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Manal A. Abdel-Fattah, PhD
Faculty of Commerce & Business Administration
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1.
Identify basic competitive strategies anddiscuss Porters classic model of competition.
2. Discuss the value chain and strategic IS
3. Give examples of how IT give competitiveadvantages to a business.
4. Give examples of how business processreengineering frequently involves the strategicuse of IT.
5. Identify the business value of using Internettechnologies to become an agile competitor orto form a virtual company.
6. Explain how knowledge management systemscan help a business gain strategic advantages.
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Technology is no longer an afterthought in
forming business strategy, but the actual cause
and driver.
IT can change the way businesses compete. Although competition can require significant
resources, it is a positive characteristic in
business that is natural and healthy.
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The strategic role of IS means using IT to
develop products, services and capabilities that
give a company major advantages over the
competitive forces it faces in the global
marketplace.
A strategic information system is
Any kind of information system (MIS, DSS, etc)
That uses IT to help an organization Gain a competitive advantage.
Reduce a competitive disadvantage.
Or meet other strategic enterprise objectives.
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In Porters classic model of competition, ifa
business wants to succeed must develop and
implement strategies to counter these 5 forces:
1. Rivalry of competitors within its industry.2. Threat of new entrants into an industry and its
markets.
3. Threat posed by substitute products which might
capture market share.
4. Bargaining power of customers.
5. Bargaining power of suppliers.
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1. Cost Leadership Become low-cost producers Help suppliers or customers reduce costs Increase cost to competitors
2. Differentiation Strategy Develop ways to differentiate a firms products from
its competitors Can focus on particular segment of market
3. Alliance Strategy Establish linkages and alliances with Customers, suppliers, competitors, consultants and other
companies (reduced inventory cost and increased sales)
Online one-stop shopping with partners
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4. Innovation Strategy Find new ways of doing business Unique products or services.
Or unique markets.
Radical changes to business processes for producing ordistributing products and services.
Example, Amazon uses online full-service customersystems
5. Growth Strategy
Expand companys capacity to produce Expand into global markets
Diversify into new products or services
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The strategies are not mutually exclusiveOrganizations use one, some or all
Porters Four Competitive Strategies
12 C
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Lock in customers and suppliers By building valuable relationships with them
prevent them from switching to competitors
Build in switching costs
Make customers and suppliers dependent on the useof innovative IS
Barriers to entry Discourage or delay other companies from entering
market Increase the technology or investment needed to
enter
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