04 - Linking IT to Business Strategy (UK 2018).pdf - LINKING INFORMATION TECHNOLOGY TO BUSINESS STRATEGY 1 Michael E Porter Author of many influential

04 - Linking IT to Business Strategy (UK 2018).pdf -...

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Michael E. Porter Author of many influential books on the topic of Business Strategy: Competitive Strategy: techniques for analysing industries and competitors (1980) Competitive Advantage: creating and sustaining superior performance (1985) Competition in Global Industries (1986) The Competitive Advantage of Nations (1990) Comments on the following slides are from his prefaces to “Competitive Advantage” editions 1985 and 1998 2
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3 The Basis of Competitive Advantage How can a firm create and sustain a competitive advantage ? The failure of many firms strategies stems from an inability to translate a broad competitive strategy into the specific action steps required to gain competitive advantage It is necessary to build a bridge between strategy formulation and implementation
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4 Business Strategy to Systems Strategy Business Strategy IT Strategy Systems Strategy Benefits come from: . Selection . Implementation Readily available Hardware and networks have become commoditised infrastructure Vast amounts of packaged software solutions are readily available ?
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5 What must a company do ? At the core is an activity-based theory of the firm To compete in any industry, companies must perform a wide array of discrete activities such as: processing orders calling on customers assembling products training employees Activities: are narrower than traditional functions such as marketing or R&D are what generate cost and create value for buyers are the basic units of competitive advantage
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6 What are activities ? Activities: are what firms do are observable, tangible and can be managed Strategy: is not just a broad vision is the particular configuration of activities a firm adopts compared to its rivals e.g., a lowest-cost strategy involves one set of activity choices, differentiation another
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7 The Role of Activities Activities provide the bridge between strategy and implementation Strategy becomes the particular array of activities aligned to deliver a particular mix of value to a chosen array of customers Activities make strategy operational Everyone in a firm is part of the strategy Employees must understand the strategy so that they appreciate: the rationale behind the configuration of their own activities how their own activities relate to those of other people
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8 What is a firm ?
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