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 competitive advantage. 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 competitive advantage. 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 procurement. 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 product purchased. 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 3. Suppliers 4. Customer 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 bargaining power. * Lower power supplier * The goods substitution Business Ecosystem 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 Network Economy 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 strategic advantage. Management Challenges * 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.
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