TAL: Question 4

Q4. How did Porter and Millar (1985) classify the impacts of IT on competition? Discuss the benefits and impacts of the use of IT initiatives to TAL, and how these initiatives have contributed to the strategic repositioning of the company in the apparel value chain.

IT have impact in the competition in three aspects: Industry structure and the rules of competition have changed as a result of new information technologies. Some organizations have successfully differentiated themselves and outperformed their competitors by using IT. And some organizations have created new businesses by using IT.

1. Driving changes in industry structure

Minimize threat of new entrants

The advance in IT erect entry barriers by tying up distribution channels in the integrated value system. Increase entry barriers by using made-to-measure (MTM), as it requires tighter integration with the buyer’s value chain.

Balance power of buyers

TAL increase the switching cost to their competitors by demanding exclusive supplier relationship in vendor-managed inventory (VMI). It also gain customer information to better understand sales patterns at the store level.

Erode power of suppliers

TAL erode the bargaining power of its supplier by controlling major resources in the value system through advanced manufacturing technologies and closer customer relationships.

2. Creating product and service differentiation

Create highly differentiated service offerings

TAL provide full-package supply solution to transform the traditional commodity-like generic products. They bundle information with physical product package, creating barriers to imitation. Moreover, it employs made-to-measure system which provides additional source of differentiation

3. Creating new business opportunities

Create new business opportunities

Provide logistics and supply chain management as one-stop-shop service offerings. Try to involve design and marketing activities in the apparel industry