Mr. Armughan Ali Assistant Professor Department of Computer
Science CIIT Attock. CSC373: Management Information Systems
Slide 2
Technology is no longer an afterthought in business strategy,
but the cause and driver IT can change the way businesses compete A
strategic information system is any information system (TPS, MIS or
DSS) that uses IT to help an organization Gain a competitive
advantage Reduce a competitive disadvantage Or meet other strategic
enterprise objectives Strategic IT 2-2
Slide 3
Competitive Forces & Strategies How should a business
professional think about competitive strategies? How can a business
use information systems to apply competitive strategies ?
Slide 4
Competitive Forces & Strategies A company can survive and
succeed in the long run only if it successfully develops strategies
to confront five competitive forces that shape the structure of
competition in its industry. ANSWER
Slide 5
Competitive Forces & Strategies
Slide 6
Cost Leadership Become low-cost producers Help suppliers or
customers reduce costs Increase cost to competitors Differentiation
Strategy Differentiate a firms products from its competitors Focus
on a particular segment or niche of market Five Competitive
Strategies 2-6
Slide 7
Innovation Strategy Unique products, services, or markets
Radical changes to business processes Growth Strategy Expand
companys capacity to produce Expand into global markets Diversify
into new products or services Competitive Strategies (continued)
2-7
Slide 8
Alliance Strategy Establish linkages and alliances with
customers, suppliers, competitors, consultants, and other companies
Includes mergers, acquisitions, joint ventures, virtual companies
Competitive Strategies (continued) 2-8
Slide 9
These strategies are not mutually exclusive Organizations use
one, some, or all A given activity could fall into one or more
categories of competitive strategy Not everything innovative serves
to differentiate one organization from another Likewise, not
everything that differentiates organizations is necessarily
innovative Using Competitive Strategies 2-9
Slide 10
Lock in Customers and Suppliers Deter them from switching to
competitors Build in Switching Costs Make customers and suppliers
dependent on the use of innovative IS Erect Barriers to Entry
Discourage or delay other companies from entering the market
Increase the technology or investment needed to enter Other
Competitive Strategies 2-10
Slide 11
Build Strategic IT Capabilities Take advantage of strategic
opportunities when they arise Improve efficiency of business
practices Leverage Investment in IT Develop products and service
that would not be possible without a strong IT capability Other
Competitive Strategies 2-11
Slide 12
Customer-Focused Business The driving force behind world
economic growth has changed from manufacturing volume to improving
customer value. As a result, the key success factor for many firms
is maximizing customer value.
Slide 13
What is the business value in being customer-focused? Ability
of Business to be Keep customers loyal Anticipate their future
needs Respond to customer concerns Provide top-quality customer
service How to Focus on customer value Quality, not price, has
become the primary determinant of value Customer-Focused Business
2-13
Slide 14
Companies that consistently offer the best value from the
customers perspective are successful Because they Track individual
preferences Keep up with market trends Supply products, services,
and information anytime, anywhere Tailor customer services to the
individual Use Customer Relationship Management (CRM) systems to
focus on the customer Internet, Intranet and Extranet plays a
pivotal role Iin communication among entities (customer, supplier,
service provider etc) Providing Customer Value 2-14
Slide 15
Building Customer Value via the Internet 2-15
Slide 16
View the firm as a chain of basic activities that add value to
its products and services Primary processes directly relate to
manufacturing or delivering products Support processes help support
the day-to-day running of the firm and indirectly contribute to
products or services Use the value chain to highlight where
competitive strategies will add the most value The Value Chain and
Strategic IS 2-16
Slide 17
Using IS in the Value Chain 2-17
Slide 18
A company that emphasizes strategic business use of IT would
use it to gain a competitive differentiation Products Services
Capabilities Strategic Uses of IT 2-18
Slide 19
Called BPR or simply Reengineering Fundamental rethinking and
radical redesign of business processes Seeks to achieve
improvements in cost, quality, speed, and service Potential payback
is high, but so is risk of disruption and failure Use of ERP across
Functional Units might be useful for one could be destructive for
other. Organizational redesign approaches are an important enabler
of reengineering Includes use of IT, process teams, case managers
Reengineering Business Processes 2-19
Slide 20
IT plays a major role in reengineering most business processes
Can substantially increase process efficiencies Improves
communication Facilitates collaboration The Role of Information
Technology 2-20
Slide 21
Many processes are reengineered with Enterprise resource
planning software Web-enabled electronic business and commerce
systems A Cross-Functional Process 2-21
Slide 22
IT that supports this process CRM systems using intranets and
the Internet Supplier-managed inventory systems using the Internet
and extranets Cross-functional ERP software to integrate
manufacturing, distribution, finance, and human resource processes
Customer-accessible e-commerce websites for order entry, status
checking, payment, and service Customer, product, and order status
databases accessed via intranets and extranets Reengineering Order
Management 2-22
Slide 23
Agility is the ability to prosper In rapidly changing,
continually fragmenting global markets By selling high-quality,
high-performance, customer- configured products and services By
using Internet technologies An agile company profits in spite of
Broad product ranges Short model lifetimes Individualized products
Arbitrary lot sizes Becoming an Agile Company 2-23
Slide 24
An agile company Presents products as solutions to customers
problems Cooperates with customers, suppliers and competitors
Brings products to market as quickly and cost-effectively as
possible Leverages the impact of its people and the knowledge they
possess Strategies for Agility 2-24
Slide 25
How IT Helps a Company be Agile 2-25
Slide 26
A virtual company uses IT to link People Organizations Assets
Ideas Inter-enterprise information systems link Customers Suppliers
Subcontractors Competitors Creating a Virtual Company 2-26
Slide 27
Basic business strategies Share information and risk with
alliance partners Link complimentary core competencies Reduce
concept-to-cash time through sharing Increase facilities and market
coverage Gain access to new markets and share market or customer
loyalty Migrate from selling products to selling solutions Virtual
Company Strategies 2-27
Slide 28
A knowledge-creating company or learning organization
Consistently creates new business knowledge Disseminates it
throughout the company Builds it into its products and services
Building a Knowledge-Creating Company 2-28
Slide 29
Explicit Knowledge Data, documents, and things written down or
stored in computers Tacit Knowledge The how-to knowledge in workers
minds Represents some of the most important information within an
organization A knowledge-creating company makes such tacit
knowledge available to others Two Kinds of Knowledge 2-29
Slide 30
Successful knowledge management Creates techniques,
technologies, systems, and rewards for getting employees to share
what they know Makes better use of accumulated workplace and
enterprise knowledge Knowledge Management 2-30
Slide 31
Knowledge Management Techniques 2-31
Slide 32
Knowledge management systems A major strategic use of IT
Manages organizational learning and know-how Helps knowledge
workers create, organize, and make available important knowledge
Makes this knowledge available wherever and whenever it is needed
Knowledge includes Processes, procedures, patents, reference works,
formulas, best practices, forecasts, and fixes Knowledge Management
Systems (KMS) 2-32
Slide 33
Case 3: GE, Dell, Intel, GM, and Others Does IT matter? No:
Nicholas Carr argues that IT is infrastructure like electricity Too
commonplace to get competitive advantage Yes: IT is not just
networks and computers The important part is the software and
information and how IT is used For Wal-Mart, GE, Dell, and many
other companies, IT is a huge advantage and will continue to be.
2-33
Slide 34
Case Study Questions 1. Do you agree with the argument made by
Nicholas Carr to support his position that IT no longer gives
companies a competitive advantage? Why or why not? 2. Do you agree
with the argument made by the business leaders in this case in
support of the competitive advantage that IT can provide to a
business? Why or why not? 3. What are several ways that IT could
provide a competitive advantage to a business? Use some of the
companies mentioned in this case as examples. Visit their Web sites
to gather more information to help you answer. 2-34
Slide 35
Case 4: GE Energy and GE Healthcare Networking and data storage
& analysis technologies enable companies like GE to gain a
competitive advantage by providing unique products and services to
their customers. This strategic investment in IT has a dramatic
effect on the profitability of GEs services. The strategic business
partnership results in a longer- term relationship than traditional
methods. 2-35
Slide 36
Case Study Questions 1. What are the business benefits of using
information technology to build strategic customer relationships
for GE Energy and GE Healthcare? What are the business benefits for
their customers? 2. What strategic uses of information technology
discussed in this chapter and summarized in Figures 2.3 and 2.5 do
you see implemented in this case? Explain the reasons for your
choices. 2-36
Slide 37
Case Study Questions 3. How could other companies benefit from
the use of IT to build strategic customer relationships? Provide or
propose several examples of such uses. Explain how each benefits
the business and its customers. 2-37