INFORMATION SYSTEMS AND BUSINESS STRATEGY
Strategic information systems, computer systems used to change the target level of organization,
operations, products, services, or environmental relationships to help organizations achieve
The decision of the company's business strategy depends on:
* Products and services produced by firms
* Industries in which companies compete
* Competitors, suppliers, and customers of the company
* The long term objectives of the company
Business-level Strategy: Value Chain Model
The most common strategy for this level are:
1. be producing products with low production costs
2. differentiate products and services
3. change the scope of competition either by expanding its market to the global market as well
as by narrowing the market.
Value chain model, a model that gives attention to the primary and supporting activities that add
value to products and services company where information systems are best applied to gain
Primary activity is activity that directly relates to the production and distribution company
product or service. While supporting activities are activities that allow execution of primary
activities. Consisting of organizational infrastructure, human resources, technology, and
Value refers to the web customer-controlled network of companies that utilize information
technology to coordinate its supply chain to collectively produce products or services to market.
Products and Services Information System
Systems that create product differentiation:
* Companies can use IT to develop different products.
* Creating brand loyalty by developing new and unique products and services
* Products and services not easily duplicated by competitors. For example, Dell Corporation.
Systems that Support Market Niche
Intensive analysis using customer data to support new ways of contact and serve customers
which allows to develop new market niches for specialized products or services. For example,
frequent guest program Wyndam Hotel
Supply Chain Management and Efficient Customer Response System
The system connects to the enterprise value chain value chain of suppliers and consumers.
System that directly links back to the distributor of consumer behavior, production, and supply
chain. Example: Wal-Mart directly connecting customers to suppliers purchase almost
immediately. work of suppliers is to ensure that products shipped to the store to replace the
IT at the organizational level is used to avoid the shift of customers to other suppliers and bind
them to the company. Replacement cost is the cost incurred by the customer or the company for
the time and resources are wasted when switching from one supplier or to the system supplier or
a competitor's system. For example, Baxter International.
Corporate-level strategy and Information Technology
Extending the core competencies, the activities in which the company excels as a world class
leader. Information systems to encourage knowledge sharing across business units and therefore
increase the competence of the company.
Industry-level strategy and Information Systems: competitive forces and the network economy.
The company operates in a larger environment consisting of other companies, governments, and
nations. Information Partnership, an alliance cooperation made by two or more companies which
aims to share information to gain strategic advantage. Helping companies gain access to new
customers, creating new opportunities for cross-selling and targeting products.
Porter's Five Forces Model
In larger environments, there are five main force or threat:
1. New market entrants
2. Product and service replacement
5. Other companies that compete directly
Competitive forces model, the model used directly to explain the interaction of external
influences, specific threats and opportunities, which affect strategy and organization's ability to
compete. Internet technology has affected the industry structure with
* Provides the technology that make it easier for competitors to compete on price and new
players on the market.
* Improving the information available for customers on price performance thus increasing the
* Lower power supplier
* The goods substitution
IT plays a strong role in creating new forms of ecosystem products business. Business
Ecosystem is a network of suppliers, distributors, outsourcing firms, transportation companies,
and manufacturing technology related. For example, Microsoft: 1 billion PCs around the world
and hundreds of thousands of businesses rely on the Microsoft platform. EBay: Millions of
people and thousands of businesses using this platform. Wal-Mart: Enterprise systems used by
suppliers to improve efficiency
IT products and services showed strong network effects and potentially create a situation of
"winner take all". Networks make the cost to add other participants zero or less, otherwise the
benefits could be even greater. Contrary to the law of profit decline in industrial and agricultural
products. For example, the value of the Internet grows exponentially with linear increase in
users. Because certain software may be standard (such as the Windows operating system or
Windows Office), people can lock into the standard and value of Windows grew as more and
more people are using it.
A good strategy, using IT to develop products and services that cause the network effect.
Opportunity management, the Company faces the development of IT-based opportunities to gain
* Some companies are facing major obstacles in applying the contemporary system.
* After the gains achieved, there is difficulty in maintaining excellence.
* Organizations are often unable to change to accommodate new technology fast enough
Guidelines for Completion of strategic systems analysis
* Understand the structure and dynamics of industrial competition in which firms operate.
* Understand the business value chain, companies, and industry
* Consider how companies can manage the "strategic shift" in an effort to implement systems
that provide competitive advantage.