1. Porter’s Competitive Forces
New entrants
Industry competitors
Suppliers
Buyers
Intensity of rivalry
Substitutes

2. Strategies for Competitive Advantage
Cost
Differentiation
Broad focus
Cost leadership
Competitive Scope
Differentiation
Narrow focus
Differentiation focus
Cost focus

3. Role of IT in Competitive Strategy
Raise Barriers to Entry
offer unique services that are hard to copy
first mover advantages
knowledge barriers

4. Role of IT in Competitive Strategy
Establish Switching Costs
integrate IT services with other services
response time and service quality
value-added services

5. Role of IT in Competitive Strategy
Generate New Products
tailor existing products to meet customer needs
emergence of new IT-based industries

6. Role of IT in Competitive Strategy
Change cost structure or product/service offerings
cheaper production, distribution through IT
use IT to differentiate

7. Role of IT in Competitive Strategy
Change supplier/buyer relationships
process automation
inventory management and JIT
electronic linkages
reducing the role of the middleman

8. Role of IT in the Value Chain
Inbound logistics
inventory and ordering
links to suppliers
Operations
process control
on-line processing
telecommunications

9. Role of IT in the Value Chain
Outbound logistics
links to buyers
Marketing and sales
customer service
linking suppliers and buyers
database marketing

10. Role of IT in the Value Chain
After-sales service
on-line support
expert systems

11. Classification of Companies’ Use of Information Systems
Adopters
Adapters
Inventors

12. Characteristics of Adopters
Use purchased, off-the-shelf systems for routine applications
Goal is short-term survival or catching up with competitors

13. Characteristics of Adopters
Most often found in
stagnant industries
areas of depressed economy
companies with insufficient capital resources

14. Characteristics of Adapters
IT is an essential element of planning
Have awareness, capability, and funds to undertake internal development

15. Characteristics of Adapters
Have close working relationships with suppliers to take advantage of developments in which timing is critical
Invest significantly in maintenance of existing applications, but also focus on adapting new technology through expansion and innovation

16. Characteristics of Inventors
Create new technologies that represent significant departures from current practice
Can “leapfrog” the competition

17. Characteristics of Inventors
Strong R&D department
Ability to market needs and bring products or services to the market at the right time and at a competitive cost

18. Information Technology Strategic Development Cycles
Assessment Cycle
Planning/Development/Implementation Cycle

19. Assessment Cycle Evaluate position and approach used by competitors
Identify strong and weak points of competitors’ products and services
Identify competitors’ major applications of IT
Identify competitors’ technical and financial strength and their ability to invest in IT

20. Assessment Cycle Evaluate company’s current IT status
should be performed by independent group within company or outside consultant
develop description of applications of IT to critical operations or products and identify gaps in application’s ability to meet its objectives

21. Assessment Cycle Evaluate company’s current IT status (cont’d)
appraise skills, methods, and tools of application developers
review work mix (e.g., percentage of time spent on maintenance versus new development)

22. Assessment Cycle
Understand how information technology could be applied
appraise available IT that could be used for competitive advantage now
appraise anticipated changes or new developments that could be used for competitive advantage over the next 3-5 years

23. Assessment Cycle
Understand how information technology could be applied
identify potential applications of current and future technology -- how will they affect competition?
identify potential changes in current applications driven by market demands or technology development

24. Assessment Cycle Assess environmental factors technology
industry structure
external economic and political forces

25. Planning/Development/Implementation Cycle
Identify major threats and opportunities
summary of results of assessment cycle
what areas would most benefit from improved use of IT?
relate to business objectives

26. Planning/Development/Implementation Cycle
Develop an IT strategy
what areas deserve high-priority attention
how competitors maximize their use of IT
how does company respond to competitors
identify any important new threats

27. Planning/Development/Implementation Cycle
Develop an IT strategy (cont’d)
identify and analyze new uses of IT for products and services
assess threats and opportunities
identify parts of company infrastructure that will need to be improved

28. Planning/Development/Implementation Cycle
Develop the infrastructure to implement the plans
Specify:
goals
strategy
approach
expected results
critical milestones
requisite resources

29. Planning/Development/Implementation Cycle
Perform detailed planning and implementation
improve the IT infrastructure
begin detailed planning for the application
establish a steering group to ensure that all interests are represented during this phase

30. Planning/Development/Implementation Cycle
Evaluate realized returns on investment
evaluation may not be possible for months due to application migration, test marketing, redesign of business processes
maintain updated estimates on return of technology investments

31. Planning/Development/Implementation Cycle
Evaluate realized returns on investment (cont’d)
measure return in terms of success criteria
Reiterate these cycles to improve competitive position

32. Risks Failure to continue investing in new technology
Lowered barriers to entry
Litigation
Dominance of customer or supplier (elimination of middleman)

33. Risks Timing Threats to large firms Misunderstanding segments
Cultural lag

34. Management Perspective
Importance of IT in the strategic plan
Securing confidentiality
Evaluating financial and accounting measures for IT
Partnership with IT specialists