NZ TV Channel: ICT Alignment with Porter's Five Forces & Value Chain

This case study examines the application of Porter's Five Forces model and Value Chain analysis to the New Zealand TV channel industry, focusing on how Information and Communication Technologies (ICTs) can be strategically leveraged to enhance competitive advantage. The analysis identifies the key competitive forces at play, including the threat of new entrants, bargaining power of suppliers and buyers, the threat of substitutes, and the intensity of competitive rivalry. It proposes ICT solutions to mitigate negative forces, such as reducing costs, utilizing latest technologies, and fostering strategic partnerships. Furthermore, the study explores the TV channel's value chain, detailing primary activities like inbound logistics, operations, outbound logistics, marketing and sales, and service, as well as support activities such as procurement, technology development, human resource management, and firm infrastructure. The document highlights how ICT can optimize each activity, improve inter-departmental communication, and create a sustainable competitive edge, ultimately driving revenue and profitability for the TV channel.

PORTER’S FIVE FORCES MODEL AND THE VALUE CHAIN
ICT’S AS A SUPPORT
Case Study - NZ TV Channel
(25 March 2019)
By Babu, Shamanth Gourish
Student ID: 20141895
e-mail: [e-mail]
By Mahajan, Ashwini
Student ID: 20120808
e-mail: [e-mail]
By Philippsen, Elisandro Anuar
Student ID: 091805245
e-mail: [e-mail]
By Rao, Kothuru Birkaran
Student ID: 091805253
e-mail: [e-mail]
By Varghese, Sajeesh Nochivalappil
Student ID: 20180439
e-mail: [e-mail]
By Yersain, Chingiz
Student ID: 091805250
e-mail: [e-mail]
Words total: 2687
Managing Information and Technology (MIT)
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Executive Summary
The objective here is to develop ICT’s that would help in the NZ TV Channels business
strategy.
We have discussed how Porters five forces model can be used to analyse the NZ TV Channel.
It is a model that analyses the five competitive forces that shape every industry and helps
determine the industry’s weaknesses and strengths. It helps us understand the forces that
shape the competition within the industry.TV industry in New Zealand being highly
competitive we must devise ICT’s to reduce buyer and supplier power and hence eliminate
the competition. In this way we will be able to increase revenue for our channel and hence
profits.
In addition, we have looked at Porter’s Value Chain and how various activities create value
for the TV Channel. We have looked at how we can minimise costs and have better
communication between various departments and improve processes to improve the
business performance and hence the profits for the company. We have looked at how
various activities are interlinked and how linkages can be improved using ICT’s and processes
can be improved to generate better value and hence profits for the company as a whole and
it can become a source of sustainable competitive advantage which our competitors will find
difficult to replicate. Thus, by linking ICT’s to business strategy we can use IT as a leverage
tool to assist in business strategy and achieve business objectives. The return on investment
will far outweigh the amount invested in the project.
We have found out by analysing the Value chain that CRM tool can help build better
customer relationship and is a good marketing tool to achieve business objectives. Also,
having an MIS system linked to business KPI’s can be useful in achieving business objectives.
MIS can be linked to HR department using the intranet and can be used for training and skill
development. The technology department can use data mining techniques and find patterns
that can be turned into meaningful data to achieve company objectives. The procurement
department could be automated saving the company thousands of dollars by linking orders
to the company’s internet and using e-payments systems and mobile and internet banking to
further reduce order and other financial costs. This would reduce costs and improve
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efficiencies and save time spent in various business processes. Thus, technology could play as
a game changer in company’s strategic objectives.
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Table of Contents
1.0 Introduction.....................................................................................................................4
2.0 Porter’s Five Forces & Value Chain and ICT’s...................................................................4
2.1 Chapter 1: Porter’s Five Forces Model and using ICT’s....................................................5
2.2 Chapter 2: The Porter’s value-chain of a NZ TV Channel using ICT’s...............................6
2.2.1 Primary Activities.............................................................................................................6
2.2.2 Secondary Activities.........................................................................................................7
2.2.3 ICT’s supporting the Primary and Secondary activities....................................................9
3.0 Conclusion......................................................................................................................10
4.0 References......................................................................................................................12
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1.0 Introduction
Is important to mention also, the value chain as a business tool, which shows all processes of
company and way how the interact. According to (Porter, 1998) every business has a value
chain which consist in 9 value activities. Porter divided Value Chain in two important parts:
primary activities and supports
activities. The former also consists
inbound logistics, operations, outbound
logistics, marketing and sales, and
service. The latter includes
procurement, technology development,
human resource management and firm
infrastructure (Porter, 1998).
The Picture 1 shows how can those activities are separated in the process to create
competitive advantage via differentiation, in other words, how functional the organization is
or how the organization manage all departments, how they communicate and finally how
they linkage the internal and external information each other.
This report will show how important links between activities is and how can using ICTs to
improve competitive advantage in a NZ TV Channel.
2.1 Porter’s Five Forces & Value Chain and ICT’s
PORTER FIVE FORCE MODEL OF NZTV CHANNEL COMPANY
There are five dimensions which can be defined as threat of new entrants, bargaining power
of suppliers, bargaining power of buyers, threat of substitutes and rivalries.
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(Source: research, methodology, 2019).
Threat of new entrants – LOW
It can be observed that the NZTV channel company has a major threat in relation to brand
identity. The channels emphasize on bringing innovation which put pressure on the
companies to consider the low pricing strategy. But on the other hand, it can be said that
threat of new entrants is low as huge investment is needed to cover the high fixed costs.
According to the present scenario in the NZTV industry, the new companies will not be able
to survive in the market as the industry is saturated with the different channels and there
are many barriers to entry. There are many competitors in the market such as Channel 9,
channel 61 and C4 New Zealand (Beal, Kang & Beal, 2016).
Positive
This force can be positive as there is a wide scope for the existing channels to boost their
customer base in the existing market.
Suppliers bargaining power (High)
In relation to the NZTV channel company, it can be stated that the suppliers provide the
input required for production of the shows such as anchors, artist and directors. The supplier
power is high as the market is dominated by the few suppliers rather than fragmented
source of the supply. Also, there are many channels but there are only few suppliers, so it
can be stated that the bargaining power of the supplier is high (Baker, 2017).
Negative
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It could be negative as the suppliers are less which enhances the overall cost of the
companies to purchase the inputs at the time of production.
Bargaining power of the buyers (High)
The bargaining power in context to NZTV industry is high as there are many potential and
actual buyers. With the increase of different channels, it can be said that the customer
bargaining power is also enhancing as the customers have more choice to select from
different channels (Cocker, 2018).
Negative
It can affect the entire sales of the company in the highly competitive market.
Competitive rivalry (High)
The competition level is high in reference to the NZTV channels. It has been seen that there
are many TV channels who are managing their activities in the New Zealand market. The
companies that are present in the market are Channel 61, Channel 9, C4 New Zealand and
CUE TV (Menzies, 2018).
Negative
It could be negative as the customer base is divided among the different channel companies.
It can negatively impact the demand of the services in the market.
Substitution of the services (high)
The NZTV channels are offering the services that can be substituted by the customers easily.
There are many TV operators who are offering similar services in the market. Also, there are
internet services that are offered which are cutting the demand of the services (Given, 2016).
Negative
It can be negative as the customers have the choice to substitute the services easily which
affect the demand of services offered in the market.
ICT SOLUTIONS TO APPLY TO NEGATIVE FORCES TO POSITIVE FORCES
The broadcasting industry in New Zealand emphasizes on ICT’S by offering the services to the
customers through their digital cables. With the help of ICT’s, the companies are able to
maintain their market share in the competitive market. In the present scenario, the
television in
Low cost of services
It can be observed that the concept of ICT is considered by the NZTV channel company. ICT
has impacted the industry competitors by maintaining cost effectiveness and it is easy for
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the companies to access the market. But to compete in the market it is important for the
NZTV channel company to focus on reducing the prices of the services offered to the
customers so that it could be easy to attain growth in the competitive market. The NZTV
channel company should maintain its competitive advantage by positioning its brand
through ICT in the market. This will help to resolve the negative impact related to
satisfaction level of the customers. It will help to boost the satisfaction level of the
customers towards the services offered by the company (Acharya, 2019).
Use of latest technologies
The digital broadcasting has been considered by the broadcasting sector. To enhance the
growth, it is important for the broadcasting companies to focus on offering the services of
digital video recorder so that it could be easy for the viewers to record and view the
channels (Kelsey, 2015). In the present scenario, the broadcasting sector should emphasize
introducing the feature of recording a live program. Like the TV server interface the DVB
material and must offer the TV server to record and left in the programs which are showed
on the television channels This is one of the best solutions that should be considered by the
companies as it will help in maintaining the competitive advantage in the market. It will also
reduce the negative impact related to decreasing the demand of the services. By considering
this service, it would be easy for the companies to boost their market share in the
competitive market (Díaz Andrade & Doolin, 2019). When it considered to be in broadcasting
sector the huge money they are spending in satellite broadcasting charges as rent, if a
channel company can make a little bit big investment to design and occupy its own satellite it
will be a competitive advantage for them to broadcast by fairly less money and make sure
the quality of the program also. Even they can allow other channels to broadcast by them by
charging a fee. New players like Netflix is entered in the industry and became popular soon
and TV channels also can air their programs through such popular platforms which will make
the program or channel to be accessed from any part of the world.
Partnership or collaboration
With the use of ICT’s, the channel technology companies should focus on partnership that
will help their customers to attain the higher investments. By collaborating with the different
companies, it would be easy for the company to maintain its demand in the market in
reference to the competition level. If the companies come into partnership then it would be
easy to minimize the competition level prevailing in the market (Myllylahti, 2017). Therefore,
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it can be stated that in this way, the broadcasting industries can consider as a solution to
convert the negative forces towards the positive forces. This will also help to attain growth in
the highly competitive market by emphasizing on boosting the customer service.
Improving social value and acceptance.
Any TV channel which refused to upgrade with advanced ICT and satisfy the customer needs
will be falling behind of competitors. TV channels which use actively new ICT technologies
like cloud storage, sharing, and digital media have possessed significant social value among
customers. Using the advanced technologies like cloud based high definition video
production and cloud based storage and sharing architecture the programs and news to be
bring to the audience fast, when, where and how they needed will definitely enhance its
social value and will improve a culture of information sharing. This will make loyal customers
to the particular channel or program which in turn eliminate the negative force of
substitutes and will make it favorable.
2.2 Chapter 2: The Porter’s value-chain of a NZ TV Channel using ICT’s
The variety of TV content can ben large, such as, live local game’s broadcasts, coverage of
international sporting events, live news, local agenda information’s of artistical shows and
theatre performances, reality shows, documenter, lifestyle, food shows, comedy, etc.
The typical value chain for NZ TV Channel includes all elements from Porter’s Value chain
Model and the kind of technology chooses by the firm can have an important impact in the
market competition.
2.2.1 Primary Activities
Primary activities are basically the core business of the company, in other words, operational
activities. Start from creating an audio-visual content, which is the main product for TV
industry. It might be news, films, TV-shows etc. That content might be created by themselves
(news, sports, and shows), in this case is called external link. In addition, it can be bought
from outsource (films, series, news agency), in this case is called internal link. (Suhendra,
2013).
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Next step in operations activities is adjusting that content for the format of TV channel. It
includes adding corporate logo, cutting timers, making video settings to translate in any
device and censorship checking. After this process’s TV channels make special packages for
any type of customer. They can be specific (for kids, for travellers or only sport channel) or
mixed, which have all contents. It will help sell advertise and sell products to particular group
of people (Beutler, 2017).
According to Porter’s Value chain model third step is outbound logistics (Porter, 1998). In
this industry, it was traditionally distributed by broadcast TV station and cable. However
nowadays with the proliferation of technologies channels might be casted by Internet
(Suhendra, 2013).
For marketing and sales TV channels use all sources. There are online and offline
advertisements. Online usually includes ads in web-banners, Google, YouTube and social
media. Offline marketing works with newspapers, shops and ambassadors. Process of sales is
also mostly oriented to online buyers, which can pay and subscribe in a few clicks.
After sales support is one of the main parts of this value chain. There is installation, setting
and process of working with all clients during their subscription. It is very important part,
because companies might retain and make customers loyal mostly in this stage.
According to (Porter, 1998), value chain it is not just independent processes, which every
company has. Value chain consists of interdependent activities, where all of them are linked.
Linkages may give company competitive advantage by helping optimize and coordinate. For
instance, in TV Channel industry, if packages of TV-shows were made correctly, it would help
marketing team advertise with good targeting. Or if company bought quality equipment for
broadcasting, they would save money from servicing. Also, linkages might be between
primary and support activities. For example, hiring famous talents will effect on content
quality. When we talk about linkages we should mention, that there are links not only inside
company, also there is connection with value chain of suppliers and buyers. Strong link
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between company and supplier will help both of them improve processes and do their job
more efficiently.
2.2.2 Secondary Activities
The secondary activities basically support the primary activities by purchase inputs,
technology, human resources and various firmware functions (Porter, 1998), in other words,
the managing activities.
In the Firm Infrastructure activities is how the organization is structured in terms of mission,
vision, values, goals, in other words, how the company defines your business strategies and
how the firm manager their resources’. Is the top of the firm expectations. It is here that
some theories are applied, such as SWOT analysis, Porte's 5 Forces, Pestel analysis, etc.
Human resources’ activities have a special challenge which is to find the right people that
have the right skills to the right position to organization’s requirement. Part of this activity
can be bought from outsource (HR agency). In a TV company this can be challenging as there
are many activities being developed in operations that require specific skills such as camera
man, TV presenter, editor and proof-reader, image editor, content creators and journalists.
The Technology Development activities is related to all (R&D) Research and Development
new products or new services and the Procurement activities is a purchasing function. This
are everything that the organization need to bring to run the business, and after that to sell
their products or services.
The Picture 2 illustrates the linkages of all those activities in the value chain.
Picture 2: The generic value chain with internal and external linkages.
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created by
themselves
(news, sports, and
shows)
bought from
outsource
(films, series,
news agency)
INTERNAL LINK
EXTERNAL LINK
vision, mission,
values, goals
(manager
resourcers)
skills, positions
(people)
skills, positions
(people)skills, positions
(people)
purchasing
adjusting the
content
broadcasting
(TV, cable,
internet)
online and offline
advertisements
installation &
setting
installation &
setting
Source: adapted from Porter, M., Competitive Advantage: Creating and Sustaining Superior
Performance, p.37, 1998.
After understanding all those 9 value chain’s activities, especially for the linkages which need
to be clear for entire organization at of the end of the line, the margin probably will be
higher than other the competitors.
2.1.1 ICT’s supporting the Primary and Secondary activities
To have a competitive advantage, the organizations needs to implement some ICT’s to
support their business strategies. The key word here is having an efficient communication, or
in other words, how the organization link internal and external the 9 value chain’s activities.
According to (Porter, 1998) there are two basic “Generic Strategies” Cost Leadership or
Differentiation and “Technology is embodied not only in primary activities but in
support activities as well”. The Business Strategy will define what type of technology
the company will adopt in your business. To describe how ICT’s can support the business
strategy some assumptions will be defined in this case, for the TV Channel will be Cost
Leadership.
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