Transcript Chapter 3
Chapter 3
Organizational Strategy, Information
Systems, and Competitive
Advantage
This Could Happen to You: “I Need to Look at the
Data and See the Impact”
FlexTime scenario video
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
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Study Questions
Q1 How does organizational strategy determine information
systems structure?
Q2 What five forces determine industry structure?
Q3 What is competitive strategy?
Q4 How does competitive strategy determine value chain
structure?
Q5 How do value chains determine business processes and
information systems?
Q6 How do information systems provide competitive
advantages?
How does the knowledge in this chapter help FlexTime and you?
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Q1: How Does Organizational Strategy Determine
Information Systems Structure?
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.
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Q2: What Five Forces Determine Industry
Structure? Porter’s five competitive forces
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Figure 3-2
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Five Forces and FlexTime
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Five Forces and FlexTime (cont’d)
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Q3: What Is Competitive Strategy?
Porter’s Four Competitive Strategies
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What Is Competitive Strategy? (cont’d)
To be effective, an organization’s:
• Goals, objectives, culture, and activities
must be consistent with its strategy
• Information systems must facilitate its
competitive strategy
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Q4: How Does Competitive Strategy
Determine Value Chain Structure?
Competitive
strategy
implemented
by creating
value
•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
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Bicycle Maker’s Value Chain: Sum of Primary
and Support Activities
Primary Activities
Support Activities
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Summary of Value Chain: Primary Activities
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Support Activities in the Value Chain
Support Activity
Description
Technology
R & D, New Techniques,
Methods, Procedures
Procurement
Raw Materials
Human Resources
Training, Recruiting,
Compensation
Firm Infrastructure
General Management, Finance,
Accounting, Legal, Government
Affairs
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Value Chain Linkages
•
•
Linkage means interactions across value activities readily
supported by information systems
Manufacturing systems use linkages to reduce costs
Sales forecasts
used to plan
production
Material needs
used to schedule
purchases
Production plan
used to determine
raw materials
needs
Reduced
inventory sizes
and costs
Just-in-time
inventory
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Business Process Design
• Create integrated, cross-departmental
business systems
Porter’s
Value
Chain is
used to:
• Create new, more efficient processes
rather than automating existing ones
• Focus on:
Creating integrated activities across
entire value chain
Eliminating redundant processes,
and creating new, more efficient
processes
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Q5: How Do Value Chains Determine Business
Processes and Information Systems?
Support activities contribute
indirectly to production, sales, and
customer service,
and
Produce margin that is often difficult
to calculate (intangible costs and
benefits)
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Value Chain for Bicycle Rental Company: Low-Volume
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Value Chain for Bicycle Rental Company: High-Volume
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Q6: How Do Information Systems Provide
Competitive Advantages?
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Competitive Advantage via Products
Creating new
products or
services
•Enhancing
existing
products or
services
• Differentiating
• By cost
• By quality
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Role for Information Systems Regarding Products:
Am Example of Automobile Service
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Competitive Advantage via Business Processes
Lock in customers
•By creating high switching costs
Lock in suppliers
•Make it easy to connect to and work with your
organization
Create entry barriers
Establish alliances
Create better business processes
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How Does an Actual Company Use IS to
Create Competitive Advantages?
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?
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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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Review: How Does This System Create a
Competitive Advantage?
Enhancing existing products
Differentiating products
Locking in customers
Raising barriers to market entry
Increasing profit margins by decreasing
costs and decreasing errors
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How Does Knowledge in This Chapter Help
FlexTime and You?
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.
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Guide: Your Personal Competitive Advantage
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?
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Active Review
Q1 How does organizational strategy determine information
systems structure?
Q2 What five forces determine industry structure?
Q3 What is competitive strategy?
Q4 How does competitive strategy determine value chain
structure?
Q5 How do value chains determine business processes and
information systems?
Q6 How do information systems provide competitive
advantages?
How does the knowledge in this chapter help FlexTime and you?
Copyright 2012 Pearson Education, Inc. for Prentice Hall
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