Strategy and IS

1
Strategy and IS

• Describe the roles of business, organizational
  and IS strategy
• Compare and contrast Porters three generic
  strategies model, DAvenis hypercompetion model,
  and Brandenburger and Nalebuffs co-opetition
  model
• Describe the major components and apply the value
  chain, competitive forces and strategic thrusts
  models
• Discuss risks of IS success
• Discuss eras of IT use

2
Strategic Advantage

• Does an organization need Information Systems to
  gain strategic advantage?

3
Strategy - A Plan

• Business strategy drives organizational and
  information systems strategy
• Information systems strategy - plan the
  organization uses in providing information
  services
• Information systems strategy is affected by a
  firms business and organizational strategies
• Organizational strategy - organizations design
  as well as the choices it makes to define, set
  up, coordinate and control its work processes
• Remember interdependency!

4
Porters Three Generic Strategies

• Cost leadership (lowest cost in industry)
• Differentiation of products/services
• Focus (finding a specialized niche)
• cost
• differentiation of product or services

5
Be Low Cost Producer - IT strategic if it can

• Help reduce production costs clerical work
• Reduce inventory, accounts receivable, etc.
• Use facilities and materials better
• Offer interorganizational efficiencies

6
Produce Unique Product - IT strategic if it can

• Offer significant component of product
• Offer key aspect of value chain
• Permit product customization to meet customers
  unique needs
• Provide higher/unique level of customer
  service/satisfaction

7
Fill Market Niche - IT strategic if it can

• Permit identification of special needs of unique
  target market
• Spot and respond to unusual trends

8
DAvenis Hypercompetition Model

• Focused on turbulent environment
• Advantages are rapidly created and eroded
• Sustaining an advantage can be a deadly
  distraction
• The goal is disruption, not sustainability, of
  advantage
• Initiatives are achieved with a series of small
  steps

9
Four Arenas of Competitive Advantage

• Cost/quality
• Timing/know-how
• Strongholds
• Deep pockets (short-term only)

10
Seven Ss

• Superior Stakeholder Satisfaction
• Strategic Soothsaying
• Positioning for Speed
• Positioning for Surprise
• Shifting the rules of competition
• Signaling strategic intent
• Simultaneous and Sequential Strategic Thrusts

11
Brandenburger and Nalebuffs Co-opetition

• Optimally combining cooperation and competition
• Valu Net of competitors and complementors

12
Strategic Information Systems

• IS that help gain strategic advantage
• Significantly change manner in which business
  supported by the system is done
• Outwardly aimed at direct competition
• Inwardly focus on enhancing the competitive
  position
• Create strategic alliances
• IS can support business strategies

13
Eras of IT
14
Eras of IT
15
Unusual Suspects Information Resources

• Information systems infrastructure
• Information and knowledge
• Proprietary technology
• Technical skills of the IT staff
• End users of the information system
• Relationship between IT and business managers
• Business processes

16
Strategy Axioms

• Axiom A scarce resource adds value
• Corollary only if there is a need
• Altnernative axiom Value is derived from
  plentitude
• What good is a single fax machine?

17
Firm Infrastructure(general management,
accounting, finance, strategic planning)
Support Activities
Human Resource Management (recruiting, training,
development)
Technology Development (RDlt product and process
improvement)
Procurement (purchasing of raw materials,
machines, supplies)
Inbound Logistics (raw materials handling and ware
hous- ing)
Outbound Logistics (warehous- ing
and distribution of finished product)
Marketing and Sales (advertising, promotion, prici
ng, channel relations)
Service (installation, repair, parts)
Operations (machine assembling, testing)
Primary Activities
18
Value Chain Model

• Chain of basic activities that add to firms
  products or services
• Primary activities
• Secondary activities

19
Value Chain Primary Activities

• Inbound
• Outbound
• Operations
• Marketing and Sales
• After-Sale Services

20
Value Chain Support Activities

• Technology development
• Procurement
• Human Resources Management
• Management Control
• accounting/finance
• coordination
• general management
• central planning

21
Competitive Forces

• Threat of entry of new competition
• Bargaining power of suppliers
• Bargaining power of buyers
• Threat of substitute products or services
• Rivalry among existing firms

22
Strategies for Competitive Forces

• Note - strength of force is determined by factors
  in industry
• Gain a competitive edge
• Build defenses against forces
• Formulate actions to influence forces

23
Strategic Questions

• Can IT create barriers to entry? (new entrants)
• Can IT build in switching costs? (buyers)
• Can IT strengthen customer relationships? (buyers)

24
Strategic Questions (cont)

• Can IT change the balance of power in supplier
  relationships? (suppliers)
• Can IT change the basis of competition?
  (competitors)
• Can IT generate new products?(competitors,
  substitutes)

25
Wisemans Theory of Strategic Thrusts

• Strategic purposes that drive the use of the
  firms resources
• Differentiation
• Cost
• Innovation
• Growth
• Alliance

26
Searching for Specific Opportunities

• What is the mode of the thrust? (offensive,
  defensive)
• What is the direction of the thrust? (use,
  provide)
• What is the strategic target of the thrust?
  (supplier, customer, competitor)

27
Risks of IS Success

• Change the Basis of Competition
• Lower Entry Barriers
• Promote Litigation or Regulation
• Awake Sleeping Giant
• Reflect Bad Timing
• Are Too Advanced