Organizational Strategy, Organizational Strategy, Information Systems, and Information Systems, and Competitive AdvantageCompetitive Advantage

Chapter 3Chapter 3

Felix makes it to meeting, offers good input

Group used discussion board, got good input from instructors

Neil suggests looking at data to analyze impact of suggested options before making any decisions

Group getting more people involved and developing a process for making a good decision

This Could Happen to You: “I Need to Look This Could Happen to You: “I Need to Look at the Data and See the Impact”at the Data and See the Impact”

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FlexTime scenario video

Study Questions

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Q1: How Does Organizational Strategy Determine Information Systems Structure?

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Organizations examine structure of their industry and determine a competitive strategy.

Competitive strategy determines value chains determine business processes.

Structure of business processes determine design of supporting information systems.

Figure 3-2

Q2: What Five Forces Determine Industry Q2: What Five Forces Determine Industry Structure? Structure? Porter’s five competitive Porter’s five competitive forcesforces

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1

4 5

2

Five Forces and FlexTime

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Five Forces and FlexTime (cont’d)

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Q3: What Is Competitive Strategy?

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Porter’s Four Competitive Porter’s Four Competitive StrategiesStrategies

• Goals, objectives, culture, and activities must be consistent with its strategy

• Information systems must facilitate its competitive strategy

To be effective, an organization’s:

What Is Competitive Strategy? (cont’d)

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•Value—amount of money a customer is willing to pay for a resource, product, or service

•Margin—difference between value an activity generates and cost of activity

•Value chain—a network of value-creating primary and support activities

Competitive strategy implement

ed by creating

value

Q4: How Does Competitive Strategy Determine Value Chain Structure?

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Bicycle Maker’s Value Chain: Sum of Primary and Support Activities

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Support ActivitiesSupport Activities

Primary ActivitiesPrimary Activities

Summary of Value Chain: Primary Summary of Value Chain: Primary ActivitiesActivities

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Support Activities in the Value ChainSupport Activities in the Value Chain

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TechnologyR & D, New Techniques, Methods, Procedures

Procurement Raw Materials

Human ResourcesTraining, Recruiting, Compensation

Firm Infrastructure General Management, Finance, Accounting, Legal, Government Affairs

Support Activity

Description

• Linkage means interactions across value activities readily supported by information systems

• Manufacturing systems use linkages to reduce costs

Value Chain Linkages

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Sales forecasts

used to plan production

Production plan used to

determine raw materials needs

Material needs used to schedule

purchases

Just-in-time inventory

Reduced inventory sizes and

costs

Business Process DesignBusiness Process Design

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Support activities contribute indirectly to production, sales, and customer service,

and

Produce margin that is often difficult to calculate (intangible costs and benefits)

Q5: How Do Value Chains Determine Business Processes and Information Systems?

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Value Chain for Bicycle Rental Company: Low-Value Chain for Bicycle Rental Company: Low-VolumeVolume

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Value Chain for Bicycle Rental Company: High-Value Chain for Bicycle Rental Company: High-VolumeVolume

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Q6: How Do Information Systems Q6: How Do Information Systems Provide Competitive Advantages?Provide Competitive Advantages?

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Creating new products or services

•Enhancing existing products or services

• Differentiating• By cost• By quality

Competitive Advantage via ProductsCompetitive Advantage via Products

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Role for Information Systems Regarding Role for Information Systems Regarding Products: Am Example of Automobile Products: Am Example of Automobile ServiceService

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Competitive Advantage via Business Competitive Advantage via Business ProcessesProcesses

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How Does an Actual Company Use IS How Does an Actual Company Use IS to Create Competitive Advantages?to Create Competitive Advantages?

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Example: ABC’s Information System

To maintain customer account data• IS collects information for ABC (adds value)• IS saves customers time by automatically filling in

part of form (adds value for customer)

Package and information delivery system• IS helps customer to select delivery address and

generate shipping labels (adds value for customer)What value does shipper get?

ABC Web Page to Select Recipient from Customer’s Records

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ABC Web Page to Select a Contact from Customer’s Records

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ABC Web Page to Specify Email Notification

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ABC Web Page to Print Shipping Label

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Enhancing existing products

Differentiating products

Locking in customers

Raising barriers to market entryIncreasing profit margins by decreasing costs and decreasing errors

Review: How Does This System Create a Review: How Does This System Create a Competitive Advantage?Competitive Advantage?

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Seek ways to save costs without compromising competitive strengths over rivals.

State their goal differently: Examine all value-generating activities to see if there isn’t some way of reducing costs, without reducing value generated.You know a process for tracing development from analysis of industry structure all the way through to requirements for information systems. All activities in firm need to facilitate the organization’s competitive strategy.

How Does Knowledge in This Chapter How Does Knowledge in This Chapter Help FlexTime and You?Help FlexTime and You?

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Who will be your competitors when you seek a job after you graduate from college?

What will be your competitive advantage in the job market?

What can you do before you graduate to develop your competitive advantage?

Guide: Your Personal Competitive Guide: Your Personal Competitive AdvantageAdvantage

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Active Review

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