MIS-Chap2 - Chapter 2 Competing with/using IT The strategic...

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2 Competing with/using IT Competing with/using IT Chapter “Technology is no longer an  afterthought in forming Business  Strategy, but the actual cause and 
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The strategic role of IS The strategic role of IS Using IT to develop products, services and capabilities that give a company major advantages over the competitive forces it faces in the global marketplace (or marketspace!) Note: Not (just) competitors, but competitive forces (thanks to Porter!)
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Strategic Information Systems Strategic Information Systems IS that support or shape the competitive position and strategies of a Business enterprise To gain a competitive advantage To reduce a competitive disadvantage To meet other strategic enterprise objectives
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Competitive forces and strategies Competitive forces and strategies Businesses can develop competitive strategies ( like Differentiation, cost leadership, innovation, growth, alliance and other strategies ) to counter the actions of the competitive forces ( viz., Bargaining power of customers, suppliers, rivalry of competitors, threat of new entrants and substitutes ) that confront in the marketplace
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Using IT to implement competitive strategies: Using IT to implement competitive strategies: Some examples Some examples Strategy Company Strategic IS Biz benefit Cost Leadership EBay.com Online auction Auction-set prices Differentiation Avnet Marshall Customer/ Supplier e-com Increase in mkt share Innovation Amazon.com Online full service system Mkt leadership Growth Citicorp Global intranet Increase in global mkt share Alliance Wal-Mart/ P&G Automatic inventory replenishment by supplier Reduced inventory cost / increased sales
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Value Chain concept Value Chain concept Views a firm as a series, chain or network of basic activities that add value to its products and services, and thus add a margin of value to the firm Some business activities are primary processes (i.e. inbound logistics, operations, outbound logistics, marketing/sales, customer service); others are support processes (i.e. admin, HRM, technology development and procurement of resources)
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The value chain of a firm The value chain of a firm
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Figure 5.2: Reconfiguring Value Chain Systems to Figure 5.2: Reconfiguring Value Chain Systems to Lower Costs -- Software Industry Lower Costs -- Software Industry A. Value Chain System of Software Developers Using Traditional Wholesale-Retail Channels - Highest Cost Software development activities CD-ROM production and packaging activities Marketing and promotion of software Warehousing and shipping of wholesaler- retailer orders Technical support activities Activities of software retailers Activities of wholesale distributors of software products
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Figure 5.2: Reconfiguring Value Chain Systems to Figure 5.2: Reconfiguring Value Chain Systems to Lower Costs -- Software Industry Lower Costs -- Software Industry B. Value Chain System of Software Developers Using Direct Sales and Physical Delivery of CDs Software development activities CD-ROM production and packaging
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