Informatics Class 3

Strategic Information Systems for business competitive advantage

information systems (SISs) and explain their advantages.
Describe Porter’s competitive forces

model and how information technology helps companies improve their competitive positions.
Describe 12 strategies companies can use to achieve competitive advantage in their industry.
Describe Porter’s value chain model and its relationship to information technology.
Describe representative SISs and the advantage they provide to organizations.
Discuss the challenges associated with sustaining competitive advantage.

some measure such as cost, quality, or speed
A difference in

the Value Chain Data
Improving Core Competency(reduce disadvantage)
Employee productivity
Operational efficiency

Any information system--EIS, OIS, TPS, KMS-- that changes the goals, processes, products, or environmental relationships to help an organization gain a competitive advantage or reduce a competitive disadvantage.

that help an organization gain a competitive advantage or reduce

a competitive disadvantage.

an organization maps or crafts the strategy of its future

operations.

that provide direct strategic advantage to organizations.
Competitive weapons: Information systems

themselves are recognized as a competitive weapon
Changes in processes: IT supports changes in business processes that translate to strategic advantage
Links with business partners: IT links a company with its business partners effectively and efficiently.

companies to reduce costs.
Relationships with suppliers and customers: IT can

be used to lock in suppliers and customers, or to build in switching costs.
New products: A firm can leverage its investment in IT to create new products that are in demand in the marketplace.
Competitive intelligence: IT provides competitive (business) intelligence by collecting and analyzing information about products, markets, competitors, and environmental changes .

knowledge management
raising the quality of strategic planning
One of the

most important aspects in developing a competitive advantage is to acquire information on the activities and actions of competitors.

However once the data has been gathered it must be processed into information and subsequently business intelligence. Porters 5 Forces is a well-known framework that aids in this analysis.

bargaining power of suppliers
The bargaining power of customers (buyers)
The threat

of substitute products or services
The competition among existing firms in the industry

The model recognizes five major forces that could enlarge a company’s position in a given industry.

External Competitive Forces

they Doing and can do?
What are their strengths & weaknesses?
Is

competition intense?

of competitors competition will become intense.
Incumbent Reaction?
What Actions are required

to build market share?
Production Process?

another industry enter the market
Customers becoming acclimated to using substitutes
Is

the substitute market growing?

the transaction?
Each element adds value – question who captures it?
The

Suppliers
The Buyers

that influence a company’s competitive position will assist management in

crafting a strategy aimed at establishing a sustained competitive advantage. To establish such a position, a company needs to develop a strategy of performing activities differently than a competitor.

Cost leadership strategy: Produce products and/or services at the lowest cost in the industry.
Differentiation strategy: Offer different products, services, or product features.
Niche strategy: Select a narrow-scope segment (niche market) and be the best in quality, speed, or cost in that market.

Increase market share, acquire more customers, or sell more products.

Alliance strategy: Work with business partners in partnerships, alliances, joint ventures, or virtual companies.
Innovation strategy: Introduce new products and services, put new features in existing products and services, or develop new ways to produce them.
Operational effectiveness strategy: Improve the manner in which internal business processes are executed so that a firm performs similar activities better than rivals.

Concentrate on making customers happy
Time strategy: Treat time as a

resource, then manage it and use it to the firm’s advantage.
Entry-barriers strategy: Create barriers to entry.
Lock in customers or suppliers strategy: Encourage customers or suppliers to stay with you rather than going to competitors.
Increase switching costs strategy: Discourage customers or suppliers from going to competitors for economic reasons.

Our goal is to perform activities differently than a competitor. Those activities can be linked in a Value Chain Model.

the activities conducted in any organization can be divided into

two parts: primary activities and support activities.

Primary activities are those activities in which materials are purchased, processed into products, and delivered to customers. Each adds value to the product or service hence the value chain.
Inbound logistics (inputs)
Operations (manufacturing and testing)
Outbound logistics (storage and distribution)
Marketing and sales
Delivery and Service

value to the product or service, the support activities are

operations that support the creation of value (primary activities)
The firm’s infrastructure (accounting, finance, management)
Human resources management
Technology development (R&D)
Procurement

The initial purpose of the value chain model was to analyze the internal operations of a corporation, in order to increase its efficiency, effectiveness, and competitiveness. We can extend that company analysis, by systematically evaluating a company’s key processes and core competencies to eliminate any activities that do not add value to the product.

larger stream of activities, which Porter calls a value system.

A value system includes the suppliers that provide the inputs necessary to the firm and their value chains. This also is the basis for the supply chain management concept. Many of these alliances and business partnerships are based on Internet connectivity
are called interorganizational information systems (IOSs)

These Internet-based EDI systems offer strategic benefits
Faster business cycle
Automation of business procedures
Reduced operational costs
Greater advantage in a aggressive competitive environment

business in this environment is becoming more challenging as the

political environment improves and as telecommunications and the Internet open the door to a large number of buyers, sellers, and competitors worldwide. This increased competition is forcing companies to look for better ways to compete globally.

Global dimensions along which management can globalize
Product
Markets & Placement
Promotion
Where value is added to the product
Competitive strategy
Use of non-home-country personnel - labor
Multidomestic Strategy: Zero standardization along the global dimensions. Global Strategy: Complete standardization along the global dimensions.

to establish a profitable and sustainable position against the competitive

forces in an industry. Due to advances in systems development it has become increasingly difficult to sustain an advantage for an extended period. Experience also indicates that information systems, by themselves, can rarely provide a sustainable competitive advantage. Therefore, the major problem that companies now face is how to sustain their competitive advantage.

One popular approach is to use inward systems that are not visible to competitors. These proprietary systems allow the company to perform the activities on their value chain differently than their competitors.