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Strategy and IS Describe the roles of business, organizational and IS
strategy Compare and contrast key strategy frameworks:
Porter’s three generic strategies and D’Aveni’s hypercompetition model
Compare and contrast key organizational strategy frameworks: Business Diamond, Managerial Levers
Discuss evolution of Information Resources Compare, contrast and apply: Porter’s competitive
forces model, value chain model and and Brandenburger and Nalebuff’s co-opetition model
Discuss the risks of using IS
Strategic Advantage
Does an organization need Information Systems to gain strategic advantage?
Information Systems Strategy Triangle
Business Strategy
Organizational Strategy
Information Strategy
Strategy - A PlanBusiness strategy drives organizational and
information systems strategy Information systems strategy - plan the
organization uses in providing information services Information systems strategy is affected by a firm’s
business and organizational strategiesOrganizational strategy - organization’s design as
well as the choices it makes to define, set up, coordinate and control its work processes
Remember interdependency!
Porter’s Three Generic Strategies
Cost leadership (lowest cost in industry)
Differentiation of products/servicesFocus (finding a specialized niche)
cost differentiation of product or services
Be Low Cost Producer - IT strategic if it can:
Help reduce production costs & clerical work
Reduce inventory, accounts receivable, etc.
Use facilities and materials betterOffer interorganizational
efficiencies
Produce Unique Product - IT strategic if it can:
Offer significant component of product
Offer key aspect of value chainPermit product customization to
meet customer’s unique needsProvide higher/unique level of
customer service/satisfaction
Fill Market Niche - IT strategic if it can:
Permit identification of special needs of unique target market
Spot and respond to unusual trends
D’Aveni’s Hypercompetition ModelFocused on turbulent environmentAdvantages are rapidly created and
easily erodedSustaining an advantage can be a
deadly distractionThe goal is disruption, not
sustainability, of advantageInitiatives are achieved with a series
of small steps
Four Arenas of Competitive Advantage
Cost/qualityTiming/know-howStrongholdsDeep pockets (short-term only)
Seven S’s
Superior Stakeholder SatisfactionStrategic Soothsaying Positioning for Speed Positioning for Surprise Shifting the rules of competition Signaling strategic intent Simultaneous and Sequential Strategic
Thrusts
Organizational Strategy Frameworks
Business DiamondManagerial Levers
Business Diamond: Hammer & Champy, 1994
Business Processes
Jobs & Structures Values & Beliefs
Management & Measurement Systems
Managerial Levers
Organizational Variables Decision rights Business processes Formal Reporting Relationships Information Networks
Control Variables Data Planning Performance Measurement & Evaluation Incentives & Rewards
Cultural Variable: Values
Evolution of Information Resources
Era I (1960s)
Era II (1970s) Era III (1980s)
Role of IT Efficiency Effectiveness Strategic
IT Justification
ROI Productivity & decision qlty
CompetitivePosition
Target ofSystems
Organization
Organization/group
Individual mgr/group
InformationModels
ApplicationSpecific
Data-driven User-driven
Value Basis
Scarcity Scarcity Scarcity
Evolution of Information Resources
Era IV (1990s) Era V (2000+)
Role of IT Strategic Value Creation
IT Justification
CompetitivePosition
Adding value
Target of Systems
Business processes, ecosystem
Customer, supplier, ecosystem
Information Models
Business-driven Knowledge-driven
Value Basis Plentitude Plentitude
Strategic Information Systems
IS that help gain strategic advantageSignificantly change manner in which
business supported by the system is done
Outwardly aimed at direct competitionInwardly focus on enhancing the
competitive positionCreate strategic alliances *IS can support business strategies
Unusual Suspects: Information Resources
Information systems infrastructureInformation and knowledgeProprietary technologyTechnical skills of the IT staffEnd users of the information systemRelationship between IT and business
managersBusiness processes
Firm Infrastructure(general management, accounting, finance, strategic planning)
Human Resource Management(recruiting, training, development)
Technology Development(R&D< product and process improvement)
Procurement(purchasing of raw materials, machines, supplies)
Su
pp
ort
Act
ivit
ies
Pri
mar
y A
ctiv
itie
s
InboundLogistics(rawmaterialshandlingandwarehous-ing)
Operations
(machineassembling,testing)
OutboundLogistics(warehous-ing anddistributionof finishedproduct)
Service
(installation,repair,parts)
Marketingand Sales(advertising,promotion,pricing,channelrelations)
Value Chain Model
Chain of basic activities that add to firm’s products or servicesPrimary activitiesSecondary activities
Includes firm’s larger value system (i.e., suppliers, buyers, channels)
Value Chain Primary Activities
InboundOutboundOperationsMarketing and SalesAfter-Sale Services
Value Chain Support Activities
Technology developmentProcurementHuman Resources ManagementManagement Control
accounting/finance coordination general management central planning
Competitive Forces
Threat of entry of new competition
Bargaining power of suppliersBargaining power of buyersThreat of substitute products or
servicesRivalry among existing firms
Strategies for Competitive Forces
Note - strength of force is determined by factors in industry
Gain a competitive edgeBuild defenses against forcesFormulate actions to influence
forces
Strategic Questions
Can IT create barriers to entry? (new entrants)
Can IT build in switching costs? (buyers)
Can IT strengthen customer relationships? (buyers)
Strategic Questions (cont)Can IT change the balance of
power in supplier relationships? (suppliers)
Can IT change the basis of competition? (competitors)
Can IT generate new products?(competitors, substitutes)
Searching for Specific Opportunities
What is the mode of the thrust? (offensive, defensive)
What is the direction of the thrust? (use, provide)
What is the strategic target of the thrust? (supplier, customer, competitor)
Brandenburger and Nalebuff’s Co-opetition
Optimally combining cooperation and competition
Value Net of competitors, complementors, customer, suppliers
Risks of IS SuccessChange the Basis of CompetitionPromote Litigation or RegulationAwake Sleeping GiantReflect Bad TimingAre Too Advanced Fail to Deliver What Users WantAre Implemented Poorly