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Information Systems for Strategic Advantage. BUS 782. 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.
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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.
Auction sites • Yahoo, Ebay • Necessity: • Ability to search and view items, view seller info and bid history, place a bid, online payment. • Advantage: • Ebay • 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 • Dell: • Customization • America West website -- http://www.americawest.com/awa/ • Select your seats • Web check-In (Travel Tools and Services)
Comparing Websites • Travel:Yahoo vs Expedia • Hotels • Cars • Vacations • Cruises • Real Estate:Century 21 vs ReMax • Buy: neighborhood, school • Sell • Finance • Learn
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
Competitive Strategies • 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.
Administrative Coordination & Support Services Human Resource Management Advantage Technology Development Procurement of Resources Inbound Logistics Operations Outbound Logistics Marketing and Sales Customer Service Competitive The Value Chain
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