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CHAPTER 2

CHAPTER 2. Organizational Strategy, Competitive Advantage, and Information Systems. CHAPTER OUTLINE. 2.1 Business Processes 2.2 Business Process Reengineering and Business Process Management 2.3 Business Pressures, Organizational Responses, and Information Technology Support

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CHAPTER 2

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  1. CHAPTER 2 Organizational Strategy, Competitive Advantage, and Information Systems

  2. CHAPTER OUTLINE 2.1 Business Processes 2.2 Business Process Reengineering and Business Process Management 2.3 Business Pressures, Organizational Responses, and Information Technology Support 2.4 Competitive Advantage and Strategic Information Systems 2.5 Business – Information Technology Alignment

  3. Learning Objectives 1. Understand the concept of business processes, and provide examples of business processes in the functional areas of an organization. 2. Differentiate between the terms business process reengineering and business process management. 3. List and provide examples of the three types of business pressures, and describe one IT response to each.

  4. Learning Objectives (continued) 4. Identify the five competitive forces described by Porter, and explain how the Web impacts each one. 5. Describe the strategies that organizations typically adopt to counter the five competitive forces and achieve competitive advantage. 6. Define business – information technology alignment, and describe the characteristics of effective alignment.

  5. Chapter Opening Case First problem Solution: Reduce number of vendors Dana Deasy

  6. Chapter Opening Case (continued) BP’s attempted solution BP’s second problem: Deepwater Horizon well exploded

  7. Before the Stores (IT’s About Business 2.1)

  8. Competitive Advantage

  9. 2.1 Business Processes Business Process Cross-Functional Business Processes

  10. Example of Business Process (Figure 2.1) The next slide shows an example of a business process: Ordering an E-ticket from an airline Web site

  11. Receive Ticket Order Traveler Airline Web Site Seats Available NO Notify Traveler Plan Trip YES Reserve Seats Check Flights NO Frequent Flyer Mileage Sufficient? Use Credit Card? NO Seats Available? NO YES YES Charge Credit Card YES Subtract Mileage Submit Ticket Order Charge OK? NO Notify Traveler Receive e-Ticket YES Confirm Flight(s) Issue e-Ticket

  12. 2.2 Business Process Reengineering and Business Process Management Business Process Reengineering Business Process Management

  13. 2.3 Business Pressures, Organizational Responses, and IT Support Business Pressures Market Pressures Technology Pressures Societal Pressures

  14. Business Pressures, Organizational Responses, and IT Support

  15. Market Pressures The Global Economy and Strong Competition The Changing Nature of the Workforce Powerful Customers

  16. The Stages of Globalization (From Thomas Friedman in The World is Flat) Globalization 1.0 (from 1492 to 1800) Globalization 2.0 (from 1800 to 2000) Globalization 3.0 (from 2000 to the present)

  17. Globalization 1.0 Christopher Columbus

  18. Globalization 2.0 (first half) Railroads Steam engine

  19. Globalization 2.0 (second half) Fiber optics Satellites Tablet computers Smart phones

  20. Globalization 3.0 3.0 2.0 1.0

  21. Globalization 3.0 (continued) Schematic Map of the Internet

  22. Thomas Friedman’s Ten Flatteners Fall of the Berlin Wall Netscape goes public Development of work-flow software

  23. Friedman’s Ten Flatteners (continued) Uploading Outsourcing Offshoring Call center in India

  24. Friedman’s Ten Flatteners (continued) Supply chaining Insourcing Informing

  25. Friedman’s Ten Flatteners (continued) The Steroids Computing Modern data center Charles Babbage’s Difference Engine (1822)

  26. The Steroids (continued) Instant messaging and file sharing Voice over Internet Protocol

  27. The Steroids (continued) Videoconferencing A telepresence system in a conference room

  28. The Steroids (continued) Computer graphics

  29. The Steroids (continued) Wireless technologies Using smart phone in motion Geostationary satellite Bluetooth phone sunglasses

  30. Sleek Audio (IT’s About Business 2.2) Reverse Offshoring

  31. Technology Pressures Technological Innovation and Obsolescence Information Overload

  32. Technological Innovation and Obsolescence Obsolescence: Slide Rule Innovation: Early calculator

  33. Technological Innovation and Obsolescence (continued) Innovation: Telegraph Obsolescence: Pony Express

  34. Technological Innovation and Obsolescence (continued) Obsolescence: old analog camera Innovation: digital camera

  35. Technological Innovation and Obsolescence (continued) Obsolescence: Horse and Buggy Innovation: Ford Model T

  36. Information Overload

  37. Societal/Political/Legal Pressures Social Responsibility Government Regulation and Deregulation Protection Against Terrorist Attacks Ethical Issues

  38. Green IT See CBS video on disposal of e-waste

  39. Web sites that enable generosity Collaborative Consumption

  40. Social Responsibility (continued) Bridging the Digital Divide

  41. Social Responsibility (continued) One Laptop per Child initiative

  42. Organizational Responses Strategic Systems Customer Focus Make-to-Order and mass customization See Reebok See Bodymetrics video E-business and E-commerce

  43. 2.4 Competitive Advantage and Strategic Information Systems Competitive Advantage Strategic Information Systems

  44. Porter’s Competitive Forces Model The best-known framework for analyzing competitiveness is Michael Porter’s competitive forces model (Porter, 1985). Michael Porter

  45. Porter’s Competitive Forces Model

  46. Porter’s Competitive Forces Model • Threat of entry of new competitors is high when it is easy to enter a market and low when significant barriers to entry exist. • A barrier to entry is a product or service feature that customers expect from organizations in a certain industry. • For most organizations, the Internet increases the threat that new competitors will enter a market.

  47. Porter’s Competitive Forces Model • The bargaining power of suppliers is high when buyers have few choices and low when buyers have many choices. • Internet impact is mixed. Buyers can find alternative suppliers and compare prices more easily, reducing power of suppliers. • On the other hand, as companies use the Internet to integrate their supply chains, suppliers can lock in customers.

  48. Porter’s Competitive Forces Model • The bargaining power of buyers is high when buyers have many choices and low when buyers have few choices. • Internet increases buyers’ access to information, increasing buyer power. • Internet reduces switching costs, which are the costs, in money and time, to buy elsewhere. This also increases buyer power.

  49. Porter’s Competitive Forces Model • The threat of substitute products or services is high when there are many substitutes for an organization’s products or services and low where there are few substitutes. • Information-based industries are in the greatest danger from this threat (e.g., music, books, software). The Internet can convey digital information quickly and efficiently.

  50. Porter’s Competitive Forces Model • Therivalry among firms in an industry is high when there is fierce competition and low when there is not.

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