Business Strategy

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Business Strategy

  1. 1. CHAPTER 2 AN OVERVIEW OF BUSINESS STRATEGY CONCEPTS & THE IS/IT STRATEGY IMPLICATIONS Strategic Planning for Information Systems John Ward and Joe Peppard Third Edition
  2. 2. Learning Objectives:- <ul><li>Evolution of strategic planning in organizations </li></ul><ul><li>Strategic framework </li></ul><ul><li>Business planning process </li></ul><ul><li>Business planning tools & techniques </li></ul>
  3. 3. <ul><li>CHAPTER 1 – Evolution of IS/IT. </li></ul><ul><li>IS strategies MUST BE developed within the context of corporate and business strategic planning processes. </li></ul>$$$ IS/IT Achievement of business objectives/goals Maximize ROI Enabling strategic use of information Gain competitive advantage Repel competitive Threat
  4. 4. PLANNING INVOLVEMENT IS Managers Business Managers <ul><li>Formal approaches to business planning – 1950s </li></ul><ul><li>Evolved to cater for changes of the dynamic business environment </li></ul>IS managers should understand the corporate perspective of the world
  5. 5. Strategic Planning in Organization <ul><li>The formal approaches to business planning started in 1950s. </li></ul><ul><li>They have evolved since in order to take account of technological, economics, social and po li tical changes. </li></ul><ul><li>They will continue to evolve in response to the dynamics of the business environment. </li></ul>
  6. 6. Evolution of Strategic Planning
  7. 7. Evolution of Strategic Management Maturity
  8. 8. The Evolving Nature of Strategic Planning in Organisations <ul><li>In 1980, a model was developed to describe the increasing maturity of strategic planning in organisations. The model consists of 4 phases. </li></ul><ul><li>In phase 1 , the focus is on cash flow and annual financial planning . </li></ul><ul><li>It involves simple techniques to develop medium term budgets. </li></ul><ul><li>The focus of the management is to reduce everything to a single financial issue – meeting the budget . </li></ul>
  9. 9. Cont… <ul><li>In phase 2 , the focus is on trying to predict, or for e cast , what is likely to happen within a 5 years horizon . </li></ul><ul><li>Historical performance analysed and projected into the future using internal trends and external parameters such as ec o nomic and market research data. </li></ul><ul><li>It for e casts sales and market growth and predicts the effects on income and expenses and changes to the balance sheet. </li></ul><ul><li>Plans are still quantitative and internally oriented, focusing on what is targeted and the resources available. </li></ul>
  10. 10. Cont… <ul><li>In phase 3 , the organisation starts to look outside itself an concentrate on understanding the nature of competition in its industry , and positions itself to gain advantage. </li></ul><ul><li>Managers try to shift company’s product portfolio to more attractive market sectors. </li></ul><ul><li>In phase 4 , the organization is driven by innovation and becomes capable of creating its own business environment. </li></ul><ul><li>Thus, the organisation gains a leading role in the industry. Obviously, the leadership will require continuing innovation . </li></ul>
  11. 11. Strategic Planning in Organizations
  12. 12. What is Strategy? <ul><li>A strategy is a collection of statements that express or propose a means through which an organization can fulfill its primary purpose or mission </li></ul><ul><ul><li>A chosen strategy must focus and coordinate the firm’s activity from the top down toward accomplishing its mission </li></ul></ul><ul><ul><li>Developing a strategy begins with: </li></ul></ul><ul><ul><ul><li>a thoughtful understanding of the firm’s mission </li></ul></ul></ul><ul><ul><ul><li>analysis of the environment </li></ul></ul></ul><ul><ul><ul><li>a detailed assessment of how various business units interact </li></ul></ul></ul><ul><li>Strategy (text book) </li></ul><ul><ul><li>“ An integrated set of actions aimed at increasing long-term well-being and strength of enterprise relative to competitors ” </li></ul></ul>
  13. 13. Why Are Strategies Needed? To proactively shape how a company’s business will be conducted To mold the independent actions and decisions of managers and employees into a coordinated, company-wide game plan
  14. 14. Relationship of Strategies to Plans <ul><li>Strategy is a collection of statements that expresses or proposes a means through which an organization can fulfill its mission </li></ul><ul><ul><li>Identifies the goal or objective </li></ul></ul><ul><ul><li>Insights </li></ul></ul><ul><li>Plan is a detailed description of how an organization can accomplish its mission </li></ul><ul><ul><li>Lays out in detail the steps necessary for the organization to accomplish the goal </li></ul></ul><ul><ul><li>Plans turn insights into actions </li></ul></ul>
  15. 15. Missions vs. Strategic Visions <ul><li>A mission statement focuses on current business activities -- “who we are and what we do” </li></ul><ul><ul><li>Current product and service offerings </li></ul></ul><ul><ul><li>Customer needs being served </li></ul></ul><ul><ul><li>Technological and business capabilities </li></ul></ul><ul><li>A strategic vision concerns a firm’s future business path -- “where we are going” </li></ul><ul><ul><li>Markets to be pursued </li></ul></ul><ul><ul><li>Future technology-product-customer focus </li></ul></ul><ul><ul><li>Kind of company that management is trying to create </li></ul></ul>
  16. 16. What is a Strategic Plan? Where firm is headed -- Strategic vision and business mission Short and long term performance targets -- Strategic and financial objectives Action approaches to achieve targeted results -- A comprehensive strategy
  17. 17. Establishment of Strategy <ul><li>There are essentially three processes that can contribute to the establishment of a strategy: </li></ul><ul><li>Strategic thinking – creative, entrepreneurial insight into the ways the enterprise could develop. </li></ul><ul><li>Strategic planning – systematic, comprehensive analysis to develop a plan of action . </li></ul><ul><li>Opportunistic decision-making – effective reaction to unexpected threats and opportunities . </li></ul>
  18. 18. Thinking Strategically : The Three Big Strategic Questions <ul><li>1. Where are we now? </li></ul><ul><li>2. Where do we want to go? </li></ul><ul><ul><li>Business(es) to be in and market positions to stake out? </li></ul></ul><ul><ul><li>Buyer needs and groups to serve? </li></ul></ul><ul><ul><li>Outcomes to achieve? </li></ul></ul><ul><li>3. How do we get there? </li></ul>
  19. 19. Company Experiences, Know-how, Resource Strengths and Weaknesses, and Competitive Capabilities A Company’s Strategy is Partly Planned and Partly Reactive Abandoned strategy features Planned Strategy New initiatives plus ongoing strategy features continued from prior periods Adaptive reactions to changing circumstances Reactive Strategy Actual Company Strategy
  20. 20. The Strategic Framework <ul><li>Any organization in stages 3 and 4 of the model will need to consider most aspects of the FW (see page 71) to succeed. </li></ul><ul><li>Three layers factors:- </li></ul><ul><ul><li>The external environment </li></ul></ul><ul><ul><li>Pressure groups and stakeholders </li></ul></ul><ul><ul><li>Internal business planning </li></ul></ul>
  21. 21. A Strategic FW <ul><li>The external environment </li></ul><ul><ul><li>Economic/ Social / Political / Legal / Ecological / Technological </li></ul></ul><ul><li>Pressure groups and stakeholders </li></ul><ul><ul><li>Shareholders / Competitors / Customers/Suppliers / Government / Unions / Employees / “The public” / Media / Financial Institutions </li></ul></ul><ul><li>Internal business strategizing and planning </li></ul><ul><ul><li>“ SBU” / Objectives / Situation analysis / Future strategies </li></ul></ul>Page 71 - Text
  22. 22. A Strategic Framework
  23. 23. The External Environment <ul><li>PEST ( P olitical, E conomic, S ocial and T echnological )Analysis </li></ul>Political: Government type and stability Freedom of press, rule of law and levels of bureaucracy and corruption Regulation and de-regulation trends Social and employment legislation Tax policy, and trade and tariff controls Environmental and consumer-protection legislation Likely changes in the political environment Economic: Stage of business cycle Current and project economic growth, inflation and interest rates Unemployment and labor supply Labor costs Levels of disposable income and income distribution Impact of globalization Likely impact of technological or other change on the economy Likely changes in the economic environment
  24. 24. Socio-Cultural: Population growth rate and age profile Population health, education and social mobility, and attitudes to these Population employment patterns, job market freedom and attitudes to work Press attitudes, public opinion, social attitudes and social taboos Lifestyle choices and attitudes to these Socio-Cultural changes Technological Environment: Impact of emerging technologies Impact of Internet, reduction in communications costs and increased remote working Research & Development activity Impact of technology transfer Firms can draw conclusions as to the significant forces of change operating within the environment. PEST Analysis is a useful tool for understanding the “big picture” of the environment in which firms are operating, and the opportunities and threats that lie within it. By understanding the environment, firms can take advantage of the opportunities and minimize the threats.
  25. 25. Pressure Groups & Stakeholders <ul><li>Pressure Groups: </li></ul><ul><ul><li>Make demands of the organization; </li></ul></ul><ul><ul><li>Demand their existence and effects be acknowledged; </li></ul></ul><ul><ul><li>Expect appropriate responses from mgmt to satisfy their particular interest; </li></ul></ul><ul><li>Stakeholders: </li></ul><ul><ul><li>Have a direct financial interest in the organization and demand a fair share of the wealth created; </li></ul></ul><ul><ul><li>Expect some form of material and financial benefit; </li></ul></ul>
  26. 26. <ul><li>Pressure Groups: </li></ul><ul><li>Media </li></ul><ul><li>Shareholders </li></ul><ul><li>Competitors </li></ul><ul><li>Suppliers </li></ul><ul><li>Government </li></ul><ul><li>Unions </li></ul><ul><li>Customers </li></ul><ul><li>Public </li></ul><ul><li>Financial Institution </li></ul><ul><li>Employees </li></ul><ul><li>Stakeholders: </li></ul><ul><li>Shareholders </li></ul><ul><li>Customers </li></ul><ul><li>Public </li></ul><ul><li>Suppliers </li></ul><ul><li>Unions </li></ul><ul><li>Employees </li></ul><ul><li>Government </li></ul>
  27. 27. Internal Business Strategy Formulation and Planning Objectives Where are we now? Strengths & Weaknesses Identify future strategies Value System Market analysis Competitive analysis PEST analysis Industry analysis Threats and Opportunities Evaluate Select Implement Analysis of Internal resources and competencies Feedback Monitor And Control
  28. 28. Business Strategy Formulation <ul><li>Identify, evaluate, and decide strategies to be pursued; </li></ul><ul><li>Establish how to achieve the strategies by planning for the required actions and by effective development and use of resources; </li></ul><ul><li>Determine scope: </li></ul><ul><ul><li>Whole organization versus </li></ul></ul><ul><ul><li>Strategic Business Unit (SBUs): a unit that sells a distinct set of products & services, serves a specific set of customers and competes with a well-defined set of competitors; </li></ul></ul><ul><ul><li>Can be reconciled by considering the enterprise strategy as combination of achievement of corporate objectives via SBU contributions; </li></ul></ul><ul><ul><li>Reflect Corporate/SBU relationship and possible inter-SBU relationships </li></ul></ul>
  29. 29. Business Planning Process Elements <ul><li>Objectives </li></ul><ul><li>Situation Analysis </li></ul><ul><li>Future Strategies </li></ul><ul><li>Described by reference to profitability, growth, market share, customer satisfaction, new product development, employment, social responsibility, etc. </li></ul><ul><li>Changes from year to year, evolve quite significantly over a period of time; </li></ul><ul><li>Reflect values of organization, management, and major stakeholders; </li></ul><ul><li>Values are expressed in terms of MISSION or VISION statement </li></ul><ul><ul><li>Long term aims and purpose; </li></ul></ul>
  30. 30. Types of Objectives Required Financial Objectives Strategic Objectives Outcomes focused on improving long-term, competitive business position Outcomes focused on improving financial performance $
  31. 31. <ul><li>Situation Analysis </li></ul><ul><li>Where are we now ? </li></ul><ul><li>Consists of two essential elements: </li></ul><ul><ul><li>looking inside the organization; </li></ul></ul><ul><ul><li>looking outside the organization. </li></ul></ul><ul><li>INTERNAL </li></ul><ul><li>Resources available in the organization; </li></ul><ul><li>Financial health of the organization; </li></ul><ul><li>Employees, skills, training, experience, motivation, resulting business competencies; </li></ul><ul><li>Physical assets, age, technology, usefulness; </li></ul><ul><li>R & D </li></ul><ul><li>The organization, its structure and relationships, attitudes and culture, and effectiveness of operational and management processes, and its ability to change the circumstances; </li></ul><ul><li>EXTERNAL </li></ul><ul><li>Market segments, and within them, identifying competitors (current & potential); </li></ul><ul><li>Market shares within segments – increase share or increase the total size of market; </li></ul><ul><li>The organization’s position in the product life cycles </li></ul><ul><li>An examination of all current and potential competitors to understand their current and potential strategies, Strengths & Weaknesses; </li></ul><ul><li>Future competitive actions – concerning potential substitute products and thrusts into new markets; </li></ul>
  32. 32. S . W . O . T Analysis <ul><li>S trengths: attributes of the organization that are helpful to achieving the objective. </li></ul><ul><li>W eaknesses : attributes of the organization that are harmful to achieving the objective . </li></ul><ul><li>O pportunities: external conditions that are helpful to achieving the objective. </li></ul><ul><li>T hreats : external conditions that are harmful to achieving the objective . </li></ul>
  33. 33. Creative Use of SWOTs : Generating Strategies <ul><li>How can we U se each Strength? </li></ul><ul><li>How can we S top each Weakness? </li></ul><ul><li>How can we E xploit each Opportunity? </li></ul><ul><li>How can we D efend against each Threat? </li></ul>
  34. 34. TOWS analysis <ul><li>Strengths and Opportunities ( SO ) – How can you use your strengths to take advantage of the opportunities? </li></ul><ul><li>Strengths and Threats (ST) – How can you take advantage of your strengths to avoid real and potential threats? </li></ul><ul><li>Weaknesses and Opportunities ( WO ) – How can you use your opportunities to overcome the weaknesses you are experiencing? </li></ul><ul><li>Weaknesses and Threats (WT) – How can you minimize your weaknesses and avoid threats? </li></ul>
  35. 35. Business SWOT
  36. 36. IS SWOT <ul><li>Business application </li></ul><ul><li>Technical infrastructure </li></ul><ul><li>People, organization, culture </li></ul><ul><li>Processes </li></ul>
  37. 37. Application Strengths and Weaknesses
  38. 38. Technical Infrastructure Analysis
  39. 39. IT Organization, Culture
  40. 40. IS Process Analysis
  41. 41. Future Strategies <ul><li>This can provide both defensive mechanism against possible future threat and capability to exploit the opportunities by identifying the pressure groups and the stakeholders; </li></ul><ul><li>Future options can be discovered by undertaking scenario planning to identify ‘discontinuities’ and predict the potential implications or bring in outside experts to facilitate ‘breakthrough thinking’; </li></ul>
  42. 42. Future Strategies <ul><li>Future possible strategies are evaluated against criteria, such as the following : </li></ul><ul><ul><li>The risks – financial and managerial; and likely responses of main competitors; </li></ul></ul><ul><ul><li>The degree to which the organization needs to create new capabilities to be offensive or improve control to be defensive; </li></ul></ul><ul><ul><li>Appropriateness of current organization structure to achieve intended strategies; </li></ul></ul><ul><ul><li>The ability of the organization to implement the strategy in terms of ability, resources, processes and culture; </li></ul></ul><ul><ul><li>The implications for customers and trading partners; </li></ul></ul><ul><ul><li>Requirement for alliances or joint ventures to enable or secure strategies; </li></ul></ul>
  43. 43. Strategy Implementation
  44. 44. Realities of Strategy Development EMERGENT STRATEGY INTENDED STRATEGY REALISED STRATEGY plans Unrealized Strategies Imposed changes New opportunities Unexpected constraints or options Failed implementation
  45. 45. Strategy Tools and Techniques
  46. 46. Business Planning Tools & Techniques <ul><li>The Boston Consulting Group Business Matrix (Product Portfolio) </li></ul><ul><li>Policy/portfolio matrices </li></ul><ul><li>Competitive Forces and Competitive Strategies </li></ul><ul><li>Industry Analysis </li></ul>
  47. 47. Product Life Cycles & Product Portfolios Boston Consulting Group Star Cash Cow Wild Cat or ? or Problem Child Dog FUNDS $’000 High Low High Low Market Growth & Cash Use Market Share & Cash Generation
  48. 48. IS/IT Support for Wildcat Products <ul><li>Low market share, high growth market </li></ul><ul><li>Focus on: </li></ul><ul><ul><li>Product and/or process development </li></ul></ul><ul><ul><li>or </li></ul></ul><ul><ul><li>Customer identification, segmentation </li></ul></ul>
  49. 49. IS/IT Support for Star Products <ul><li>High market share, high growth market </li></ul><ul><li>Focus on: </li></ul><ul><ul><li>Identifying customers & requirements </li></ul></ul><ul><ul><li>and/or </li></ul></ul><ul><ul><li>Business innovation to meet market </li></ul></ul><ul><ul><li>requirements & differentiate </li></ul></ul>
  50. 50. IS/IT Support for Cash Cow Products <ul><li>High market share, low growth market </li></ul><ul><li>Focus on: </li></ul><ul><ul><li>Keeping costs low </li></ul></ul><ul><ul><li>and </li></ul></ul><ul><ul><li>Control of business relationships & activities $ $ $ </li></ul></ul>
  51. 51. IS/IT Support for Dog Products <ul><li>Low market share, low growth market </li></ul><ul><li>Focus on: </li></ul><ul><ul><li>Reducing costs or securing customers to improve profit performance </li></ul></ul><ul><ul><li>Very little innovation as line may be discontinued </li></ul></ul>
  52. 52. Threat of New entrants Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitute Products or Services Rivalry Among Existing Competitors Industry Competitive Forces
  53. 54. Factors Affecting the Impact of Competitive Forces <ul><li>New entrants will be inhibited by: </li></ul><ul><ul><li>Capital requirement </li></ul></ul><ul><ul><li>Patents and specialist skills required </li></ul></ul><ul><ul><li>Distribution channels available </li></ul></ul><ul><ul><li>Achieved/required economics of scale and resultant cost advantages </li></ul></ul><ul><ul><li>Number and size of existing rivals and intensity of competition </li></ul></ul><ul><ul><li>Differentiation and brand establishment/loyalty </li></ul></ul><ul><ul><li>Access to raw materials/critical resources, etc. </li></ul></ul>
  54. 55. Factors Affecting the Impact of Competitive Forces <ul><li>Substitute product/service: </li></ul><ul><ul><li>Customer awareness of need and means of satisfaction </li></ul></ul><ul><ul><li>Customer sensitively to value for money and ability to compare </li></ul></ul><ul><ul><li>Existing loyalty of customers-impact of ‘industry’ promotion </li></ul></ul><ul><ul><li>Ability to differentiate product etc. </li></ul></ul>
  55. 56. Factors Affecting the Impact of Competitive Forces <ul><li>Competitive rivalry will be intensified by: </li></ul><ul><ul><li>Market growth slow (or in decline) </li></ul></ul><ul><ul><li>Small number of similar sized competitors dominate </li></ul></ul><ul><ul><li>High fixed costs and/or high exit barriers for all rivals </li></ul></ul><ul><ul><li>Overcapacity, and/or capacity increments are large units </li></ul></ul><ul><ul><li>Commodity-like, undifferentiated products, etc. </li></ul></ul>
  56. 57. Factors Affecting the Impact of Competitive Forces <ul><li>Buyers’ power will be increased by: </li></ul><ul><ul><li>Concentrated/few buyers making high volume and/or high value of purchases </li></ul></ul><ul><ul><li>Low switching costs across suppliers </li></ul></ul><ul><ul><li>Price sensitive and many alternative sources of supply </li></ul></ul><ul><ul><li>Weak brand identities, products not differentiated </li></ul></ul><ul><ul><li>Buyers capable of backward integration due to low ‘entry’ costs, etc. </li></ul></ul>
  57. 58. Factors Affecting the Impact of Competitive Forces <ul><li>Suppliers’ power will be increased by: </li></ul><ul><ul><li>Few suppliers-high switching costs for rivals and suppliers deal with many small customers </li></ul></ul><ul><ul><li>Potential substitute suppliers/resources not easily available </li></ul></ul><ul><ul><li>Supplied goods make up large part of firms’ costs </li></ul></ul><ul><ul><li>Suppliers capable of forward integration or bypass to customers, etc. </li></ul></ul>
  58. 59. Implications for IS/IT Strategy <ul><li>The opportunities and threats that IS/IT can offer and pose will vary over time in an industry, partly due to the role IS/IT can play and partly due to the economic and competitive situation of the industry. </li></ul><ul><li>IS/IT innovation can stimulate new industry growth or, in some cases, hasten the decline of certain industries. </li></ul><ul><li>IS/IT can be immediate impact and obvious. </li></ul><ul><li>But, in other, the effects are secondary and require other changes in business economics and social behavior or parallel developments in other fields before the become fully effective. </li></ul>
  59. 60. Industry Analysis <ul><li>How can IS/IT affect nature & value of product or service and it’s life cycle? </li></ul><ul><ul><li>– Electronic financial and business services, e.g. Banks </li></ul></ul><ul><ul><li>– Online publishing, e.g. online journals </li></ul></ul><ul><ul><li>– Recruitment services via Internet </li></ul></ul>
  60. 61. Industry Analysis (Cont.) <ul><li>How can IT affect demand, extend markets geographically, or provide new distribution channels? </li></ul><ul><ul><li>– Direct financial services </li></ul></ul><ul><ul><li>– Online marketing, e.g. Amazon </li></ul></ul><ul><ul><li>– Auctions & financial markets </li></ul></ul>
  61. 62. Industry Analysis (Cont.) <ul><li>How can IT affect the cost base of key processes or change the balance between flexibility & standardization? </li></ul><ul><ul><li>– Publishing, from preparation of materials by authors to the final printing process. </li></ul></ul><ul><ul><li>– Automated warehousing/tracking </li></ul></ul><ul><ul><li>– Document digitization, for back-office process </li></ul></ul>
  62. 63. How IS/IT Has Affected Competitive Forces: The airline Industry By linking purchasing and remittance systems to reduce overheads of customer Discount/volume packages to discourage piecemeal purchase 2. How can IS/IT build in switching cost for customers? By increasing IT entry cost for reservation systems By tying in distribution channels (travel agencies) By sharing capacity and ticketing costs via alliances and integrated systems <ul><li>How can IS/IT build barriers? </li></ul>
  63. 64. How IS/IT Has Affected Competitive Forces: The airline Industry Lower costs: optimize yield per aircraft Differentiate service: reconfiguring aircraft due to demand Niche/focus service into high yield sectors (e.g. business travel) Low-cost/low-price ‘no frills’ service with online direct booking, bypassing agents 3. How can IS/IT change the basis of competition?
  64. 65. How IS/IT Has Affected Competitive Forces: The airline Industry Integrated travel package to high mileage business customers, bypassing agencies New routes/schedules to cater for demand 5. How can IS/IT generate new products/services? Agent is constantly aware of seat availability of competing airlines Airline can readily promote unsold capacity via chosen agents or direct to customers via online booking with variable pricing based on sales patterns 4. How can IS/IT change the balance of power in supplier/customer relationship?
  65. 66. Impact of Competitive Forces and Potential IS/IT Opportunities Differentiate products/services and improve price/performance Increase switching costs, of buyers Facilitate buyer product selection Forces prices down Demand higher quality Require service flexibility Encourage competition Buyer power high <ul><li>Provide entry barriers/reduce access by </li></ul><ul><li>exploiting existing economies of scale </li></ul><ul><li>differentiate products/services </li></ul><ul><li>controls distribution channels </li></ul><ul><li>segment markets </li></ul>Additional capacity Reduced prices New basis for competition Threat of new entrants Potential IS/IT effects Business implications Key force impacting the industry
  66. 67. Impact of Competitive Forces and Potential IS/IT Opportunities Improve price/performance Differentiate products and services in distribution channel and to consumer Get closer to the end-consumer-understand the requirement Price competition Product development Distribution and service critical Customer loyalty required Intense competition from rivals Improve price/performance Redefine products and services to increase value Redefine market segments Limits potential market and profit Price ceilings Substitute products threatened Supplier sourcing systems Extended quality control into suppliers Forward planning with supplier Raises prices/costs Reduced quality of supply Reduced availability Supplier power high Potential IS/IT effects Business implications Key force impacting the industry
  67. 68. Generic Strategies: low-cost <ul><li>IS/IT implications: </li></ul><ul><ul><li>Deal with basic business information process efficiently and link them together </li></ul></ul><ul><ul><li>Flexibility system increases the cost of development and operation=> simple systems, often standard packages implemented w/o change </li></ul></ul><ul><ul><li>Integration can reduce the opportunities to improve the efficiency of any particular process </li></ul></ul><ul><ul><li>Information is not seen as a key resource for exploitation, but as an overhead cost to be processed efficiently with minimum additional IS/IT overhead </li></ul></ul>
  68. 69. Generic Strategies: Differentiation Strategy <ul><li>IS/IT implications: </li></ul><ul><ul><li>Flexible systems to extract information from an integrated database or comprehensive data warehouse =>sophisticated systems and user tailoring rather than standard solutions </li></ul></ul><ul><ul><li>If mismanaged this can lead to unnecessary spending on IS/IT=> ask the following issues: </li></ul></ul><ul><ul><ul><li>Find out more about customer requirements </li></ul></ul></ul><ul><ul><ul><li>Monitor customer perception of service </li></ul></ul></ul><ul><ul><ul><li>Enable rapid and accurate response to customer queries </li></ul></ul></ul><ul><ul><ul><li>Provide a range of delivery options to meet customer needs </li></ul></ul></ul><ul><ul><ul><li>Reduce new product introduction lead times </li></ul></ul></ul><ul><ul><ul><li>Enable knowledge sharing across the organization to facilitate innovation </li></ul></ul></ul>
  69. 70. Generic Strategies: Niche/Focus Strategy <ul><li>IS/IT implications: </li></ul><ul><ul><li>Identifying the target market, and developing a unique base of information about the selected market and its needs </li></ul></ul><ul><ul><li>Establishing a specialist process via system to produce a clear cost advantage or distinctive customer value proposition </li></ul></ul><ul><ul><li>Linking the organization via systems into the business processed of customers to increase switching costs and establish potential barriers to re-entry from general market servers </li></ul></ul>
  70. 71. CONCLUSION <ul><li>IS Strategies must be developed within the context of business st ra tegic planning processes. </li></ul><ul><li>Thus, the investment in IS/IT throughout an organization can be directed towards the achivement of business objectives </li></ul>

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