Question

• What is ERP? What are major advantages / disadvantages of ERP?
• Discuss ERP in terms of Porter's Five Forces Analysis.

• If two competitors (Company A and Company B) both have installed ERP system - SAP HANA, how/why can they compete even though their IT solution are the same enterprise information systems solution (SAP HANA)? Note: you can use any possibilities from the Five Forces Model, Value Chain, and Competitive IT Advantages.

Answer 1

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Advantages and disadvantages of Enterprise Resource Planning (ERP)

Advantages:

1. Better organizational control, especially in large companies, where the volume of information is more than in a small company.
2. Duplication of information is avoided.
3. Improved communication, both internally and externally.
4. Company profitability analysis can be carried out to analyse where costs are higher and where there are more sales.
5. Improved decision-making process within the company.
6. The company is able to react better to any unforeseen problem or situation.
7. Better use of time.

Disadvantages:

1. The high cost of implementation and maintenance. (High initial investment)
2. Adaptation to the hardware in the company.
3. It is necessary to train all employees in the company so that the system is used efficiently. This is a cost for the company as well as the time and effort needed for it.
4. Integration with other applications in the enterprise needed.
5. Inflexibility of the system, because this is a generic system.
6. There are few experts in this system.
7. If the system is not applied correctly, it can be very detrimental to the company

Porter's framework maintains that the attractiveness of a market segment is determined by five competitive forces:

• Threat of new entrants - how easy is it for a new competitor to enter the market?
• Rivalry among existing competitors - how many competitors offer a similar product at a similar price?
• Threat of substitute products or services - what is the likelihood a customer will switch to a similar product?
• Power of buyers - how easy is it for buyers to drive prices down?
• Power of suppliers - how easy it is for suppliers to drive prices up?

The Five Forces analysis was developed by Porter in reaction to the SWOT (strengths, weaknesses, opportunities, and threats) analysis, a popular framework for identifying and analyzing the internal and external factors that can have an impact on the viability of a project, product, place or person. Porter believed his framework, drawing from industrial organization economics theory, was more rigorous

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