of basic drivers creating new forms of differentiation of diagnose how sustainable its existing differentiation is They are:
Firms make crucial policy choices that dictate their operational activities and methods, serving as a key driver of uniqueness These choices encompass various aspects, including the specific product features and performance levels offered, the range of services provided, the intensity with which activities are conducted, and the technology utilized Additionally, the quality of inputs, the procedures guiding personnel actions, the skill and experience levels of employees, the training they receive, and the information used to manage activities all contribute to a firm's distinctive approach in the marketplace.
Uniqueness in a firm's operations often arises from strategic linkages within its value chain, as well as with suppliers and distribution channels These linkages enhance the distinctiveness of how activities are executed, ultimately influencing the performance of interconnected processes There are three primary types of linkages: those within the value chain, supplier linkages, and channel linkages, each contributing to a firm's competitive advantage.
- Timing: Uniqueness may result from when a firm began performing an activity Being the first to adopt a product image may prevent others from doing so and make the firm unique
- Location: Uniqueness may stem from location For example, a retail bank may have the most convenient branch and automatic teller machine locations
Interrelationships among business units can enhance the uniqueness of value activities By sharing resources, such as a sales force for both insurance and financial products, companies can provide improved service to their customers This collaborative approach not only strengthens the overall service offering but also fosters better customer relationships.
Learning enhances the uniqueness of activities by improving performance, such as achieving consistent quality in manufacturing processes However, when competitors benefit from this learning spillover, it diminishes the potential for differentiation in the market.
A firm's level of integration can set it apart by enhancing its ability to manage and coordinate various value activities This integration not only improves performance but also expands the range of activities that can contribute to differentiation, ultimately making the firm more unique in its market.
Large-scale operations can enable unique activities that aren't feasible at smaller volumes, but they can also hinder flexibility, particularly in time-sensitive industries.
- Institutional factors: institutional factors sometimes play a role in allowing a firm to be unique Similarly, a good relationship with its unions may allow a firm to establish unique job definitions for employees
RESEARCH PROBLEM
With the problem areas of “How IT impact to the company’s value chain to get differentiation?”, we define the research problem
The first question is “How can the value chain be described in the companies pursuing the differentiation strategy under the influence of the Information technology?”
The second question is “How can the sources of differentiation be described under the influence of the Information Technology?”.
RESEARCH OBJECTIVE
Our research is both exploratory and descriptive, focusing on gaining fundamental insights into the problem area The aim of these exploratory studies is to enhance our understanding of the nature of the issue at hand.
Descriptive research aims to outline the characteristics of variables within a specific context By presenting data in a clear and meaningful way, descriptive studies facilitate a better understanding of group characteristics, generate ideas for future research, and assist in informed decision-making.
RESEARCH METHOD
This qualitative study explores the value chain in companies implementing differentiation strategies in the age of internet technology Additionally, a quantitative approach was employed to analyze a sample of 100 customers, focusing on their needs and the impact of information technology on the services they receive.
RESEARCH STRATEGY
We use survey and multiple-case choice We choose two cases to compare the possible similarities and dissimilarities.
SAMPLE SELECTION
This article examines the impact of information technology on the value chain of two prominent English training centers, Language Link and SITC As pioneers in integrating IT into their operations, Language Link offers high-priced services, while SITC provides premium-priced services.
We also choose a sample size of 228 potential customers to determine their needs for the product and awareness of Impact of IT and their needs for that kind of service.
DATA COLLECTION
The choice of a data collection method is a critical point in the research process
With the two cases, we use archival documents that are service records, organizations records, and survey… to know what happened and what is happening
Regard to sampling, We often have four basic survey method: 1 Personal interview,
In this article, we focus on two effective data collection methods: personal interviews and email surveys We design a questionnaire that includes both multiple-choice questions, which can be easily answered by circling options, and open-ended questions to allow customers to express their needs Personal interviews are preferred due to their high response rates and the quick duration of data collection.
DATA ANALYSIS
We use Data display and cross case analysis for two cases and statistic method to analyze the sample of customers
Our value chain analysis will be as follows:
- Analysis of the value chain of two cases to better understand the company’s strength and weakness
- Analyse of customer value chains to see how the product fit into the value chain of the customer
- Identify potential cost advantages in comparison with competitors
Identifying the potential value added for customers is crucial in understanding how new information technologies and the Internet enhance business operations These advancements can lead to lower costs and improved performance, significantly benefiting the customer value chain Customers often recognize this potential in areas such as increased efficiency, streamlined processes, and enhanced service delivery, which ultimately contribute to a more satisfying overall experience.
ENGLISH TRAINING IN VIETNAM
In the past, businesses in Vietnam and globally gained competitive advantage primarily through access to inexpensive raw materials and labor However, this paradigm has shifted, and a company's value now hinges on knowledge-based activities that set it apart from competitors, including design, technology, customer service, project management, and logistics To thrive in this new landscape, it is crucial to preserve and enhance the key resource of knowledge: the individuals who possess it The question remains, what factors contribute to making these individuals more competitive?
Vietnam boasts a youthful demographic, with over 53% of its 80 million people under the age of 25 As of November 2003, the country had 768,000 students enrolled in colleges and universities, reflecting a rate of 118 students per 10,000 inhabitants.
In the 2003-2004 school year, a total of 751,783 students took the high school graduation examination, with 704,879 having studied English for either three or seven years For the 2004-2005 school year in Hanoi, 93 upper secondary schools admitted 36,915 students into the 10th grade.
As Vietnam strengthens its position as a member of ASEAN, ASEM, APEC, and prepares for WTO membership, the demand for learning has surged This growth is driven by the country's expanding trade and investment relationships with numerous nations worldwide, highlighting the importance of education and skills development for the youth.
Vietnamese individuals increasingly recognize the vital role of knowledge in improving their lives and gaining a competitive edge in a crowded market Learning English is essential, as it opens the door to global knowledge and opportunities.
Many foreign English centers appearred in Vietnam market recently to meet the demand of learning English They recognized the potential of the needs of the young population country
E-business is a relatively new concept in Vietnam, and companies that effectively integrate information technology into their value chains can set themselves apart and capitalize on value margins According to the Business Association, out of 132,000 businesses in the country, only 5,000 are utilizing the Internet, with merely 10% having websites to showcase their products, yet lacking online transaction capabilities.
The rise of information technology in Vietnam has significantly influenced the operations of various centers, compelling them to integrate IT into their value activities This strategic application not only enhances their competitive advantage but also helps in distinguishing their services in the market.
In our thesis, we analyze the impact of information technology on the value chain of two prominent English centers in Hanoi: Language Link Vietnam and SITC We selected these centers due to their pioneering use of technology in various business activities Language Link is known for its high-priced services, while SITC offers premium-priced options, making them ideal subjects for our study on the integration of IT in enhancing business operations.
CASE STUDY ONE – LANGUAGE LINK VIETNAM
Background
Language Link is an international teaching group with its headquarters in London and more than 120 centres worldwide Language Link Vietnam was established in
Since 1996, we have been dedicated to training students in General English, Business English, and preparing them for the International English Language Testing System (IELTS) and Cambridge examinations Additionally, we provide impactful language and skills training tailored for the corporate sector.
English for the business community, tailored to specific needs
Academic English, including training for the International English Language Testing System IELTS / TOEFL and Cambridge examinations
Language Link trains learners with diverse language requirements from a wide range of social and business sectors, including:
The general public and school children
Government Ministries, enterprises and the military
Corporations in the Service, Industrial, IT and Law sectors
Information technology in Language Link
Language Link effectively utilizes technology in its operations, featuring an attractive website that offers comprehensive information about its products, teachers, students, and corporate clients, as well as details on its activities and customer contact options.
The primary goal of utilizing Internet technology for companies is to enhance sales and attract customers to their products and services Websites serve as essential tools for marketing and sales, while web-based technologies permeate various business operations, including information dissemination, reporting, accounting, and logistics through systems like web-based EDI Language Link Vietnam effectively employs an Intranet for internal communication and an Extranet for collaboration with its global network Employees utilize email, web publishing, and logistics management tools to share information seamlessly Additionally, the company actively engages with students and parents online, facilitating convenient communication and interest Potential customers can easily download application forms and interact with Customer Service Officers for inquiries.
Value Chain and Information Technology
Language Link employs a management system to streamline its financing and accounting activities The management team relies on traditional decision-making methods, enhanced by IT tools, email, and the Internet to access vital information sources.
Language Link Vietnam effectively utilizes advanced technology in its HR management, leveraging the collaborative platform of Language Link Global to enhance employee satisfaction and streamline operations By employing the Internet as a self-training resource, the company provides valuable information about its centers and HR-related matters For instance, it develops internal questionnaires to assess employee satisfaction and address specific concerns, enabling staff to highlight issues at their centers and seek solutions through the broader network.
Language Link can also recruit more qualified teacher with the help of Internet and labor market research or online recruiting service website
Technology doesn’t differentiate with other companies because it doesn’t apply rare technology
Language Link Vietnam functions within its established Language Link network, utilizing pre-selected suppliers for information and certification The process involves directing customer requests to these specific suppliers to fulfill their needs efficiently.
Inbound Logistic is handled via electronic devices, like Internet, Intranet
Efficient service management requires seamless integration of information and documents, ensuring a smooth transition from the customer's application to the effective utilization of resources for service implementation.
While online applications are available, customers must visit centers to receive services Currently, in Vietnam, online English learning is not widely accessible, although it may become more prevalent in the future Language Link Vietnam recognizes this trend and offers a resource center equipped with 20 computers for self-study and research, along with Internet access Nevertheless, the primary method of learning remains direct interaction between students and teachers.
Language Link utilizes an internet application that enhances marketing and sales through comprehensive information and interactive engagement with both existing and potential customers While the internet does not fundamentally change the marketing and sales strategies of Language Link, it significantly accelerates these processes and fosters greater interactivity.
Language Link employs a diverse range of advertising strategies, integrating traditional methods with prominent placements on its homepage The company's key strength lies in its strong brand identity, which minimizes the need for an extensive sales force Instead, Language Link focuses on providing friendly and effective customer service to satisfy both existing and potential customers, thereby enhancing brand loyalty and recognition.
Language Link offers high service with high price so Internet doesn’t help much in its pricing strategy
At Language Link, we prioritize not just quality but also creativity in our services Our value-adding process begins with a deep understanding of our customers' needs, followed by thorough research and product development We effectively integrate online feedback systems with direct customer interactions, ensuring we remain responsive to their needs The Internet has become an essential and rapid tool for maintaining contact with our clients, enhancing our service delivery.
Technology has significantly enhanced the center's operations by streamlining information flow and facilitating the creation of a robust database of teaching documents and materials This valuable content can be easily shared across the Language Link network via an extranet, leading to more effective and efficient processes within the center.
Differentiation and Information Technology
Language Link consider itself differing from English language centres in a number of ways:
Language Link is owned and managed by
English Teachers This means that
Language Link courses and services are designed by people who know English language training better than anyone else
Vietnam employs highly qualified and experienced trainers who are well-versed in the unique challenges faced by Vietnamese learners These trainers reside in Vietnam long-term, allowing them to fully understand the specific needs and requirements of their students.
Quality Control Systems: Language Link has a complete Quality Control
System to maintain a high – level of learning outcomes Their Quality Control System includes:
Regular and direct feedback from students
Monitoring of teachers by the Academic Department
On-going professional development and training of teachers and staff
Customer Service: Language Link Vietnam’s Customer Service Officers
Customer Service Officers (CSOs) at Language Link Vietnam are dedicated to addressing all student needs, offering precise information and guidance for inquiries They thoroughly explain the various courses and services available, ensuring that customers receive tailored assistance throughout the placement process to enroll in the most suitable course.
It emphasizes CSOs are also available for on-going support, and will happily resolve any difficulties customers experience in theirs studies
Courses: Language Link students learn English more quickly and effectively than other students because their courses combine many elements
Up-to-date text books – the latest and best text books provide the basis for classroom activities
Language Link courses offer a wealth of supplementary materials, featuring engaging and challenging interactive classroom activities tailored by experienced teachers These activities are specifically designed to provide students with intensive speaking practice, reinforcing the new language concepts they have learned in each lesson.
Revision – Revision is necessary to reinforce what has been learned in previous lessons All Language Link lessons contain revision of important language points to ensure students remember them
Intensive reading texts – Reading helps Speaking, Writing and
Enhancing listening skills reinforces students' learning, while reading serves as a personal activity that allows them to progress at their own pace This practice not only aids in developing their comprehension but also fosters quick thinking in English.
All Language Link students receive a novel or story-book at the beginning of the course When finished reading the book, students are free to exchange books with other students
Major writing assignments are essential for students, as they encourage careful thought and expression in a new language These tasks provide a valuable opportunity to practice writing creatively and effectively, which is crucial for those planning to study or work in English-speaking environments Language Link students will engage in a variety of extended writing assignments centered around course themes, offering both interesting and challenging opportunities These assignments will serve as concrete evidence of their English proficiency.
Language Link enhances English learning through regular club activities that provide a social environment for students These activities allow participants to engage in discussions, play games, and build friendships in a warm and welcoming atmosphere, fostering both language skills and social connections.
All Language Link students get automatic membership to English Club activities
All the above differentiation has built their brand image
Information technology has not significantly altered the differentiation of products or services, especially in the context of English language teaching, which relies heavily on customer interaction While online marketing and applications play a role in value activities, competitors remain largely on the same level Language Link Vietnam believes that its competitive advantage stems not from the Internet, but from the quality of its products, reputation, and brand The Internet serves merely as a channel for promoting offerings rather than a primary focus, as the organization prefers direct engagement with students and feels sufficient demand without needing to expand its services.
Information technology significantly influences every aspect of the value chain at Language Link Customers benefit from faster access to information, as well as the convenience of obtaining it through multiple services and channels.
Information technology has significantly enhanced Language Link's human resource management in staff recruitment, optimized inbound logistics through ERP systems, improved operational facilities for teaching, and created new marketing and sales channels for customer interaction The company believes that its service differentiation stems from its people—staff, owners, and customers—where meaningful interactions are facilitated by advanced information technology.