Is Org Strategy
Transcript of Is Org Strategy
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Using IS To Achieve Competitive Advantage
Porters Competitive Force Model
Value Chain Model
Case Study
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USING INFORM TION SYSTEMS TOCHIEVE COMPETITIVEDV NT GE
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Access to special resources that others do nothave
They are able to use commonly availableresources more efficiently
They do better in terms of revenue growth,
profitability, or productivity growth(efficiency)
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Why do some firms do better than others and
how do they achieve competitive advantage?
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How can you analyze a business and identifyits strategic advantages?
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How can you develop a strategic advantagefor your own business?
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And how do information systems contributeto strategic advantages?
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Traditional Competitors
New Market Entrants
Substitute Products and Services
Customers
Suppliers
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INFORMATION SYSTEM STRATEGIES FORDEALING WITH COMPETITIVE FORCES
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low-cost leadership
product differentiation
focus on market niche
strengthening customer and supplier
intimacy
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Sears, have been spending 24.9 percent ofsales on overhead
Wal-Mart pays only 16.6 percent of salesrevenue for overhead.
Operating costs average 20.7 percent of
sales in the retail industry
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Google continuously introduces new andunique search services on its Web site, suchas Google Maps, Google Images, GMail.
Apple created iPod, a unique portable digitalmusic player, plus a unique online Web musicservice where songs can be purchased for 99
cents
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Dell Computer Corporation sells directly tocustomers using assemble-to-ordermanufacturing.
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Hilton Hotels uses a customer informationsystem called OnQ
Search through 180 million records to findcustomer details.
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Chrysler Corporation uses informationsystems to facilitate direct access fromsuppliers to production schedules
Amazon.com keeps track of user preferencesfor book and CD purchases
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Outbound logistics -storing and distributing theproduct Airline reservation system
Automated shipping scheduling systems
Sales and marketing -promoting and selling thefirms product
Industrial air conditioning firms provide computer-basedmodeling systems to help architects determine coolingrequirements for commercial properties
Otis elevator uses sensors in its equipment thatautomatically notify service centers before malfunctionsoccur
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Administration and management Voice mail and e-mail, intranets
Human resources Employee skills database, systems that facilitate compliance
with government regulations
Technology development -improving productsand the production process
An oil company uses infrared data gathered by satellite tosearch for oil deposits
CAD systems
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Procurement (purchasing inputs) On-line electronic auctions exist that provide access to
excess inventory
Retailers use on-line systems to access the inventoryfiles and production schedules of their suppliers
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Outputs of some units can be used as inputs toother units.
Two different organizations pool markets and
expertise
Result
Cost
& Profit
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Tie together the operations of disparatebusiness units so that they can act as awhole.
E.g.
US Airways & America West Airlines
Merging of Bank One with JP Morgan Chase
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A core competency is an activity for which afirm is a world-class leader.
A core competency relies on: Knowledge that is gained over many years of
experience
A first-class research organization.
simply key people who follow the literature andstay abreast of new external knowledge.
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Information System encourages sharing ofknowledge across business units enhancescompetency.
Help employees become aware of newexternal knowledge.
E.g. P&G uses extranet called InnovationNet
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Network Economics
Virtual Company Strategy
Business Ecosystems
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Traditional Economics
The economics of factories and agriculture.
Production experiences diminishing returns
Law of diminishing returns does not workevery time. E.g. eBay
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A virtual company uses networks to linkpeople, assets, and ideas.
One company can use the capabilities ofanother company without being physicallytied to the company.
Cheaper to acquire products, services orcapabilities from external vendors.
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GUESS, Levi Strauss, Reebok enroll HongKong based Li & Fung
Li & Fung handles product development, rawmaterial sourcing, production planning,quality assurance and shipping.
Li & Fung does not own any factories, fabricsor machines.
Outsources all of its work to a network ofmore than 7500 suppliers in 37 countries.
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Traditional Porter model assumes: A relatively static industry environment,
Relatively clear-cut industry boundaries; and
A relatively stable set of suppliers, substitutes,
and customers.
Some of todays firm participate in industrysets collection of industries that provide
related services and products.
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Business ecosystems can be characterized as havingone or a few keystone firms that dominate theecosystem and create the platforms used by otherniche firms.
E.g. Keystone Firms Microsoft, Wal-Mart, Amazon.com Niche Firms
Software application firms, that both support and rely onthe Microsoft products.
Wal-Marts order entry and inventory managements system
used by thousands of suppliers. Fortune 500 companies using Amazon.com to sell
products.
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Information systems alone cannot provide anenduring business advantage.
E.g.
Citibanks ATM system, now most banks haveATM.
Amazon.com was an e-commerce leader but
now faces competition from eBay, Yahoo!,and Google.
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Adopting the kinds of strategic systemsrequires changes in business goals,relationships with customers and suppliers,and business processes.
Strategic Transition is sociotechnical changesaffecting both social and technical elementsof the organizations.
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Using IS to Achieve Competitive Advantage
Porters Competitive Force Model
Traditional Competitors
New Market Entrants
Substitute Products and ServicesCustomers
Suppliers
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IS Strategies For Dealing With Competitive Forces Low Cost Leadership
Product Differentiation
Focus on Market Niche
Strengthening Customer and Supplier Intimacy
Business Value Chain Model Primary Activities
Support Activities
Synergies, Core Competencies and Network-Based Strategies. Network Economics
Virtual Company Strategy
Business Ecosystems
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