Transcript IST4e Chapter 2

Chapter 2
Gaining Competitive Advantage
Through Information Systems
2-1
“You’ve got a life. TiVo gets it.”
TiVo Incorporated
advertisement motto.
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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. Explain why and how companies are continually
looking for innovative ways to use information systems
for competitive advantage.
4. 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.
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Key Terms
 structured decisionmaking, operational manager,
executive level manager, best-cost provider strategy,
customers' bargaining power, IS operational &
architectural value, transnational company, Moore's
law, process requirements, home-replication or
global international strategy, administrative
heritage, Disruptive innovations, business
innovation cycle, freemium & freeconomics,
marginal cost
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Decision-Making Levels of an Organization
2-4
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Business Process Supported by Functional Area IS
2-5
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Major IS Tasks: Business Value Added
2-6
 Automating: Doing Things Faster
 Organizational Learning: Doing Things Better
 Supporting Strategy: Doing Things Smarter
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Competitive Forces (Pressures on the Firm)
2-7
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Pursuit of Competitive Advantage
2-8
 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
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Use of IS in the Value Chain
2-9
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International Business Strategies in the Digital World
2-10
 The number of exclusively
domestic companies is
shrinking.
 Today’s large companies
have some international
business strategy for
competing in global
markets.




Home Replication Strategy
Multidomestic Strategy
Global Strategy
Transnational Strategy
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Predicting the Next New Thing
2-11
 Deciding which innovations to adopt is very
difficult.
 Diffusion of
Innovations

Classic view
of adoption of
innovations
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The Innovator’s Dilemma
2-12
 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
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Three Ways to Think About Investments in
Disruptive Innovations
2-13
 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.
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Freeconomics
2-14
 Freeconomics—The leveraging of digital technologies
to provide free goods and services to customers as a
business strategy for gaining competitive advantage.
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The Freeconomic Value Proposition
2-15
 Someone, somewhere is paying for a services.
 Value proposition includes more than just buyers
and sellers.

Advertisers (see Google)
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WHEN THINGS GO WRONG
e-Waste Is a Global Problem
2-16
 Disposal of electronics containing hazardous
materials is a rising issue.
 U.S. exports much of its e-waste to third world
countries.
China banned the import in 2002.
 Other countries to follow

 In mid 2006, EU banned toxic ingredients.
 Production of “green” hardware
 In the United States, no federal legislation, but
several states have e-waste laws.
 Pace of technological changes increases problem.
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