Post on 22-Dec-2015
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Learning Objectives Describe strategic information systems (SIS) and explain
their advantages.
Describe Porter’s competitive forces model & how IT helps companies improve their competitive positions.
Describe Porter’s value chain model and its relationship to information technology.
Describe several other frameworks that show how IT supports the attainment of competitive advantage.
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Learning Objectives (cont.)
Describe and understand the role of web-based SIS and the nature of competition in the digital age.
Describe global competition and its SIS framework.
Describe representative strategic information systems and the advantage they provide to organizations.
Discuss implementation issues including possible failures of SIS.
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Strategic Information Systems (SISs)
SIS Characterized by its ability to significantly change
the manner in which business is done.
It can also change the goal, processes, products, or environmental relationships to to help an organization gain a competitive advantage.
An organization competitive strategy is the search of a competitive advantage in an industry.
Cost, quality, or speed.
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Strategic Information Systems (SISs)
SIS Definition Systems that organizations totally depends on
Systems that has very impact on organization business processes, operation, and the bottom line.
Internally focused or externally focused
Can be applied within the organization or across the organization
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Strategic Information Systems (SISs)
Sustaining Strategic Advantage This systems are design from the
beginning to facilitate competitive advantage.
Today it is more difficult to sustain a competitive advantage with the use of IT for a long period of time.
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The Role of IT IT creates applications that provide strategic advantages to companies
E.g. Federal Express was the first to company to use the tracking system
IT is a competitive weapon
IT supports strategic change, e.g, re-engineering Cycle time reduction,streamlining, CASE, etc.
IT networks with business partners B2B
IT provides cost reduction
IT provides competitive business intelligence
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Porter’s 5 Competitive Forces
The threat of entry of new competitors.
The bargaining power of suppliers.
The bargaining power of customers (buyers).
The threat of substitute products or services.
The rivalry among existing firms in the industry.
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Response Strategies (Porter, 1985)
FOCUS
Selecting a niche market and achieving
cost leadership and/or
differentation.
DIFFERENTATION
Being unique in the industry
COST LEADERSHIP
Providing products and/or services at the lowest cost in
the industry.
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Response Strategies (added by Porter and others)
INNOVATIONDeveloping new products & services
GROWTH
Increasing market share, acquiring more customers or selling more products
IMPROVE INTERNAL EFFICIENCY
To improve employee and customer satisfaction
ALLIANCESWorking with business partners to create synergy & provide opportunities for growth
CRMCustomer-oriented approaches, e.g. the customer is king (queen)
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The Value Chain
Supportactivities
Primary activitiesInbound logistics Materials receiving, storing, and distribution to manufacturing premisesOperations Transforming inputs into finished products.Outbound logistics Storing and distributing productsMarketing and Sales Promotions and sales forceService Service to maintain or enhance product valueCorporate infrastructure Support of entire value chain, e.g. general management planning,
financing, accounting, legal services, government affairs, and QMHuman resources management Recruiting, hiring, training, and developmentTechnology Development Improving product and manufacturing processProcurement Purchasing input
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VALUE SYSTEM A firm’s value chain is part of a larger stream of activities,
which Porter calls a “Value System”.
Includes the suppliers that provide the necessary inputs AND their value chains.
Applies to both products & services, for any organization, PUBLIC or PRIVATE.
Is the basis for the Supply Chain Management.
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The Value Chain Model The Value System Model is
used to:
Evaluate a company’s process and competencies.
Investigate whether adding IT supports the value chain.
Enable managers to assess the information intensity and the role of IT.
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Strategic Information Systems Frameworks A framework for SIS is a descriptive
structure that helps us understand and clarify the relationships among strategic management and IT. E.g.
Bakos and Treacy Framework McFarlan Application Portfolio Analysis
Framework
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McFarlan’s Portfolion Framework (1984)
For Analyzing Existing, Planned & Potential Information SystemsStrategic
e-procurement electronic ticketing
Agents’ management
High Potential Intelligent data mining
e-mail direct marketing
Key Operational Scheduling online
Online parts ordering Maintenance online
Support Frequent flyer account tracking
Online credit union Training online
Wireless SMS information
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Categories of Strategic Relevance and Impact
Factory
Support
Strategic
Turnaround
Strategic Impact of existing IT system
Low
Low
High
High
A contingency appropriate to IT management.
Strategic Impact of IT applications under development
Totally depending on it
Not absolutely depending on totally uninterrupted, fast response-time.
IT are important but theyare not fundamental to thefirms ability to compete.
Strategic Impact of ITon operations and futurestrategy is low.
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SIS Implementation Major Issues to be Considered:
Justification Justifying SIS may be difficult due to the intengible nature of
their benefits.
Risks & Failures The magnitude, complexity, continuous changes in
technology and business environment may result in failures.
Finding appropriate SIS Identifying appropriate SIS is not a simple task.
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Sustaining SIS & Strategic Advantage
A Major problem that companies face is how to sustain their SIS competitive advantage.
3 Major approaches = Create inward systems which are not visible to competitors.
Provide a comprehensive, innovative & expensive system that is difficult to duplicate.
Combine SIS with structural changes. This would include business processes, reengineering & organizational transformation.
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Managerial Issues Implementing SIS Can Be
Risky.
The investment involved in implementing Strategic Information Systems (SIS) is high.
Strategic Information Systems Requires Planning.
Planning for an SIS is a major concern of organizations.
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Managerial Issues (cont.) Sustaining Competitive Advantage Is Challenging.
As companies become larger and more sophisticated, they develop resources to duplicate the systems of their competitors quickly.
Ethical Issues. Gaining competitive advantage through the use of IT may involve unethical or even illegal actions.Companies can use IT to monitor the activities of other companies and may invade the privacy of individuals working there.