Value Chain and IT Transformation at Desko Harvard Case Solution & Analysis

Invoicing:

  • An invoice is a business document issued by a supplier to a consumer, concerning to a sale business deal and demonstrating the products, quantities, and agreed prices for products the seller had provided the buyer.
  • The last step in the order processing cycle is based on invoicing as it is extremely time-consuming and thus complex as well.
  • The invoicing process at Desko is long and requires various steps that are not required.

Current Business Strategy at Desko:

The business strategy can be defined as a plan that is based on setting goals and objectives for the company’s future. With the help of business strategy, companies would be able to set and communicate the desired goals. As of now, the business strategy at Desko lacks in terms of the recent market scenario in the industry. Further, the company’s strategy lacks in terms of its response against the changes in the industry. In order to bring improvements in the current strategy at Desko, it is important to first analyze the existing strategy of the company.

External environment:

To find the current strategy of the company, Desko can use porter’s five forces model to find the competitive position of the company. The bargaining power of suppliers for Desko is found to be low because the company has a pool of suppliers that are ready to make business with them. On the contrary, bargaining power of buyers for Desko is found to be low because there are very few number of customers in the market and thus have more power on the company in terms of price negotiation. The internal rivalry among the industry is found to be high because there are many companies in the industry like Desko. Further, threat of substitute is high as the consumers do have other options like importing same goods from other countries at lower prices. Lastly, threat of new entrants is found to be moderate as the industry is found to be attractive and profitable for many companies.

Porter’s generic strategy:

As seen above, the company is facing high risk in terms of customers and new entrants thus, there is a high need to devise a new strategy for Desko. New strategy can be best identified through porter’s generic strategies that are differentiation, cost leadership, and focus. Cost leadership is based on reducing cost and maintaining quality; differentiation is based on going for an approach that makes company’s product innovative from others and focus strategy is based on limiting the scope.

Recommendation:

Right now, it is recommended for Desko to opt for cost leadership strategy to the maximum extent possible along with the differentiation strategy for its large customers. The issues highlighted through porter’s model can be solved through implementation of cost leadership strategy. The strategy will help the company in offering the Desko products at lower prices. This will also help the company in gaining competitive advantage against its rivals. Further, it will also help the company to compete with substitutes through low prices. Further, the major concern of the company that is cancelation of business will reduce as well.

Further, the company can deal its business in a different way and use differentiation focus strategy on it as it will give an edge to the company over its competitors. Moreover, it will offer an opportunity for the company toinvest in its business order process to bring efficiency in it.

Information technology strategy:

Strategies related to information technology are based on long term plans for goal achievement in terms of changes made in the technology sector. There should be a proper link between company’s goals and the IT department of the company to make IT strategy successful. The connection can be found through strategic grid model proposed by Nolan and McFarlan. The model comprised of four primary modes in information technology, and these four modes are factory mode, support mode, strategic mode, and turnaround mode. For Desko, the company lies in the second mode of the strategic grid that is support mode because the IT department of the company is not the major contributor in the decision making process of the company and thus perceived as a cost center. Moreover, the ERP of the company is outdated with full of flaws as there is a lot of problems in both MTS and MTO production planning process............................

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