2-1 Management Information Systems for the Information Age Copyright 2004 The McGraw-Hill Companies,...

2-2-11 Management Information Systems Management Information Systems

for the Information Agefor the Information Age

Copyright 2004 Copyright 2004 The McGraw-Hill Companies, Inc. The McGraw-Hill Companies, Inc.

All rights reservedAll rights reserved

Chapter 2Chapter 2

STRATEGIC AND COMPETITIVE STRATEGIC AND COMPETITIVE OPPORTUNITIESOPPORTUNITIES

Using IT for Competitive AdvantageUsing IT for Competitive Advantage





Presentation OverviewPresentation Overview

Competitive Advantage ExamplesCompetitive Advantage Examples Developing A Strategy For The Internet Developing A Strategy For The Internet

Age Age Key E-Commerce StrategiesKey E-Commerce Strategies The U.S. Airline IndustryThe U.S. Airline Industry Summing It UpSumming It Up





Opening Case StudyOpening Case StudyZara – Fashion Fast ForwardZara – Fashion Fast Forward

Zara sets itself apart with its computerized Zara sets itself apart with its computerized network that ties stores to design shops network that ties stores to design shops and company-owned factories in real time.and company-owned factories in real time.

How can technology be used to respond How can technology be used to respond quickly to shifts in consumer tastes?quickly to shifts in consumer tastes?





Competitive advantageCompetitive advantage – a company provides – a company provides a product or service in a way that customers a product or service in a way that customers value more than what the competition is able to value more than what the competition is able to do.do.

Application architect - Application architect - information technology information technology professional who can design creative professional who can design creative technology-based business solutions.technology-based business solutions.

IntroductionIntroduction





Competitive Advantage Competitive Advantage ExamplesExamples

Temporary advantage - Temporary advantage - whatever you do, sooner or whatever you do, sooner or later the competition duplicates what you’ve done. later the competition duplicates what you’ve done.

First mover - First mover - the company who is first to market with the company who is first to market with a new IT-based product or service.a new IT-based product or service.

Distribution chain - Distribution chain - the path followed from the the path followed from the originator of a product or service to the consumer. originator of a product or service to the consumer.

Alliance partner - Alliance partner - a company you do business with a company you do business with on a regular basis in a cooperative fashion.on a regular basis in a cooperative fashion.






Information partnership - Information partnership - lets two or more lets two or more companies cooperate by integrating their IT companies cooperate by integrating their IT systems. systems.

Business to Business (B2B) - Business to Business (B2B) - companies companies whose customers are primarily other whose customers are primarily other businesses.businesses.

Business to Consumer (B2C) -Business to Consumer (B2C) -companies companies whose customers are primarily individuals. whose customers are primarily individuals.






Federal ExpressFederal Express Access information over the InternetAccess information over the Internet

Charles Schwab Charles Schwab Stock trades over the InternetStock trades over the Internet

Dell ComputerDell Computer Direct sell modelDirect sell model

Cisco SystemsCisco Systems Direct sell model over the InternetDirect sell model over the Internet

On Your Own

Looking for Opportunities Close to Home





Developing A Strategy For Developing A Strategy For The Internet AgeThe Internet AgeThe Five Forces ModelThe Five Forces Model





Developing A Strategy For Developing A Strategy For The Internet AgeThe Internet AgeThe Five Forces ModelThe Five Forces Model

Five forces modelFive forces model - determines the relative - determines the relative attractiveness of an industry. attractiveness of an industry. Buyer power Buyer power Supplier powerSupplier power Threat of substitute products or services Threat of substitute products or services

• Switching costs -Switching costs - costs that costs that can make customers reluctant can make customers reluctant to switch to another product or service. to switch to another product or service.

Threat of new entrantsThreat of new entrants Rivalry among existing competitorsRivalry among existing competitors





Developing A Strategy For Developing A Strategy For The Internet AgeThe Internet Age

The Three Generic StrategiesThe Three Generic Strategies

Three generic Three generic strategiesstrategies Cost leadershipCost leadership DifferentiationDifferentiation Focused strategyFocused strategy






Using the Five Forces ModelUsing the Five Forces Model

Buyer powerBuyer power Loyalty programs.Loyalty programs.

Supplier powerSupplier power B2B marketplace - B2B marketplace - an Internet-based service which an Internet-based service which

brings together many buyers and sellers. brings together many buyers and sellers.

Threat of substitute products or servicesThreat of substitute products or services IT-based alternatives.IT-based alternatives.






Using the Five Forces ModelUsing the Five Forces Model

Threat of new entrantsThreat of new entrants Entry barrierEntry barrier - a product or service feature - a product or service feature

that customers have come to expect from that customers have come to expect from companies in a particular industry. companies in a particular industry.

Rivalry among existing competitorsRivalry among existing competitors Using IT systems to be more efficient.Using IT systems to be more efficient.






Bridging the Gap Between Business Bridging the Gap Between Business People and Technical PeoplePeople and Technical People

Project team -Project team - a team designed to a team designed to accomplish accomplish specific one-time goals which is disbanded once specific one-time goals which is disbanded once the project is complete. the project is complete.






Using the Three Generic StrategiesUsing the Three Generic Strategies

Use the three generic strategies to change Use the three generic strategies to change the basis of competition.the basis of competition.

Amazon.com makes the buying Amazon.com makes the buying experience a pleasure by using experience a pleasure by using sophisticated software to personalize the sophisticated software to personalize the site for each individual.site for each individual.






Developing a Creative DesignDeveloping a Creative Design

Creative design - Creative design - solves the business solves the business problem in a new and problem in a new and highly effective way highly effective way rather than the same rather than the same way others have done it.way others have done it.

Team Work

Finding the BestIT Strategy

For Your Industry(p. 83)






The Value ChainThe Value Chain Business process Business process - a standardized set of - a standardized set of

activities that accomplishes a specific task, activities that accomplishes a specific task, such as processing a customer’s order.such as processing a customer’s order.

Value chainValue chain - views the organization as a - views the organization as a chain – or series – of processes, each of chain – or series – of processes, each of which adds value to the product or service which adds value to the product or service for the customer. for the customer.






The Value ChainThe Value Chain







Talbott used the value chain to:Talbott used the value chain to: Plan for a better way of meeting customer Plan for a better way of meeting customer

demands.demands. Identifying processes that add value.Identifying processes that add value. Identifying processes that reduce value.Identifying processes that reduce value.






Looking Beyond The Four Walls Of The Looking Beyond The Four Walls Of The CompanyCompany

Just-in-timeJust-in-time - - an approach that produces or delivers a an approach that produces or delivers a product or service just at the time the customer wants it. product or service just at the time the customer wants it.

Supply chain - Supply chain - consists of the paths reaching out to all consists of the paths reaching out to all of a company’s suppliers of parts and services. of a company’s suppliers of parts and services.

Collaborative planning, forecasting, and Collaborative planning, forecasting, and replenishment (CPFR) - replenishment (CPFR) - a concept that encourages and a concept that encourages and facilitates collaborative processes between members of facilitates collaborative processes between members of a supply chain. a supply chain.





Key E-Commerce StrategiesKey E-Commerce StrategiesMass Customization and PersonalizationMass Customization and Personalization

Mass customizationMass customization - a business gives its customers - a business gives its customers the opportunity to tailor its product or service to the the opportunity to tailor its product or service to the customer’s specifications. customer’s specifications.

PersonalizationPersonalization - a Web site can know enough about - a Web site can know enough about your likes and dislikes that it can fashion offers that are your likes and dislikes that it can fashion offers that are more likely to appeal to you. more likely to appeal to you.

Collaborative filtering - Collaborative filtering - a method of placing you in an a method of placing you in an affinity group of people with the same characteristics. affinity group of people with the same characteristics.





Key E-Commerce StrategiesKey E-Commerce StrategiesDisintermediationDisintermediation

Disintermediation Disintermediation – – using the Internet using the Internet as a delivery as a delivery vehicle, vehicle, intermediate intermediate players in a players in a distribution distribution channel can be channel can be bypassed. bypassed.





Key E-Commerce StrategiesKey E-Commerce StrategiesGlobal ReachGlobal Reach

Global reach - Global reach - the ability to extend reach the ability to extend reach to customers anywhere there is an Internet to customers anywhere there is an Internet connection, and at a much lower cost. connection, and at a much lower cost.





The U.S. Airline IndustryThe U.S. Airline IndustryAirline Reservation SystemsAirline Reservation Systems

The airlines really began using IT in a The airlines really began using IT in a significant way when American Airlines significant way when American Airlines and United Airlines introduced the first and United Airlines introduced the first airline reservations systems.airline reservations systems. SABRESABRE APPOLO APPOLO





The U.S. Airline IndustryThe U.S. Airline IndustryFrequent Flyer ProgramsFrequent Flyer Programs

Frequent flyer programs are a great example of Frequent flyer programs are a great example of using IT to alter Porter’s five forces. using IT to alter Porter’s five forces. They reduced buyer power by making it less likely a They reduced buyer power by making it less likely a

traveler would choose another airline.traveler would choose another airline. They reduced the threat of substitute products or They reduced the threat of substitute products or

services by increasing switching costs.services by increasing switching costs. They erected entry barriers by making a frequent flyer They erected entry barriers by making a frequent flyer

program a practical necessity for any airline to program a practical necessity for any airline to compete effectively. compete effectively.





The U.S. Airline IndustryThe U.S. Airline IndustryDisintermediating the Travel AgentDisintermediating the Travel Agent

Expert surveys have Expert surveys have estimated that the estimated that the number of travel agents number of travel agents in the U.S. will be in the U.S. will be sharply reduced as a sharply reduced as a result of result of disintermediation.disintermediation.

Team Work

Helping the Little Guy Compete

(p. 93)





The U.S. Airline IndustryThe U.S. Airline IndustryUtilizing Emerging TechnologiesUtilizing Emerging Technologies

Permission marketingPermission marketing - when you have - when you have given a merchant your permission to send given a merchant your permission to send you special offers. you special offers.





Summing It UpSumming It Up

On Your Own

Building on the State of the Art

(p. 95)





Closing Case StudiesClosing Case Studies

GM Tries to Lure Customers with OnStarGM Tries to Lure Customers with OnStar Did the OnStar system give GM a competitive Did the OnStar system give GM a competitive

advantage?advantage?

Speedpass: Throw Away Your Plastic?Speedpass: Throw Away Your Plastic? Speedpass is an alternative to a credit card.Speedpass is an alternative to a credit card. How is Speedpass an example of a first How is Speedpass an example of a first

mover?mover?





Summary Summary Assignments & ExercisesAssignments & Exercises

1.1. Evaluating telemedicineEvaluating telemedicine

2.2. Comparing parcel delivery servicesComparing parcel delivery services

3.3. Disintermediation in the travel agent Disintermediation in the travel agent industryindustry





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