is org strategy

8/13/2019 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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