1) The document discusses strategic advantage and competitive advantage. Strategic advantage is broader and includes returns to stakeholders, while competitive advantage is an organization's ability to outcompete in a market. 2) It also discusses strategic management, strategic information systems, strategic IT, and requirements for a relevant strategy. This includes recognizing limits to predictability and gaining acceptance of the strategy. 3) Several competitive strategies are outlined, like cost leadership, differentiation, innovation, growth, and alliances. Strategic uses of IT are developing customer focus, business process reengineering, quality improvement, agility, virtual companies, and learning organizations.

1. Fundamentals of Strategic Advantage
Strategic Advantage vs Competitive Advantage
Competitive Advantage is an organization’s ability to outcompete in a market, while strategic
advantage is the ability to outcompete overall including returns to stakeholders. Hence strategic
advantage is a broader term.
Strategy
Strategy is the pattern of resource allocation decisions made throughout an organization. These
encapsulate both desired goals and beliefs about what are acceptable and, most critically,
unacceptable means for achieving them.
Strategic Management
Strategic management is concerned with deciding on strategy and planning how that strategy is
to be put in effect through strategic analysis, strategic choice, and strategic implementation. Note
that there are various levels of strategies including: Corporate strategy, Business strategy: (within
business unit), and Functional strategy (Information system strategy).
Strategic Information System (SIS)
Strategic Information systems can be defined as “Systems that support or shape a business unit’s
competitive strategy.”

2. Fundamentals of Strategic Advantage
Strategic IT
IT can change the way businesses compete. A strategic information system is any information
system that uses IT to help an organization gain a competitive advantage, reduce a competitive
disadvantage, or meet other strategic enterprise objectives.
Requirements for a Relevant Strategy
The strategy needs to be used proactively, recognize that there are severe limits to the
predictability of the future, take account of the organizational, political, and psychological
dimensions of corporate life, and be accepted by the majority of those concerned with strategy to
be a realistic relevant tool for more effectively coping with the future.
1) Competitive Strategy Concepts
Porter’s 5 Competitive forces:
 The Rivalry of Competitors Within Its Industry
 The Threat of New Entrants into An Industry and Its Markets
 The Threat Posed by Substitute Products That Might Capture Market Share
 The Bargaining Power of Customers
 The Bargaining Power of Suppliers
Basic Competitive Strategies:
 Cost Leadership
Become low-cost producers –Help suppliers or customers reduce costs –Increase cost to
competitors
 Differentiation Strategy
Differentiate a firm’s products from its competitors’ –Focus on a particular segment or
niche of market
 Innovation Strategy
Unique products, services, or markets –Radical changes to business processes
 Growth Strategy
Expand company’s capacity to produce –Expand into global markets –Diversify into new
products or services

3.  Alliance Strategy
Establish linkages and alliances with customers, suppliers, competitors, consultants, and
other companies –Includes mergers, acquisitions, joint ventures, virtual companies.
Other Competitive Strategies
 Lock in Customers and Suppliers
Deter them from switching to competitors
 Build in Switching Costs
Make customers and suppliers dependent on the use of innovative IS
 Erect Barriers to Entry
Discourage or delay other companies from entering the market – Increase the technology
or investment needed to enter
 Build Strategic IT Capabilities
Take advantage of strategic opportunities when they arise –Improve efficiency of
business practices
 Leverage Investment in IT
Develop products and service that would not be possible without a strong IT capability
2) Strategic Advantage Uses of Information Technology
Includes develop a focus on the customer, Business Process Reengineering (BPR), Improving
business quality, becoming agile, creating a virtual company, and build learning organizations.
a) Developa Focus on the Customer
This strategy involves creating customer value, having the best value, understanding
customer preferences, tracking market trends, supplying products, services, &
information, and providing tailored customer service.
b) Business Process Reengineering (BPR)
Business process reengineering involves rethinking & redesign of business processes,
combines innovation and process improvement. Success of this process includes the
following factors: Organizational redesign, process teams and case managers, and
information technology.
c) Improving Business Quality

4. To improve business quality, Total Quality Management (TQM) principles are used. Its
main tenants involve understanding quality from customer’s perspective, meeting or
exceeding customer expectations, and emphasizing commitment to: Higher quality,
Quicker response, Greater flexibility, and Lower cost.
d) Becoming Agile
To create an agile organization, one may use four basic strategies: 1) Customers’
perception of product/service as solution to individual problem, 2) Cooperate with
customers, suppliers, other companies (including competitors), 3) Thrive on change and
uncertainty, and 4) Leverage impact of people and people’s knowledge.
e) The Virtual Company
The virtual company uses IT to link people, assets, and ideas, forms virtual workgroups
and alliances with business partners, Interorganizational information systems with
Internet, extranets, and intranets. Its strategies include sharing infrastructure & risk with
alliance partners, linking complementary core competencies, reduce concept-to-cash time
through sharing, increasing facilities and market coverage, gain access to new markets
and share market or customer loyalty, or migrate from selling products to selling
solutions.
f) Build Learning Organizations
Building learning organizations entail creating, disseminating, and incorporating
knowledge into products. Further, it also involves exploit two kinds of knowledge:
explicit documented knowledge, and tacit internal knowledge.
i. Knowledge management systems
Knowledge management systems help create, organize, and share business
knowledge wherever and whenever needed within the organization.
3) Building a Customer Focused Business
A key strategic use of Internet technologies is to build a company that develops its business
value by making customer value its strategic focus. Customer-focused companies use Internet,
intranet, and extranet e-commerce Web sites and services to keep track of their customers’
preferences; to supply products, services, and information anytime, anywhere; and to provide
services tailored to the individual needs of the customers.
 The Value Chain
Views a firm as a series, chain, or network of activities that add value to its products and
services. It improves administrative coordination, training, and the procurement

5. processes. Primary processes directly relate to manufacturing or delivering products.
Support processes help support the day-to- day running of the firm and indirectly
contribute to products or services. It can involve joint design of products and processes,
JIT inventory, and Order processing systems.
 Strategic Information Systems
Information systems that provide a firm with competitive products and services that give
it a strategic advantage over its competitors in the marketplace. Also, information
systems that promote business innovation, improve business processes, and build
strategic information resources for a firm.