Information Systems for Strategic Advantage
Strategic Information System
• Information systems that provide a firm with competitive products and services which give it a strategic advantage over its competitors in the marketplace.
– Information systems that promote business innovation, improve operational efficiency.
Strategic Advantage and Strategic Necessity
• Strategic advantage refers to obtaining a sustainable competitive edge over competitors. The ability to obtain a greater than normal return on investment. • A strategic necessity is a system that must be installed to remain competitive and stay in business.
• Yahoo, Ebay • Necessity:
– Ability to search and view items, view seller info and bid history, place a bid, online payment.
• Ebay store • PayPal • Micropayments • SkyPe: http://pages.ebay.com/skype/
– Special SkyPe services for eBay sellers and buyers
• Amazon Associates:
– Amazon.com's affiliate marketing program. By linking to Amazon products and services you can add compelling content for your site visitors enjoyment and receive up to 8.5% in referral fees for doing so. – aStore
Being the First
• Internet Search Engines:
– Yahoo, Google – Teoma – Mooter
New Way of Doing Business
• America West website -http://www.americawest.com/awa/
• Select your seats • Web check-In (Travel Tools and Services)
• Travel:Yahoo vs Expedia
– – – –
– – – –
Hotels Cars Vacations Cruises
Buy: neighborhood, school Sell Finance Learn
• Real Estate:Century 21 vs ReMax
Competitive forces model by Michael Porter
Threat of New Entrants
Bargaining Power of Suppliers
Rivalry among Existing Competitors
Bargaining Power of Customers
Threat of Substitute Products
• Cost leadership strategy:
– Become a low cost producer of products and services – Find ways to help suppliers or customers reduce their costs
• Product differentiation strategy. • Innovation strategy: Finding new way of doing business, enter new market. • Alliance strategy: Establish alliances with customer, suppliers, competitors, other company. • Growth strategy: expanding, diversifying, integrating.
Strategic Roles for Information Systems
• Improving business operations • Promoting business innovation • Locking in customers and suppliers – Interorganizational IS, EDI, automatic inventory replenishment system • Creating switching costs – make customers dependent on the continued use of innovative IS. • Raising barriers to entry – discourage competitors from entering a market
The Value Chain and Strategic IS
• It views a firm as a series, or chain, or network of basic activities that add value to its products and services, and thus add a margin of value to the firm.
– Margin is the value of the firm’s products and services less their costs, as perceived by the firm’s customers.
• Support activities:
– Administration, human resource management ,etc.
• Primary activities:
– Inbound logistics, operations, outbound logistics, marketing, etc.
The Value Chain
Administrative Coordination & Support Services Human Resource Management Technology Development Procurement of Resources
Inbound Outbound Operations Logistics Logistics
Marketing Customer and Service Sales
Becoming an Agile Competitor
• Agility in competitive performance is the ability of a business to prosper in rapidly changing, continually fragmenting global markets for high-quality, high-performance, customer-configured products and services. An agile company can:
– 1. Make a profit in markets with broad product ranges and short model lifetimes – 2. Process orders in arbitrary lot sizes – 3. Offer individualized products while maintaining high volumes of production.
IT and Agility
• Agile companies depend heavily on information technology to:
– 1. Enriched its customers with customized solutions to their needs.
• Mass customization
– 2. Cooperate with other businesses to bring products to market as rapidly and cost-efficient as possible. – B2B E-Commerce
• Electronic Exchange: An electronic forum where manufacturers, suppliers, and competitors buy and sell goods. • Example: WorldWide Retail Exchange (WWRE)
IT Doesn’t Matter – Nicholas Carr
• The basis for a sustainable competitive advantage is not ubiquity but scarcity. • The core functions of IT have become available to all. • Computer programs today are industry specific, most “right out of box””. That is they are commodities. • Costs of doing business – paid by all but provide distinction to none.
Carr’s Rules for Firms
• Spend less • Follow, don’t lead • Focus on the risks of IT, not the opportunities:
– Webvan - wiki – Peapod