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Strategy and ISDescribe the roles of business, organizational and
IS strategyCompare and contrast: Porter’s three generic
strategies model, D’Aveni’s hypercompetion model, and Brandenburger and Nalebuff’s co-opetition model
Describe the major components and apply the value chain, competitive forces and strategic thrusts models
Discuss risks of IS successDiscuss eras of IT use
Strategic Advantage
Does an organization need Information Systems to gain strategic advantage?
Strategy - A PlanBusiness strategy drives organizational and
information systems strategy Information systems strategy - plan the
organization uses in providing information services Information systems strategy is affected by a firm’s
business and organizational strategiesOrganizational strategy - organization’s design as
well as the choices it makes to define, set up, coordinate and control its work processes
Remember interdependency!
Porter’s Three Generic Strategies
Cost leadership (lowest cost in industry)
Differentiation of products/servicesFocus (finding a specialized niche)
cost differentiation of product or services
Be Low Cost Producer - IT strategic if it can:
Help reduce production costs & clerical work
Reduce inventory, accounts receivable, etc.
Use facilities and materials betterOffer interorganizational
efficiencies
Produce Unique Product - IT strategic if it can:
Offer significant component of product
Offer key aspect of value chainPermit product customization to
meet customer’s unique needsProvide higher/unique level of
customer service/satisfaction
Fill Market Niche - IT strategic if it can:
Permit identification of special needs of unique target market
Spot and respond to unusual trends
D’Aveni’s Hypercompetition ModelFocused on turbulent environmentAdvantages are rapidly created and
erodedSustaining an advantage can be a deadly
distractionThe goal is disruption, not sustainability, of
advantageInitiatives are achieved with a series of
small steps
Four Arenas of Competitive Advantage
Cost/qualityTiming/know-howStrongholdsDeep pockets (short-term only)
Seven S’s
Superior Stakeholder SatisfactionStrategic Soothsaying Positioning for Speed Positioning for Surprise Shifting the rules of competition Signaling strategic intent Simultaneous and Sequential Strategic
Thrusts
Brandenburger and Nalebuff’s Co-opetition
Optimally combining cooperation and competition
Valu Net of competitors and complementors
Strategic Information Systems
IS that help gain strategic advantageSignificantly change manner in which
business supported by the system is doneOutwardly aimed at direct competitionInwardly focus on enhancing the
competitive positionCreate strategic alliancesIS can support business strategies
Eras of IT
Primary Roleof IT
Justify ITExpenditures
Era I1960s
Efficiency:Automate
ROI
Era II1970s
Effectiveness:Ind & groupeffectiveness
Increasingproductivity andbetter decisions
Era III1980s-1990s
Strategic:Org & IndustryTransformation
Competitiveposition
Era IV1990s-2000
Value creation:Partnerships
Adding value
Eras of ITTarget ofSystems
DominateTechnology
Era I1960s
Organization Mainframe“Centralized”
Era II1970a
Individual/manager
Minicomputer“Decentralized”
Era III1980s-1990s
BusinessProcess
Client/Server“Distributed”
Era IV1990s-2000
Customer,Supplier,Ecosystem
Internet“Ubiquitous”
Unusual Suspects: Information Resources
Information systems infrastructureInformation and knowledgeProprietary technologyTechnical skills of the IT staffEnd users of the information systemRelationship between IT and business
managersBusiness processes
Strategy Axioms
Axiom: A scarce resource adds value Corollary: only if there is a need
Altnernative axiom: Value is derived from plentitude What good is a single fax machine?
Firm Infrastructure(general management, accounting, finance, strategic planning)
Human Resource Management(recruiting, training, development)
Technology Development(R&D< product and process improvement)
Procurement(purchasing of raw materials, machines, supplies)
Su
pp
ort
Act
ivit
ies
Pri
mar
y A
ctiv
itie
s
InboundLogistics(rawmaterialshandlingandwarehous-ing)
Operations
(machineassembling,testing)
OutboundLogistics(warehous-ing anddistributionof finishedproduct)
Service
(installation,repair,parts)
Marketingand Sales(advertising,promotion,pricing,channelrelations)
Value Chain Model
Chain of basic activities that add to firm’s products or services
Primary activitiesSecondary activities
Value Chain Primary Activities
InboundOutboundOperationsMarketing and SalesAfter-Sale Services
Value Chain Support Activities
Technology developmentProcurementHuman Resources ManagementManagement Control
accounting/finance coordination general management central planning
Competitive Forces
Threat of entry of new competition
Bargaining power of suppliersBargaining power of buyersThreat of substitute products or
servicesRivalry among existing firms
Strategies for Competitive Forces
Note - strength of force is determined by factors in industry
Gain a competitive edgeBuild defenses against forcesFormulate actions to influence
forces
Strategic Questions
Can IT create barriers to entry? (new entrants)
Can IT build in switching costs? (buyers)
Can IT strengthen customer relationships? (buyers)
Strategic Questions (cont)Can IT change the balance of
power in supplier relationships? (suppliers)
Can IT change the basis of competition? (competitors)
Can IT generate new products?(competitors, substitutes)
Wiseman’s Theory of Strategic Thrusts
Strategic purposes that drive the use of the firm’s resources
DifferentiationCostInnovationGrowthAlliance
Searching for Specific Opportunities
What is the mode of the thrust? (offensive, defensive)
What is the direction of the thrust? (use, provide)
What is the strategic target of the thrust? (supplier, customer, competitor)
Risks of IS SuccessChange the Basis of CompetitionLower Entry BarriersPromote Litigation or RegulationAwake Sleeping GiantReflect Bad TimingAre Too Advanced
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