Final Dissertation Tamima

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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 StudiesBy

Tamima Shan ChowdhuryID 0014OTOT1008

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

DeclarationI 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 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: .

Tamima Shan Chowdhury

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

AbstractThis 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 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.

Tamima Shan Chowdhury

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

AcknowledgementI 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.

Tamima Shan Chowdhury

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

Table of ContentsChapter 1: Introduction1.1 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 MNCs................................................................................................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

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

Chapter 2: Literature Review2.1 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 Venkatramans Model of Strategic Alignment............................................................29 2.5.2 Kings Input-Process-Output-Impact Model................................................................31 2.5.3 Jangs Contingency Model of SISP............................................................................33 2.5.4 Reichs Research Model.............................................................................................33

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

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 Summary36

Chapter 3: Research Methodology3.1 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).........................