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CHAPTER 2

CHAPTER 2. Organizational Strategy, Competitive Advantage, and Information Systems . Competitive Advantage . Competitive advantage is an advantage over competitors in some measure such as: Cost Quality Speed Desired Results: C ontrol of a market L arger-than-average profits.

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CHAPTER 2

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

  2. Competitive Advantage • Competitive advantage is an advantage over competitors in some measure such as: • Cost • Quality • Speed • Desired Results: • Control of a market • Larger-than-average profits

  3. Business Process • Collection of related activities that produce a product or a service of value to: • Organization • Business partners • Customers • Cross-Functional Business Processes

  4. 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

  5. Business Pressures, Organizational Responses, and IT Support • Business Pressures • Market Pressures • Technology Pressures • Societal Pressures

  6. Market Pressures • The Global Economy & Strong Competition • The Changing Nature of the Workforce • Powerful customers

  7. Technology Pressures • Technological Innovation and Obsolescence • Information Overload

  8. Societal Pressures • Social Responsibility • Government Regulation and Deregulation • Protection Against Terrorist Attacks • Ethical Issues

  9. Organizational Responses • Strategic Systems • Customer Focus • Make-to-Order and mass customization • E-business and E-commerce

  10. Porter’s Competitive Forces Model

  11. 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. • Impact of Internet?

  12. Porter’s Competitive Forces Model • The bargaining power of suppliers is high when buyers have few choices and low when buyers have many choices. • Impact of Internet?

  13. Porter’s Competitive Forces Model • The bargaining power of buyers is high when buyers have many choices and low when buyers have few choices. • Switching costs are the costs (money and time) to buy elsewhere. • Impact of Internet?

  14. 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. • What types of industries have highest threat of substitute products/services? Why?

  15. Porter’s Competitive Forces Model • Therivalry among firms in an industry is high when there is fierce competition and low when there is not. • What are industries that have high rivalry?

  16. Strategies for Competitive Advantage • Cost Leadership • Differentiation • Innovation • Operational Effectiveness • Customer-orientation • Examples of businesses who implement these?

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