The Business Value Chain Model  Porter Model  Not very specific -What exactly to do?  No exact methodology for competitive advantage  Value Chain Model -Highlights specific activities in the business -Competitive strategies can be best applied -IT Systems are most likely to have impact

 Primary activities  Support activities  Best practices  Identified by government or research organizations, most successful solution for achieving business objective.  Benchmarking  Comparing efficiency of your business process with strict standards.

The Business Value Chain Model

 Value Web  Collection of independent firms using highly synchronous IT to coordinate value chains to produce product or service collectively.  More customer driven, less linear operation than traditional value chain.

 Information systems can improve overall performance of business unit by promoting synergies and core competencies.  Synergies - when output of some units used as inputs to others, or organization pool markets and expertise. -Examples : merger of bank of NY and JPMorgan Chase. -Purchase of You tube on Google.

 Core competencies. - Activity for which firm is world-class leader. -Relies on knowledge, experience, and sharing this across business units. - Examples : Procter & Gamble’s intranet and directory of subject matter expert.

 Network Based Strategies - Take advantage of firm’s abilities to network each other Include use of :  Network economics  Virtual company model  Business ecosystems

USING INFORMATION SYSTEMS FOR COMPETITIVE ADVANTAGE : MANAGEMENT ISSUES. Sustaining competitive advantages -Because competitors can retaliate and copy strategic systems, competitive advantage is not always sustainable : systems may become tools for survival.

Aligning IT with business objective. -75 percent of businesses fail to align their IT with their business objectives, leading to lower profitability. -Information technology takes on a life of its own and does not serve management and shareholder interests very well. Instead of business people taking an active role in shaping IT to the enterprise. They ignore it, claim not to understand IT, and tolerate failure in the IT area as just a nuisance to work around.

Performing strategic analysis - what is the structure of the industry? - what are value chains for this firm? - have we aligned IT with our business strategy? To align IT: Identify business goals and strategies Break strategic goals concrete activities and processes. Identify metrics for measuring progress. Determine how IT can help achieve business goals. Measure actual performance.

Managing strategic transitions -adopting strategic systems requires changes in business goals, relationships with customers and suppliers, and business process.