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Strategic AdvantageCompetitive Strategy ConceptsStrategic Uses of Information TechnologyThe Value ChainSection IICustomer –Focused BusinessReengineering ProcessesThe Virtual Co.Building a Knowledge-Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-1
Real World Cases
Competing with Competing with Information Information TechnologyTechnology
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Strategic AdvantageCompetitive Strategy ConceptsStrategic Uses of Information TechnologyThe Value ChainSection IICustomer –Focused BusinessReengineering ProcessesThe Virtual Co.Building a Knowledge-Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-2
Real World Cases
Learning ObjectivesLearning Objectives1. Identify several basic competitive
strategies and explain how they can use information technologies to confront the competitive forces faced by a business.
2. Identify several strategic uses of Internet technologies, and give examples of how they give competitive advantages to a business.
3. Give examples of how business process reengineering frequently involves the strategic use of Internet technologies.
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-3
Real World Cases
Learning ObjectivesLearning Objectives4. Identify the business value of
using Internet technologies to become an agile competitor or to form a virtual company.
5. Explain how knowledge management systems can help a business gain strategic advantages.
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-4
Real World Cases
FundamentalsFundamentalsof Strategic Advantageof Strategic Advantage
Strategic IT• Supports Efficient Business
Operations• Workgroup or Enterprise
Collaboration• Effective Business Decisions Real World Case 1- GE,Dell, Intel, and Others Click to go to
Case 1
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Strategic AdvantageCompetitive Strategy ConceptsStrategic Uses of Information TechnologyThe Value ChainSection IICustomer –Focused BusinessReengineering ProcessesThe Virtual Co.Building a Knowledge-Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-5
Real World Cases
Competitive Strategy ConceptsStrategic Information Systems
• Support Competitive Position
• Can Be Any Kind of Information System
• Gain Competitive Advantage
• Reduce a Competitive Disadvantage
Strategic AdvantageStrategic Advantage
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Strategic AdvantageCompetitive Strategy ConceptsStrategic Uses of Information TechnologyThe Value ChainSection IICustomer –Focused BusinessReengineering ProcessesThe Virtual Co.Building a Knowledge-Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-6
Real World Cases
Strategic AdvantageStrategic AdvantageCostLeadership
Differentia-tion
Innovation
Growth
Alliance
OtherStrategies
Rivalry ofCompetitors
Threat ofNew
Entrants
Threat ofSubstitutes
BargainingPower of
Customers
BargainingPower ofSuppliers
Competitive Forces
Com
peti
tive
Str
ateg
ies
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Strategic AdvantageCompetitive Strategy ConceptsStrategic Uses of Information TechnologyThe Value ChainSection IICustomer –Focused BusinessReengineering ProcessesThe Virtual Co.Building a Knowledge-Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-7
Real World Cases
Strategic AdvantageStrategic AdvantageOther Competitive Strategies
•Lock in Customers•Lock in Suppliers•Switching Costs•Barriers to Entry•Leverage Investment in IT
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-8
Real World Cases
Wal-Mart and Others• Satellite Network Linking all
Point-of-Sale Terminals• Immediate Sales and Inventory
Information• Extended to Customers and
Suppliers• Interenterprise Information
Systems• Stockless Inventory
Replenishment Systems
Strategic AdvantageStrategic Advantage
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Strategic AdvantageCompetitive Strategy ConceptsStrategic Uses of Information TechnologyThe Value ChainSection IICustomer –Focused BusinessReengineering ProcessesThe Virtual Co.Building a Knowledge-Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-9
Real World Cases
Value Chain & Strategic ITValue Chain & Strategic ITSupport Processes
• Administrative Coordination and Support Services
• Human Resources Management
• Technology Development• Procurement of
Resources
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Strategic AdvantageCompetitive Strategy ConceptsStrategic Uses of Information TechnologyThe Value ChainSection IICustomer –Focused BusinessReengineering ProcessesThe Virtual Co.Building a Knowledge-Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-10
Real World Cases
Value Chain & Strategic ITValue Chain & Strategic ITPrimary Business Processes
• Inbound Logistics
• Operations
• Outbound Logistics
• Marketing and Sales
• Customer Service
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-11
Real World Cases
Value Chain & Strategic ITValue Chain & Strategic IT
CO
MP
ET
ITIV
EA
DV
AN
TA
GE
SU
PP
OR
TP
RO
CE
SS
ES
PR
IMA
RY
BU
SIN
ES
SP
RO
CE
SS
ES
Administrative Coordination & Support Services
Human Resources Management
Technology Development
Procurement of Resources
Collaborative Workflow IntranetCollaborative Workflow Intranet
Employee Benefits IntranetEmployee Benefits Intranet
Product Development Extranet with PartnersProduct Development Extranet with Partners
E-Commerce Web Portals for SuppliersE-Commerce Web Portals for Suppliers
InboundLogistics
AutomatedAutomatedJust-in-TimeJust-in-TimeWarehousingWarehousing
OperationsOutboundLogistics
Marketing& Sales
CustomerService
Computer-Computer-AidedAided
FlexibleFlexibleManufactu-Manufactu-
ringring
OnlineOnlinePoint-of-SalePoint-of-Sale
And OrderAnd OrderProcessingProcessing
TargetTargetMarketingMarketing
CustomerCustomerRelation-Relation-shipshipManage-Manage-mentment
The Value Chain of a FirmThe Value Chain of a Firm
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-12
Real World Cases
Using IT forUsing IT forStrategic AdvantageStrategic Advantage
Strategic Uses of IT• Major Competitive
Differentiator• Use IT to Develop
Competitive AdvantageReal World Case 2- Intec Engineering: Click to go to
Case 2
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-13
Real World Cases
Using IT forUsing IT forStrategic AdvantageStrategic Advantage
Building a Customer-Focused Business
• Building Customer Value• Fast Response to
Individual Customer Needs
• Use of Internet, Intranets, and Extranets
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-14
Real World Cases
Using IT forUsing IT forStrategic AdvantageStrategic Advantage
Hilton Hotels• Hilton.Com Reservation
System• Services Tailored
Automatically to Last Visit• High Level of Personalization• Deeper Personal Relationship• Direct-to-Customer Business
Model Via the Web
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-15
Real World Cases
Building Customer ValueBuilding Customer Value
Build a WebCommunity of
Customers, etc.
CustomersCheck Own
History
Web Personal-ization Builds
Loyalty
EmployeeView of
Customer isComplete
CustomerDatabase
TransactionDatabase
CustomerOrders ThroughPartners
CustomerDatabase by
Preferences &Profitability
CustomerPlace Orders
Directly
CustomersLinked With Distribution
IntranetsIntranets InternetInternet
IntranetsIntranetsExtranetsExtranets
IntranetsIntranetsExtranetsExtranets
InternetInternet
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-16
Real World Cases
Reengineering Business ProcessesReengineering Business Processes
Level of Change
ProcessChange
Primary Enabler
Time Required
Path toExecution
Risk
BusinessImprovement
BusinessReengineering
Incremental Radical
Improved NewVersion of Process
Brand NewProcess
HighModerate
Information TechnologyStatistical Control
Clean SlateExisting Processes
Broad, Cross-Functional
Narrow, WithinFunctions
Typical Scope
LongShort
Cultural Cultural Structural
Participation Bottom-up Top-down
Horizon Past and Present Future
Frequency ofChange
One-time orContinuous
Periodic One-timeChange
Starting Point
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-17
Real World Cases
Order Management ProcessOrder Management Process
PROPOSAL
COMMITMENT
CONFIGURATION
CREDIT
CHECKING
DELIVERY
BILLING
COLLECTIONS
Bu
sin
ess
Pro
cess
esB
usi
nes
sF
un
ctio
ns
SALES
MANUFACTURINGFINANCE
LOGISTICS
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-18
Real World Cases
Johnson Controls:Success with Reengineering
• Web-Based Reengineering Project
• Fixing a Problem During Engineering Costs 1/10 of Correction at the Prototype Stage
• Web-Based Collaboration Saved 80% on R&D Investments
Order Management ProcessOrder Management Process
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-19
Real World Cases
Reengineering Order Reengineering Order ManagementManagement
• Customer Relationships Using Intranets and the Internet
• Supplier Managed Inventories Using the Internet
• Cross-Functional ERP Software Integrating Manufacturing, Distribution, Finance, and Human Resource Processes
• Customer-Access to Web Order Entry, Status-Checking, Payment, and Services
• Customer, Product, and Order Status Databases accessed via Intranets and Extranets by Employees and Suppliers
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-20
Real World Cases
Agilent Technologies:Failure in Reengineering
• Rocky ERP Reengineering Project
• Lost $105 Million in Revenue and $70 Million in Profits
• Implementation Disruptions More Extensive than Expected
• ERP Changes Affect People, Processes, Policies, and Company Culture
Reengineering Order Reengineering Order ManagementManagement
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-21
Real World Cases
Becoming an Agile Becoming an Agile CompanyCompany
1. Customers Perceive Products and Services as Solutions to their Individual Problems
2. Cooperates with Customers, Suppliers, and Even Competitors to Bring Products to Market Quickly and at Lowest Cost
3. Organized to Thrive on Uncertainty
4. Leverages the Impact of its People and Knowledge
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-22
Real World Cases
Becoming an Agile Becoming an Agile CompanyCompany
Dell Computer – Agility in Action
• Customer-Focused Company• Champion of Mass
Customization• Build-to-Order Business Model• 25,000 on a Typical Day• Tight Supply Chain
Management• Rarely More than Two Hours
Worth of Parts Inventory
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-23
Real World Cases
The Virtual CompanyThe Virtual CompanyInterenterprise ISInterenterprise IS
Boundary of a Firm
CustomerResponseand Order-FulfillmentTeams
ManufacturingTeams
EngineeringTeams
Cross-FunctionalTeams
Alliance -Complementary
Services
Alliance -Major
Customer
Alliance -Major
Supplier
Alliance -Small
Suppliers
Alliance -Subcontractors
Intranets
Ext
ran
ets
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-24
Real World Cases
Virtual Company StrategiesVirtual Company Strategies• Share Infrastructure and Risk with
Alliance Partners• Link Complementary Core
Competencies• Reduce Concept-to-Cash Time
Through Sharing• Increase Facilities and Market
Coverage• Gain Access to New Markets and
Share Market or Customer Loyalty• Migrate from Selling Products to
Selling Solutions
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-25
Real World Cases
Virtual Company StrategiesVirtual Company StrategiesCisco Systems: Virtual
Manufacturing Alliances• Alliances Create a Virtual
Manufacturing Company• Three Companies Involved in
the Alliance• Provides and Agile Build-to-
Order Capability in Fiercely Competitive Industry
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-26
Real World Cases
Knowledge Creating CompanyKnowledge Creating Company
Learning Organizations
Knowledge Management
Explicit Knowledge
Knowledge Management Systems (KMS)
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-27
Real World Cases
Knowledge ManagementKnowledge Management
Document Management
InformationCreation, Sharing,and Management
EnterpriseIntelligence
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-28
Real World Cases
Siemens AG: Global Knowledge Management System
• Stop Employee Problem of Knowledge Hoarding
• Created ShareNet Web Site• Profitable Real-time
Worldwide CollaborationReal World Case 3- Yellow, JetBlue and Gentex:
Knowledge ManagementKnowledge Management
Click to go toCase 3
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-29
Real World Cases
SummarySummaryStrategic Uses of Information Technology
• Cut Costs• Differentiate and Innovate
Products and Services• Promote Growth• Develop Alliances• Lock in Customers & Suppliers• Create Switching Costs• Create Barriers to Entry• Leverage IT Investment• Develop Competitive Advantage
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-30
Real World Cases
SummarySummaryBuilding a Customer-Focused Business
• Develop Business Value• Make Customer Value the
Strategic Focus• Use of Internet, Intranets,
and Extranets to Track and Serve Customer Needs and Interests
• Provide Services Tailored to Specific Customer Needs
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-31
Real World Cases
SummarySummaryReengineering Business
Processes• Enable Radical Changes to
Business Processes• Improves Efficiency and
Effectiveness• IT Supports Innovative
Changes in Work Flows, Job Requirements, and Organizational Structures in a Company
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-32
Real World Cases
SummarySummaryBecoming an Agile Company• Rapid Response to Market
Changes• Broad Product Ranges• Short Model Lifetimes• Heavy Dependence Upon IT
to Respond to Customer’s Unique Situations
• Enhance Cost Effectiveness
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-33
Real World Cases
SummarySummaryCreating a Virtual Company
• Use of Internet and IT Provide Computing and Communications Resources
• IT Enables Management of a Network of People, Knowledge, Financial, and Physical Resources
• Takes Advantage of Rapidly Changing Markets
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-34
Real World Cases
SummarySummaryBuilding a Knowledge-Creating
Company• Creates a Lasting
Competitive Advantage• Innovative Use of
Organization Knowledge• Supports Development and
Management of New Organization Knowledge
• Integrates Into New Products and Services
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-35
Real World Cases
KEY TERMSKEY TERMSAgile CompetitorBusiness Process ReengineeringCompetitive ForcesCompetitive StrategiesCreating Switching CostsCustomer-Focused e-businessIdentifying e-business and e-
commerce StrategiesKnowledge-Creating CompanyKnowledge Management System
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-36
Real World Cases
KEY TERMSKEY TERMSLeveraging Investment in ITLocking in Customers and
SuppliersRaising Barriers to EntryStrategic Information SystemStrategic uses of Information
TechnologyStrategic uses of Internet
TechnologiesTotal Quality ManagementValue ChainVirtual Company
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-37
Real World Cases
Real World Case 1 G.E., Dell, Intel, and Others: The Competitive Advantage of I.T.
Click to go toCase 1
Real World Case 2 Intec Engineering Company: The Strategic Value of Knowledge Information Systems
Click to go toCase 2
Optional Case StudiesOptional Case Studies
Real World Case 3 Yellow, JetBlue, and Gentex: Using I.T. for Competitive Advantage
Real World Case 4 CDW and Harrah’s Entertainment: Developing Strategic Customer-Loyalty Systems
Click to go toCase 3
Click to go toCase 4
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-38
Real World Cases
Computer HardwareChapter 3
Module II – Information Technologies
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-39
Real World Cases
GE - Dell - IntelGE - Dell - Inteland Others:and Others:
1.1. Do you agree with the Do you agree with the argument made by Nick argument made by Nick Carr to support his Carr to support his position that IT no longer position that IT no longer gives companies a gives companies a competitive competitive advantage? advantage? Why or why not?Why or why not?
The Competitive Advantage ofThe Competitive Advantage ofInformation TechnologyInformation Technology
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Return toChapter 2
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-40
Real World Cases
GE - Dell - IntelGE - Dell - Inteland Others:and Others:
• IT costs now the same as other traditional costs and as such do not have as great an impact on a company’s strategic planning.
• If all companies in an industry invest in similar levels of IT then IT cannot be a strategic advantage to a given company.
• The IT infrastructure changes rapidly and requires a continual investment in new IT and impacts a company’s strategic planning.
• The IT infrastructure’s continual improvements allow a company to adjust the mix of traditional resources such as physical and human resources.
Discussion points would Discussion points would include the following:include the following:
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-41
Real World Cases
GE - Dell - IntelGE - Dell - Inteland Others:and Others:
The Competitive Advantage ofThe Competitive Advantage ofInformation TechnologyInformation Technology
2.2. Do you agree with the Do you agree with the argument made by the argument made by the business leaders in this business leaders in this case in support of the case in support of the competitive advantage competitive advantage that IT can provide to a that IT can provide to a business? Why or why business? Why or why not?not?
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-42
Real World Cases
GE - Dell - IntelGE - Dell - Inteland Others:and Others:
• The productivity lifeblood for a service oriented company is IT and not plants and equipment.
• How it is used determines the competitive advantage of the IT infrastructure.
• Some segments of the IT infrastructure are reaching maturity and not much can be gained by additional changes; however other areas aren’t close to maturity and gains in competitive advantage can still be made.
• All companies are not at the same level of IT usage and you cannot generalize that increased IT expenditures no longer have value to a company.
Discussion points would Discussion points would include the following:include the following:
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-43
Real World Cases
GE - Dell - IntelGE - Dell - Inteland Others:and Others:
The Competitive Advantage ofThe Competitive Advantage ofInformation TechnologyInformation Technology
3.3. What are several ways that What are several ways that IT could provide a IT could provide a competitive advantage to a competitive advantage to a business? Use some of the business? Use some of the companies mentioned in this companies mentioned in this case as examples. Visit their case as examples. Visit their websites to gather more websites to gather more information to help you information to help you answer. answer.
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-44
Real World Cases
GE - Dell - IntelGE - Dell - Inteland Others:and Others:
• Improve the customer relationship management system.
• Create new uses for information to remain competitive.
• Leveraging the knowledge-capital as an integral part of strategic planning.
• Determining the best mix of knowledge, software and hardware to be highly competitive.
Ways to provide a competitiveWays to provide a competitiveadvantage may include:advantage may include:
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-45
Real World Cases
GE - Dell - IntelGE - Dell - Inteland Others:and Others:
• Improve the customer relationship management system.
• Create new uses for information to remain competitive.
• Leveraging the knowledge-capital as an integral part of strategic planning.
• Determining the best mix of knowledge, software and hardware to be highly competitive.
• Improve the value chain for the company.
Ways to provide a competitiveWays to provide a competitiveadvantage may include:advantage may include:
Return toCases Page
Return toChapter 2
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-46
Real World Cases
1.1. What is the potential value What is the potential value for competitive advantage for competitive advantage that a business might gain that a business might gain from knowledge from knowledge management systems? Why management systems? Why might this value be difficult might this value be difficult to measure?to measure?
Intec Engineering:Intec Engineering:The Strategic Value of KnowledgeThe Strategic Value of Knowledge
Management SystemsManagement Systems
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Return toChapter 2
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-47
Real World Cases
• Quickly building new knowledge into its products and services.
• Facilitate organizational learning and knowledge creation.
• Provide rapid feedback to knowledge workers by encouraging behavior changes in employees and improving business performance.
• Help company become more innovative as an agile provider of high-quality products and customer services.
• Help company become a formidable competitor in the marketplace.
Intec Engineering:Intec Engineering:Discussion points would Discussion points would include the following:include the following:
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-48
Real World Cases
Intec Engineering:Intec Engineering:The Strategic Value of KnowledgeThe Strategic Value of Knowledge
Management SystemsManagement Systems
2.2. Do you approve of how Do you approve of how Intec Engineering is Intec Engineering is measuring the value of measuring the value of their KMS? Why or why their KMS? Why or why not? How else could the not? How else could the strategic value of their strategic value of their KMS be measured?KMS be measured?
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-49
Real World Cases
• The value of the KMS can be quantified.
• The quality of the KMS is not adequately measured.
• The focus on measuring the value of the KMS permits Intec to consider the value of their employees’ time.
• The real value is one of Intec being able to expand its knowledge base through questions being answered.
Intec Engineering:Intec Engineering:Points to consider would include:Points to consider would include:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-50
Real World Cases
Intec Engineering:Intec Engineering:The Strategic Value of KnowledgeThe Strategic Value of Knowledge
Management SystemsManagement Systems
3.3. Does Intec’s knowledge Does Intec’s knowledge management system management system give them a competitive give them a competitive advantage? Give several advantage? Give several examples from the case examples from the case to support your answer.to support your answer.
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-51
Real World Cases
• The Beijing project with different specifications
Intec Engineering:Intec Engineering:The Strategic Value of KnowledgeThe Strategic Value of Knowledge
Management SystemsManagement Systems
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-52
Real World Cases
• The Beijing project with different specifications
• The prospective customer in Australia
Intec Engineering:Intec Engineering:The Strategic Value of KnowledgeThe Strategic Value of Knowledge
Management SystemsManagement Systems
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-53
Real World Cases
• The Beijing project with different specifications
• The prospective customer in Australia
• Ability to reduce the time of projects for clients so daily revenue is generated sooner by the client
Intec Engineering:Intec Engineering:The Strategic Value of KnowledgeThe Strategic Value of Knowledge
Management SystemsManagement Systems
Return toCases Page
Return toChapter 2
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-54
Real World Cases
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Using Information TechnologyUsing Information Technology for Competitive Advantagefor Competitive Advantage
1.1. What strategies in the What strategies in the use of IT for use of IT for competitive advantage competitive advantage are being used by each are being used by each of the companies in this of the companies in this case? Explain your case? Explain your choices.choices. Return to
Cases Page
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-55
Real World Cases
Progressive – Progressive – • Lower Costs• Differentiate• Innovate• Promote Growth• Leverage investment in IS
people, hardware, software, databases, and networks from operational uses into strategic applications.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Choices would include:Choices would include:
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Copyright 2005, McGraw-Hill/Irwin, Inc. 2-56
Real World Cases
Yellow –Yellow –• Lower Costs• Innovate• Leverage investment in IS
people, hardware, software, databases, and networks from operational uses into strategic applications.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Choices would include:Choices would include:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-57
Real World Cases
JetBlue – JetBlue – • Lower Costs• Differentiate• Innovate• Develop interenterprise
information systems to create switching costs.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Choices would include:Choices would include:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-58
Real World Cases
Gentex –Gentex –• Lower Costs• Promote Growth• Leverage investment in IS
people, hardware, software, databases, and networks from operational uses into strategic applications.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Choices would include:Choices would include:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-59
Real World Cases
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Using Information TechnologyUsing Information Technology for Competitive Advantagefor Competitive Advantage2.2. Visit the website of one Visit the website of one
these companies for more these companies for more information on their information on their business. What other business. What other competitive strategies competitive strategies could you recommend for could you recommend for this company? Explain this company? Explain your recommendations.your recommendations.
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-60
Real World Cases
Progressive – Progressive – •Develop Alliances•Develop interenterprise systems creating switching costs that lock in customers.
•Include IT components in services to make substitution of competing services more difficult.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Choices would include:Choices would include:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-61
Real World Cases
Yellow –Yellow –•Differentiate •Develop alliances •Develop interenterprise systems creating switching costs that lock in customers.
•Include IT components in services to make substitution of competing services more difficult.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Choices would include:Choices would include:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-62
Real World Cases
JetBlue –JetBlue – •Promote Growth•Develop Alliances•Include IT components in services to make substitution of competing services more difficult.
•Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Choices would include:Choices would include:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-63
Real World Cases
Gentex –Gentex –•Innovate•Develop Alliances•Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications.
•Include IT components in services to make substitution of competing services more difficult.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Choices would include:Choices would include:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-64
Real World Cases
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Using Information TechnologyUsing Information Technology for Competitive Advantagefor Competitive Advantage3.3. How could other How could other
companies apply the companies apply the competitive strategies being competitive strategies being used by the companies in used by the companies in this case? Use examples this case? Use examples from both a large and small from both a large and small business perspective to business perspective to illustrate your answer.illustrate your answer.
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-65
Real World Cases
• Maintain or increase investment in IT to improve operating activities if they can be improved.
• Use investment in IT to be innovative to distinguish company from competition.
• IT can be used to develop alliances with customers and suppliers.
• Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Large business perspective –Large business perspective –
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-66
Real World Cases
• Maintain or increase investment in IT to improve operating activities if they can be improved.
• Use the investment in IT to establish alliances for the first time.
• Use IT to differentiate your company from the competition.
• Use IT to be innovative to distinguish your company from the competition.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Small business perspective –Small business perspective –
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-67
Real World Cases
• The use of IT can permit a larger company to develop interenterprise systems.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Using Information TechnologyUsing Information Technology for Competitive Advantagefor Competitive Advantage
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-68
Real World Cases
• The use of IT can permit a larger company to develop interenterprise systems.
• IT can create barriers to restrict competition from entering the marketplace.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Using Information TechnologyUsing Information Technology for Competitive Advantagefor Competitive Advantage
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-69
Real World Cases
• The use of IT can permit a larger company to develop interenterprise systems.
• IT can create barriers to restrict competition from entering the marketplace.
• IT can be leveraged to advance the company into more profitable uses for strategic applications.
Progressive - Yellow Progressive - Yellow JetBlue and Gentex:JetBlue and Gentex:
Using Information TechnologyUsing Information Technology for Competitive Advantagefor Competitive Advantage
Return toCases Page
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-70
Real World Cases
CDW and Harrah’s CDW and Harrah’s Entertainment:Entertainment:
Developing Strategic Customer-Developing Strategic Customer-Loyalty SystemsLoyalty Systems
Return toCases Page
1.1. Does CDW’s customer Does CDW’s customer loyalty program give loyalty program give them a competitive them a competitive advantage? Why or why advantage? Why or why not?not?
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-71
Real World Cases
• Loyalty program is a system that differentiates CDW from its competitors.
• CDW used IT in an innovative way to move beyond a CRM package to a system that measures customer satisfaction and loyalty.
• The loyalty program provides CDW with an alliance strategy with its customers by locking in the customers to the CDW system.
CDW and Harrah’s CDW and Harrah’s Entertainment:Entertainment:
Discussion points to consider:Discussion points to consider:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-72
Real World Cases
CDW and Harrah’s CDW and Harrah’s Entertainment:Entertainment:
Developing Strategic Customer-Developing Strategic Customer-Loyalty SystemsLoyalty Systems
2.2. What is the strategic What is the strategic value of Harrah’s value of Harrah’s approach to approach to determining and determining and rewarding customer rewarding customer loyalty?loyalty?
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-73
Real World Cases
• Differentiate Harrah from its competitors in terms of service to different groups of customers.
• Promote growth through improved targeting of multiple customer groups on a real-time basis.
• Creating switching costs in multiple customer groups to lock customers in all groups into continuing to have loyalty to Harrah’s.
CDW and Harrah’s CDW and Harrah’s Entertainment:Entertainment:
Discussion points to consider:Discussion points to consider:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-74
Real World Cases
CDW and Harrah’s CDW and Harrah’s Entertainment:Entertainment:
Developing Strategic Customer-Developing Strategic Customer-Loyalty SystemsLoyalty Systems
3.3. What else could CDW What else could CDW and Harrah’s do to and Harrah’s do to truly become customer-truly become customer-focused businesses? focused businesses? Visit their websites to Visit their websites to help you suggest several help you suggest several alternatives.alternatives.
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-75
Real World Cases
CDW –CDW –• Online competitive pricing or auction
features as products age.• Web site redesign to improve
appearance.• Better leverage IT so that every order
is filled as quickly as possible by creating alliances with suppliers that permit direct shipment to customers to ensure best price and delivery for loyal customers.
CDW and Harrah’s CDW and Harrah’s Entertainment:Entertainment:
Suggestions could include:Suggestions could include:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-76
Real World Cases
Harrah’s -Harrah’s -• Leverage IT investments by
expanding the analytical mining of the data.
CDW and Harrah’s CDW and Harrah’s Entertainment:Entertainment:
Suggestions could include:Suggestions could include:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-77
Real World Cases
Harrah’s -Harrah’s -• Leverage IT investments by
expanding the analytical mining of the data.
• Differentiate Harrah’s from its competitors by using the data mining to expand products and services offered to repeat customers.
CDW and Harrah’s CDW and Harrah’s Entertainment:Entertainment:
Suggestions could include:Suggestions could include:
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KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-78
Real World Cases
Harrah’s -Harrah’s -• Leverage IT investments by expanding
the analytical mining of the data.• Differentiate Harrah’s from its
competitors by using the data mining to expand products and services offered to repeat customers.
• Use IT to develop new products and services that will attract new customers to Harrah’s.
CDW and Harrah’s CDW and Harrah’s Entertainment:Entertainment:
Return toCases Page
Suggestions could include:Suggestions could include: