Low Cost Leadership Strategy

Low Cost Leadership outlineIn the cosmos of problemes today, every dust of rules definitely haves randomness clays in their direction of doing course. Laudon and Laudon define culture constitution as a s abolish of interrelated components that retrieve, butt against, store and distribute the data to support the finale reservation in an organization. In fact, those who acquire a decent information dodge would eliminate those who dont have to fight against it. The ever changing world of information technology causes pertly ch wholeenges for every organization to set up an information ashes that would provide numerous advantages.According to Laudon and Laudon (2009), there argon six main reasons why business argon investing millions of one dollar bill in information dodging and technologies, among them be functional excellence bleak products, go, and business models client and supplier intimacy improved decision making competitory advantage and last but n ot least, survival. Therefore, Aalsmeer crown sell ( entrust be bashn as Aalsmeer end-to-end the research paper) who is encountering several problems would need the help of information outline to overcome the problems.2.0 breeding strategy2.1 compendium of catamenia situationAalsmeer is facing threats from various sources and should utilize the information technology today in defending their business. Laudon and Laudon (2009) believe that the much(prenominal) than advantagefully a firm terminate align the information technology with business goals, the more profitable it leave be. Apart from that, business people who claim themselves do not understand information technology will pay a hefty price in poor writ of execution (Laudon and Laudon, 2009).In the grocery today, electronic operate visor trade is becoming more and more dominant than the traditional way of doing business. Besides, the competitive milieus among the retailers encourage them to merge and form ing a wide-rangingr confederacy with an gaind in demanding power. Indeed, they atomic number 18 demanding fresh-cut products, more varieties, smaller quantities and multiple deliveries and this inevitably exert pressures on Aalsmeer who need to veer their way of doing business in sound out to survive.It is advisable for Aalsmeer to adopt a peeled strategy for the organization to achieve their business objectives and go over competitive advantage in the industry. The objectives of Aalsmeer at the moment areEnable presentation for the business processing methodsRedefine the gild chain to reduce deed costsIntegrate smoothly with wholesalers and retailersIncrease the commercialise share to increase profit2.2 Low-cost leadership strategyAfter examine the on-line(prenominal) situation of Aalsmeer, low-cost leadership strategy is undoubtedly the most suited for the federation now. Low-cost leadership strategy is centered on the electrical capacity of Aalsmeer to produce and deliver the products of high quality at low costs. A comp some(prenominal) having low-cost leadership when extends its value to customers expectation, can moreover prove its strategic position in the food market place, (Alagse, n.d).In fact, information arrangings could be custom to demoralise the operational costs and hence, lower prices for the customers. The typical prototype is Wal-Mart, which is a company continuously relies heavily on information carcass to reduce costs and this leads them to one of the freehandedst profitable company. They replenish the products as short as the customers get along payments at the cashier. The computers collect information from the stores and send it to suppliers and therefore, Wal-Mart does not need to spend large amount of money on opposeing large inventories.Aalsmeer offer relatively standardized products with features that are acceptable to customers in some other words, with minimum differentiation at the lowest competit ive price. In addition, Aalsmeer who are suggested to follow a low-cost leadership strategy need to curb constant efforts aimed at lowering their costs, but yet creating values for the customers. such(prenominal)(prenominal)(prenominal) efforts include investing in technologies, establishing tight control of production and command overhead costs, minimizing the cost of sales and usefulnesss. Specifically, investing technologies means to develop a crudeborn information system for Aalsmeer to achieve the objectives stated earlier which would be die hard forth later on this marriage proposal.Implementing the strategy means Aalsmeer must rent its value chain of primary and secondary activities and effectively link them to be successful. The little focus now is to increase the efficiency of how the business process. In detail, processes and procedures of sell flowers to customers must be simplified, achieving efficiency and effectiveness and last but not least, monitoring the cost of activities provided by others that interface with the companys inbound and outbound logistics. For instance, the bringing break costs.Moreover, when Aalsmeer successfully implements the low-cost leadership strategy, it can clam up restrain a high return rase when the Porters five competitive forces are strong.Porters five forcesExplanationTraditional competitorsWhen Aalsmeer is offering the lowest cost in the market, the competitors will undoubtedly consider competing in a price war, and even if it does, Aalsmeer will still continue to earn profit after the competitors grapple away their profits.CustomersIf there is any customers tends to drive prices below the cost of the nigh most efficient company, that company might choose to exit the market and leaves the low-cost company with a monopoly position. Therefore, customers would lose bargaining powers when that happens since low-cost company would be in a position that has power to raise the prices. bran- refreshing m arket entrantsAalsmeer who successfully utilize the low-cost strategy generally will sell in large volume to earn high profit. This indirectly creates a barrier for the impudently entrants who need to enter the industry at large scale (large enough to achieve the same economies of scale with low-cost company).SuppliersOnce Aalsmeer achieve the lowest cost in the market, it enables them to absorb a greater amount of cost increases from suppliers before it must raise prices supercharged to customers. Moreover, Aalsmeer who will be dominating the market whitethorn force the suppliers to hold down the take aim of price increases, reducing the power of suppliers.Substitute products and servicesAalsmeer, as a low-cost leader will be in a more attractive position relative to the substitutes. They could reduce prices to maintain the price-value relationship to retain customers from going to the electronic determined market.2.3 effort alternative come forthingThe information system t hat is suggested for Aalsmeer would be the Enterprise Resource Planning (ERP), which can be define as a set of merged programs capable of managing a companys vital business operations for an entire multi-site, planetary organization. ERP attempts to integrate the key business processes of an entire firm into a maven parcel system that allows information to flow seamlessly doneout the organization. For instance, the transactions with customers and flower growers.Indeed, the key to ERP is real epoch monitoring of business functions, which allows eraly outline of key issues such as quality, availability, customer satisfaction, performance and availability. It is a set of integrated software modules and a central database that enable data to be shared by many different business processes and functional units throughout the enterprise (Curtis Cobham, 2005).Sources extolcorpERP functional unitsFinancial and chronicleThe Aalsmeer is facing challenges from the electronically drive n flower markets and due to this reason, it is vital for them to have a complete accounting system. All the transaction ought to be recorded quickly with no illusion or minimal error in high society to let the other departments to take the next actions immediately.It also includes cash direction and estimateing, credit instruction and financial reporting. It would gives Aalsmeer an edge if they could forecast the cash flow and make all-important(a) decisions when necessary such as, stop buying stock of flowers when they flower markets are down in position period.Human ResourceSince consumers are demanding fresher products, more varieties and smaller quantities, the human resource definitely needs an information system that can divide the jobs to each employees from each department of the organization. Therefore, the company could satisfy the demands from the consumers.Besides, human resource process also involves performance caution and travel expense reporting. The sensiti ve system could do a performance analysis of the current situation and make necessary falsifys to it. Apart from that, the travel expenses such as petrol fees can be monitored closely to reduce any extra expenses being apply.Manufacturing and productionWhereas the manufacturing and production processes includes mainly the procurance process, which is the action of obtaining flowers at the operational level. As the problems stated, the growers are becoming more professional and starting to utilize the electronic way of selling their flowers.The system could manage the inventory effectively by not wasting any extra capital to rent the inventory, or having insufficient place to make unnecessary the flowers. This is to ensure the flowers are in well(p) quality control and further streng consequently the links between wholesalers and retailers when they actually get what is ideal for themselves. allow Chain ManagementIt is composed of three sub processes demand planning, supply pla nning and demand fulfillment. Demand planning is to understand the customers buying patterns and then develop aggregate long-term or short term forecast of demand on the flowers. Whereas the supply planning includes the strategic inventory with dispersal planning and demand fulfillment is to provide a fast, accurate and real delivery for customer orders.It also helps to ensure what type of supplies is required, what quantities are postulate to meet the demand, and how the shipments of supplies and products to customers are to be scheduled, monitored and controlled.Customer Relationship ManagementA system that helps in all aspects of customer encounters, including marketing and advertising, customer service after the sale and programs that retain loyal customers. Aalsmeer ought to understand the needs of current and potential customers to increase customer retention and loyalty, which leads to a bigger market share.With the processing system capturing data of every customer with the company, Aalsmeer would then know the best way to sell the flowers based on the analysis such as customer preference, time of purchasing, ways of purchasing and many more. This could ensure an increase in efficiency of the selling force and then, increase the productiveness by foc utilize on the most profitable customers.2.4 Advantages of ERPAgile manufacturing underpins the success of Smart car, DailerChryslers city car brand. Smart has successfully responded quickly to customer demands ever since they have adopted the ERP system from Baan, the Dutch software vender (Geoff Nairn, 2003, as cited in Curtis Cobham, 2005). The optimized production is due to shorter processes but yet still came out with tried products.AdvantagesExplanationImprovement of Work ProcessIt ensures good work processes based on best practices which lead to increased efficiency. In this case, the ERP could helps in reducing costs for the organization, such as human resourcing or transaction cost. Besides , it eliminates the problem of synchronizing changes between multiple systems and provides a top-down view of the enterprise at anytime.Increase in Access to selective information for Operational Decision MakingThe data is integrated from all the departments in the organization to provide excellent support for operational decision making. In addition, it allows the company to provide greater customer service and support, skillen customer and supplier relationship, and also generates untried business opportunities. The system connects the necessary software for accurate forecasting and this allows inventory levels to be kept at upper limit efficiency.3.0 Methodology3.1 arranging Development Life Cycle (SDLC)Kay. R (2004) believes that formation Development Life Cycle (SDLC) is a model created for an organization when adopting a invigorated information system. In fact, SDLC is a sequential series of move to build an information system and it is one of the most common tuition st rategies. It is best to follow the SDLC which consists of five material bodys system planning, system analysis, system design, system implementation, system operation and maintenance. The signifiers are interconnected by the inputs and outputs, and if the previous physical body has poor outputs, the rest would be affected.3.1.1 System PlanningThe first phase of SDLC is system planning, which happen when there is a request of a virgin system. Aalsmeer realizes that they need a new information strategy in order to remain strong player in the market. A preliminary probe ought to be conducted to inspection the existing system and identify the problems. Indeed, a feasibleness study could be carried out to identify whether the proposed new system is feasible to be implemented. If the new system is viable, practicable, reasonable and applicable in cardinal main aspects, then the management should invest on it in order to get benefits in a long term.AspectsWhy?Technical feasiblenes sTo recover whether a new IS can be authentic with functional technical resources.Does Aalsmeer Flower Auction have the ironware, software and equipments?Can it be developed with current technology?Economic feasibilityTo determine whether the new IS has a reasonable cost despite the changes it will bringsCan Aalsmeer Flower Auction bear with the cost?Operational feasibilityTo determine if the new IS will be used effectively and efficiently after it is developedAre the changes to business operation minimal?Schedule feasibilityTo determine whether the new IS can be developed within an acceptable time frame?After conducting the feasibility test, Aalsmeer could then decide the actions to be interpreted based on the preliminary investigation report.3.1.2 System AnalysisNext, it is the system analysis phase, where the purpose is for Aalsmeer to learn how to improve the existing system, and then determine what the new system should do in order to achieve the goals. Therefore, the orga nization could find some facts about the current system, such as the strength and weakness of it and produce a report with what is required in the new system.RequirementAnticipationRequirement SpecificationRequirementInvestigationIn fact, Aalsmeer could gather the facts by study existing documentation, interview with employees, observation and questionnaire. Then, operational details and performance criteria need to be specified and examined, i.e. the speed of the ERP system after developed. After that, this phase carefully analyzes the information and then prepares a system requirement document which should include managements and users requirements, and recommended plan to develop the new ERP.3.1.3 System DesignThis is the phase where after the management level has contumacious to develop a new system for the organization. A blueprint, which is a expound plan that satisfied all requirements specified, needed to be develop at this phase. Aalsmeers management should discuss this w ith all the employees in order to develop a system that satisfies everyone. Programs related are written, tested and documented by the analyst.In addition, internal and external controls are to be designed to ensure the system would be reliable, accurate, maintainable at any time and secure. Lastly, this phase would end up with system design specification where the blueprint is presented to managements and the actual users for review and approval.3.1.4 System ImplementationAt this phase, the developed ERP system will be installed in the organization. In addition, operational documentation and procedures of the new ERP system are prepared for the Aalsmeer employees. The employees would need to attend classes to be trained in order to utilize the system effectively. This is a phase of conversion from old system to new system.Indeed, the new system is a huge and complex one, so Aalsmeer could install the software step by step and therefore, it would not disrupt the whole system when s ome particular department has problem victimization it. Aalsmeer could create a legal contract that indicates the system is approved and will be signed by users and stakeholders (Stair Reynolds, 2008).A post-implementation system evaluation could be done to access the quality of the system. Apart from that, it is to examine whether the system operates ideally and are the costs and benefits within the earlier expectations.3.1.5 System MaintenanceThis phase is an on-going process as the purpose is to support the operation of the system through proper maintenance, enhancement and protection. Under the maintenance process, any broken hardware is repaired or replaced to avoid any surprising break down. Besides that, the Aalsmeer needs to optimize the system to make the system run smoothly. For example, by condensation the data base, or delete the old and unused files. When there are any errors detected, modification should be done as soon as possible (Stair Reynolds, 2008).On the othe r hand, enhancement is needed at particular time interval to increase the system capability such as adding more hard disk space to store a large database of customer information. In addition, new functionalities and features could be added when there is a change in the ways of doing business. Lastly, the protection on the system to ensure it is not attacked by any virus or hackers. The firewall of the system is configured and monitored to decrease the chances of being attacked. Besides, backing up the database is definitely a good way to protect all the customer information which is private and confidential. King stairs Software (n.d.) mentioned that a proper backup strategy is vital for business as well as personal users.4.0 Impacts and effectiveness of ERPSystems changeover can be effected in some ways which not precisely has certain benefits, there will be drawbacks as well (Curtis Cobham, 2005).4.1 musical arrangementThe purpose of this research is to identify a way for Aals ameer to strengthen itself in the market. It is believed that the company is able to reduce the operational cost, due to the effectiveness of the system to finish up the work in lesser time given. The new system would emphasize on the information technologies, where the large amount hail of workers is no longer needed.Apart from that, the organization can offer lower cost compared to rivals. The ERP system enable the organization to fight with the electronically driven market and thus, accelerating the business growth. Besides, the budget saved can be use on the marketing campaign to promote the new system of organization to public, and thus, they would be well aware of the new operating business model.However, Aalsameer should consider whether the system supports the business objectives (OBrien Marakas, 2008). If the system does fully support the business objectives, it is price to be invested even though they may face problems on capital, when hiring the system vendors to develo p it. If the system does not support the objectives, Aalsmeer may need to re-consider the actions taken before.4.2 ManagementWhereas for the management level, the reports statement such as invoice, can be generated through online now. It saves the time for everyone the processing time is cut down in a systematic way. To top it off, it reduces the workload easily and the burden of management level can be taken off. Therefore, it increases the efficiency of management level since they can rely on the ERP system more than before.By using a complete and efficient ERP system, it also reduces the error or fault which could possibly occur when the work is done by human alone. The process of paper work simply becomes easier, simpler and faster for management and they could put more attention on other problems. For example, searching for more potential customers via new marketing communications.On the other hand, they can put more wildness on matters that could possibly cut down the operat ional cost such as downsizing the number of workers in the organization. Since the organization is utilizing the ERP system now, it is possible to rely on the technology instead of human hand to do the work. However in reality, it may be difficult for the management to layoff the employees who may be had work for the company long time, but it is essential to make the decision as it benefits the organization, after all.4.3 EmployeesCertainly, there would be several impacts on the employee of the organization, who is the direct users of the new ERP system. Firstly, it may create a chaos in them, where the new system would take over their position by terminating them. Besides, elder employees who are not familiar with new technology, or not used to changes in working environment will definitely suffer in using ERP when the system is installed. Indeed, employees who are not good at adapting to the adjoin will face hardships this may create a negative environment in the organization.Ho wever, it is believed that after few months, they will eventually find themselves well-situated with the ERP. Moreover, the new system will ease the burden of the employees, and increase the time for them to focus on their work. For instance, they can provide a good and reliable quality of customer service which in long term, will bring up the reputation of Aalsmeer Flower Auction. Moreover, since the ordering and payment are all done online now, it simplifies the working process. Indeed, employee would be more ambitious in terminate their tasks.5.0 ConclusionAll in all, Aalsmeer definitely needs a new information strategy as well as a new information system in order to achieve the business objectives. Ideas suggested to Aalsmeer are considered carefully and it is believed as the best way for the organization now. If Aalsmeer would to follow the proposal carefully, they would achieve the business objectives and make a success in the market today.ReferencesBooksCurtis, G. Cobham, D ., 2005. Business Information Systems. 5th ed. Edinburgh Gate Pearson Education LimitedLaudon, K.C. Laudon, J.P., 2007. Essentials of business Information Systems. 7th ed. New Jersey Pearson Prentice Hall.Laudon, K.C. Laudon, J.P., 2009. Essentials of management Information System. 8th ed. New Jersey Pearson Prentice Hall.OBrien J.A. Marakas, G.M., 2008. Introduction to Information Systems. fourteenth ed. New York McGraw-Hill/Irwin.Stair, R.M. Reynolds, G.W., 2008. Principles of Information Systems a managerial approach. 8th ed. Boston Thomson way Technology.WebsitesAlagse, n.d. Promoting through leadership . OnlineAvailable at http//www.alagse.com/strategy/s10.phpAccessed 2 April 2010Kay, R., 2002. QuickStudy System Development Life Cycle. Online Available at http//www.computerworld.com/s/article/71151/System_Development_Life_Cycle Accessed 5 April 2010King Stairs Software, n.d. The importance of backup. OnlineAvailable at http//www.kingstairs.com/articles/doc0003.htmlAccessed 24 April 2010Extol, 2006. Secured Enterprise Application. 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