Embed Size (px)
Citation preview
1
First Canadian Edition
James A. O’Brien Ali Montazemi
1
Management Information Systems
Managing Information Technology in the Business Enterprise
2
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
2
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 2
Competing with Information Technology
3
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
3
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Objectives
Identify basic competitive strategies and explain how IT may be used to gain competitive advantage.
Identify strategic uses of information technology.
How does business process engineering frequently use e-business technologies for strategic purposes?
4
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
4
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
(Objectives – continued)
Identify the business value of using e-business technologies for total quality management, to become an agile competitor, or to form a virtual company.
Explain how knowledge management systems can help a business gain strategic advantage.
5
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
5
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Section I
Fundamentals of Strategic Advantage
6
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
6
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Fundamentals of Strategic Advantage
Competitive Forces (Porter)Bargaining power of customersBargaining power of suppliersRivalry of competitorsThreat of new entrantsThreat of substitutes
7
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
7
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Competitive Strategies & the Role of IT
Cost Leadership (low cost producer)DifferentiationInnovationGrowthAllianceOther Competitive Strategies
8
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
8
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Cost Leadership (low cost producer)
Reduce inventory (JIT)Reduce manpower costs per sale Help suppliers or customers reduce costsIncrease costs of competitorsReduce manufacturing costs (process control)
9
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
9
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Differentiation
Create a positive difference between your products/services & the competition.
May allow you to reduce a competitor’s differentiation advantage.
May allow you to serve a niche market.
10
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
10
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Innovation
New ways of doing businessUnique products or services that include ITNew ways to better serve customersImprove quality or efficiencyReduce time to marketNew distribution models
11
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
11
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Growth
Expand production capacityExpand into global marketsDiversifyIntegrate into related products and services.
12
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
12
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Alliance
Broaden your base of support with new linkages and alliances with customers, suppliers, competitors, and consultants
Mergers, acquisitions, joint ventures, virtual companies
Marketing, manufacturing, or distribution agreements.
13
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
13
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Other Competitive Strategies
Locking in customers or suppliersBuild value into your relationship
Creating switching costsExtranetsProprietary software applications
14
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
14
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Other Competitive Strategies (continued)
Raising barriers to entryImprove operations or promote innovation
Leveraging investment in ITAllows the business to take advantage of
strategic opportunities
15
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
15
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
The Value Chain
Views a firm as a series, chain, or network of activities that add value to its products and services.Improved administrative coordinationTrainingJoint design of products and processesImproved procurement processesJIT inventoryOrder processing systems
16
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
16
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Value Chain (continued)
17
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
17
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Section II
Using Information Technology for Strategic Advantage
18
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
18
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Strategic Uses Of Information Technology
Develop a focus on the customerBusiness Process Reengineering (BPR)Improve business qualityBecome agileThe virtual companyBuild learning organizations
19
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
19
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Develop a Focus on the Customer
Customer valueBest valueUnderstand customer preferencesTrack market trendsSupply products, services, & information
anytime, anywhereTailored customer service
20
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
20
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Business Process Reengineering (BPR)
Rethinking & redesign of business processesCombines innovation and process improvementThere are risks involved.Success factors
Organizational redesignProcess teams and case managersInformation technology
21
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
21
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Improve Business Quality
Total Quality Management (TQM)Quality from customer’s perspectiveMeeting or exceeding customer expectationsCommitment to:
Higher qualityQuicker responseGreater flexibilityLower cost
22
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
22
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Become Agile
Four basic strategiesCustomers’ perception of product/service as
solution to individual problemCooperate with customers, suppliers, other
companies (including competitors)Thrive on change and uncertaintyLeverage impact of people and people’s
knowledge
23
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
23
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
The Virtual Company
Uses IT to link people, assets, and ideasForms virtual workgroups and alliances with
business partnersInterorganizational information systems with
Internet, extranets, and intranets
24
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
24
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
The Virtual Company (continued)
StrategiesShare infrastructure & risk with alliance
partnersLink complementary core competenciesReduce concept-to-cash time through sharing
25
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
25
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
The Virtual Company (continued)
Strategies (continued)Increase facilities and market coverageGain access to new markets and share market
or customer loyaltyMigrate from selling products to selling
solutions
26
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
26
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Build Learning Organizations
Create, disseminate, and incorporate knowledge into products
Exploit two kinds of knowledgeExplicit documented knowledgeTacit internal knowledge
27
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
27
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Build Learning Organizations (continued)
Knowledge Management
28
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
28
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Build Learning Organizations (continued)
Knowledge management systemsHelp create, organize, and share business
knowledge wherever and whenever needed within the organization
29
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
29
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Summary
Information technology has strategic valueCustomer focused e-Business is key strategyRe-engineer business processes radicallyImprove quality from customer viewpointAgile companies capitalize on changeVirtual companies combine talents of othersKnowledge creation and incorporation are major
competitive strategies
30
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
30
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Discussion Questions
You have been asked to develop e-business & e-commerce applications to gain competitive advantage. What reservations might you have about doing so?
How could a business use IT to increase switching costs and lock in its customers and suppliers?
31
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
31
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Discussion Questions (continued)
How could a business leverage its investment in IT to build strategic IT capabilities that serve as a barrier to entry by new entrants into its markets?
What strategic role can information technology play in business process reengineering and total quality management?
32
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
32
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Discussion Questions (continued)
How can Internet technologies help a business form strategic alliances with its customers, suppliers, and others?
How could a business use Internet technologies to form a virtual company or become an agile competitor?
33
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
33
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Discussion Questions (continued)
IT can’t really give a company a strategic advantage, because most competitive advantages don’t last more than a few years & soon become strategic necessities that just raise the stakes of the game. Discuss.
MIS author & consultant Peter Keen says: “We have learned that it is not technology that creates a competitive edge, but the management process that exploits technology.” What does he mean?
34
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
34
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Real World Case 1 - Royal Bank Financial
Which of the strategic uses of information technology does RBFG use?
Is IT a strategic advantage or a strategic necessity for financial firms like RBFG?
What additional IT support do you suggest for RBFG’s customer service?
35
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
35
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Real World Case 2 – WESCO International, Inc.
Business-to-Business
Describe WESCO’s original system.
Describe WESCO’s new system.
36
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
36
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Real World Case 2 (continued)
What are the business benefits to WESCO and its suppliers of its new e-procurement system?
Is WESCO’s new system a strategic use of IT?
37
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
37
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Real World Case 2 (continued)
Does WESCO’s new system give the company a competitive advantage?
What other strategic moves could WESCO implement to gain competitive advantage?
38
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
38
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Real World Case 3 – Staples, Inc.
What is the strategic business value to Staples and their large business clients of the new web-based procurement system?
What is the strategic business value to Staples and the value proposition to their customers of their new bricks-and-clicks capabilities?
39
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
39
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Real World Case 3 (continued)
Is an integrated bricks-and-clicks strategy the Internet strategy that most businesses, large and small, should adopt?
What competitive strategies is Staples pursuing?
40
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
40
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Real World Case 3 (continued)
What other e-business or e-commerce strategy would you recommend to Staples to help them gain a competitive advantage in their industry?
41
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
41
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Real World Case – Ford, Dow Chemical, IBM, et al.
What is Six Sigma?
What do critics of Six Sigma see as its shortcomings?
42
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
42
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Real World Case (continued)
Is Six Sigma “an enterprise-wide business strategy?”
What role does information technology play in Six Sigma business initiatives?
43
McGraw-Hill Ryerson Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
43
Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
Real World Case (continued)
What are the benefits and limitations of Six Sigma as a business strategy?
Can Six Sigma make up for poor management and faulty vision?
