Strategy and Information Systems

Chapter 3

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“And we’ve got a lot of process and systems work to

do."

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• Differentiates itself by having a large inventory of parts.

• Competitive strategy is threatened by 3D printing.

• Manufacturing 3D printing line means building new business

processes and systems.

• Innovations threaten competitive strategies.

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Study Guide

Q1: How does organizational strategy determine information systems structure?

Q2: What five forces determine industry structure?

Q3: How does analysis of industry structure determine competitive strategy?

Q4: How does competitive strategy determine value chain structure?

Q5: How do business processes generate value?

Q6: How does competitive strategy determine business processes and the

structure of information systems?

Q7: How do information systems provide competitive advantages?

Q8: 2024?

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Q1: How Does Organizational Strategy Determine

Information Systems Structure?

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Q2: What Five Forces Determine Industry Structure?

Competitive Forces

• Competition from vendors of substitutes.

• Competition from new competitors.

• Competition from existing rivals.

Bargaining Power Forces

• Bargaining power of suppliers.

• Bargaining power of customers.

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Use 5-forces Model to Identify Sources of Strong

Competition

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Assessing the Five Forces at AllRoad

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Q3: How Does Analysis of Industry Structure

Determine Competitive Strategy?

Porter's Four

Competitive Strategies

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Bottom Line

• To be effective goals, objectives, culture, and activities must

be consistent with strategy.

• In MIS, this means all information systems must reflect and

facilitate the organization's competitive strategy.

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Yikes! Bikes!

• You are the operations manager for Yikes! Bikes, a manufacturer of

high-end mountain bicycles.

• New owners plan to pursue lowest-cost vendor strategy by importing

low-cost, lower quality bikes.

• New owners are not being honest with employees about cutting jobs.

• Say you might be promoted to new general manager. Should you trust

them?

Q: Are the owner’s actions illegal? Unethical?

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Q4: How Does Competitive Strategy Determine Value

Chain Structure?

Linkages

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Task Descriptions for Primary Activities of the Value

Chain

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Q5: How Do Business Processes Generate Value?

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Improved Material Ordering Process

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Q6: How Does Competitive Strategy Determine Business

Processes and the Structure of Information Systems?

Low-Cost Rental Value Chain

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High-Service Rental Value Chain

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Industry Structure

Competitive Strategy

Value Chains

Business Processes

Information Systems

Using MIS InClass Exercise 3: Competitive Strategy

Over the Web

• www.sportsauthority.com vs. www.soccer.com

• www.target.com vs. www.sephora.com

• www.woot.com vs. www.amazon.com

• www.petco.com vs. www.wag.com

• www.llbean.com vs. www.rei.com

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Q7: How Do Information Systems Provide Competitive

Advantages?

Principles of

Competitive

Advantage

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How Does an Actual Company Use IS to Create

Competitive Advantages?

• Maintains customer account data IS collects information for ABC (adds value).

IS saves customers time by automatically filling in part of form (adds value for customer).

• Package & information delivery system IS helps customer to select delivery address and generate

shipping labels.

What value does shipper get?

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Two Roles for Information Systems Regarding

Products

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ABC, Inc., Web Page to Select a Contact from the

Customer’s Records

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ABC, Inc., Web Page to Specify Email Notification

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ABC, Inc., Web Page to Print a Shipping Label

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Q8: 2024?

• Models of business strategy, competitive advantages, and

relationship to processes and IS unlikely to change.

• Pace of business will accelerate.

• New ideas and innovations and require businesses to be

constantly on alert for changes that may affect their strategy.

• Be a modern-day prospector and use technology to create

new products.

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Security Guide: Differentiating on Security!

• Major data centers harden their sites; computer criminals

turn to less strongly protected assets held by small

organizations and individuals.

• Habit of effective security behavior easy way to gain a

competitive advantage.

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Active Review

Q1: How does organizational strategy determine information systems structure?

Q2: What five forces determine industry structure?

Q3: How does analysis of industry structure determine competitive strategy?

Q4: How does competitive strategy determine value chain structure?

Q5: How do business processes generate value?

Q6: How does competitive strategy determine business processes and the

structure of information systems?

Q7: How do information systems provide competitive advantages?

Q8: 2024?

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Case Study 3: Fulfillment by Amazon (FBA):

• Primary product offerings:

1. Online retail store.

2. Computing infrastructure leasing.

3. Order fulfillment services.

• Amazon buys, takes ownership, physical possession,

inventories good, sells from inventory.

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Is FBA Right for AllRoad Parts?

• Outsource to AllRoad, thus avoiding cost of developing own

processes, facilities, and order fulfillment information

systems.

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FBA Fees for Products Like Sporting Goods as of May

2013

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Guide: Your Personal Competitive Advantage

• Who will be your competitors when you seek a job after

graduating from college?

• What will be your competitive advantage in the job market?

• What can you do before you graduate to develop your

competitive advantage?

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Using the Guide: Your Personal Competitive

Advantage (cont'd)

How do these elements of competitive advantage apply to

you personally?

• Switching costs?

• Differentiating products?

• Creating barriers?

• Establishing alliances?

• Reducing costs, increasing revenues?

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