Week 03 – Gaining Competitive Advantage

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Transcript Week 03 – Gaining Competitive Advantage

Chapter 2

Gaining Competitive Advantage Through Information Systems

2-1 “You’ve got a life. TiVo gets it.”

TiVo Incorporated advertisement motto.

Learning Objectives

2-2

1.

Discuss how information systems can be used for automation, organizational learning, and strategic advantage.

2.

Describe international business and IS strategies used by companies operating in the digital world.

3. 4.

Explain why and how companies are continually looking for innovative ways to use information systems for competitive advantage.

Describe freeconomics and how organizations can leverage digital technologies to provide free goods and services to customers as a business strategy for gaining a competitive advantage.

Types of Decisions You Face

Decision-Making Levels of an Organization

Operational Level

Managerial Level

Executive Level

Organizational Functional Areas

Business Process Supported by Functional Area IS 2-9 What is your major?

Do any of these have value for you?

Top/Bottom Line?

Major IS Tasks: Business Value Added

2-10  What do we mean when we say we create business value by automating, organizational learning and supporting strategy IS Today (Valacich & Schneider) 5/e Copyright © 2012 Pearson Education, Inc. Published as Prentice Hall 4/30/2020

The Five Forces Model – Evaluating Business Segments

Product returns Competition in price, distribution and service Decision support and Value added services Electronic connections to more suppliers Reduced prices Lost market share 11 ERP to reduce costs and react more quickly CAD/CAM improve quality supply chain, etc.

Pursuit of Competitive Advantage

2-12  What technologies enable an organization:   Best-made product Superior customer service      Lower costs than rivals Proprietary manufacturing technology Shorter development/test lead times Well-known brand name More value for the money IS Today (Valacich & Schneider) 5/e Copyright © 2012 Pearson Education, Inc. Published as Prentice Hall 4/30/2020

Learning Objectives

2-13

1.

Discuss how information systems can be used for automation, organizational learning, and strategic advantage.

2.

Describe international business and IS strategies used by companies operating in the digital world.

3. 4.

Explain why and how companies are continually looking for innovative ways to use information systems for competitive advantage.

Describe freeconomics and how organizations can leverage digital technologies to provide free goods and services to customers as a business strategy for gaining a competitive advantage.

International Business Strategies in the Digital World 2-14     Home Replication Strategy Multidomestic Strategy Global Strategy Transnational Strategy IS Today (Valacich & Schneider) 5/e Copyright © 2012 Pearson Education, Inc. Published as Prentice Hall 4/30/2020

Home Replication Strategy

2-15  International business as an extension of home business  Strengths: focus on core competencies in home market  Weakness: inability to react to local market conditions  Appropriate use: homogeneous markets IS Today (Valacich & Schneider) 5/e Copyright © 2012 Pearson Education, Inc. Published as Prentice Hall 4/30/2020

 Strengths?

 Weaknesses?

Global Business Strategy

Multidomestic Business Strategy

2-17  Strengths?

 Weaknesses?

Transnational Business Strategy

2-18  Strengths?

 Weaknesses?

Business/Information Systems Strategies

Learning Objectives

2-20

1.

Discuss how information systems can be used for automation, organizational learning, and strategic advantage.

2.

Describe international business and IS strategies used by companies operating in the digital world.

3. 4.

Explain why and how companies are continually looking for innovative ways to use information systems for competitive advantage.

Describe freeconomics and how organizations can leverage digital technologies to provide free goods and services to customers as a business strategy for gaining a competitive advantage.

Miniaturization – What is Moore’s Law?

Valuing Innovations

2-22 

Which new technology will make or break your business?

Successful Innovation Is Difficult

2-23 

Innovation is often fleeting.

 The advantages gained from innovations are often short lived.



I nnovation is often risky.

 Sometimes even superior products can lose the race.

 Blu-ray vs. HD DVD 

Innovation choices are often difficult.

 Foreseeing the future is not always possible.

 In 1994, the Internet was not given much attention.

Organizational Requirements for Innovation

2-24  Process requirements— change.

the organization has to be willing to do whatever it takes to implement the  Resource requirements— the system need to have the human capital necessary for successful deployment of  Risk tolerance requirements— organizational members must have appropriate tolerance of risk and uncertainty.

Predicting the Next New Thing

2-25 

Deciding which innovations to adopt is very difficult.



Diffusion of Innovations

The Innovator’s Dilemma

2-26 

Disruptive innovations

 New technologies, products, or services that eventually surpass dominant technologies  Online vs. brick-and-mortar retailing  Automobiles vs. horses  CDs vs. records  MP3 vs. CDs  Undermine effective management practices IS Today (Valacich & Schneider) 5/e Copyright © 2012 Pearson Education, Inc. Published as Prentice Hall 4/30/2020

Disruptive Innovations

2-27    1970s: mid- and high performance users were bulk of the market Digital Equipment Company (DEC) tried to sell to those markets Microcomputers seen as “toys” IS Today (Valacich & Schneider) 5/e Copyright © 2012 Pearson Education, Inc. Published as Prentice Hall 4/30/2020

Disruptive Innovations (cont’d)

2-29   1990s: Growing performance of Microcomputers, meeting mid performance users’ needs DEC lost biggest market segment IS Today (Valacich & Schneider) 5/e Copyright © 2012 Pearson Education, Inc. Published as Prentice Hall 4/30/2020

Disruptive Innovations (cont’d)

2-30    Today, micro computers meeting entire market’s needs DEC out of business Next disruptive innovation: 3G and 4G mobile phones?



The Innovator’s Solution

2-31 1.

Christensen outlines a process—disruptive growth engine—that helps organizations respond to disruptive innovations more effectively.

Start early.

Executive leadership.

Build a team of expert innovators.

Educate the organization.

Implementing the Innovation Process

2-32 

E-Business Innovation Cycle

 The key to success is the extent of IS use in timely and innovative ways.

E-Business Innovation Cycle

2-33

Choosing Enabling/Emerging Technologies



Process/ group devoted to looking for emerging IT

E-Business Innovation Cycle (cont’d)

2-34

Matching Technologies to Opportunities



Most promising new technology matched with current economic opportunities

E-Business Innovation Cycle (cont’d)

2-35

Executing Business Innovation for Growth



Stage at which the change is actually implemented

E-Business Innovation Cycle (cont’d)

2-36

Assessing Value



Value created for customers and internal operations assessed

Three Ways to Think About Investments in Disruptive Innovations

2-37   

Put technology ahead of strategy.

  Technology is so important to success, it needs to be considered first.

Strategy is developed afterwards.

Put technology ahead of marketing.

 Rapid development of technology makes it impossible for people to know what they want.

Innovation is continuous.

 New technologies are constantly being developed.

Learning Objectives

2-38

1.

Discuss how information systems can be used for automation, organizational learning, and strategic advantage.

2.

Describe international business and IS strategies used by companies operating in the digital world.

3. 4.

Explain why and how companies are continually looking for innovative ways to use information systems for competitive advantage.

Describe freeconomics and how organizations can leverage digital technologies to provide free goods and services to customers as a business strategy for gaining a competitive advantage.

Question?

 How many of you would take a free smartphone, both the phone and no cost monthly service, if all you had to do was put up with a few advertisements?

Free smartphone and free service

Freeconomics

2-40  Freeconomics—The leveraging of digital technologies to provide free goods and services to customers as a business strategy for gaining competitive advantage.

How Does Freeconomics Work (for Yahoo!)

2-41    Price is set by a product/service’s marginal costs.

Marginal costs for digital services decrease tremendously.

Yahoo! makes millions with free e-mail service (by placing ads).

The Freeconomic Value Proposition

2-42   Someone, somewhere is paying for a services.

Value proposition includes more than just buyers and sellers.

Approaches for Applying Freeconomics

2-43       Advertising Freemium Cross-Subsidies Zero Marginal Cost Labor Exchange Gift Economy IS Today (Valacich & Schneider) 5/e Copyright © 2012 Pearson Education, Inc. Published as Prentice Hall 4/30/2020

Week 03 – Gaining Competitive Advantage

Transcript Week 03 – Gaining Competitive Advantage

Chapter 2

Gaining Competitive Advantage Through Information Systems

Learning Objectives

1.

2.

3. 4.

Types of Decisions You Face

Decision-Making Levels of an Organization

Operational Level

Managerial Level

Executive Level

Organizational Functional Areas

Major IS Tasks: Business Value Added

The Five Forces Model – Evaluating Business Segments

Pursuit of Competitive Advantage

Learning Objectives

1.

2.

3. 4.

Home Replication Strategy

Global Business Strategy

Multidomestic Business Strategy

Transnational Business Strategy

Business/Information Systems Strategies

Learning Objectives

1.

2.

3. 4.

Miniaturization – What is Moore’s Law?

Valuing Innovations

Which new technology will make or break your business?

Successful Innovation Is Difficult

Organizational Requirements for Innovation

Predicting the Next New Thing

Deciding which innovations to adopt is very difficult.

Diffusion of Innovations

The Innovator’s Dilemma

Disruptive innovations

Disruptive Innovations

Disruptive Innovations (cont’d)

Disruptive Innovations (cont’d)

Disruptive Innovations (cont’d)

The Innovator’s Solution

Implementing the Innovation Process

E-Business Innovation Cycle

E-Business Innovation Cycle

Process/ group devoted to looking for emerging IT

E-Business Innovation Cycle (cont’d)

Most promising new technology matched with current economic opportunities

E-Business Innovation Cycle (cont’d)

Stage at which the change is actually implemented

E-Business Innovation Cycle (cont’d)

Value created for customers and internal operations assessed

Three Ways to Think About Investments in Disruptive Innovations

Learning Objectives

1.

2.

3. 4.

Question?

Free smartphone and free service

Freeconomics

How Does Freeconomics Work (for Yahoo!)

The Freeconomic Value Proposition

Approaches for Applying Freeconomics

Directory