Transcript CHAPTER 3 STRATEGIC & COMPETITIVE OPPORTUNITIES Using IT to Generate Organizational Horsepower CASE STUDY Creating Vision for a New Way to Do business  Anderson Corp.  Business process.

CHAPTER 3
STRATEGIC & COMPETITIVE
OPPORTUNITIES
Using IT to Generate
Organizational Horsepower
CASE STUDY
Creating Vision for a New Way to Do
business
 Anderson Corp.
 Business process reengineering
 EDI, Information partnership, Just-in-time,
cross-functional teams, paperless product
ordering system

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Introduction
THE FLEETING COMPETITIVE
ADVANTAGE
A COMPETITIVE ADVANTAGE is providing the
best perceived perfect service at the customer‘s
moment of value.

This chapter examines 7 strategies,
enabled by IT, that promote
organizational competitiveness.
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Introduction
YOUR FOCUS IN THIS CHAPTER
IT Enabling Perfect Service
 Organizational Horsepower (OHP)
Development
 Quality as the Foundation of Organizational
Competitiveness
 OHP Strategies Creating a Competitive
Advantage
 OHP Strategy Adoption - Radical or
Continuous?

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OHP
ORGANIZATIONAL
HORSEPOWER (OHP)...
is a measure of organizational competitiveness
generated through organizational force and
speed.
ORGANIZATIONAL FORCE is meeting as
many customer expectations as possible.
 ORGANIZATIONAL SPEED is meeting
customer expectations quickly.


Weather your organization pursues
organizational force or speed or both, it’s IT
that creates the opportunities.
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OHP
7 IT-ENABLED OHP STRATEGIES
FORCE SPEED
Just-in-time (JIT) approach
X
 Teams
X
 Information partnerships
X
X
 Timeless & locationless operations
X
X
 Transnational firm
X
 Virtual organization
X
 Learning organization
X
See Figure 3.2 (page 83) to compare these
strategies.

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Quality
WHAT IS QUALITY?
QUALITY is meeting customer expectations.
Quality is not goodness, prettiness, or luxury.
Quality is the foundation of all OHP strategies
and a fundamental building block to
organizational competitiveness.
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Quality
TOTAL QUALITY MANAGEMENT
(TQM) is...
meeting customer expectations through
 continuous improvement and
 organization-wide quality ownership.

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Quality
STATISTICAL PROCESS
CONTROL (SPC)
is a method of gathering and analyzing quality
requirements. SPC tools (such as those below)
help you meet customer expectations.
1.A CONTROL CHART - a graphic means of
identifying causes to problems that are
controllable.
2.A HISTOGRAM - a graphic representation of
frequency distributions.
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Histogram
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Quality
CONTINUOUS IMPROVEMENT
TOOLS
A FISHBONE DIAGRAM - a line diagram that
begins with a problem (the effect) and
branches out into problem causes.
 A PARETO CHART - sorted frequencies of
various problem causes with percentages of
each.
 A SCATTER DIAGRAM - a tool used to depict
data patterns and is created by plotting paired
data on a two-axis graph.
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Amount Rate
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Pareto Chart
100%
97%
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Customer Complaints and Training Time
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Scatter diagram
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Quality
Organization-Wide Quality
Ownership Supports TQM by...
1.Promoting individual employee
commitment and power.
2.Communicating that sense of ownership
to customers.
3.The recognition that quality is everyone抯
job.
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JIT
The JUST-IN-TIME (JIT)
Approach Is...
producing or delivering a product or service
when the customer wants it.
The JIT approach may be viewed from two
perspectives:
 Internal
 External
An OHP strategy for organizational speed.
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JIT
JIT OVERCOMES SEVERAL
PROBLEMS
Unsold inventories must be stored in costly
warehouses.
 New products are delayed until existing
inventories are sold.
 Quality lapses occur when defects aren抰
caught until quality control catches up with the
inventory.

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JIT
IT SYSTEMS ENABLE JIT
PRODUCTION SCHEDULING systems
provide detailed plans for producing all
components of a final product.
 MATERIAL REQUIREMENTS PLANNING
(MRP) systems take the production schedule
and determine which raw materials and
components are required and when.
 MANUFACTURING RESOURCE PLANNING
(MRP II) systems tie material requirements
from MRP systems into other organizational
systems.



Enterprise resource planning(ERP) is a crossfunctional enterprise system that serves as a
framework to integrate and automate many of the
business processes that must be accomplished
within the manufacturing, logistics, distribution,
accounting, finance, and human resources
functions of a business.
For example ERP software for a manufacturing
company will typically track the status of sales,
inventory, shipping, and invoicing, as well as
forecast raw material and human resource
requirements.
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Teams
TEAMS IN AN ORGANIZATION
A TEAM is a group of people with a shared goal
and task interdependence.
The shared goal gives the team focus.
 Task interdependence means each team
member relies on one another to complete their
work and achieve the shared team goal.

An OHP strategy for organizational force.
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Teams
PROJECT TEAMS
PROJECT TEAMS accomplish one-time goals
and disband once the project is complete.

Project teams compliment and don抰 replace a
departmental structure.
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Teams
PERMANENT TEAMS
PERMANENT TEAMS are designed to support
permanent processes and are not intended to
disband.

Permanent teams are an alternative to a
departmental structure.
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Teams
IT SYSTEMS ENABLE TEAMS
Groupware supports group decision-making.
 Work flow automation software speeds
processing.
 Videoconferencing and electronic meeting
software reduce the need for in-person team
meetings.
 Group scheduling software facilitates
scheduling.

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Information
Partnerships
INFORMATION PARTNERSHIPS
An INFORMATION PARTNERSHIP is an
agreement between organizations for the
sharing of information to strengthen each partner
organization.
An OHP strategy for organizational force and/or
speed.
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Information
Partnerships
AN INFORMATION
PARTNERSHIP FOR SPEED
Electronic data interchange (EDI) automates
the transaction information flow between
partner organizations.
 Partners do not modify their product offerings
or their target markets.
 Business volume increases because
transactions take less time and have fewer
errors.

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Information Partnerships
AN INFORMATION
PARTNERSHIP FOR FORCE
Information is shared between partner
organizations to reach a larger market.
 Information is available because it is routinely
captured and stored.
 EDI and interorganizational systems (IOSs)
using networking technology support this
strategy.

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Information Partnerships
AN INFORMATION
PARTNERSHIP FOR BOTH
Partner organizations share information that is
strategic in nature and affects their
fundamental business strategy.
 New product offerings or services result.
 Innovations are generated faster organizational speed.
 Partners reach more customers organizational force.

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Timeless & Locationless
TIMELESS & LOCATIONLESS
OPERATIONS
TIMELESS OPERATIONS operate without
regard to time. Timeless operations serve
customers whenever the customers want.
 LOCATIONLESS OPERATIONS operate
without regard to location. Locationless
operations serve customers wherever the
customers want.

An OHP strategy for organizational force or
speed.
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Timeless & Locationless
SUCCESSFUL TIMELESS
OPERATIONS

Kansas City Power & Light
– With wireless technologies, meter reading can take place
any time.

Cisco Systems
– Customers now service themselves whenever they want.
See Table 3.1 on page 95.
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Timeless & Locationless
SUCCESSFUL LOCATIONLESS
OPERATIONS

Hot Hot Hot
– 1,500 people daily drop by its Web site.

Dell Computers
– Dell doesn抰 manufacture anything anywhere - it simply
assembles pre-made components.

Paul, Hastings, Janofsky & Walker
– Lawyers working anywhere they want. Definitely not in
the office.
See Table 3.1 on page 95.
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Timeless & Locationless
THE PAPERLESS OFFICE
The PAPERLESS OFFICE is an office where all
materials are maintained in electronic instead of
paper form.
Eliminating paper reduces the cost of storing
that paper.
 Electronic materials can be searched
electronically saving time.

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Timeless & Locationless
SUPPORTING THE
TELECOMMUTER
Telecommuting, or working away from the main
office, requires the creation of an individual,
remote workplace - a virtual workplace. Five
components support this virtual workplace:
1.Communication technology
2.Constant communication
3.Goal setting and monitoring
4.Physical meetings
5.Information access
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Transnational Firm
THE TRANSNATIONAL FIRM
A TRANSNATIONAL FIRM is a firm that
produces and sells products and services all
over the world in coordinated cooperation.
Operations are geographically dispersed.
 The dispersed operations extend the firm抯
market reach and thus its organization force.

An OHP strategy for organizational force.
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Transnational Firm
INTERNATIONAL
CONFIGURATIONS
GLOBAL - all operations depend upon
headquarters for resources and direction.
 MULTINATIONAL - all operations operate
independently, reporting only financial
information to headquarters.
 TRANSNATIONAL - all operations share
information and resources equally.

See Photo Essay 3-1, page 100.
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Transnational Firm
TRANSNATIONAL FIRM
CRITICAL SUCCESS FACTORS
1.Balancing local uniqueness with global
uniformity
– Use translation software with Web communication
2.Creating a global infrastructure
– Global DSSs, MISs, and WSSs
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Transnational Firm
TRANSNATIONAL FIRM
CHALLENGES
1.Fostering interoperational communication
2.Integrating OHP strategies internationally
3.Moving information across borders, called
TRANSBORDER DATA FLOWS, that is
subject to custom regulations just like any other
product.
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Virtual Organization
THE VIRTUAL ORGANIZATION
A VIRTUAL ORGANIZATION is a network of
independent organizations linked together by IT
to exploit market opportunities by sharing skills,
costs, and market access.
揑f you think of a transnational firm as located
everywhere, think of a virtual organization as
located nowhere.
An OHP strategy for organizational speed.
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Virtual Organization
DEFINING A VIRTUAL
ORGANIZATION
Locationless
Operations
Unlimited life
Virtual
Organization
Unlimited life
Outsourcing
Specified
lifetime
Employee run Partnership run
Contractual
operation
Share
Share knowledge
assignments
& resources
Share only
what抯
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Virtual Organization
IT SYSTEMS FOR THE VIRTUAL
ORGANIZATION
Joining independent organizations can create IT
systems integration challenges, including:
Linking incompatible hardware and software.
 Fostering creativity without human contact.
 Effectively communicating concepts online.

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Learning Organization
THE LEARNING ORGANIZATION
The LEARNING ORGANIZATION is an
organization whose people are continually
discovering how to learn together while, at the
same time, altering their organization as a result
of what they learn.
An OHP strategy for organizational speed.
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Learning Organization
BARRIERS THAT PROHIBIT
ORGANIZATIONS FROM 揕
EARNING
A command and control structure.
 Always assigning blame.
 The failure to learn from your experience.

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Learning Organization
COMMAND IT TO CONTROL IT
A command and control structure is an
organizational learning barrier because:
Efficiency is gained at the cost of
flexibility.
 Information flows only from top to
bottom.

Use IT systems to increase the bottom to top
flow of information.
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Learning Organization
IT SHOULDN扵 BE A BLAME
GAME
Assigning blame for all errors in an organization
is an organizational learning barrier because:
It promotes individual not
organizational learning.
 Assigning blame assumes you are to
blame and not me.

Use whiteboard software to solve problems
jointly.
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Learning Organization
LEARNING FROM YOUR
EXPERIENCES
Failing to learn from your experiences is an
organizational learning barrier because:
Seeing the 揵ig picture?requires
experiencing both causes and effects.
 Effects from events are often separated
by time and distance from the cause.

Utilize artificial intelligence to identify patterns
and find unique solutions to complicated
problems.
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OHP Strategy Implementation
STEPS IN SELECTING AN OHP
STRATEGY
1.How do your customers define perfect service?
2.Does your organization have a strategic plan
and how do those goals translate into OHP
force and speed?
3.Which OHP strategy best fits the answers to
the first two questions?
4.Does your organization have the resources to
adopt the strategy you抳e selected?
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OHP Strategy Implementation
ADOPTING AN OHP STRATEGY
Once selected, adopting an OHP strategy
considers three issues. They are:
1.Is the strategy to be applied partially or
comprehensively?
2.Which technologies does the strategy require?
3.Should a continuous improvement process or
business process reengineering be used to
adopt the strategy?
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BPR
BUSINESS PROCESS
REENGINEERING
BUSINESS PROCESS REENGINEERING
(BPR) is the reinventing of processes within a
business.
BUSINESS PROCESSES are sequences of
activities that take raw materials from a supplier
and serve outcomes to a customer.
BUSINESS PROCESS
REENGINEERING
1993年哈默和钱皮的《再造企业--工商管
理革命宣言》
 为了在衡量绩效的关键指标上取得显著
改善，从根本上重新思考、彻底改造企
业流程。
 企业业务流程的再造关键是：根本、彻
底、显著和流程。

BUSINESS PROCESS
REENGINEERING

根本就是企业流程需要从根本上重新思
考业已形成的基本信念，组织需要对长
期以来形成的分工思想、等级制度、规
模经营、标准化生产和管理体制等进行
重新思考，打破原有的思考模式，进行
创造性思维。需要重新思考"我们为什么
要这样做"，"我们为什么需要做这样的事
"等。
BUSINESS PROCESS
REENGINEERING
彻底就是企业流程再造就是一次彻底的
变革，不是对组织修修补补，而是进行
彻底改造，抛弃现有的业务流程和组织
结构，另起炉灶。
 显著，即企业通过流程再造可以取得显
著的进步，哈默和钱皮为"显著改善"制定
了一个目标：周转期缩短70%，成本降低
40%，顾客满意度和企业收益提高40%，
市场份额增长25%。

BUSINESS PROCESS
REENGINEERING

流程，即企业流程再造从重新设计业务
流程着手。在一个企业中，业务流程决
定着组织的运行效率，是企业的生命线
。在传统的企业组织中，分工理论不仅
决定着业务流程的构造方式，同时也带
来了一系列弊端。企业流程再造之所以
要从重新设计业务流程着手，是因为原
有的业务流程是组织低效率的根源所在
。
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BPR
STEPS IN PERFORMING BPR
1.Defining the OHP strategy you wish to adopt.
2.Identifying the affected processes that need to
be reengineered.
3.Identifying the goal for each process.
4.Identifying process participants and a facilitator
for each process.
5.Mapping the “as-is” process.
6.Designing the “to-be” process.
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TO SUMMARIZE
Competitive advantages are fleeting.
 7 OHP strategies enabled by IT are:

–
–
–
–
–
–
–
Just-in-time approach
Teams
Information partnerships
Timeless & locationless operations
Transnational firm
Virtual organization
Learning organization
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TO SUMMARIZE
Quality through TQM is the foundation for all
OHP strategies.
 Each OHP strategy generates various
magnitudes of organizational force and speed the components of OHP.
 Adopting an OHP strategy may be done either
continuously or radically.
 TQM is the continuous adoption process.
 BPR is the radical adoption process.
