2_competing with information technology

8/8/2019 2_Competing With Information Technology

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CompetingCompetingwithwith

Information TechnologyInformation Technology

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Obj ectivesObj ectives

Identify basic competitive strategies andIdentify basic competitive strategies andexplain how IT may be used to gainexplain how IT may be used to gaincompetitive advantage.competitive advantage.

Identify strategic uses of informationIdentify strategic uses of informationtechnology.technology.

How does business process engineeringHow does business process engineeringfrequently use efrequently use e- -business technologiesbusiness technologiesfor strategic purposes?for strategic purposes?

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(Obj ectives(Obj ectives continued)continued)

Identify the business value of using eIdentify the business value of using e- -business technologies for total qualitybusiness technologies for total qualitymanagement, to become an agilemanagement, to become an agilecompetitor, or to form a virtualcompetitor, or to form a virtualcompany.company.

Explain how knowledge managementExplain how knowledge managementsystems can help a business gainsystems can help a business gainstrategic advantage.strategic advantage.

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Fundamentals of Strategic AdvantageFundamentals of Strategic Advantage22


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Fundamentals of Strategic AdvantageFundamentals of Strategic Advantage

Competitive Forces (Porter)Competitive Forces (Porter) Bargaining power of customersBargaining power of customers Bargaining power of suppliersBargaining power of suppliers Rivalry of competitorsRivalry of competitors Threat of new entrantsThreat of new entrants

Threat of substitutesThreat of substitutes

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Competitive Strategies & the Role of IT

Cost Leadership (low costCost Leadership (low costproducer)producer) Reduce inventory (JIT)Reduce inventory (JIT) Reduce manpower costs per saleReduce manpower costs per sale

(see Real World Case(see Real World Case 1 1)) Help suppliers or customers reduceHelp suppliers or customers reduce

costscosts Increase costs of competitorsIncrease costs of competitors Reduce manufacturing costsReduce manufacturing costs

(process control)(process control)

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Competitive Strategies & the Role of ITCompetitive Strategies & the Role of IT(continued)(continued)

DifferentiationDifferentiation Create a positive difference betweenCreate a positive difference between

your products/services & theyour products/services & thecompetition.competition.

May allow you to reduce a competitorsMay allow you to reduce a competitorsdifferentiation advantage.differentiation advantage.

May allow you to serve a niche market.May allow you to serve a niche market.

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InnovationInnovation New ways of doing businessNew ways of doing business

Unique products or servicesUnique products or servicesNew ways to better serve customersNew ways to better serve customersReduce time to marketReduce time to marketNew distribution modelsNew distribution models

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GrowthGrowth Expand production capacityExpand production capacity

Expand into global marketsExpand into global markets DiversifyDiversify Integrate into related products andIntegrate into related products and

services.services.

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Alliance Alliance Broaden your base of supportBroaden your base of support

New linkagesNew linkages

Mergers, acquisitions, joint ventures,Mergers, acquisitions, joint ventures,virtual companiesvirtual companies

Marketing, manufacturing, or Marketing, manufacturing, or

distribution agreements.distribution agreements.

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Other Competitive StrategiesOther Competitive Strategies Locking in customers or suppliersLocking in customers or suppliers

Build value into your relationshipBuild value into your relationship

Creating switching costsCreating switching costsExtranetsExtranetsProprietary software applicationsProprietary software applications

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Other Competitive StrategiesOther Competitive Strategies(continued)(continued) Raising barriers to entryRaising barriers to entry

Improve operations or promoteImprove operations or promoteinnovationinnovation

Leveraging investment in ITLeveraging investment in IT

Allows the business to take advantage Allows the business to take advantageof strategic opportunitiesof strategic opportunities

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Value Chain (continued)Value Chain (continued)

SupportSupport

ProcessesProcesses

PrimaryPrimary

BusinessBusiness

ProcessesProcesses

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Section IISection II

Using Information Technology for Using Information Technology for Strategic AdvantageStrategic Advantage

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Strategic Uses Of Information TechnologyStrategic Uses Of Information Technology

Major competitive differentiator Major competitive differentiator Develop a focus on the customer Develop a focus on the customer

Customer valueCustomer valueBest valueBest valueUnderstand customer preferencesUnderstand customer preferencesTrack market trendsTrack market trends

Supply products, services, & informationSupply products, services, & informationanytime, anywhereanytime, anywhereTailored customer serviceTailored customer service

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Strategic Uses of IT (continued)Strategic Uses of IT (continued)

Business Process Reengineering (BPR) Rethinking & redesign of business

processes

Combines innovation and processimprovement

There are risks involved. SuccessSuccess factors

Organizational redesignProcess teams and case managersInformation technology

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Strategic Uses of IT (continued)Strategic Uses of IT (continued)

Improve business qualityImprove business quality Total Quality Management (TQM)Total Quality Management (TQM)

Quality from customers perspectiveQuality from customers perspectiveMeeting or exceeding customer Meeting or exceeding customer expectationsexpectationsCommitment to:Commitment to: Higher qualityHigher quality Quicker responseQuicker response Greater flexibilityGreater flexibility Lower costLower cost

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Becoming agileBecoming agile Four basic strategiesFour basic strategies

Customers perception of product/serviceCustomers perception of product/serviceas solution to individual problemas solution to individual problemCooperate with customers, suppliers, other Cooperate with customers, suppliers, other companies (including competitors)companies (including competitors)Thrive on change and uncertaintyThrive on change and uncertainty

Leverage impact of people and peoplesLeverage impact of people and peoplesknowledgeknowledge

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The virtual companyThe virtual company Uses IT to link people, assets, andUses IT to link people, assets, and

ideasideas Forms virtual workgroups and alliancesForms virtual workgroups and alliances

with business partnerswith business partners Interorganizational information systemsInterorganizational information systems

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The Virtual Company (continued)The Virtual Company (continued)

StrategiesStrategiesShare infrastructure & risk with allianceShare infrastructure & risk with alliance

partnerspartnersLink complementary core competenciesLink complementary core competenciesReduce conceptReduce concept- -toto--cash time throughcash time throughsharingsharing

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Strategies (continued)Strategies (continued)Increase facilities and market coverageIncrease facilities and market coverageGain access to new markets and shareGain access to new markets and share

market or customer loyaltymarket or customer loyaltyMigrate from selling products to sellingMigrate from selling products to sellingsolutionssolutions

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Learning OrganizationsLearning Organizations

Exploit two kinds of Exploit two kinds of knowledgeknowledge ExplicitExplicit TacitTacit

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Learning Organizations (continued)Learning Organizations (continued)22


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Knowledge management systemsKnowledge management systems

Help create, organize, and shareHelp create, organize, and sharebusiness knowledge wherever andbusiness knowledge wherever andwhenever needed within thewhenever needed within theorganizationorganization

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Discussion QuestionsDiscussion Questions

You have been asked to developYou have been asked to developee--business & ebusiness & e- -commercecommerceapplications to gain competitiveapplications to gain competitiveadvantage. What reservationsadvantage. What reservationsmight you have about doing so?might you have about doing so?

How could a business use IT toHow could a business use IT toincrease switching costs and lockincrease switching costs and lockin its customers and suppliers?in its customers and suppliers?

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Discussion Questions (continued)Discussion Questions (continued)

How could a business leverage itsHow could a business leverage itsinvestment in IT to build strategic ITinvestment in IT to build strategic ITcapabilities that serve as a barrier tocapabilities that serve as a barrier to

entry by new entrants into its markets?entry by new entrants into its markets?

What strategic role can informationWhat strategic role can informationtechnology play in business processtechnology play in business processreengineering and total qualityreengineering and total qualitymanagement?management?

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Discussion Questions (continued)Discussion Questions (continued)22

How can Internet technologies helpHow can Internet technologies helpa business form strategic alliancesa business form strategic allianceswith its customers, suppliers, andwith its customers, suppliers, andothers?others?

How could a business use InternetHow could a business use Internet

technologies to form a virtualtechnologies to form a virtualcompany or become an agilecompany or become an agilecompetitor?competitor?


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IT cant really give a company a strategicIT cant really give a company a strategicadvantage, because most competitiveadvantage, because most competitiveadvantages dont last more than a fewadvantages dont last more than a fewyears & soon become strategicyears & soon become strategicnecessities that just raise the stakes of necessities that just raise the stakes of the game. Discuss.the game. Discuss.

MIS author & consultant Peter Keen says:MIS author & consultant Peter Keen says:We have learned that it is not technologyWe have learned that it is not technologythat creates a competitive edge, but thethat creates a competitive edge, but themanagement process that exploitsmanagement process that exploitstechnology. What does he mean?technology. What does he mean?

Discussion Questions (continued)Discussion Questions (continued)22


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ReferencesReferences22

James A. O'Brien; George M.Marakas. Management InformationSystems: Managing InformationTechnology in the BusinessEnterprise 6 th Ed., Boston:McGraw-Hill/ Irwin,200 4

2_competing with information technology

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