Assignment for an Information System Management class.I have attached all the files and let you read the instructions on what needs to be done. The assignment is C I have also attached what I did for the stage 1 assignment as they all coincide together.

Running head: UMUC HAIRCUTS CASE STUDY

PAGE 9

UMUC HAIRCUTS CASE STUDY

UMUC Haircuts Case Study

Olen Bailey

IFSM 300

30 August 2015

Introduction

This case concerns UMUC Haircuts, a salon business in operation since 1995, which has recently seen an increase in competition from competitors. With the advent of a new salon opening just five miles away, UMUC’s owner, Myra, has identified concerns about competitive threats, her desire to remain the high volume, low cost provider in the market, and how technological improvements in the areas of employee and customer scheduling are needed to allow her to make the process improvements needed to maintain an advantage over other competitors in the market. This analysis will support the competitive strategy and process improvement issues identified by the owner, by reviewing the business environment using the Five Forces Analysis (Porter, 2008) and proposing a viable information technology (IT) solution.

Five Forces Analysis

The Five Forces Analysis developed by Michael Porter is a method of analyzing business strategy development in the context of a specific industry and the competition therein (Porter, 2008). These ‘five forces’ look to the intensity of competition and the overall potential for profitability within the particular industry, which in this case is hair salons services. The following sets forth such analysis with respect to UMUC Haircuts, by explaining the particular ‘force’ element and what it means to UMUC Haircuts; by assessing the impact of such force, be it positive, negative or neutral, on the business, and noting whether such dynamic may affect the owner’s desired strategy for a competitive advantage.

FORCE	EXPLANATION (Minimum 2 good sentences)	IMPACT (POSITIVE, NEGATIVE, or NEUTRAL)	AFFECT STRATEGY? (YES/NO)
BUYER POWER	This represents the bargaining power of customers and their ability to place a business under pressure. In the case of UMUC, we understand that there are numerous existing competitors and a new one on the horizon. As such, buyer power could be deemed to be high, or capable of having either a positive or negative impact on UMUC, depending on which choices the buyers make.	Positive or negative	Yes
SUPPLIER POWER	This is the market that provides input to the business, in this case, such as suppliers of salon products, labor and expertise (stylists) and equipment. For UMUC there are likely substantial resources in each of these areas, including alternatives and talent, which would tend to minimize or at least neutralize the impact of this force.	Neutral	No
THREAT OF SUBSTITUTE PRODUCTS OR SERVICES	This threat means that customers can look elsewhere for the same or for substitute services, which we know to be the case with UMUC. Thus, the owner would like to differentiate through costs, and be at the top of her game to ward off such an imposing and high threat.	Negative	No
THREAT OF NEW ENTRANTS	This threat is somewhat low because there are no virtual salons, and any entry into the marketplace is necessarily a bricks and mortar endeavor. However, the advent of a new highly successful market entry could represent a negative force factor.	Neutral to negative	Yes
RIVALRY AMONG EXISTING COMPETITORS	Based upon the owner’s comments, there is a fair amount of existing competition in the salon business and consumers have definite options for hair related services, making this a relatively high threat to UMUC. This is factor is easily impacted by cost and by operational issues like scheduling and access to services.	Negative	Yes

Justification of Selected Strategy for Competitive Advantage

Myra’s selected strategy for competitive advantage, cost leadership strategy, is clearly justified and supported by the Five Forces Analysis. This particular strategy falls within the quadrant intersecting broad market and low costs. From a functional perspective, as Myra desires, the broad market serves to bring in the maximum potential clients, which would in effect lower buying power. The low cost she is aiming for, is indicative of the fact that with the appropriate management of personnel and clients, she could use her increased efficiency to mitigate those management costs, and to negate the costs of any related technology, in an effort to become the preeminent low cost, high volume salon services provider. Under that scenario, this strategy absolutely makes sense.

Under the Five Forces Analysis, UMUC’s greatest areas of concern would be salon-related activities, like improved employee scheduling and customer management, which could serve to reduce operating costs. On the customer side, technological advances like ease of booking and payment, making, modifying, and/or changing appointments online, would increase the number of potential customers, please and retain existing customers, and help with the over-arching objective of cost reduction.

In terms of the chosen cost leadership strategy, the five forces can have certain impact upon UMUC’s business. Relative to buyer power, the impact may be positive or negative, depending on how customers elect to use their bargaining power. To the extent that the service offerings and low price cause them to remain loyal to UMUC, the impact would be positive. Conversely, if the low costs and the services were not sufficient to retain customers and they opted to go elsewhere for hair services, the impact would be negative and would make it difficult to maintain a cost leadership strategy based upon the availability of a broad market.

As to supplier power, the impact upon UMUC is likely quite neutral. There are most likely ample alternatives in terms of product, vendors and talent and accordingly, this threat is not likely to have a dramatic impact on the business’ ability to maintain a cost leadership strategy.

The threat of substitute products and services is a direct threat to UMUC’s desired cost leadership strategy. To the extent that customer migration occurs due to cost or service offerings, the impact of this force could be extremely negative. An effective cost leadership strategy can help to keep this from happening. The same rational would also apply to the issue of threat from new entrants in the market. Where UMUC can continue to be the low cost leader, the impact of new competition may be minimized (kept neutral) and competitive threats warded off. Should the new market entrant decide to employ the same strategy, differentiation will have to occur in other ways (IT process improvements in employee and customer scheduling) in order to protect against potential negative impact.

Lastly, as to rivalry among existing competitors, an effective cost leadership strategy can continue to neutralize this threat. To the extent that Myra can improve her scheduling efficiencies and continue to differentiate by being the low cost competitor, she can maintain an advantage over existing competitors and quell any negative threat.

Business Process

Myra endeavors to improve her Customer and Employee Scheduling process in order to increase profits, which is directly related to her strategy for competitive advantage, the low cost advantage. Wisely, Myra has identified the need for information technology (IT) assistance, and is seeking this help to identify an appropriate scheduling system to help reduce overall costs, and in turn lead to the desired competitive advantage. Myra and her IT team believe that how UMUC schedules its employees and customers will greatly help in the reduction of costs.

As with any salon, UMUC’s appointment function is the nexus of the business and is imperative for managing daily operations in a successful manner. With the advent of the right IT solution, UMUC would be bolstered by the technology that understands how salon operations function. Myra knows if she were able to look at a complete overview of appointments by day, by time or by stylist, that she could more efficiently staff and plan by moving personnel, adjusting appointments, cancelling services or staff, and moving customers on and off of waiting lists. From an information management perspective, Myra knows she can move even more people in and out of the salon if she is equipped with technology that will show her client information, confirmation status, appointment history and more in a single location. And for the UMUC customer, they can book, cancel or modify one or more appointments with the stylist of their choosing at the time of their choosing, with relative ease and a great reduction in the time and effort it takes to make an appointment.

Conclusion

Through the implementation of a comprehensive IT-based Customer and Employee Scheduling program, Myra can anticipate achieving the competitive advantage that she desires and to help thwart any perceived competitive threat from Hair Cuttery or other like service offerings. Cancellations and over or under staffing issues should be dramatically reduced by the real time system, and both customer and employee satisfaction should increase as a result. These increases in efficiency, satisfaction and competitive advantage, will inevitably also yield positive net effect on Myra’s sales and profits as well.

References

Ehmke, C. “Strategies for Competitive Advantage) (n.d). Retrieved August 29, 2015 from: http://cals.arizona.edu/arec/wemc/nichemarkets/05competitiveadvantage.pdf

Porter, M.E. (2008) “The Five Competitive Forces that Shape Strategy.” Harvard Business Review, 01, 86-104.

“Porter’s Five Forces of Competitive Position Analysis” (n.d) Chartered Global Management Accountant (CGMA). Retrieved August 29, 2015 from: http://www.cgma.org/Resources/Tools/essential-tools/Pages/porters-five- forces.aspx?

References

: Provide at least one external resource in your paper on an area of your choice. Note that two or more external resources are required for maximum points. An external resource is a resource other than those provided in the class or textbook. Incorporate a properly formatted APA citation in the text of your document. Then, place an APA style reference page at the end of your document.