Slide introduction to information ssstem 10th obien chap002 eng

• Identify several strategic uses of information technology and give examples of how they give competitive advantages to business.. • Identify several strategic uses of Internet techno

C h a p t e r

2

Competing

with

Information Technology

• Identify several basic competitive strategies

and explain how they can be used to confront the competitive forces faced by a business.

• Identify several strategic uses of information

technology and give examples of how they give competitive advantages to business.

• Identify several strategic uses of Internet

technologies for electronic business and

commerce, and give examples of each.

Chapter Objectives

• Give examples of how business process

reengineering involves the strategic use of

information technology.

• Identify how total quality management differs

from business process reengineering in its use

of information technology.

• Identify how information technology can be

used to help a company be an agile competitor,

or to form a virtual company to meet strategic business opportunities

Chapter Objectives

• Explain how knowledge management systems

can help a business build a knowledge-creating company.

Chapter Objectives

The Competitive Environment

Threat of New

Entrants

Rivalry Among Existing Competitors

Bargaining Power

of Customers

Bargaining Power

of Suppliers

Threat of Substitutes

Fundamental Competitive Strategies

Differentiation Strategies

Innovation Strategies

Growth Strategies

Alliance Strategies Cost Leadership Strategies

Strategic Uses of Information Technology

Improving Business Process

Promote Business Innovation

Locking in Customers and Suppliers

Use IT to reduce costs

of doing business

•Use IT to improve quality

•Use IT to link business to customers and suppliers

Use IT to create new products or services

Enhance Efficiency

Create New Business Opportunities

Maintain Valuable Customers and Relationships

Strategy

IT Role

Outcome

Strategic Uses of Information Technology

Raise Barriers

to Entry

Build a Strategic IT Platform

Build a Strategic Information Base

Increase amount of investment or complexity of

IT needed to compete

Use IT to provide information to support firm’s competitive strategy

Leverage investment in

IS resources from operat- ional uses to strategic uses

Increase Market Share

Create New Business Opportunities

Enhance Organizational Collaboration

Strategy

IT Role

Outcome

Strategic Positioning of Internet Technologies

Global Market Penetration

E-Commerce Website Value-added IT Services

Product and Services Transformation

E-Business; Extensive Intranets and Extranets

Cost and Efficiency Improvements

E-Mail, Chat Systems

Performance Improvements in Business

Effectiveness

Intranets and Extranets

Strategy Solution

Low

High

High

m e

tit io

n ec

E-Business Processes Connectivity

Internal Drivers

xt e

v e

0 The Value Chain

Administrative Coordination & Support Services

Human Resource Management Technology Development Procurement of Resources

Inbound

Logistics

Inbound

Logistics Operations Operations Outbound Outbound Logistics Logistics

Marketing and Sales

Marketing and Sales

Customer Service

Customer Service

C om

pe tit

iv e

A dv an ta ge

1 The Internet Value Chain

Marketing and Product

Research

Sales and Distribution

Support and Customer Feedback

Data for market research, establishes consumer responses

•Access to customer com-ments online

•Immediate re-sponse to

customer problems

•Low cost distribution

•Reaches new customers

•Multiplies contact points

Enhance Efficiency

Create New Business Opportunities

Maintain Valuable Customers and Relationships

Internet

Capability

Benefits

to

Company

Opportunity

for

Advantage

2 Customer-Focused E-Business

Let customers place orders thru distribution

partners

Transaction Database

Link Employees and distribution partners

Let customers check order history and delivery status

Let customers place orders directly

Customer Database

Build a

community

of customers,

employees,

and partners

Give all employees a complete view

of customers

3 Business Reengineering and Quality Management

Business Quality Improvement

Business Quality Improvement Reengineering Reengineering Business Business

Definition Target

Potential Payback

Potential Payback Risk What Changes?

Primary Enablers

Primary Enablers

Incrementally Improving Existing Processes

Incrementally Improving Existing Processes Radically Redesigning Business Systems Radically Redesigning Business Systems

Processes

Strategic Business Processes

10%-50% Improvements 10-Fold Improvements

Same Jobs - More Efficient

Same Jobs - More Efficient Big Job Cuts; New Jobs;

Major Job Redesign

Big Job Cuts; New Jobs; Major Job Redesign

IT and Work Simplification IT and Organizational

Redesign

IT and Organizational Redesign

4 The Customer- Focused Agile Competitor

Leverage the Impact of People and

IS

A cc

es si

bi lit y

D el

iv er

y Ti

m e

tim

Anticipation of future needs Customization Conformance

C o

st o f

Tr an sa

ct io n

C os

t o f

Va lu e-a dd ed

S er vic es

Give Customers

Solutions

to Problems

Give Customers

Solutions

to Problems

Cooperate with Business Partners and Competitors

Cooperate with Business Partners and Competitors

Organize to Master Change

Organize to Master Change

Borderless

Technology

Excellence

Trust-Based Adaptability

Opportunism

Six Characteristics

of Virtual Companies

Virtual Corporations

6 Knowledge Management Systems

Solution Knowledge

Development Engineers

Technical Support Staff

Product

Vendors

Customers

The Internet

Intranet

Firm

Environment

Performance

• Size

• Geographical scope

• Product scope

• Organization

structure

• Technological

resources

• Knowledge

resources

• Creating

switching costs

• Exploiting

knowledge

• Developing

response strategies

• Managing risks

Key Factors for Sustaining Strategic Success

• Information systems can play several strategic

roles in business

• The Internet, intranets, extranets, and other

Internet-based technologies can be used

strategically for E-Business and E-Commerce.

• A key strategic use of Internet technologies is

to build an E-Business which develops its

business value by making customer value its strategic focus.

Chapter Summary

• IT is a key ingredient in reengineering business

operations, by enabling radical changes to

business processes that dramatically improve their efficiency and effectiveness.

• IT can be strategically used to improve the

quality of business performance.

• A business can use IT to help it become an

agile company, that can respond quickly to

Chapter Summary (cont)

0 Chapter Summary (cont)

• Forming virtual companies has become an

important competitive strategy in today’s

• Lasting competitive advantages today can only

come from innovative use and management of organizational knowledge by knowledge

creating companies and learning organizations.

• Successful strategic information systems are

not easy to develop and implement They may require major change in how businesses

operate.