Final Dissertation Tamima

Strategic Alignment of Information Systems and Information Technology Strategy with Business Strategy to Gain Competitive Advantage

*A Case Study of Lafarge Surma Cement and Berger Paints Bangladesh Ltd.

The Dissertation Submitted in Partial Fulfillment of the Requirements for

the

BA (Hons) Business Studies

By

Tamima Shan Chowdhury

ID – 0014OTOT1008

Declaration

I hereby declare that this dissertation solely constitutes my own product; with quotation marks

indicating where the language of others is set forth and appropriate references are given where

Strategic Alignment of IS-IT Strategy with Business Strategy to Gain Competitive Advantage

ideas, expressions or writings of another is used. This dissertation does not contain any

defamatory material. A full list of the references employed has been included.

Signed: …………………………….

Name: Tamima Shan Chowdhury

ID: 0014OTOT1008

Date: ……………………………….

Abstract

This dissertation critically evaluates the concept of strategic alignment of IS-IT strategy with

business strategy to gain competitive advantage. The strategic application of information systems

Tamima Shan Chowdhury 1


can convey important competitive advantages. For this reason, it is essential to understand which

factors influence the strategic use of information resources and what relationships exist among

these factors. This dissertation introduces literature for studying the influence of strategic

alignment on the ability of the firm to provide IS-based competitive advantage. It uses three

reference theories: contingency theory, strategic management theory, and the resource based

view of the firm and other pertinent models to support the literature review. The study

demonstrates the linkage between strategic alignment and competitive advantage by comparative

analysis of the extent of strategic alignment at Lafarge Surma Cement and Berger Paints.

A survey of two hundred employees has been undertaken for the purpose of

this research along with focus group discussions with managers at Lafarge

and Berger to reveal the extent of strategic alignment that exists in each

company.

This paper draws attention to specific IS-IT functions and strategies that may

need to be implemented for greater integration thus enhanced

organisational performance and effectiveness in the organizations of

Bangladesh.



Acknowledgement

I would like to thank my supervisor Mr. Irfan Khan, for his great insights, perspectives and

guidance. My sincere gratitude to all the faculty members of London School of Commerce for

their help in various ways and especially Mr. Muktadir Rahman, Principal of London School of

Commerce.

I would like to thank the managers and employees of Berger Paints and Lafarge Surma Cement

for their patience and cooperation. This dissertation would not have been possible without their

generous cooperation.

Finally, I would like to extend my heartfelt felicitations towards all my friends and my family

who has made these educational endeavor a success. I would especially like to thank my parents

for their continuous support and encouragement.



Table of Contents

Chapter 1: Introduction

1.1 Introduction.................................................................................................................11

1.2 Research Background.................................................................................................11

1.2.1 IS-IT Strategy............................................................................................................12

1.2.2 Strategic Planning of IS-IT........................................................................................12

1.2.3 Importance of aligning the IS-IT strategy with the Business Strategy to gain

Competitive Advantage.......................................................................................................13

1.3 Background of MNC’s................................................................................................14

1.3.1 Lafarge Surma Cement...............................................................................................14

1.3.2 Berger Paint...............................................................................................................14

1.4 Statement of the Problem............................................................................................15

1.5 Significance of the Study.............................................................................................15

1.6 Research Questions.....................................................................................................16

1.7 Research Objectives....................................................................................................16

1.8 Limitations of the Study..............................................................................................17

1.9 Outline of the Dissertation..........................................................................................18



Chapter 2: Literature Review

2.1 Introduction.................................................................................................................19

2.2 Information Systems Planning Literature.................................................................19

2.2.1 Strategic Information Systems Planning.....................................................................19

2.2.2 Evolution of Importance of IS Planning.....................................................................19

2.3 Strategic Alignment arising from IS Planning...........................................................20

2.3.1 Importance of IS-IT Strategic Alignment...................................................................21

2.4 Theoretical Underpinnings to the IS Planning and Strategic Alignment.................22

2.4.1 Strategic Management Theory: The Business Planning School...................................22

2.4.1.1 Contingency Variables from Strategic Management Theory....................................22

2.4.1.2 IS-IT Alignment from Strategic Management Perspective.......................................23

2.4.2 Contingency Theory...................................................................................................24

2.4.2.1 The Contingency Approach.....................................................................................24

2.4.2.2 Contingency Variables of IS Planning.....................................................................25

2.4.2.3 Importance of Existing and Future IS applications as a Contingency .......................25

2.4.3 Resource-Based View of the Firm..............................................................................26

2.4.3.1 Resource-Based View Approach.............................................................................26

2.4.3.2 Using Information Systems as a Source of Competitive Advantage.........................27

2.4.3.3 Creating a Distinctive Competency through Strategic IS-IT Alignment ...................27

2.5 Models of IS Planning and Strategic Alignment........................................................29

2.5.1 Venkatraman’s Model of Strategic Alignment............................................................29

2.5.2 Kings Input-Process-Output-Impact Model................................................................31

2.5.3 Jang’s Contingency Model of SISP............................................................................33



2.5.4 Reich’s Research Model.............................................................................................33

2.6 Effectiveness and Criticisms of the Models................................................................34

2.7 Measuring the Impact of Strategic Alignment of IS-IT on Organisational

Performance......................................................................................................................35

2.8 Challenges of Strategic IS Planning and Alignment……………………………………..35

2.9 Summary……………………………………………………………………………………36

Chapter 3: Research Methodology

3.1 Purpose of the Research..............................................................................................38

3.1.1 Descriptive Research..................................................................................................38

3.1.2 Explanatory Research.................................................................................................38

3.1.3 Exploratory Research.................................................................................................38

3.2 Research Approach.....................................................................................................39

3.2.1 Theoretical Approach- Deductive and Inductive Reasoning.......................................39

3.2.2 Methodological Approach- Qualitative and Quantitative research..............................40

3.3 Research Strategy........................................................................................................40

3.3.1 Case Study.................................................................................................................41

3.3.2 Survey........................................................................................................................41

3.3.3 Focus Group Discussion (FGD)..................................................................................42

3.4 Sources of Data Collection and its Methods...............................................................42

3.4.1 Primary Data Collection Method................................................................................42

3.4.2 Secondary Data Collection Method............................................................................42

3.5 Research Sampling......................................................................................................43



3.5.1 Research Population...................................................................................................43

3.5.2 Sampling Frame and Sample Size...............................................................................44

3.5.3 Sampling Technique...................................................................................................44

3.5.3.1 Probability Sampling...............................................................................................44

3.5.3.2 Non-Probability Sampling.......................................................................................45

3.6 Validity and Reliability...............................................................................................45

3.7 Ethical Considerations................................................................................................46

3.8 Limitations...................................................................................................................46

Chapter 4: Data Analysis and Findings

4.1 Secondary Data Analysis.............................................................................................47

4.1.1 Sales Volume Analysis...............................................................................................47

4.1.2 Profitability Analysis..................................................................................................49

4.2 Primary Data Analysis................................................................................................51

4.2.1 External Business Environment Conditions................................................................51

4.2.2 Strategic Information Systems Planning.....................................................................53

4.2.3 Strategic Implications of IS-IT...................................................................................56

4.2.4 Alignment of IS Strategy with Business Strategy.......................................................60

4.3 Focus Group Discussion..............................................................................................63

4.3.1 Business and IS Planning with the role played by the Top Management and IS-IT

managers in the planning process........................................................................................63

4.3.2 IS-IT enables firms to exploit their Distinctive Compatibilities..................................64

4.3.3 IS-IT acts as a source of Competitive Advantage.......................................................65



4.3.4 IS Plan reflects the business resource constraints and supports the business mission,

goals and strategies relying on IS-IT both internally and externally....................................66

4.3.5 Strategies Alignment of IS-IT Strategy with Business Strategy..................................67

Chapter 5: Conclusion

5.1 Discussion of the Research Questions.........................................................................69

5.2 Justification of Research Objectives...........................................................................71

Chapter 6: Recommendation

6.1 Recommendation.........................................................................................................73

6.2 Limitations of the Study..............................................................................................75

6.3 Implications for Practitioners.....................................................................................75

6.4 Implications for Future Research...............................................................................76

List of References…………………………………………………………………………..77

Bibliography…………………………………………………………………………………83

Appendix A…………………………………………………………………………………...94

Appendix B…………………………………………………………………………………...97

Appendix C………………………………………………………………………………….105



Table of Exhibits

Chapter: 1

Fig 1.1 Rationales of SISP……………………………………………………………………….13

Chapter: 2

Fig 2.1 Strategic Management Perspective………………………………………………………24

Fig 2.2 Model for the Contingency Perspective………………………………………………....26

Fig 2.3 Model for Resource-Based View………………………………………………………..29

Fig 2.4 Venkatraman’s Model of Strategic Alignment…………………………………………..31

Fig 2.5 Input-Process-Output-Impact Model…………………………………………………….32

Fig 2.6 Teo’s Research Model…………………………………………………………………...32

Fig 2.7 Contingency Model of SISP……………………………………………………………..33

Fig 2.8 Reich’s Research Model………………………………………………………………....34

Chapter: 3

Fig 3.1 Research Approach and its Categories………………………………………………….39

Fig 3.2 Research Strategies……………………………………………………………………...41

Fig 3.3 Sources of Data Collection……………………………………………………………...43

Fig 3.4 Sampling Techniques……………………………………………………………………44



Chapter: 4

Fig 4.1 Comparative Sales Value Representation of Lafarge and Berger……………………….47

Fig 4.2 Comparative PBIT Analysis Representation of Lafarge and Berger……………………49

Fig 4.3 Changes in External IS-IT Environment of Lafarge and Berger………………………...51

Fug 4.4Variations in Industrial factors in Lafarge and Berger…………………………………..52

Fig 4.5 Representation of Business and IS Plan in Lafarge and Berger…………………………53

Fig 4.6 Range of Functions supported by IS Planning at Lafarge and Berger…………………..54

Fig 4.7 Extent to which IS Planning Exploits Company’s Distinctive competencies at Lafarge

and Berger……………………………………………………………………………………….55

Fig 4.8 Dependency on IS-IT for Achieving Critical Success and Competitive Advantage at

Lafarge and Berger………………………………………………………………………………56

Fig 4.9 Strategic Impact of Existing and Future IS at Lafarge and Berger……………………...57

Fig 4.10 Daily Operation Dependencies on IS Applications and Measurability of its Intangible

Benefits at Lafarge and Berger…………………………………………………………………..58

Fig 4.11 Advantages Achieved from IS-IT at Lafarge and Berger………………………………59

Fig 4.12 The IS Strategy reflects the Business Recourse Constraints its Missions, Goals and

Strategies…………………………………………………………………………………………60

Fig 4.13 The Business Plan Utilizes the IS Capabilities and refers to the IS Plan at Lafarge and

Berger…………………………………………………………………………………………….61

Fig 4.14 Alignment of IS Strategy with Business Strategy and Vice-Versa…………………….62

Chapter: 6 Models for Effective Alignment of Information Systems Strategy with Business Strategy…….74



Chapter 1: Introduction

1.1 IntroductionIntense rivalry across global markets has resulted in a dramatic increase in competitive pressures

across corporations worldwide; striving to obtain a competitive edge. With the increasing use

and advancements in Information Systems and Information Technology (IS-IT) and the

conditions under which they can provide competitive advantage, has become a significant

contributing factor to organisations worldwide.

1.2 Research BackgroundAlthough organisations today heavily invest on IS-IT infrastructure such practices still tend to be

either too slow or maladaptive to adjust to today’s high paced competition. Companies that do

not view the IS function strategically and considers it to be just a supportive function;

characterize their information processing requirements with much earlier phases of technological

innovation and lose out from obtaining synergic benefits; resulting in losing their competitive

edge in this dynamic global marketplace (Pearlson, 2008).

Thus the main objective should be to integrate IS-IT strategies with business strategies in order

to support business objectives and goals; which tend to be a major indicator of flexibility and

competitiveness. Strategic application of IS planning can be used to alter market forces as well as

overall performance of the company to achieve goal congruence (Laitinen and La¨nsiluoto, 2009).


This chapter introduces the idea behind the background of this paper and overview of the case

studied companies. It also clearly point outs the research problems and the significance of the

study as well as outlining the research questions and objectives and the limitations faced in

conducting the research.


1.2.1 IS-IT Strategy

John Ward and Joe Peppard (2005) stated that the IS-IT strategy comprises of components from

both IS and IT. The IS component referring to the demand for organisation's information needs

and system requirements to hold up the business strategy as a whole. Primarily, IS strategy

identifies and prioritizes the investment requirements to realize the ultimate applications

portfolio; the type of the expected benefits that will be derived from these investments along

with the adaptation and transformations required to deliver those benefits. It also considers the

business resource constraints and system interdependencies for strategic alignment (Luftmann,

2003). In contrast, the IT strategy is concerned with visualization of fulfilling the firm's demand

for information needs and system requirements through technological support. It supports the

prerequisite IT resources and competencies- software and hardware; along with services for

instance IT operations, user support and systems development. (DeLone and McLean, 2010)

1.2.2 Strategic Planning of IS-IT

The IS-IT strategy process should include both strategy development and planning through a

process of alignment and competitive impact; in order to obtain greater integration with business

strategy. A carefully architected IS planning process is an important mechanism for strategy

development. The process must consider the corporate mission and vision, the resources

available to the firm, the external business environment, and unique strengths and weaknesses of

the firm (Damiani, 2008).

Strategic Information Systems Planning (SISP) refers to emphasizing on the ‘planning’ phase of

strategy development focusing on planned IS-IT investments to shape and support business

strategy; consequential to portraying IS-IT as a part of the implementation of business strategy

(Cassidy, 2005). Detailed IS-IT planning determines the best possible way of implementing the

developed IS-IT applications and supporting technologies in order to balance the portfolio more

effectively; along with determining the required IS-IT investments for the next 2-3 years (Ward

and Peppard, 2005). According to Earl (1996), for effective SISP an organisation must identify its

current position in relation to the eventual need for IS-IT integration with business planning; also

determine the approaches required for short-term adaptation to achieve its eventual business



goals (cited from Pongatichat and Johnston, 2008). SISP focuses on the following rationales at each

stage as elucidated herafter:

Fig 1.1- Rationales of SISP (adapted from Pongatichat and Johnston, 2008)

1.2.3 Importance of aligning IS-IT strategy with the Business Strategy to gain

Competitive Advantage

Declining costs of information systems and technology coupled with vast improvements in

capabilities and capacities have helped to transform the IS function from a supportive to an

enabling role. Many companies view IS-IT as a strategic resource that, properly exploited, can

yield competitive advantage, since it possesses potential to alter the entity’s strategic direction

through information-based competitive strategies (Sharma, et al., 2009). Barney (1996), proposed

the Resource Based theory which emphasizes on several sources of achieving and sustaining

competitive advantage including the judicious use of information technology. Despite

acknowledged importance, the role of IS-IT in creating competitive advantage has been

neglected in both empirical and theoretical studies (Jusoh and Parnell, 2008).

To fulfill this expanded goal of competitive advantage, the IS function must ensure its plans are

in alignment with the business mission, objectives, and strategies as outlined in the business plan

and is given first-order importance. This is owing to the fact that alignment impacts IS

effectiveness and in turn business performance (Nevo and Chan, 2007). Lederer and Mendelow

(1986) state three reasons why achieving top management's objectives is more likely if the IS

planning process is coordinated with the business planning process:


Business Lead IS-IT investment plan based on current business strategy.

Method DrivenIdentifies IS needs by analyzing business processes with the use techniques.

OrganizationalKey themes of IS-IT investment plan derived from business consensus, which supports IS-IT to attain overall business objectives.


Integration assures development of the most critical IS applications.

Coordination helps retain management support as organisational priorities shift

unexpectedly.

Projects that are the product of coordinated efforts are more likely to be related to

organisational needs and, therefore, be of value

Past studies reveal that general managers and IS managers agree that alignment is an extremely

important issue. In a 2009 survey of sixty-three MIS managers, alignment was ranked as the

second most important issue after planning (Pongatichat and Johnston, 2008). Alignment between

the IS strategic orientation and the business strategic orientation thus strategic fit, need not be

based on complex strategies to positively affect company performance. An important objective

for organisations is to identify practices or patterns of practices that support alignment.

Identifying those IS management activities that facilitate alignment and determining the impacts

of these practices on organisational performance will provide a valuable tool for management

(Chan, 2007).

1.3 Background of MNCs

1.3.1 Lafarge Surma Cement

Lafarge group holds world’s top ranking position in Cement, Aggregates, Concrete and Gypsum.

With 176 years of experience it operates in 78 countries and is named one of the most

sustainable companies in the world. Lafarge Surma Cement Ltd. was incorporated in November

1997 as a private Ltd company in Dhaka, Bangladesh. The company produces world class

clinkers and cement at the company’s plant in Chhatak with the help of sophisticated and state-

of-the-art machineries and processes. It is already meeting about 8% of the total market need for

cement and 10% of clinker requirement of Bangladesh market, and has more than 10,000 share

holders today enjoying continuous strong growth rates. (Lafarge, 2010)

1.3.2 Berger Paint

Berger is one of the oldest names in the Paint Industry worldwide, dating back more than 250

years to 1760. It started off as a dye and pigment producing company in England by Louis



Berger, and ever since the company has grown rapidly as a leading paint and coating producing

company. It has established branches worldwide and underwent mergers and acquisitions with

other paint manufacturing companies to establish a global presence. In 1970, Berger Paints

Bangladesh Limited (BPBL) was established in Bangladesh and today has emerged as the market

leader in the Paint Solutions industry of the country. It has specialized in every field of the

business- from Decorative Paints to Industrial Coatings, from Marine Coatings to Powder

Coating and so on. Its well-built distribution network, and superior quality products has enabled

Berger to reach out to almost every corners of Bangladesh. (Berger, 2010)

1.4 Statement of the ProblemUse of information systems is a very new and upcoming issue in most industries of Bangladesh.

MNC’s like Lafarge Cement and BPBL among other companies have become heavily IS-IT

oriented as they are striving for improved performance and efficiency. However the concept of

integrating IS-IT function with overall business strategies and practices is very much

underutilized and ignored. Companies fail to attain the optimum level of efficiency and benefits

that they could from their IS-IT investments, owing to their failure to integrate the two factors.

One primary reason behind this is the lack of knowledge of the MIS managers in most

organisations in Bangladesh, as it is still a grey area in this region. Most IT professionals in

Bangladesh although being proficient in their technical skills lack the far sightedness of the

benefits that could be derived from IS-IT strategic alignment, rather they focus on investments

made on such projects for enhanced short term performance. This is owing to the fact that

obtaining a strategic fit not only requires the availability of resources and consensus within the

organisation as a whole; but also the uncertain dynamic external environment has a deterrent role

to play.

1.5 Significance of the StudyThis study is important for two reasons. First, companies are spending record amounts on new

information systems, yet, despite rapid progress in technology, many implementations do not

meet expectations. Second, many companies have missed strategic opportunities afforded by

information technology. Knowledge about the nature of strategic IS-IT alignment is lacking due



to empirical research on the alignment problem being very limited. Earl (1996) states that "there

is little practical guidance available on competitor and environment analysis from an IS

perspective. Thus the findings of this research will directly benefit Lafarge Group and BPBL, as

well as their suppliers and customers; along with IT professionals and MIS managers operating

in both the industries. The study is also intended to help academics, practitioners’ as well as

students who would like to conduct further study on strategic alignment of IS-IT strategy on any

given industry.

1.6 Research Questionsi. Why is it important for organisations to align their IS-IT strategy with business strategy?

ii. How does strategic alignment influence the contribution of IS to the organisation, given

the contextual factors of environmental uncertainty and resource constraints to the firm?

iii. Does strategic alignment of IS-IT lead to competitive advantage?

1.7 Research Objectivesi. To understand the level of strategic alignment between IS-IT plan and business plan in

the Cement and Paint Industry of Bangladesh- to what extent Lafarge Cement and BPBL

has strategically aligned its IS-IT strategy with its business strategy.

ii. To evaluate how strategic alignment influences the contribution of IS in Lafarge Cement

and BPBL - to determine whether strategic alignment of IS-IT has led to increased usage

of IS and thus improved organisational performance.

iii. To examine the benefits and challenges of strategic alignment- to determine the

contextual factors that act as barriers to strategic alignment; as well evaluate the benefits

of strategic alignment in context to Lafarge Cement and BPBL.

iv. To analyse how strategic alignment can be a source of competitive advantage- to evaluate

whether IS-IT can lead to competitive advantage at Lafarge and Berger according to the

resource based view.

v. To demonstrate how strategic alignment can create value for firms in Bangladesh- to

evaluate whether strategic alignment of IS-IT strategy with business strategy can lead to



value creation for firms in Bangladesh proved through case studies done on Lafarge and

Berger Paint.

1.8 Limitations of the StudyThe research is strictly confined to the Cement and Paint Industry of Bangladesh narrowing the

scope of the study. The sample size considered for this research is relatively small comprising of

200 employees and 5 managers in the two companies; and is based on non-probability sampling

techniques which may not be a true representation of the whole population. There has been a

major time and resource constraint in conducting the study. The availability of secondary data

may be limited and questionable along with the reluctance of organisations to disclose

confidential data regarding their IS-IT capabilities and investments.



1.9 Outline of the Dissertation


CH. 1

Introduction-This chapter introduces the background of the study. It provides an overview of the two companies studied. It identifies the research problem, its significance, research questions and objectives, and limitations.

CH. 2

Literature Review-This chapter provides a review of the relevant literature pertaining to the research model from various authors' point of view. It concludes with a summary of the whole literature review.

CH. 3

Methodology-This chapter illustrates the research methodology includes: research pupose, research approaches, research strategy, data collection sources and methods, sampling technique, reliability and validity, ethical considerations and limitations.

CH. 4

Data Analysis-This chapter provides a detailed representation of the research findings in the forms of primary and secondary data analysis and provides a brief discussion on the findings.

CH. 5Conclusion-This chapter intends to answer the research questions and justify the research objectives set out at the beginning of the research.

CH. 6Recommendation-This chapter aims to provide further recommendation on strategic alignment of IS-IT strategy with business strategy to gain competitive advantage.


Chapter 2: Literature Review

2.1 IntroductionAlthough there has been a growing interest in IS planning, few empirical studies exist

associating strategic alignment with IS-based competitive advantage. Available theories on

which to base research are limited because the body of knowledge surrounding IS-IT strategic

alignment is generally prescriptive in nature and empirical models are often incomplete.

This chapter presents a review of the information systems planning literature pertinent to this

study plus a review of the three reference theories: Strategic Management, Contingency and the

Resource-Based View. It also draws literature from popular strategic alignment models such as

the one proposed by Venkatraman among others.

2.2 Information Systems Planning Literature

2.2.1 Strategic Information Systems Planning

According to Lederer and Sethi (1991) strategic information systems planning (SISP) has been

defined as "the process of identifying a portfolio of computer-based applications to assist an

organisation in executing its business plans and realizing its business goals". IS executives have

ranked the top two objectives of SISP as the alignment of IS with business needs and the search

for opportunities to use information technology to provide competitive advantage. (Cited from

Pearlson, 2008)

2.2.2 Evolution of IS Planning

Information systems planning have evolved from bottom-up processes with outputs, essentially

operational in nature; designed to support existing business needs (King, 1994). However Cassidy


This chapter provides a review of the relevant pertaining theories and concepts related to

the study, reflected by the previous works of authors and specifically arranged by sub-

headings.


(2005) argued that in many organisations today, strategic information systems planning parallels

business planning processes, supports and enables corporate strategy, and significantly

contributes to organisational performance. Thus focusing on a two way process both top-down

and bottom-up to support IS planning and business planning.

2.3 Strategic Alignment arising from IS

PlanningThe focus on strategic alignment has been a result of certain factors leading to the rising

importance of IS-IT strategic planning. According to Sharma, et al. (2009), these driving forces

include:-

Technological drive has lead to each new innovation in technology to create a market

opportunity, while the integration of technologies has resulted in efficient processes by

one system replacing the job of two or more. Hence Luftmann (2003) advocates that

technological change has made it imperative for organisations to carry out strategic

alignment in IS-IT planning to keep pace with the technological drive.

Financial implications of capital investments in IS-IT not earning immediate returns and

potential losses in revenues, acts as an ample purpose for organisations to align IS-IT in

strategic business planning. (Sharma, et al., 2009)

Inter organisational systems directly affect the competitive environment and their overall

organisational impact and potential warrants the appearance of IS-IT alignment in the

strategic plan of the organisation.

The issue of IS-IT has reasoned above the functional concerns of management thus

altering their roles. Therefore Galliers (2009) argues that adaptation is critical in an

environment in which inter organisational systems, network organisations and strategic

alliances are threatening, thus enabling management to strategize on IS-IT alignment in

order to innovate and compete effectively.

According to Mc Farlan (1991) the role of IS-IT acts as a strategic weapon to alter the

potential of competitiveness either leading to competitive advantage through strategic

alignment or competitive disadvantage through disintegration of IS-IT strategies.



2.3.1 Importance of IS-IT Strategic Alignment

According to Earl (1996) the success factors in SISP demonstrate the importance of IS-IT

strategic alignment:

Internal and External Focus- Aligning IS-IT strategy with business strategy not only

improves internal management of the organisation but also looks into the broader

stakeholder concerns and business relationships and similarities with the external

business world. (Pongatichat and Johnston, 2008)

Value Additions and Cost Reductions- Business expansion arising from strategizing on

IS-IT leads to not only reduced marginal costs but also makes the process more efficient

and valuable. This enables organisations to differentiate them from competitors through

better products and services thus creating value. (Galliers, 2009)

Sharing the Benefits- IS-IT alignment enables organisations to share the benefit with their

suppliers, customers and even competitors through effective integration which ensures

generating synergic benefits in return. (Pongatichat and Johnston, 2008)

Business Driven Innovation- Strategizing on new and existing IS-IT enables an

organisation to convert its business opportunity into reality as the pressures of the

market-place drive technological business innovations. (Galliers, 2009)

Enhanced Information Usage- Information gained from IS-IT helps develop the business

through product and market analysis. Plus information on external market research can be

merged and divided in a number of ways to exploit the appropriate market segment and

product mix. (Cassidy, 2005)

Increased Customer Satisfaction- O’Leary (2007) highlights that with efficient processes

and focus on customer oriented systems like CRM, organisations can effectively attract

and retain customer groups by increasing customer satisfaction with the use of IS-IT.

Pearlson (2008) points out that in order to achieve enhanced organisational effectiveness and

performance firms must align there IS-IT strategy with the business strategy to obtain the

benefits of strategic planning.



2.4 Theoretical Underpinnings to IS Planning

and Strategic Alignment

2.4.1 Strategic Management Theory: The Business Planning School

Strategic management theory provides three conditions essential to business success:

development and implementation of business goals; identification of internal strengths and

weaknesses with external threats and opportunities; and creating and exploiting unique firm

capabilities (Grant, 2005). Linn et al, (2006) argues that strategic management theory has long

viewed competitive advantage as being dependent upon a proper match between an

organisation's internal capabilities and external environmental uncertainty.

Strategic management theory describes the business planning process as a complex activity

requiring periodic examination of mission statements, strategies, resource commitments and

should be a participative process involving all key managers (Ireland, 2008).

2.4.1.1 Contingency Variables from Strategic Management Theory

Venkatraman (1999) proposes that strategic planning research is an appropriate benchmark for

development of IS-IT strategies, research models and approaches. Important contingency

variables from strategic management theory can help advance the definition and development of

IS theories. For example, in the past it was popularly assumed that planning practices for large

companies were significantly different than those for small companies. However Abernethy, and

Guthrie (2008), has established that size (the contingency variable) does not significantly affect

planning style rather the IS-IT planning being congruencial with strategic business planning is

the key to sustainability.

Linn, (2006) further argues that strategic management theory has long held environmental

uncertainty to be an important contextual factor. Thus strategic decision in IS-IT planning should

be based on accurate assessments of the external environment as the organisation must position

itself to adapt to external forces



Porter (1995) outlined five competitive forces and three generic strategies for combating these

forces. Based upon these strategies, researchers have provided anecdotal evidence of the use of

IS to lower costs, differentiate products or services, create switching costs to retain suppliers and

customers, and impose barriers to market entry. (Jusoh and Parnell, 2008)

According to Tillema (2005), exploiting IS opportunities for competitive advantage has been the

subject of empirical research and has been performed in a contextual environment using

contingency variables from strategic management theory. Such IS opportunities include

searching out inter-organisational opportunities for competitive advantage; seeking IS-based

opportunities in value chain activities and using IS to leverage unique organisational strengths.

2.4.1.2 IS-IT alignment from Strategic Management Perspective

Prior Strategic management research provides the following relationships:

Competitive advantage is dependent upon an organisation's internal IS/IT capabilities

recognizing and adjusting to threats and opportunities posed by external environmental

uncertainty (Linn, 2006).

Business planning should be based upon strategic decision making which includes an

accurate assessment of the external environment (Jusoh and Parnell, 2008).

Sebatian (2008) advocates that business planning requires periodic examination of

mission statements and strategies, and should be a participative process involving all key

managers.

Strategies that differentiate products or services, create switching costs to retain

suppliers and customers, exploit unique firm capabilities and impose barriers to market

entry can create competitive advantage and add value to the firm (Ireland, 2008).



Figure 2.1: Strategic Management Perspective (adapted from Ireland, 2008)

2.4.2 Contingency Theory

Chenhall (2007) proposes that contingency theory identifies alternative courses of action and

presents factors for consideration in deriving an optimal model of behavior. By emphasizing the

importance of the situational influences on the management of the organisation and its outcomes,

contingency theory offers an alternative to universal management principles. Earl (1996), states

that "a contingency theory is required in order to prescribe which methodologies are effective in

what situations." In contrast, Damiani et al. (2008), states that any research model of IS planning

should adopt a contingency perspective because it is not possible to generalize conclusions from

simple relationships and apply them to universal situations.

2.4.2.1 The Contingency Approach

Galliers (2009) confirms that the contingency approach involves identification and grouping of

important contextual variables in order to identify the most effective approaches. It is necessary

in IS research to conceptually identify critical contingency variables and to descriptively



establish their roles. Tillema (2005) however argues that the purpose of the contingency

approach is to study the fit between prescriptive variables within an organisational context in

order to illustrate that performance is contingent upon that context.

2.4.2.2 Contingency Variable of IS Planning

Prescriptive studies have used contingency variables to explore the practices associated with

strategic IS planning. Premkumar and King (1994) found that the quality of SISP was dependent

upon the quality of the informational inputs and resources available. Lederer and Sethi (1996)

compiled a list of 71 prescriptions for improving the SISP process. In contrast, Reich(2002)

found that linkage between business objectives and information technology objectives was

achieved when there was a high level of mutual understanding between IS and business

executives about each others' mission, objectives, and plans. This understanding was contingent

upon the level of shared knowledge and the frequency of communications between IS and

business executives.

Pearlson (2008) notes two streams of research concerning contingency variables which

influences the alignment of IS and business strategies. First, there is research regarding

information systems planning. Second, there is research regarding the strategic use of

information resources. Both streams are relevant to this study.

External environmental conditions can affect the strategic deployment of IS-IT and the

organisation's decision to use it strategically (Linn, et al., 2006). Certain management practices

and environmental conditions are facilitators or inhibitors to the successful implementation of the

IS plan. Nonetheless Damiani (2008) argues that by aligning the IS plan with the business plan,

information resources are more likely to support corporate objectives and opportunities since the

strategic use of IS-IT are increased.

2.4.2.3 Importance of Existing and Future IS Applications as a Contingency

Galliers (2009) proposed that strategic IS planning could be measured by a model, which plots

the strategic importance of existing and future information systems. Knowledge of where the



company operates in the model can provide important information to management about the role

of IS.

.

Figure 2.2: Model for the Contingency Perspective (Galliers, 2009)

2.4.3 Resource-Based View of the Firm

The resource-based view of the firm posits that the firm, through its internal processes, creates an

asset that can enable creation and sustainability of a competitive edge. Idiosyncratic core

competencies (also distinctive competencies or unique firm capabilities) can provide competitive

advantage. (Sharma, 2009)

2.4.3.1 The Resource-Based View Approach

According to Peteraf (1993), major contribution of the theory is that it explains differences in a

firm's long term profitability that cannot be ascribed to industry conditions. Identification of



traits for providing strategic advantages unavailable to other firms is the core of resource-based

theory.

The purpose of the resource-based view is to extend understanding of a firm's success in

achieving and sustaining competitive advantage by treating the resources and capabilities of a

firm as the central consideration in strategy formulation and the primary sources of profitability

(Sharma, et al., 2009). Resource-based theory states that success will be dependent upon a firm's

power to acquire and utilize resources, its capacity to innovate, and the ability of management to

deploy the resources effectively (Barney, 1998). Jusoh and Parnell (2008) argue that although

management practices and capabilities are important; organisational competencies are vulnerable

to erosion, imitation and substitution and are always context dependent. Thus Barney (1998)

suggested that for a resource to be a source of competitive advantage it should serve the

following criterion: Valuable, Rare, Inimitable and Non-substitutable.

2.4.3.2 Using Information Systems as a Source of Competitive Advantage

Two assertions from the field of strategic management underlie the resource based view and are

important to the inclusion of IS planning and alignment as a source of competitive advantage.

First, resource heterogeneity states that each firm possesses a unique set of IS-IT resources

(including processes and strategies) that differentiate it from other firms in its ability to compete.

Second, the property of resource immobility implies that certain differences in IS-IT planning

and alignment may be sustainable over time (Bharadwaj, 2007). Thus, Sharma et al. (2009)

proposes that the resource-based view is sufficiently broad to encompass the strategic use of IS-

IT to leverage core firm resources to create a sustainable competitive advantage.

2.4.3.3 Creating a Distinctive Competency through Strategic IS-IT Planning and Alignment

It is imperative that the firm strategically identifies and nurtures those IS-IT functions that can

lead to distinctive competencies. Peteraf (1994) notes that a priori determination of what

resources will yield a competitive advantage, especially in an uncertain environment, is difficult

thus alignment with the business plan is of outmost necessity. Bharadwaj (2007) further

advocates that while focusing internally on the firm and its resources, analysis of the external

environment is critical as external changes and uncertainty can alter the "significance of



resources to the firm". Value can be achieved through the matching of internal IS-IT resources to

overall business strategy and the matching of business strategy to the external environment (Linn

et al, 2006).

According to Mata, et al., (1995), literature relating the resource-based view to the use of

strategic IS-IT to provide competitive advantage focuses on IS managerial skills, as opposed to

technical skills, as a the source of sustained competitive advantage. Successful managerial

attributes create invisible IS-IT assets strategically via causal ambiguity, e.g., the ambiguity

surrounding complex causal connections that cannot easily be imitated. IS can also leverage

socially complex resources and capabilities that have evolved slowly over time, are distinctive to

the firm, and are not likely to be perfectly imitated (Bharadwaj, 2007). Jusoh and Parnell (2008)

in turn advocates the use of IS to leverage the core resources of the firm as it has recently

emerged as an important vehicle for competitive advantage. This ability signifies the strategic

use of IS for sustainability of competitive advantage and is compatible with the resource-based

view of the firm.

In this dissertation, the resource-based view theory is portrayed by a model that identifies the

relationships necessary to create a distinctive IS competency and competitive IS-based strategic

asset. This asset consists of IS management practices which can, through the strategic alignment

process, enable the use of information resources for competitive advantage. While the asset is

intangible, it is a unique resource that requires identification, acknowledgment, and nurturing by

top management. (Luftmann, 2003)



Figure 2.3: Model for Resource Based View (Luftmann, 2003)

2.5 Models of IS Planning and Strategic

AlignmentThis section presents five models of IS planning and strategic alignment that are relevant to this

study.

2.5.1 Venkatraman’s Model of Strategic Alignment

When defining the Model of Strategic Alignment, Venkatraman (1996) stated that the barrier in

grasping the worth from IS-IT investment is the organisational management itself. Primarily it is

often due to the lack of alignment between the business and the IS-IT strategy of the investing

firm; arising from the lacking in administrative process that fails to guarantee continuous

alignment between the business planning and the IS-IT functions (Cited from Abernethy and

Guthrie, 2008). Venkatraman described four prominent factors towards methodical alignment in

the strategic model which are detailed below:



Strategy Execution

This perspective is merely a reflection of the classical strategic management theory where the

business strategy is the result of both the choice for organisational design and the IS-IT

infrastructure. Here the top management acts as the strategy formulator and IS-IT management

as the strategic implementer. (Damiani, 2008)

Technology Potential

This perspective like the above also focuses on business driven strategy, although an in-depth

integration with IS-IT strategy and interrelated IS-IT infrastructure is chosen to support the

business strategy and its inter-related processes. Here top managements’ sole responsibility is to

provide a vision that is incorporated with the choices relating to the IS-IT strategy that is in best

interest to sustain the business strategy (Damiani, 2008). While Ward and Peppard (2005)

proposes that the IS manager should play the role of a technology designer whose aim is to

efficiently and resourcefully design and implement the required IS-IT infrastructure that is in-

sync with the external component of IS-IT environment.

Competitive Potential

This perspective takes into account the new technological innovations that will have an impact

on the development of products and services; attain distinctive competencies; and build stronger

relationships with both their internal and external customers. This in turn enhances business

scope, influences business strategy and accentuates business governance (Abernethy and Guthrie,

2008). Contrasting the previous two strategies this perspective does not emphasize only on core

business strategy but rather shapes or alters the strategy according to the emerging IS-IT

capabilities. Ward and Peppard (2005) points out that, here top management should strategically

comprehend the future of the firm in terms of changes in IS-IT competencies and marketplace

innovations, and in accordance alter the business strategies and patterns in order to succeed. The

IS-IT manager here acts like a catalyst identifying the trends and changes in the IS-IT

environment and suggest potential investments or strategies to the management to counter

threats.

Service Level



This perspective is entirely in a different class and completely focuses on the organisations IS-IT

needs rather than the firms’ business strategy. Damiani (2008) argues that this theory is mostly

considered important (although not adequate) and ensures the efficient use of IS-IT to meet the

dynamic demands of the new generation of customers. In order to succeed, the top management

must ensure that resources are allocated efficiently in both within the organisation and also in the

external IS-IT environment. The IS-IT manager has a limited role to play here; the manager is in

charge of carrying out business leadership with the provided guidelines from the top

management and brings about success in both the international and domestic environment of IS-

IT infrastructure. (Abernethy and Guthrie, 2008)

Fig 2.4: Venkatraman’s Model of Strategic Alignment (Cited from Abernethy and Guthrie, 2008)



2.5.2 King's Input-Process-Output-Impact Model

This model illustrates the influence of organisational theory on information systems theory.

Goals and resources are inputs to the system which creates an information system plan consisting

of an IS mission, IS goals, and resource requirements. The planning process is designed to

influence business performance, the final dependent variable. Thus, the goal of IS planning to

influence business performance was established fairly early in the development of information

systems theory. (DeLone and McLean, 2010)

Figure 2.5: Input-Process-Output-Impact Model (DeLone and McLean, 2010)

King's (1991) model of input-process-output-impact is clearly present in more recent research

models of both Teo (2001) (shown in Figures 2.4) and Chan (2007). All include contextual

variables and some measure of alignment. Linkage, extent of business planning and IS planning

integration, and strategic fit are synonymous with alignment. While Galliers (2009) advocates

that levels of SISP activity are indicative of efforts to attain alignment. All three have some



measure of business performance as the dependent variable. Chan (2007), however, introduce an

antecedent variable- fit and integration reflect that higher levels of strategic alignment of the

business and IS orientations, leads to higher levels of business performance.

Figure 2.6: Teo’s Research Model (DeLone and McLean, 2010)

2.5.3 Jang’s Contingency Model of SISP

Jang's (1999) model is concerned with contingency variables that influence the level of strategic

IS planning activity. Antecedent variables such as size of the firm and volatility of the business

environment have been studied in past research in organisation theory and strategic management

theory. However Nevo and Chan (2007), proposes that maturity of the IS function, status of the

IS executive, and the IS executive's access to top management are important contingency

variables in more recent information systems theory research. Jang argues that the presence and

level of a contingency variable influences the level of IS strategic planning activity.



Figure 2.7: Contingency Model of SISP (Nevo and Chan, 2007)

2.5.4 Reich’s Research Model

Reich's (2002) research model emphasizes the importance of communications and shared beliefs

in producing linkage which is synonymous with strategic fit and strategic alignment. The

maturity of the IS function, a contingency variable in Jang's model, is represented by the history

of implementation of previous IS plans. A positive history of implementation ultimately leads to

improved linkage and vice-versa as proposed by Luftmann (2003). Shared beliefs about the

strategic value of information technology and high levels of communication between the

business and IS executives also lead to higher levels of linkage between the IS plan and the

business plan. (DeLone and McLean, 2010)



Figure 2.8: Reich’s Research Model (DeLone and McLean, 2010)

2.6 Effectiveness and Criticisms of the

Models The models of Jang and Teo recognize the influence of the external business environment on

alignment, while those of Reich and Chan are only concerned with internal influences. Chan's

model shows both a direct relationship between strategic fit (alignment) and business

performance (impact) and an indirect relationship as strategic fit affects IS effectiveness which,

in turn, affects business performance (DeLone and McLean, 2010).

What is unclear from any of the models is the relationship between the importance of the IS

function to the firm and the participation of top management in IS planning. Teo, in

organisational characteristics, measures the importance of IS to the firm but does not relate it to

how IS executives and other members of top management participating in IS planning. Chan

investigates planning relationships from both the business and IS perspectives, but does not

consider the importance of IS to the firm. Neither Reich nor Jang measure the relationship

between alignment and organisational impact (Nevo and Chan, 2007). However Venkatraman’s



model takes all these considerations into account and thus is considered as a preferred model in

theory and practice.

2.7 Measuring the Impact of Strategic

Alignment of IS-IT on Organisational

PerformanceMeasurement of effective IS-IT alignment impacts on overall organisational performance

provides a valuable dependent variable for validating the importance of IS-IT practices. Strategic

management theories rely heavily on performance measures because they are the time test of any

strategy (Sebatian, 2008). Strategic management empirical research of Venkatraman (1994)

employs a business performance construct to evaluate various contents and process issues of IS-

IT alignment. These constructs have usually relied upon some set of financial or operational

procedures. Measures of impact on organisational performance employed in prior field research

have included improvement in the firm's return-on-investment; pretax profits and sales growth;

profitability; and internal rate-of-return and cost benefit ratio. IS management practices are also

intended to improve the bottom line processes. (Chenhall, 2007)

However Abernethy and Guthrie (2008), argues that despite top management's overwhelming

desire to use IS-IT in a strategic sense, a barrier to evaluation of IS planning has been the

absence of a direct measure of the impact on the firm's financial performance, as well as the

reluctance of employees to adapt to this change; as the benefits of strategic alignment in many

cases is intangible and unquantifiable. The lack of measures to quantify the impact of enterprise

performance is a serious and practical theoretical problem; we can often only test whether the

systems engender individual satisfaction or usage. (Pongatichat and Johnston, 2008)

2.8 Challenges of Strategic IS-IT Planning and

Alignment



Galliers (2009) points out that despite the growing concern towards strategic IS-IT planning and

alignment there are various challenges faced by organisations today, which inhibits the

implementation of this process. Some of these barriers as pointed out by many authors are

elucidated below:

Data processing capabilities and technical orientation of employees and management tend

to be inadequate and low in many manufacturing and tertiary level organisations thus

hindering effective implementation of IS integration. (Cassidy, 2005)

O’Leary (2007) proposes that implementation failure of IS integration resulting from

malfunction of operating software from a technical specification end to meet the

requirements of desired performance. Pearlson (2007) however argues that this is

consequential to the lack of user distrust, user adaptability and low technical skills

resulting in failure to deliver the desired requirements of the end users.

Damiani (2008) points put that one of the significant barriers to strategic alignment is

lack of awareness of the impact of IS-IT on organisational performance by top

management. In many organisations top management does not view IS as a business

resource to be utilized strategically for long-term benefit. Galliers (2009) argues that top

managers tend to be short-term action oriented rather than focusing on long-term IS-IT

planning.

The absence of a structured business strategy to guide the IS strategy thus failure to

translate business objectives into IS-IT action plans consequently hindering the alignment

process. Pearlson (2008) further argues that lack of a two way top-down and bottom-up

analysis to identify critical business processes that the IS-IT strategy must support, also

acts as a barrier.

Time and financial constraints also acts as strong impediments in the strategic IS-IT

planning and alignment process. (Galliers, 2009)

2.9 SummaryThis chapter has presented a review of pertinent literature on information systems planning and

strategic alignment with business strategies to attain a cohesive strategic fit with the reference to

theories and models used for the dissertation. IS planning and alignment has received extensive



attention in this era of technological advancements. Empirical studies have analysed the use of IS

to create competitive advantage. All three reference theories and models are appropriate for the

study of strategic alignment and the use of IS-IT to provide competitive advantage. Contingency

theory is important to IS planning research because it is performed within an organisational and

environmental context that can affect the process outcomes; thus, it is context-dependent.

Strategic management theory provides an important source of research on environmental

uncertainty and competitive practices impact on the strategic alignment of IS-IT with business

strategy. The resource-based view complements both of these theories by describing strategic

alignment as an asset creating process that produces strategic impact under the right conditions.

Among the various models demonstrated in this chapter strategic alignment model proposed by

Venkatraman (1999) is considered to be the best as it covers a wide-range of components as

mentioned earlier.



Chapter 3: Research Methodology

3.1 Purpose of the ResearchFirstly it is essential to reflect upon the underlying purpose of the research. The primal aim of a

study is eminent amongst the three classifications of research purpose: descriptive, explanatory

and exploratory (Saunders, Lewis, & Thornhill, 2007).

3.1.1 Descriptive Research

The core focus of this approach is to gain a thorough and fully expressive idea about the

concerned subject matter. Descriptive research follows a structured design and is manifested by

specific existing theories, hypotheses, researches and studies that have been formulated

previously. (Chambliss & Schutt, 2009)

3.1.2 Explanatory Research

Explanatory research seeks to develop causal relationships between variables, discovering the

justification behind a certain occurrence. This sort of research follows a rather structured

approach, as it focuses on assessing situations to build and clarify relationships between

variables (Rubin et al., 2009).

3.1.3 Exploratory Research

An exploratory research is conducted with the endeavor to stimulate better understanding of the

phenomenon by seeking new insights. Thus is a more informal and flexible procedure which is

adaptable to varieties of information. (Saunders et al., 2007)


This chapter focuses on the following research methodologies- the purpose of the research; the types of research approaches and strategies; sources of data collection and its methods; the sampling process. It also emphasizes on the reliability and validity of data, the limitations and the ethical issues faced by the researcher while carrying out the data analysis.


The research purpose of this study is both explanatory as well as exploratory. The research tries

to elucidate the present condition of strategic alignment of IS-IT strategy in Bangladesh through

demonstrating the perception of two MNCs regarding the phenomenon thus is explanatory in

nature. And exploratory in nature, as it attempts to investigate the extent to which strategic

alignment can lead to competitive advantage.

3.2 Research ApproachAccording to Bryman & Bell (2007), the research approach used to conduct the study has two

fundamental trajectories: theoretical and methodological.

Fig 3.1 Research Approach and its Categories (Bryman & Bell 2007)

3.2.1 Theoretical Approach- Deductive and Inductive Reasoning

Deductive reasoning envelops deducing a conclusion from known hypotheses and propositions

derived from true facts. In deductive reasoning, if the hypotheses or propositions are true, then

the rationally consequential conclusion will also be accurate (Mick et al, 2009).

In contrast, the inductive reasoning refers to inferring a judgment regarding a collection or

category of objects through the information obtained from the collected sample. Bryman & Bell

(2007) proposes that this approach develops broader conclusions and theories based on precise

observations and procedures that identify the propositions or hypothesis required.


Research Approach

Theoretical

Deductive

Inductive

Methodological

Qualitative

Quantitative


This research uses a blend of both deductive and inductive reasoning. It was supported by the

literature review, from which the research questions were deduced and the primary data

requisites determined thus deductive in nature. However inductive reasoning was also used as

the primary data analysis was purely based on the perceptions and information obtained from

the employees and managers at Lafarge and Berger.

3.2.2 Methodological Approach- Qualitative and Quantitative Research

The qualitative research methodology is exploratory and unstructured in nature; which is not

dependent on quantitative evaluation and is derived from small sample to provide better

understanding regarding the phenomenon. It tends to be principally inductive, as theories are

established based on inference of both individual behavior and social processes (Bryman and Bell,

2007).

On the contrary, the quantitative research methodology mostly applies statistical analysis to

quantify the data collected using techniques such as surveys, experiments, structured interviews,

existing data, etc (Curwin & Slater, 2008). Consequently, results derived from this approach are

numerical and tends to be primarily deductive as focus is on testing theories (Bryman and Bell,

2007).

The qualitative approach has been used in this research to collect data from the employees and

managers of Berger Paint and Lafarge Surma Cement, through surveys and discussions and

further analysed to provide a comprehensive understanding of the research problem. The data

obtained from individual perceptions is also qualitatively evaluated to establish a co-

relationship between strategic alignment and competitive advantage in firms.

3.3 Research StrategyResearch strategies encompass an arrangement on how to respond to the research questions

along with presenting widespread comprehensive information with reference to the source.

Saunders et al. (2007), advocates that the selection of research strategy depends on the degree of

present knowledge, research questions and objectives, the time-frame along with the researcher’s


RESEARCHSTRATEG

IES Case Study

Survey

Action ResearchExperiment

Experiment

Ethnography

Archival Research


idealistic fundamentals. The various popular research strategies are shown in the exhibit

hereafter:

Exhibit 3.2 Research Strategies (Saunders, Lewis, & Thornhill, 2007)

In this research case studies were done on Berger Paint and Lafarge Surma Cement to gain a

comprehensive evaluation of the research problem and to support primary data analysis. This

research also carried out surveys in the form of likert-scale close ended questionnaire to gather

data from 100 employees in each of the given organisations to evaluate the level of strategic

alignment that exists in their company. Focus Group Discussions with 5 managers from the two

companies was also carried out to gather knowledge about the extent of strategic alignment and

its importance in the two companies.

3.3.1 Case Study

Case study approach is used to study one or more comparable conditions to the researcher’s

topic; deriving a deeper conceptualization of the concerned phenomenon (Blaxter, Hughes, and

Tight, 2006). Establishing a close relationship between the researcher and the respondent enables

obtaining accurate information easily through constructive and formal methods (Saunders et al.,

2007).

3.3.2 Survey

The survey method is often used to complement descriptive and explanatory researches. This

refers to face-to-face data collection from human respondents through techniques such as



questionnaires; interviews etc and are suitable when large amounts of data are cited . In this

approach the respondents response is taken for granted and thus may be false or biased

(Jankowicz, 2005).

3.3.3 Focus Group Discussion (FGD)

According to Kotler (2007) focus group discussions is a meeting of two to ten individuals,

brought together to get and deliver knowledge regarding the concerned topic. Malhotra et al.

(2009) identifies the key advantage of a FGD by stating that group members learn from each

other and discloses new and creative ideas that the researcher may not have considered.

3.4 Sources of Data Collection and its

Methods:

3.4.1 Primary Data Collection Method: Kotler (2007) defines primary data as data,

which is principally obtained for the research being initiated and can be collected through

interviews, observations, surveys or questionnaires. This is a more complex and time consuming

process as the data available is freshly collected.

The primary data for this research was collected from two companies Berger Paint and Lafarge

Surma Cement with the aid of focus group discussions (FGD) and surveys. Surveys were carried

out through questionnaires (refer to Appendix A), for the 200 combined employees of Berger

Paint and Lafarge Surma Cement. Two FGD’s were also arranged with five top management

executives at the two concerned organisations. This enabled the researcher to obtain in-depth

information and knowledge regarding the topic through open discussions and a variety of

answers from respondents.

3.4.2 Secondary Data Collection Method: Kotler (2007) refers to secondary data as

data that are readily available in books, journals and websites, and is already in existence,



collected for some prior cause. Researchers have a tendency to initiate their study using

secondary data as it presents the low cost advantage and is also readily available.

The secondary data used in this study was collected from: annual reports and webpage’s of the

two companies; books and journals from Business Source Premier Databases such as Emerald;

other internet sites, along with newspapers and publications.

Fig 3.3 Sources of Data Collection (Kotler, 2007)

3.5 Research Sampling

3.5.1 Research Population

Research population entails the entire group of people who are related to the concerned research

to obtain information and reach conclusions. (Saunders et al, 2007).

The research population of this study involves each and every employee within Berger and

Lafarge. Since the population is very large it is beyond the scope of the study to obtain data from

the entire population. Thus a small sample representing the total population will be used to carry

out the research, which can be collected via sampling techniques.


Sources of Data Collection

Secondary Data CollectionJournals, books, newspapers, magazines, databases, websitesResearch workers & ScholarsTrade associations & other organisations

Primary Data CollectionObservationPersonal InterviewsTelephone InterviewQuestionnaires


3.5.2 Sampling Frame and Sample Size

According to Saunders (2007) a sampling frame is a complete directory of all the components of

the entire population from which the illustration is drawn.

The entire sampling frame of this research comprise of a sample size of 205 individuals,

encompassing 100 employees and 2 executives chosen from Berger Pain;, and 100 employees

and 3 executives from Lafarge Cement. Data was collected from the sampling frame through e-

mailed questionnaires, sent to a total of 428 employees obtained from both the companies

databases out of which 261 responded and 200 were chosen. Furthermore data from the 5

chosen executives were obtained through FGD’s organized at Lafarges’ Head Office in Gulshan

and Bergers’ Head Office in Uttara.

3.5.3 Sampling Technique

Sampling techniques enables a researcher to collect data only from as subset rather than the

entire population through various methods that reduces the amount of data to be collected. The

two types of sampling techniques and their sub-categories as proposed by Saunders et al. (2007)

are shown below:

Exhibit 3.4 Sampling Techniques (Saunders, Lewis, & Thornhill, 2007)

3.5.3.1 Probability Sampling


Sampling Technique

Probability

Simple Random

Stratified Random

Systema-tic Cluster

Non-probability

Self-selecti

onQuota Conve

n-iencePurpo-

siveSnowb

all


Probability sampling entails opting for a sample using random non- bias selection procedures, to

ensure that the likelihood of inclusion of each element is known. This technique poses its

advantage by notably decreasing the odds of selecting a non-representative sample. (Monette,

Sullivan, & DeJong, 2005).

3.5.3.2 Non-Probability Sampling

Non-probability sampling entails opting for a sample using non- random and biased procedures,

in which the likelihood of inclusion of each element is unknown. The major drawback of this

technique is that it restricts the scope of findings, since it can’t be generalised to characterize the

entire population (Monette et al, 2005).

The researcher used a combination of probability and non-probability sampling methods to

choose 200 employees and 5 executives from the two companies. This was carried out using

Stratified Random sampling and Judgmental sampling techniques. The entire population of

employees was divided into 4 groups in each organisation according to the different

organisational levels- operational, knowledge, management and strategic level. Then from each

group 25 employees were selected based on the judgment and convenience of the researcher.

The selection of the 5 managers was purely based on self-selection and judgmental sampling.

3.6 Validity & ReliabilityAccording to Yin (2009) reliability refers to the likelihood the research would generate the same

result consistently along with measuring the extent to which it is free of error or biasness.

Validity conversely implies the accomplishment and extent to which the study correctly examines

the desired theories and models that the researcher is attempting to measure.

Therefore, this study has been conducted in the manner that if some other researcher attempts to

derive answers to a similar research, it would deliver similar results of “strategic alignment of

IS-IT strategy leading to competitive advantage’” which will prove that the research is reliable.

With regards to validity the test has measured the required norms and traits it was intended to

measure, in evaluating the extent of competitive advantage gained from IS-IT alignment.



3.7 Ethical ConsiderationsEthical considerations in research refer to matters of ‘right and wrong’ in conducting the

research. In this study the researcher took into account the following ethical considerations:

i. In this research both the companies were assured that the findings will be used only for

educational purposes and not for any other means.

ii. The researcher ensured maintaining confidentiality and privacy of the valuable

information disclosed to the researcher, as asserted by Lancaster (2008) as the two most

vital ethical research considerations.

iii. The investigator obtained information through voluntary participation and ensured the

privacy of the employees and confirmed that anonymity will be maintained with

individual answers not being disclosed.

iv. The researcher also deliberately reported all information with great caution and

vigilance in order to maintain reliability and validity of the results through elimination of

biases, which was crucial for obtaining accurate results.

3.8 Limitations The sample size was fairly undersized when compared to the mass population of employees,

thus accuracy of data obtained may be hampered.

This research was only carried out by one individual, which narrows the capacity of the

research.

Time and financial constraints acted as impediments in conducting the research.

The validity and reliability of the research is ambiguous and may be regarded bias owing to

the use of non-probability sampling techniques.

It was difficult to find acceptable academic literature and previous research concerning the

topic.



Chapter 4: Data Analysis and Findings

4.1 Secondary Data AnalysisA detailed evaluation of Lafarge Cement and Berger’s sales volumes and profit figures for the

past four years has been analysed to determine the effectiveness of IS-IT alignment in both of

these organisations.

4.1.1 Sales Volume Analysis

2006 2007 2008 2009

La-farge

153190000 2399876000 6211938000 7543725000

Berger

2872447000 3527759000 4499206000 5333002000

500000000

1500000000

2500000000

3500000000

4500000000

5500000000

6500000000

7500000000

Sale

s Vol

ume

Fig 4.1: Comparative Sales Volume Representation of Lafarge Cement and Berger Paint

(adapted from: Annual Reports, 2010)

The sales volume figure’s of Lafarge Cement reflect that there has been tremendous

enhancement in their sales depicted by a very sharp positively sloped curve with an increasing

gradient from 2006-2009. Analysis of secondary data, confirmed by focus group discussion

revealed that Lafarge had extensively invested on IS-IT infrastructure in 2006 implementing an

ERP system known as ‘JD Edwards’ which helped in integrating their business processes and


This chapter provides a detailed representation of the research findings in the forms of

secondary data and primary data analysis of both the companies and also provides a

summary of the findings.


enabled them to perfectly align there IS-IT functions with their business plans.(Refer to

Appendix C). This helped in achieving higher levels of productivity and lower marginal costs

resulting in ever increasing sales volumes over the next three years. This phenomenal increase in

sales volume owing to the implementation of ERP systems which manifested strategic alignment

is congruencial to Davenport (2000) theory; which proposes that if ERP systems are

implemented effectively they have the ability to provide a variety of benefits and opportunities at

the technological, operational, organisational as well as strategic levels. This has been achieved

by Lafarge by the amalgamation of their disintegrated systems working in isolation previously

and increasing both information systems and overall organisational efficiency. (Lafarge IS-IT Plan

Report, 2010)

In contrast, the graph of Berger Paints depicts a rather slow increase in sales volumes, over the

period of 2006-09 reflected by a low and constant gradient. This is a clear representation of the

absence of a robust IS-IT infrastructure as supported by both secondary sources and focus group

discussion. The lack of an integrated ERP system from 2006- to mid 2009 has resulted in more

or less stagnant sales volumes as the organisational wide efficiency levels were low owing to

isolated IS functions which is also advocated by Davenport (2000). However secondary data

analysis has also revealed that Berger has implemented an ERP solution named “SAP” in middle

of 2009 which is a 5 year project aimed at improving its future organisational efficiency. (Refer

to Appendix B) (Berger IT Departmental Report, 2010)

4.1.2 Profitability Analysis.



2006 2007 2008 2009

Lafarge -618659000 -1136612000 940982000 1049829000

Berger 434297000 466557000 540867000 779772000

-1250000000

-750000000

-250000000

250000000

750000000

1250000000

PBIT

in B

DT

Fig 4.2: Comparative PBIT Analysis Representation of Lafarge and Berger (adapted from- Annual

Reports, 2010)

From the PBIT Analysis it is evident that there has been a sharp rise in profitability in Lafarge

from substantial losses in 2006 and 2007 to significant levels of profit in 2008 and 2009. These

noteworthy profit figures have surpassed Berger Paint’s profits in the latter consecutive years;

although Berger seemed to have been maintaining a consistent level of profit over the past years

when Lafarge was incurring substantial losses. This is also evidential of the effectiveness of

strategic alignment at Lafarge through the implementation of its ERP solutions. Prior to the

implementation of the ERP system by Lafarge, there were no IS-IT applications or strategies to

complement the business strategy. This resulted in incongruity between the objectives being

practiced at the global corporate as well as enterprise and business-unit levels of the

organisation. The goals being pursued at business unit levels were not aligned through IS

planning which sufficed the difficulty in articulation of its overall business strategies. This notion

is also supported by the drawbacks of not implementing ERP systems as an enabler of strategic

alignment as suggested by Grant (2008). The analysis of secondary data has depicted the

reduction in losses of Lafarge from 2006-07 as the huge expenditure incurred in ERP

implementation of an investment of approximately BDT 10 million. (Refer to Appendix C)

(Lafarge IS-IT Plan Report, 2010)



Following the same notion of sales volumes in Berger, its more or less consistent levels of

profitability is reflective of its misalignment of IS-IT strategy with business strategy; however

it’s recent ERP implementation in 2009 with an investment of BDT 8.25 million is expected to

increase potential for enhanced profitability in the near future. (Berger IT Departmental Report,

2010)



4.2 Primary Data AnalysisComparative analysis of the responses to the questionnaire gathered from 100 employees of

Lafarge and Berger respectively. The 20 likert-scale questions have been amalgamated to derive

twelve broader statements and graphs.

4.2.1 External Business Environment Conditions

Changes in IS-IT Environment in the Given Industries and its Impact on IS Planning

From the exhibit below it is evident that majority of the employees at Lafarge advocated that

there are dynamic changes in the IS-IT environment in the Cement Industry which immensely

impacts strategic IS-IT planning in Lafarge. This result can be related to the technology potential

component proposed by Venkatraman (1996), which refers, that the internal IS-IT plan should be

developed according to the changes in the external IS-IT environment, for effective strategic

alignment and cohesive fit. However respondents’ at Berger seem to have a more neutral and

disagreeable view towards this approach, portraying that the Paint Industry in comparison to the

Cement Industry is less vulnerable to external technological changes.

Strongly Agree Agree Neutral Disagree Strongly

Disagree

05

101520253035404550

LafargeBerger

Lafarge

Berger

Fig 4.3: Changes in External IS-IT Environment of Lafarge and Berger

Variations in Industrial Factors and its Impact on IS Planning



SA A N D SD0

5

10

15

20

25

30

35

40

45

Lafarge

Customer Buy-ing Habits

Nature of Competition

Product Lines

Dynamic and Heterogenous Industry

S A A N D S D

0

10

20

30

40

50

60

Berger

Customer Buy-ing Habits

Nature of Competition

Product Lines

Dynamic and Heterogenous Industry

Fig 4.4: Variations in Industrial factors in Lafarge (Left) and Berger (Right)

Based on the respondents’ views, it is reflective that in the Cement Industry- the diversity in

customer buying habits is moderate; nature of competition is extremely high, diversity in product

lines are not that strong and the industry is comparatively less dynamic and heterogeneous. In

contrast, the Paint Industry reflects an immense diversity in customer buying habits, moderate

levels of competition, immense product lines and a very dynamic and heterogeneous industry.

All these variations in industrial contextual factors impact heavily both Lafarge and Berger’s IS-

IT planning and alignment as prescribed by many authors. This in sync with the conceptual

models of Strategic Management and Contingency Theory advocated by Ireland (2008), Chan

(2009), among many scholars who propose that internal IS-IT capabilities should be dependent

upon external environmental changes and volatility to achieve a strategic fit and greater levels of

inter-organisational integration and performance.

4.2.2 Strategic Information Systems Planning



Structured Business and IS Plan with Participative Top Management

In response to the above question most of the employees in Lafarge confidently agreed that

Lafarge has a structured high quality Business and IS Plan with a very participative top

management playing a vital role in formulating these plans. However an amiable contrast can be

observed in the response of the employees at Berger proposing that both their Business and IS

plan is not formulated in a structured manner with a negligent management participation.

Lafarge’s formal strategic planning process is congruencial to the Planning School theories of

many Strategic Management scholars; and Damiani (2008) proposing that strategic planning

should be used as a benchmark for IS-IT planning and development. Reich (2002) further

emphasized on the importance of high levels of communication and participation between the

top management and IS executives for higher levels of linkage between the IS plan and the

business plan.

SA

A

N

D

SD

0 5 10 15 20 25 30 35 40 45 50

Berger

Lafarge

Fig 4.5: Representation of Business and IS Plan in Lafarge and Berger

Range of Functions Supported by IS Planning



SA A N D SD0

5

10

15

20

25

30

35

40

45

50

LafargeCreates Decision Support System

Creates Com-pany-wide IS In-frastructure

Creates Informa-tion Partner-ships with Cus-tomers and Suppliers

SA A N D SD0

5

10

15

20

25

30

35

40

BergerCreates Decision Support System

Creates Com-pany-wide IS In-frastructure

Creates Informa-tion Partnerships with Customers and Suppliers

Fig 4.6 Range of functions supported by IS Planning at Lafarge (left) and Berger (right)

The graph reveals that IS planning at Lafarge is extremely robust, since their employees very

confidently agrees that it provides extensive support in decision making, creates an integrated

company-wide infrastructure and also supports information exchanges with its customers and

suppliers. This notion is supported by Venkatraman’s (1996) alignment model concepts of

‘technology potential’ and ‘competitive potential’, which advocates that IS-IT plan should

support all internal business processes as well as accentuate business governance by establishing

stronger stakeholder relationships. On the contrary response of Berger’s employees reveal that

although IS planning creates a strong company-wide infrastructure and creates information links

with its customers and suppliers it does not help in decision making.

IS Planning Exploits Company’s Distinctive Competencies



The graph is indicative of the fact that at Lafarge the IS Plan strongly emphasizes on exploiting

their distinctive competencies of quality and consistency in their products and services. (Refer to

Appendix C). On the contrary absence of strategic IS planning and alignment prohibits Berger

from exploiting and nurturing its distinctive competencies using IS-IT. (Refer to Appendix B)

Proponents of Strategic IS Planning and Alignment such as Johnston (2008) conforms to the fact

that an effective IS-IT plan will indeed enhance organisational productivity and performance by

exploiting its distinctive resources such as human resources and quality of products and services

and lead to synergic benefits of value additions.

SA A N D SD

0

5

10

15

20

25

30

35

40

Lafarge

Berger

Lafarge

Berger

Fig 4.7: Extent to which IS Planning Exploits Company’s Distinctive Competencies at Lafarge

and Berger

4.2.3 Strategic Implications of IS-IT



Dependency on IS-IT for Achieving Critical Success and Competitive Advantage

Strongly Agree

Agree Neutral Disagree Strongly Disagree

0

5

10

15

20

25

30

35

40

LafargeBerger

Fig 4.8: Dependency on IS-IT for achieving Critical Success and Competitive Advantage at

Lafarge and Berger

The graph above portrays that Lafarge is heavily dependent upon IS-IT to gain successful

sustainability as well as achieve competitive advantage, whereas responses of Berger’s

employees show a sharp contrast and reveal opposite results. However according to the RBV

proposed by Barney (1999), the strategic use of IS-IT can be used leverage core firm resources,

to attain critical success through sustainable competitive advantage. Bharadwaj (2007)

substantiates Barney’s theory by arguing that each firms IS-IT resources and strategies are

heterogeneous, unique and immobile owing to their differences in IS-IT planning and alignment

providing the firm with a competitive edge.



Strategic Impact of Existing and Future IS

The graphical representations deduce that employees at Lafarge strongly comprehend the

strategic impact of both existing and future IS-IT applications in their organisation, while it also

mirrors that at Berger this strategic impact is mostly not fully understood by their employee base.

Although advocates of the Contingency Model such as McKenney (1991) and more recently

Sharma (2009) proposes that positive employee attitudes and management practices towards

strategic importance of existing and future IS-IT acts as contingent variable in the strategic

alignment process; however Abernethy and Guthrie (2008) argued that it is in fact the resistance

from employees to adhere to this change which hinders this process in organisations.

Fig 4.9: Strategic Impact of Existing and Future IS at Lafarge and Berger


Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

0 5 10 15 20 25 30 35 40 45

Berger

Lafarge


Daily Operational Dependency on IS Applications and Non-measurability of Its

Intangible Benefits

32%

28%17%

13%10%

LafargeStrongly Agree

Agree

Neutral

Disagree

Strongly Disagree

27%

23%19%

11%

20%

BergerStrongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Fig 4.10: Daily Operational Dependency on IS Applications and Measurability of its Intangible

Benefits at Lafarge (left) and Berger (right)

The pie diagrams depict that both Lafarge and Berger are strongly dependent upon IS

applications with respect to their daily operations as they have incorporated company-wide

integrated IS, with Lafarge being more heavily accentuated towards IS-IT for its operations. The

diagrams also reveal that despite the level of dependency, the intangible benefits obtained from

IS-IT applications cannot always be measured. This result is in line with the theory suggested by

Johnston (2009), proposing that the lack of a direct measure of IS-IT impacts on the firm's

financial performance, acts as a hindrance to strategic alignment, due to the presence of

intangible unquantifiable benefits such as enhanced communication.



Advantages Achieved from IS-IT

The graphs below reveal that majority of the employees at both Lafarge and Berger conform to

the fact that IS-IT helps them to achieve certain advantages such as greater power over their

customers and suppliers by imposing higher switching costs and attracting customers of rival

firms to buy their products. However in terms of providing lower costs and product

differentiation a variation is observed in the perceptions of the employees in the two companies,

with Lafarge’s employees strongly agreeing to the notion and the opposite being true for Berger.

Despite the contradictory results, theories proposed by scholars like Earl (1996) and Ward and

Peppard (2005) validate the fact that the success factors and advantages of IS-IT alignment lies

in cost reductions, value additions and increased customer satisfaction among others.

SA A N D SD0

5

10

15

20

25

30

35

40

45Lafarge

Lowers Cost and Product Differentiation

Imposes Higher Switching Costs for Customers

Influences Buyers to Switch to their Products

SA A N D SD0

5

10

15

20

25

30

35

40 Berger

Lowers Cost and Product Differ-entiation

Imposes Higher Switching Cost for Customers

Influences Buyers to Switch to their Products

Fig 4.11: Advantages Achieved from IS-IT at Lafarge (left) and Berger (right)



4.2.4 Alignment of IS Strategy with Business Strategy

The IS Strategy reflects the Business Resource Constraints, its Mission, Goals and

Strategies

SA

A

N

D

SD

0 5 10 15 20 25 30 35 40 45

Berger

Lafarge

Fig 4.12: The IS Strategy reflects the Business Resource Constraints, its Mission, Goals and

Strategies at Lafarge and Berger

The majority of the respondents at Lafarge gave a strong positive feedback regarding there IS

strategy reflecting their business mission, goals and strategies. On the other hand responses from

Berger’s employees, strongly discloses that their IS strategy does not reflect their business

mission, goals and strategies. Luftmann (2003), strongly emphasizes on the importance of the IS

planning process considering the resources available to the firm, the corporate mission and vision

along with its unique strengths and weaknesses. This concept is further developed by Nevo and

Chan (2007), proposing that first-order importance should be given to the IS strategy and its

plans being configured according to the business resource constraints; its overall mission,

objectives and strategies as outlined in the business plan; to fulfill the visionary goal of

competitive advantage.



The Business Plan Utilizes the IS Capabilities and Refers to the IS Plan

The representations below show a sharp contrast between the responses obtained from Lafarge

and Berger. Lafarge’s representation reveal that the IS capabilities are utilized and the IS plan is

referred to while formulating the business plan; while responses from Berger strongly contradict

the notion. However Lafarge’s response can be related to the ‘competitive potential’ of

Venkatraman’s alignment model proposing that core business strategy should shaped or altered

according to the emerging IS-IT capabilities of the organisation; this is also in-sync with the

conceptual model of the strategic management perspective which strongly advocates the

utilization of internal IS-IT capabilities to gain competitive advantage.

SAA

ND

SD

05

101520253035404550

Lafarge

Berger

Lafarge

Berger

Fig: 4.13 The Business Plan Utilizes the IS Capabilities and Refers to the IS Plan at Lafarge and

Berger



Alignment of IS Strategy with Business Strategy and Vice-versa

SA A N D SD0

10

20

30

40

50

60

LafargeIS Plan aligned with the Busi-ness Plan

Business Plan aligned with the IS Plan

SA A N D SD0

10

20

30

40

50

60

BergerIS Plan aligned with the Busi-ness Plan

Business Plan aligned with the IS Plan

Fig 4.14: Alignment of IS Strategy with Business Strategy and Vice-versa at Lafarge (left) and

Berger (right)

Analysis of the most critical question has disclosed that there is noteworthy strategic alignment

between IS-IT strategy and business strategy at Lafarge, since a significant proportion of their

employees have conformed to the fact that the IS plan is aligned with the business plan and vice-

versa. The importance of strategic alignment for enhanced organisational performance and

achieving organisational objectives has been strongly emphasized by early scholars like Lederer

and Mendelow (1986). While more recent authors like Abernethy and Guthrie (2008) propose

that IS-IT planning being congruencial with strategic business planning is the key to

sustainability. However Berger’s analysis reveals that most of their employees perceive there is

absence of both two-way strategic alignment between IS-IT strategy and business strategy.



4.3 Focus Group DiscussionThe members of the focus group- 3 representatives from Lafarge and 2 from Berger were asked

open ended questions by the researcher (questions attached in Appendix A). The analysis of this

discussion is elucidated below with further information on Berger and Lafarge attached in

Appendix B and C respectively.

4.3.1 Business Planning and IS Planning with the role played by top

management and IS/IT managers in the planning process

Discussion with the managers of Lafarge advocated that there is presence of a formal strategic

planning process with regards to its business strategy as well as IS-IT strategy. The managers

stated that every year, the Company does a formal strategic plan that is coordinated to the region

and the Lafarge group strategic plan. On the basis of the corporate strategic plan, the top

management and the IT department draws up a three year rolling IS-IT strategic plan which is

revised and developed annually to maintain consistency with the corporate strategy and overall

Lafarge group level business and IS-IT strategy followed worldwide. Discussion revealed that

Lafarge follows participative management with full involvement of the executive level for

strategic planning in detailing and defining the IS-IT strategy. The managers further stated that

the three year IS-IT plan is drawn up after consultation with all heads of department and the final

plan is vetted by the top team.

In contrast discussion with the managers at Berger revealed their disappointment towards the

absence of a meticulously developed overall strategic plan. Managers stated that departmental

strategies are developed every five years without any integration between the departmental

strategies. This reflects the absence of an integrated IS-IT strategic plan resulting in failure to

identify the IS-IT needs and requirements to fulfill the overall business goals. Discussion further

exposed that at Berger top level management does not play a crucial role in the business and IS-

IT strategy development phase; the only level of involvement is during the implementation phase

carried out through budget approval by the executive level. Managers view the IS-IT strategic

plan as a bottom-up approach from IS-IT plan to business plan rather than a combination of top-

down and bottom-up process.



Ireland (2008) supporting the Planning School of Strategic Management, highlights the

importance of a structured and formal business planning essential to organisational sustainability

and success. Cassidy (2005) further accentuates the significance of IS planning as an important

mechanism for strategy development, designed to shape and support business strategy. In

addition she further states that effective business and IS planning requires participative

management with strategic consensus to interact and form shared knowledge and understandings

of both IS and business objectives.

4.3.2 IS-IT enables firms to exploit their Distinctive Capabilities

Managers at Lafarge proposed that IS-IT is considered as a business enabler to enhance their

understanding of the market and customers by exploiting their distinctive competencies to

improve customer satisfaction and increase market share. They stated that their quality control

systems ensures enhancing the quality, timeliness, and availability of materials and also helps in

complex maintenance planning. They further added that their inventory management and demand

planning modules among others helps in optimization of inventory levels of both spares and

products thus reducing working capital and ensures continuity in supply.

On the other hand managers at Berger strongly disagreed with this notion proposing that IS-IT is

only used as a supportive function rather than an enabler to exploit their distinctive

competencies. However they added that their demand planning module (implemented in the first

quarter 2009), also has helped them to effectively analyse their market demand and achieve

greater accuracy in demand planning from 42% to 74% (during the last quarter of 2009). This

lowered their inventory levels, working capital requirements as well as the volume of excess

finished goods; thus helped Berger to achieve greater customer satisfaction and lesser sales

losses.

The ability of IS-IT to exploit an organisation’s distinctive capabilities and competencies is

firmly supported by academic literature proposed by many authors. Early scholars such as Mata

et al. (1995) and more recent ones like Sharma et al. (2009) advocated that IS-IT can leverage

firms’ socially complex resources and capabilities that have evolved slowly over time and are

distinctive to the firm hence cannot be imitated. Johnston (2008) further suggested that IS-IT can



be used to exploit firms’ distinctive resources such as quality of raw materials, products and

services; as well as the potentiality and efficiency of their human resources, machineries and

systems leading to enhanced organisational performance and productivity.

4.3.3 IS-IT acts as a source of Competitive Advantage

Discussion with managers at Lafarge reflected that IS-IT helps them to compete in new ways

thus achieve a competitive edge over their existing and potential competitors. Managers at

Lafarge affirmed that they are using ‘People Soft ERP System’ that integrates sales order

processing, dispatch, accounts receivable with general ledger financials. At the same time, in

order to further enhance their customer service levels, they are using ‘Warehouse Dispatch

System’ that is fully integrated with the sales depots. They added that this year, they have taken

up three more important projects to further enhance their understanding of their customers and

improve their customer services in a spirit of continuous improvement. They also confirmed that

the transportation module is under implementation. This will enable planning of transportation

considering the sales plan and optimize transportation costs. In addition, ‘Bonsai’ a business

intelligence system enables market segmentation analysis in addition to all forms of sales

analysis. Finally, they are also launching another IT project to develop a customer portal where

customers can place on line orders, make status enquiries and log complaints. All these

components mentioned above by their managers, helps in achieving multi-faceted advantages in

management reporting and strategic management by enabling Lafarge to take the right decisions

at the right time thus taking them ahead of others. This is achieved through greater data integrity,

accuracy, efficient business processes, and the use of less human resources to obtain competitive

advantage.

Berger’s management however contradicted this concept by stating that IS-IT itself does not

ensure lead over their competition; as competitive advantage at Berger is achieved through the

multi-disciplinary combination of their formula, materials and innovative marketing activities.

They further added that although IS-IT is not a direct source of competitive advantage, it

facilitates the effective management of the functions that provide them with their competitive

edge. IS-IT helps in meticulously measuring the exact demand of every customer and ensures

availability of their entire product-range in all their sales outlets countrywide; thus maintaining



customer retention and attraction of new customers from rival companies. Berger’s managers

consequently agreed that this indeed portrays the contribution of IS-IT to gain competitive

advantage since these activities were previously very inefficient before the implementation of

their supply chain management system. Prior to the implementation it was humanly impossible

to monitor the accurate demand of their thousands of stock keeping units leading to higher

inventory carrying and stock out costs as well as greater levels of excess inventory thus resulting

in a competitive disadvantage.

According to the Resource Based View proposed by many scholars like Barney (1999), IS-IT

can be used as a vehicle to leverage firms’ core competencies to achieve sustainable competitive

advantage. This concept is also advocated by Bharadwaj (2007) emphasizing on the importance

of a firm to strategically identify and nurture those IS-IT functions that can lead to distinctive

competencies to yield a competitive advantage in an uncertain environment. In congruence Linn

et al. (2006) suggested that competitive advantage can be achieved through the matching of

internal IS-IT resources to overall business strategy and matching the business strategy with the

external environment. Literature concerning the Resource Based View also supports the use of

strategic IS-IT to provide competitive advantage, by focusing on successful managerial attributes

that can create IS-IT assets strategically via causal ambiguity that cannot be easily imitated by

other firms.

4.3.4 IS Plan reflects the business resource constraints and supports the business

mission, goals and strategies relying on IS-IT both internally and externally

Lafarge’s managers advocated that IS-IT planning reflects their business resource constraints by

taking into account their size and growth, financial considerations, human resources and other

organisational complexities. The IS-IT plan finally culminates with an IT Financial Plan based

on the constraints mentioned above, with two components – Revenue Expenditure and Capital

Expenditure. Lafarge’s core mission is “to be the undisputed leader in building materials” and

discussion with the managers revealed that IS-IT acts as a supportive function to attain this

mission. IS-IT capabilities at Lafarge are aimed at achieving the height of performance required

to support overall organisational goals and strategies in order to be effective and efficient in

operations leading towards achieving its ultimate mission. All departments are working closely



with IT in achieving the business objectives for effective internal and external management.

Apart from providing a robust IS-IT infrastructure in terms of LAN, WAN and voice

communication across its head office, quarry, plant and sales offices; the IT software cuts across

all department through the use of ERP, data warehousing and business intelligence tools such as

‘Bonsai’.

In contrast FGD with Berger revealed that currently IS-IT does not reflect their business resource

constraints as there is no optimum resource planning that is converted into financial terms

through an effective IS-IT plan. Berger’s managers further added that IS-IT strategy does not

directly reflect or relate to business mission or goals however supports in maintaining business

strategy of market leadership. Berger’s mission is “to increase turnover by 100% in the next 5

years”, achieved through multiplying their resources and doubling their market share and thus

cannot be accomplished by IS-IT itself. They also added that Berger is heavily dependent on IS-

IT for internal management, however cannot use it to evaluate the external environment due to

lack of integration and absence of business and market intelligence system.

Theories proposed by Venkatraman (1996), Sharma (2009) among others stress on the

importance of the IS Plan incorporating the resources available to the firm, the corporate mission

and vision and adaption with the external business environment. They focused on the importance

of integrating the IS-IT strategy and infrastructure to support the chosen business strategy and

interrelated business processes which are in-sync with the external environment. Johnston (2008)

advocated that IS-IT helps in developing the business through product and market analysis that

can be merged and divided to exploit appropriate market segments and product mixes for

effective external management and enhanced customer satisfaction.

4.3.5 Strategic Alignment of IS-IT Strategy with Business Strategy

FGD with the managers identified that there is commendable degree of strategic alignment of IS-

IT strategy with business strategy at Lafarge. The ERP systems in place are completely

integrated with the organisational operations plus the Lafarge group level quality standards. All

branches and business units are fully incorporated with ERP systems, with the group ensuring

that harmonious standards and quality of ERP systems and strategic alignment is attained



throughout all business units. Managers identified this ultimate objective of strategic alignment

to be fulfilled by the components mentioned in earlier sections.

This important and crucial objective is however not accomplished by Berger as deduced from the

discussion with their managers. They propose that effective strategic alignment at Berger is both

time and financial constrained. The only degree of alignment is carried out through the Standard

Operating Procedure which integrates the IS-IT function with other departmental policies and

practices. The processes are developed by the departments through their policies and the

techniques are formulated by the IS-IT functions accordingly.

Strategic alignment and its importance which is the core focus of this research has been stressed

throughout by theorists conforming to- the Strategic Management School such as Abernethy and

Guthrie (2008); Resource Based View approach such as Barney (1999); Contingency Perspective

such McFarlan (1991). They all view this objective as a conditional factor leading towards

enhanced organisational effectiveness and performance and achieving a competitive edge

through goal congruence and attaining a cohesive strategic fit.



Chapter 5: Conclusion

5.1 Discussion of the Research Questions

5.1.1 Why is it important for organisations to align their IS-IT strategy with the

business strategy?

The discussion of the findings and analysis emphasizes on the importance of strategic alignment

of IS-IT strategy with business strategy as proposed by scholars such as Venkatraman (1996),

Chan (2007) and Teo (2008) among others; in which cohesive fit and integration reflected by

strategic alignment leads to higher levels of business performance. From the research it was

evident that at Lafarge there is a high degree of strategic alignment within the organisation, both

at the business unit and group level, which resulted in higher sales volume and profitability from

2006 to 2009. Alternatively it may be noted that there is negligible amount of strategic alignment

at Berger reflected by a minimal increase in sales volume and profitability during the same

period. Thus this further justifies the notion suggested by Peteraf (1994) and Sharma (2009) that

a major contribution towards the growth of a firm’s long-term profitability is dependent upon its

utilisation of IS-IT resources strategically and efficiently. It is summarized below how strategic

alignment can be achieved effectively:

Aligning the external IS-IT environment with the internal IS-IT plan

Considering the impact of the variations in the industrial factors on IS planning

Structured IS plan supported by participative top management

IS plan exploiting firm’s distinctive competencies and supporting its range of functions

Considering the strategic impact of existing and future IS-IT

Effectively utilising the IS capabilities in the business processes

The business referring to the IS plan


This chapter presents the concluding remarks for the research. It includes discussion of

the research questions and justification of the research objectives.


5.1.2 How does strategic alignment influence the contribution of IS to the

organisation, given the contextual factors of environmental uncertainty and

resource constraints to the firm?

According to Pongatichat and Johnston (2008), strategic alignment augments corporate

governance with broader stakeholder groups such as shareholders, employees, customers and

suppliers. This is achieved by influencing the contribution of IS- to enhance information usage,

enable benefit sharing with stakeholders, increase employee as well as customer satisfaction

along with carrying out business driven technological innovations. The study reflected that

effective strategic IS-IT alignment has increased the contribution of Lafarge’s IS-IT applications

by supporting a multi-disciplinary array of functions. This encompasses- extensive support in

decision making, company-wide increased information exchange through IS and creating

harmonious information partnerships with customers and suppliers. Whereas the lack of effective

strategic alignment at Berger was reflected by under-utilisation of its IS-IT capabilities and

infrastructure to provide extensive support both for internal and external management. The

impact of the dynamic external environment along with the internal resource constraints on

strategic alignment, as proposed by proponents of the Contingency Perspective such as Lederer

(1996) and Linn (2006) is given considerable attention by Lafarge as discussed earlier in the

discussion and analysis. However the opposite was reflected to be true for Berger resulting in

failure to maximize capacity utilisation of IS-IT.

5.1.3 Does strategic alignment of IS-IT lead to Competitive Advantage?

As proposed by the Resource Based View advocated by scholars as early as Barney (1998) and

more recently Sharma et al. (2009), strategic alignment of IS-IT can serve as a source of

competitive advantage as it is identified with the functions of resource heterogeneity and

immobility. By basing the IS plan on the mission, goals, and strategies of the business plan, the

executives of Lafarge improves the ability of information resources to provide competitive

advantage. Their competitive advantage development indicates practices prescribed in theory

such as using electronic data interchange to create links with customers and suppliers. Although

causal direction is theorized from alignment to impacting organisational performance, it must be

noted that firms such as Lafarge that adopt competitive practices which are IS based, would most



likely have higher levels of strategic alignment. Thus, a possibility is that alignment causally

affects the use of IS to provide competitive advantage. It also predicts the positive outcome of

strategic alignment for firms such as Berger, where the internal environment of the firm, hinders

lack of both alignment and impact of IS on organisational performance and competitive

advantage.

5.2 Justification of Research Objectives

5.2.1 To understand the level of strategic alignment between IS-IT plan and business plan in

the Cement and Paint Industry of Bangladesh

Through case studies done on Lafarge and Berger the research reflected that the level of strategic

alignment in the Cement industry is significantly stronger than in the Paint industry, leading to

higher levels or organisational effectiveness and performance of firms’ in the Cement industry.

5.2.2 To evaluate how strategic alignment influences the contribution of IS in Lafarge and

BPBL

From the research it is evident that the contribution of IS-IT has been considerable leading to

synergic improvements through strategic alignment at Lafarge; while at Berger the absence of

effectual strategic alignment has lead to under utilisation of its IS-IT capabilities and

infrastructure.

5.2.3 To examine the benefits and challenges of strategic alignment

The researcher has found that internal resource constraints such as time requirement, human

resource adaptability and financial considerations have impeded the process of strategic

alignment at Berger. Whilst advantages provided by IS such as lower cost and product

differentiation, and influencing buyers to switch to Lafarges product has persuaded the degree of

strategic alignment at Lafarge.



5.2.4 To analyse how strategic alignment can be a source of Competitive Advantage

According to the analysis done on both Lafarge and Berger it is evidential that strategic

alignment has indeed provided Lafarge with a competitive edge. However at Berger IS-IT

functions only acts as a supportive tool to gain competitive advantage.

5.2.5 To demonstrate how strategic alignment can create value for firms in Bangladesh

Based on the study of Lafarge whose practices conformed to the strategic management theory of

alignment versus Berger that did not; total returns to investors were significantly higher for the

former group as compared to the latter. Thus, competitive IS practices and strategic alignment

should lead to higher total returns for firms in Bangladesh that employ them correctly.



Chapter 6: Recommendation

6.1 RecommendationThe detailed research model recommended in Figure 6.1 is supported by the various

conceptualizations from the Contingency theory, Resource Based View approach and Strategic

Management perspective. Uncertainty in the external environment affects the importance of IS to

the firm. Where IS is valued as a strategic asset, top management should perceive IS positively,

as existing and future IS applications will include strategic benefits, and the information intensity

of products and services as well as value chain activities will generally be higher.

The importance of IS resources to the firm should directly influence key IS planning practices.

Distinctive IS management practices will result in the utilization of IS resources for competitive

advantage. Participation in business planning which results in increased understanding between

the IS executive and the CEO, will consequently heighten the strategic value of IS resources to

create an asset and a unique core competency. This can be evidenced by the effective use of

information systems to support business strategy and to develop new innovative strategies.

Key IS practices can directly influence the alignment of IS strategy with business strategy. Thus

linking business planning and IS planning will result in an integrated plan of missions and

strategies that more fully utilizes IS resources. Alignment of the IS plan and the business plan

assures a mapping of IS applications to business strategies that support the firm's goals.

Alignment of IS strategy with business strategy directly influences the use of IS applications to

provide competitive advantage. Therefore improved utilization of IS resources resulting from a

shared knowledge of IS-based opportunities will lead to competitive applications prescribed in


This chapter provides recommendation for effective strategic alignment of IS-IT strategy

with the business strategy. It also includes limitations of the study and implications for

practitioners as well as for further research.


strategic management theory. Alignment will leverage the firm's investments by using IS to

deploy firm assets more efficiently, to create inter organisational efficiencies via electronic data

interchange, and to support decision making by employing decision support systems and

executive information systems. Thus, the process if applied effectively has the potential for

creating a unique and intangible asset that, as the resource-based view notes, can create a

significant difference in profitability as compared to firms that do not possess such an asset.

Fig 6.1: Model for Effective Alignment of Information Systems Strategy with Business Strategy



6.2 Limitations of the StudyWhile the contributions of this study are felt to be important, there are several limitations that

require consideration. Firstly, this study used a mailing list to carry out its survey that had a low

delivery rate. Despite assurances of the quality of the list, telephone follow-ups revealed that a

significant percentage of the recipients were no longer employed by the company and that the

surveys were, therefore, undeliverable. Secondly, Likert scales used for primary data analysis

relied on the beliefs and attitudes of the employees. As such, the measures are subject to each

participant's attitudes and beliefs formed by their own unique experiences. Thirdly, this paper is

based on case studies of only two companies operating in two different industries in Bangladesh

– Lafarge Surma Cement and Berger Paints. Therefore the data collected from both primary and

secondary sources and the application of it on this study’s findings and conclusion may not be

sufficient and at times contradictory when compared to the broad range of firms in Bangladesh.

6.3 Implications for PractitionersThese findings are especially relevant for practitioners seeking ways to improve market share

and increase profitability. They support the notion that strategic alignment is an important

method for achievement of its financial goals. Hence practitioners might consider increasing

their efforts to achieve alignment so they can positively impact organisational performance. The

findings are also consistent with the expectation that the cooperation and communication of IS

and business executives in IS planning can influence alignment. Thus practitioners interested in

improving market share and profitability might consider encouraging and cultivating that

cooperation and communication.

From a practitioner perspective, the findings suggest that when information is important (as

reflected in value chain activities), then such cooperation and communication are more likely to

prevail. This suggests that where information is not as important in an organisation's value chain,

managers who advocate the establishment of IS-based competitive advantage should expect to

take more diligent efforts to convince IS and business executives to cooperate and communicate.

For many organisations, the IS function is relegated to the traditional role of support. For the

aggressive organisation, however, analysis of IS opportunities could be rewarded by future IS



based practices that offer a strategic advantage. Opportunities exist where there is evidence that

such an asset could be produced by adjusting the information component of the value chain.

6.4 Implications for Future ResearchThis study can make several contributions to future research. First, it provides a direction for

using the resource based view of the firm in strategic information systems research. Successful

managerial attributes can create invisible IS-IT unique assets via causal ambiguity; e.g., the

ambiguity surrounding complex causal connections that cannot easily be imitated. One approach

to developing a unique firm asset is to develop IS strategic management practices as distinctive

firm competencies. If these practices exist, they should be nurtured, and if they do not exist, they

should be developed carefully.

The proposed model could easily be modified for further research. The construct alignment of

the business plan with the IS plan could be dropped in favor of the construct IS performs

strategic planning practices.

Further investigation might also consider the potential effects of environmental uncertainty upon

the importance of IS needs to the firm. Teo (2008) found external forces to be less influential

than internal forces. This perhaps could be a reflection that IS managers do not make themselves

aware of outside threats and opportunities or incorporate these into the IS plan. An improved

measure for environmental uncertainty in future research might increase its importance to the

model so that it could serve as an instructive, independent variable.

Finally the data obtained from employees and management could be matched and compared to

provide valuable insights. Poor communications between top management and the IS executive

could lead to less than effective application of important IS resources. If research reveals low

perceptual agreement between top management, IS management and employees, then it is likely

that the role of IS is not well defined within the organisation.



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Appendices

Appendix A

Questionnaire for Employees

Please tick one correct answer of your choice for each of the following questions.

SA: Strongly Agree=5, A: Agree=4, N: Neutral=3, D: Disagree=2, SD: Strongly Disagree=1

SA A N D SD

● The following questions concerns the External Business

Environment

1. The product or service technologies in your industry changes very

quickly and impacts strategic alignment

2. In your industry there is a considerable diversity in the following:

a. customer buying habits

b. nature of competition

c. product lines

3. In your industry the external environment is dynamic and

heterogeneous

4. The survival of your industry is dependent upon tough price

competition and product/service differentiation

● The following questions concerns IS planning

5. The company prepares a structured business and IS plan

6. The CEO participates in IS planning and has frequent meetings

with IS management

7. IS performs planning practices to:

a. create decision support systems for middle and top management

b. create a companywide IS infrastructure appropriate for

organizational goals

c. create information partnerships with suppliers and customers

8. IS planning exploits company’s distinctive competencies

● The following questions concerns Strategic Importance of IS



9. The organization uses IS for its critical success and to gain

competitive advantage

SA A N D SD

10. Do you agree that existing and future IS have a strategic impact

11. Do you agree that IS application frequently have intangible

benefits that are important but cannot be measured by traditional

means

12. With respect to your company’s core products and services IS

has been used to provide advantages such as lower costs or product

differentiation

13. With respect to your customers and suppliers IS has been used

to:

a. make it more costly for your customers to change suppliers

b. influence the buyers decision to switch to your product

14. The daily operations of your business are critically dependent on

IS

● The following questions concerns Alignment of IS strategy

and Business Strategy

15. The IS plan reflects the business

a. mission

b. goals

c. strategies

16. The IS plan reflects the business resource constraints

17. The business plan utilizes specific IS capabilities and

applications

18. The IS plan is aligned with the business plan

19. The business plan refers to the IS plan

20. The business plan is aligned with the IS plan

Thank You for your kind co-operation



Focus Group Questionnaire (for Management)

1. Do you feel Information System and Information Technology (IS-IT) enables your firm to

compete in new ways? Explain.

2. What is the strategic implication of IS-IT in your organization?

3. What role does top management play in formulating IS-IT strategy and how frequently do they

and IT professionals together participate in business planning?

4. To what extent do you agree that IS enables your organization to exploit its distinctive

competencies?

5. Please explain the way IS-IT can serve as a source of competitive advantage for your

organization.

6. To what extent thus current IS strategy reflects the business missions and goals?

7. Does your IS-IT reflect the business resource constraints?

8. To what extent is your IS-IT strategy aligned with your business strategy?

9. To what extent does the company rely on IS-IT both internally and externally?

10. To what degree does the IS plan support the business strategy?

Thank You for your kind co-operation



Appendix B: Berger Paints



Continuation of Appendix B - Slides on ERP Implementation at Berger



Appendix C: Lafarge



Continuation of Appendix C…


Final Dissertation Tamima

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