1Chapter    2                    Competing                       with              Information TechnologyMcGraw-Hill/Irwin...
2                    ObjectivesIdentify  basic competitive strategies and  explain how IT may be used to gain  competitiv...
3                    (Objectives – continued)Identify  the business value of using e-business  technologies for total qua...
4                      Section I         Fundamentals of Strategic AdvantageMcGraw-Hill/Irwin     Copyright © 2004, The Mc...
5     Fundamentals of Strategic AdvantageCompetitive   Forces (Porter)   Bargaining power of customers   Bargaining pow...
6      Competitive Strategies & the Role of ITCost  Leadership (low cost producer)   Reduce inventory (JIT)   Reduce ma...
7                    Competitive Strategies & the Role of IT (continued)Differentiation   Create  a positive difference ...
8                    Competitive Strategies & the Role of IT (continued)Innovation   New   ways of doing business       ...
9                    Competitive Strategies & the Role of IT (continued)Growth   Expand  production capacity   Expand i...
10                    Competitive Strategies & the Role of IT (continued)Alliance   Broaden   your base of support     ...
11                    Competitive Strategies & the Role of IT (continued)Other  Competitive Strategies   Locking in cust...
12                    Competitive Strategies & the Role of IT (continued)Other  Competitive Strategies (continued)   Rai...
13                    The Value ChainViews    a firm as a series, chain, or network of  activities that add value to its ...
14                    Value Chain (continued)McGraw-Hill/Irwin      Copyright © 2004, The McGraw-Hill Companies, Inc. All ...
15                        Section II               Using Information Technology                   for Strategic AdvantageM...
16   Strategic Uses Of Information TechnologyMajor competitive differentiatorDevelop a focus on the customer Customer v...
17                Strategic Uses of IT (continued)Business         Process Reengineering (BPR)   Rethinking & redesign o...
18                Strategic Uses of IT (continued)Improve          business quality   Total Quality Management (TQM)    ...
19                    Strategic Uses of IT (continued)Becoming   agile   Four basic strategies    Customers’ perception...
20                    Strategic Uses of IT (continued)The  virtual company   Uses IT to link people, assets, and ideas  ...
21                    The Virtual Company (continued)   Strategies       Share infrastructure & risk with alliance      ...
22                    The Virtual Company (continued)   Strategies   (continued)       Increase facilities and market co...
23                    Learning OrganizationsExploit  two kinds of knowledge   Explicit   TacitMcGraw-Hill/Irwin        ...
24                       Learning Organizations (continued) Knowledge         ManagementMcGraw-Hill/Irwin               C...
25                    Learning Organizations (continued)Knowledge    management systems   Help create, organize, and sha...
26                    Discussion QuestionsYou  have been asked to develop e-business &  e-commerce applications to gain c...
27                    Discussion Questions (continued)How    could a business leverage its investment  in IT to build str...
28                    Discussion Questions (continued)How   can Internet technologies help a business  form strategic all...
29                    Discussion Questions (continued)IT  can’t really give a company a strategic  advantage, because mos...
30    Real World Case 1 – WESCO International, Inc.Business-to-BusinessDescribe           WESCO’s original system.Descr...
31                    Real World Case 1 (continued)What    are the business benefits to WESCO and  its suppliers of its n...
32                    Real World Case 1 (continued)Does  WESCO’s new system give the company  a competitive advantage?Wh...
33                Real World Case 2 – Staples, Inc.What   is the strategic business value to Staples  and their large bus...
34                    Real World Case 2 (continued)Is an integrated clicks and bricks strategy the  Internet strategy tha...
35                    Real World Case 2 (continued)What   other e-business or e-commerce strategy  would you recommend to...
36               Real World Case 3 – Enron Corp.What  mistakes did Enron make in the use or  management of IT?Did those ...
37                    Real World Case 3 (continued)“Is it time to go back to the days when IT  supported the business rat...
38                    Real World Case 3 (continued)How    would you apply one of the lessons from  this case in your pres...
39  Real World Case 4 – Delta Technology & FirstHealth GroupWhat   are Delta Technology’s new  requirements for IT invest...
40                    Real World Case 4 (continued)Explain  FirstHealth’s “return on opportunity”  guidelines.Is FirstHe...
41                    Real World Case 4 (continued)What  should be the role of ROI in IT decision-  making?Are   the IT ...
42        Real World Case 5 – Ford, Dow Chemical, IBM, et al.What         is Six Sigma?What   do critics of Six Sigma se...
43                    Real World Case 5 (continued)Is  Six Sigma “an enterprise-wide business  strategy?”What    role do...
44                    Real World Case 5 (continued)What  are the benefits and limitations of Six  Sigma as a business str...
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Chap002 MIS

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Chap002 MIS

  1. 1. 1Chapter 2 Competing with Information TechnologyMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  2. 2. 2 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?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  3. 3. 3 (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.McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  4. 4. 4 Section I Fundamentals of Strategic AdvantageMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  5. 5. 5 Fundamentals of Strategic AdvantageCompetitive Forces (Porter) Bargaining power of customers Bargaining power of suppliers Rivalry of competitors Threat of new entrants Threat of substitutesMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  6. 6. 6 Competitive Strategies & the Role of ITCost Leadership (low cost producer) Reduce inventory (JIT) Reduce manpower costs per sale (see Real World Case 1) Help suppliers or customers reduce costs Increase costs of competitors Reduce manufacturing costs (process control)McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  7. 7. 7 Competitive Strategies & the Role of IT (continued)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.McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  8. 8. 8 Competitive Strategies & the Role of IT (continued)Innovation New ways of doing business Unique products or services New ways to better serve customers Reduce time to market New distribution modelsMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  9. 9. 9 Competitive Strategies & the Role of IT (continued)Growth Expand production capacity Expand into global markets Diversify Integrate into related products and services.McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  10. 10. 10 Competitive Strategies & the Role of IT (continued)Alliance Broaden your base of support New linkages Mergers, acquisitions, joint ventures, “virtual companies” Marketing, manufacturing, or distribution agreements.McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  11. 11. 11 Competitive Strategies & the Role of IT (continued)Other Competitive Strategies Locking in customers or suppliers Build value into your relationship Creating switching costs Extranets Proprietary software applicationsMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  12. 12. 12 Competitive Strategies & the Role of IT (continued)Other Competitive Strategies (continued) Raising barriers to entry Improve operations or promote innovation Leveraging investment in IT Allows the business to take advantage of strategic opportunitiesMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  13. 13. 13 The Value ChainViews a firm as a series, chain, or network of activities that add value to its products and services. Improved administrative coordination Training Joint design of products and processes Improved procurement processes JIT inventory Order processing systemsMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  14. 14. 14 Value Chain (continued)McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  15. 15. 15 Section II Using Information Technology for Strategic AdvantageMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  16. 16. 16 Strategic Uses Of Information TechnologyMajor competitive differentiatorDevelop a focus on the customer Customer value Best value Understand customer preferences Track market trends Supply products, services, & information anytime, anywhere Tailored customer serviceMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  17. 17. 17 Strategic Uses of IT (continued)Business Process Reengineering (BPR) Rethinking & redesign of business processes Combines innovation and process improvement There are risks involved. Success factors Organizational redesign Process teams and case managers Information technologyMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  18. 18. 18 Strategic Uses of IT (continued)Improve business quality Total Quality Management (TQM) Quality from customer’s perspective Meeting or exceeding customer expectations Commitment to: Higher quality Quicker response Greater flexibility Lower costMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  19. 19. 19 Strategic Uses of IT (continued)Becoming agile Four basic strategies Customers’ perception of product/service as solution to individual problem Cooperate with customers, suppliers, other companies (including competitors) Thrive on change and uncertainty Leverage impact of people and people’s knowledgeMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  20. 20. 20 Strategic Uses of IT (continued)The virtual company Uses IT to link people, assets, and ideas Forms virtual workgroups and alliances with business partners Interorganizational information systemsMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  21. 21. 21 The Virtual Company (continued) Strategies Share infrastructure & risk with alliance partners Link complementary core competencies Reduce concept-to-cash time through sharingMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  22. 22. 22 The Virtual Company (continued) Strategies (continued) Increase facilities and market coverage Gain access to new markets and share market or customer loyalty Migrate from selling products to selling solutionsMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  23. 23. 23 Learning OrganizationsExploit two kinds of knowledge Explicit TacitMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  24. 24. 24 Learning Organizations (continued) Knowledge ManagementMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  25. 25. 25 Learning Organizations (continued)Knowledge management systems Help create, organize, and share business knowledge wherever and whenever needed within the organizationMcGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  26. 26. 26 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?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  27. 27. 27 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?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  28. 28. 28 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?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  29. 29. 29 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?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  30. 30. 30 Real World Case 1 – WESCO International, Inc.Business-to-BusinessDescribe WESCO’s original system.Describe WESCO’s new system.McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  31. 31. 31 Real World Case 1 (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?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  32. 32. 32 Real World Case 1 (continued)Does WESCO’s new system give the company a competitive advantage?What other strategic moves could WESCO implement to gain competitive advantage?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  33. 33. 33 Real World Case 2 – 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 clicks and bricks capabilities?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  34. 34. 34 Real World Case 2 (continued)Is an integrated clicks and bricks strategy the Internet strategy that most businesses, large and small, should adopt?What competitive strategies is Staples pursuing?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  35. 35. 35 Real World Case 2 (continued)What other e-business or e-commerce strategy would you recommend to Staples to help them gain a competitive advantage in their industry?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  36. 36. 36 Real World Case 3 – Enron Corp.What mistakes did Enron make in the use or management of IT?Did those mistakes play a part in the failure of Enron?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  37. 37. 37 Real World Case 3 (continued)“Is it time to go back to the days when IT supported the business rather than became the business?” Explain your position.What are the major lessons for the future use of IT in business that you gained from this case?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  38. 38. 38 Real World Case 3 (continued)How would you apply one of the lessons from this case in your present job or in your future business career?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  39. 39. 39 Real World Case 4 – Delta Technology & FirstHealth GroupWhat are Delta Technology’s new requirements for IT investments?What is the business value of Delta’s new requirements?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  40. 40. 40 Real World Case 4 (continued)Explain FirstHealth’s “return on opportunity” guidelines.Is FirstHealth’s “return on opportunity” guideline for IT investments a good way to evaluate investments in IT?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  41. 41. 41 Real World Case 4 (continued)What should be the role of ROI in IT decision- making?Are the IT investment guidelines of Delta and FirstHealth applicable to other companies, including small businesses?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  42. 42. 42 Real World Case 5 – Ford, Dow Chemical, IBM, et al.What is Six Sigma?What do critics of Six Sigma see as its shortcomings?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  43. 43. 43 Real World Case 5 (continued)Is Six Sigma “an enterprise-wide business strategy?”What role does information technology play in Six Sigma business initiatives?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.
  44. 44. 44 Real World Case 5 (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?McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.

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