Overview of Business Environment Analysis for UMUC Haircuts
UMUC Haircuts has been in business since 1995 and has seen an increase in competition from a variety of competitors, as described in the Case Study. With the news that a Hair Cuttery is likely to open only five miles away, Myra, the owner of UMUC Haircuts, is concerned and has begun analyzing her situation and what could be done to remain competitive in this changing environment. She has recognized that scheduling her employees and her customers is causing her problems, and she thinks she should focus on that first, as it is fundamental to her business. Myra also believes that there must be a technology solution that could help her run her salon, but she has no idea where to start.
You are a Systems Analyst, and Myra has asked you to help her with determining how she can improve her business. Myra has requested, specifically, that you verify and provide added support to her own analysis that has resulted in the identification of a Strategy for Competitive Advantage and a Business Process for Improvement. This will be the basis for defining business and systems requirements for an IT solution. This Strategy and IT Solution will help to bring UMUC Haircuts into the 21st century and take advantage of current technology. You will analyze her business environment using Porter’s Five Forces Analysis. Then, you will use the results of that analysis to explain how it supports Myra’s Strategy for Competitive Advantage, and the business process that she selected for improvement through the use of technology.
It is important to note that a business owner has many areas where improvements can be made, such as: staff, building facility, supplier agreements, advertising, etc. There are also many possible solutions that could improve the business strategy and processes. Since time and costs are involved, the owner should address basic problems first in choosing the strategy and which processes to improve. (Consider a lemonade stand; while it would be nice to have a chair to sit behind a table to serve the lemonade to customers, that is not crucial; however, having lemonade and cups are crucial to the business.)
A second important concept for this class is that, among all the ways that competitive advantage and processes can be improved, the focus is on information technology solutions. In your role as a Systems Analyst, you will be supporting Myra’s selected strategy and process for improvement, and proposing an appropriate IT solution. This work begins with an analysis of UMUC Haircuts using the Five Forces Model.
Five Forces Analysis:
You know that Michael Porter’s Five Forces Model is a useful tool for analyzing a business. The Model is used to help understand the importance of the five competitive forces and determine a strategy to develop and maintain a competitive advantage. The Five Forces are described and discussed in Chapter 7 of the e-textbook. They are:
- Buyer Power
- Supplier power
- Threat of substitute products or services
- Threat of new entrants
- Rivalry among existing competitors
Strategy for Competitive Advantage:
After reviewing Porter’s Generic Strategies for competitive advantage, as shown in the table below, Myra has decided on the Cost Leadership Strategy because she wants to provide a variety of services at a cost that is lower than her competitors and thereby attract more customers. She knows that she can offer lower costs than the Hair Cuttery that is opening nearby, but she will need to make some improvements to do that.
| Target Scope |
Advantage |
| Low Cost |
Product Uniqueness |
| Broad
(Industry Wide) |
Cost Leadership Strategy |
Differentiation Strategy |
| Narrow
(Market Segment) |
Focus Strategy
(low cost) |
Focus Strategy
(differentiation) |
Business Process:
Following a Five Forces Analysis and selection of a strategy for competitive advantage, the next step is to identify a process for improvement that will support the strategy and provide the most benefit, and position the business for future improvements. While there are several areas in need of improvement, Myra has decided that Customer and Employee Scheduling is the most important process to be improved.
In your role as Systems Analyst, Myra wants you to provide solid justification for the strategy for competitive advantage and the business process that she has selected, and help her determine if an information technology solution can help.
Assignment: UMUC Haircuts Stage 1: Create a document that includes:
- Introduction
Brief introduction providing the background of the case, why you are writing and what is to come in your paper. This should only be 3-5 sentences.
- Five Forces Analysis
Perform a Porter’s Five Forces analysis for UMUC Haircuts, addressing each of the five forces in two or three sentences. For each of the five forces, your analysis should include:
- Explanation of the force and what it means to UMUC Haircuts
- Assessment of the force’s impact (Positive, Negative or Neutral) on the business
- A statement as to whether it should affect Myra’s strategy for a competitive advantage (yes or no).
You will copy the table below into your paper and use it as the framework for this analysis.
FIVE FORCES ANALYSIS
| FORCE |
EXPLANATION
(Minimum 2 good sentences) |
IMPACT (POSITIVE, NEGATIVE, or NEUTRAL) |
AFFECT STRATEGY? (YES/NO) |
| BUYER POWER |
|
|
|
| SUPPLIER POWER |
|
|
|
| THREAT OF SUBSTITUTE PRODUCTS OR SERVICES |
|
|
|
| THREAT OF NEW ENTRANTS |
|
|
|
| RIVALRY AMONG EXISTING COMPETITORS |
|
|
|
[Note] Do not identify solutions or things that Myra should do to address the force’s impact. (The idea is to simply identify an assessment of the impact and if the force will affect UMUC Haircuts’ Strategy for Competitive Advantage.)
- Justification of Selected Strategy for Competitive Advantage
- Explain how Myra’s selected strategy for competitive advantage – Cost Leadership Strategy — is justified and supported by the Five Forces Analysis.
- Relate the strategy back to each of Porter’s five forces discussing the impact of the strategy based on your assessment of the force (positive, negative, or neutral).
- Business Process
- Explain how the process Myra has identified to be improved – Customer and Employee Scheduling — is related to and supports the strategy for competitive advantage Myra selected.
- Explain generally how a technology solution could help improve the process. (Do not provide any specific solution.)
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.
Formatting:
For academic writing, the writer is expected to write in the third person. In third person, the writer avoids the pronouns I, we, my, and ours. The third person is used to make the writing more objective by taking the individual, the “self,” out of the writing. This method is very helpful for academic writing, a form in which facts, not opinion, drive the tone of the text. Writing in the third person allows the writer to come across as unbiased and thus more informed.
- Write a short concise paper: 2-3 double spaced pages of content; table entries for the Five Forces analysis should be single spaced.
- Use at least one external resources with APA formatted citation and reference.
- Include a title page and a reference page.
- Compare your work to the Grading Rubric below to be sure you have met content and quality criteria.
- Submit your paper as a Word document, or a document that can be read in Word.
- Your submission should include your last name first in the filename: Lastname_firstname_Stage_1
GRADING RUBRIC:
The “right” and “wrong” answers have to do with whether or not you correctly incorporated the course vocabulary and concepts from the textbook to support your choices and have addressed all parts of the assignment.
