1. Chapter 3
Organizational Strategy, Information Systems, and Competitive Advantage

2. FlexTime scenario video
This Could Happen to You: “I Need to Look at the Data and See the Impact”
FlexTime scenario video
Felix makes it to meeting, offers good input
Group used discussion board, got good input from instructors
Neil suggests looking at data to analyze impact of suggested options before making any decisions
Group getting more people involved and developing a process for making a good decision
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3. Study Questions
Q1 How does organizational strategy determine information systems structure?
Q2 What five forces determine industry structure?
Q3 What is competitive strategy?
Q4 How does competitive strategy determine value chain structure?
Q5 How do value chains determine business processes and information systems?
Q6 How do information systems provide competitive advantages?
How does the knowledge in this chapter help FlexTime and you?
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4. Q1: How Does Organizational Strategy Determine Information Systems Structure?
Organizations examine structure of their industry and determine a competitive strategy.
Competitive strategy determines value chains determine business processes.
Structure of business processes determine design of supporting information systems.
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5. Q2: What Five Forces Determine Industry Structure
Q2: What Five Forces Determine Industry Structure? Porter’s five competitive forces 2 1
Figure 3-2 4 5
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6. Five Forces and FlexTime
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7. Five Forces and FlexTime (cont’d)
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8. Q3: What Is Competitive Strategy?
Porter’s Four Competitive Strategies
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9. What Is Competitive Strategy? (cont’d)
To be effective, an organization’s:
Goals, objectives, culture, and activities must be consistent with its strategy
Information systems must facilitate its competitive strategy
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10. Q4: How Does Competitive Strategy Determine Value Chain Structure?
Value—amount of money a customer is willing to pay for a resource, product, or service
Margin—difference between value an activity generates and cost of activity
Value chain—a network of value-creating primary and support activities
Competitive strategy implemented by creating value
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11. Bicycle Maker’s Value Chain: Sum of Primary and Support Activities
Primary Activities
Support Activities
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12. Summary of Value Chain: Primary Activities
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13. Support Activities in the Value Chain
Support Activity
Description
Technology
R & D, New Techniques, Methods, Procedures
Procurement
Raw Materials
Human Resources
Training, Recruiting, Compensation
Firm Infrastructure
General Management, Finance, Accounting, Legal, Government Affairs
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14. Value Chain Linkages
Linkage means interactions across value activities readily supported by information systems
Manufacturing systems use linkages to reduce costs
Sales forecasts used to plan production
Production plan used to determine raw materials needs
Material needs used to schedule purchases
Just-in-time inventory
Reduced inventory sizes and costs
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15. Business Process Design
Porter’s Value Chain is used to:
Create integrated, cross-departmental business systems
Create new, more efficient processes rather than automating existing ones
Focus on:
Creating integrated activities across entire value chain
Eliminating redundant processes, and creating new, more efficient processes
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16. Q5: How Do Value Chains Determine Business Processes and Information Systems?
Support activities contribute indirectly to production, sales, and customer service,
and
Produce margin that is often difficult to calculate (intangible costs and benefits)
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17. Value Chain for Bicycle Rental Company: Low-Volume
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18. Value Chain for Bicycle Rental Company: High-Volume
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19. Q6: How Do Information Systems Provide Competitive Advantages?
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20. Competitive Advantage via Products
Creating new products or services
Enhancing existing products or services
Differentiating
By cost
By quality
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21. Role for Information Systems Regarding Products: Am Example of Automobile Service
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22. Competitive Advantage via Business Processes
Lock in customers
By creating high switching costs
Lock in suppliers
Make it easy to connect to and work with your organization
Create entry barriers
Establish alliances
Create better business processes
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23. How Does an Actual Company Use IS to Create Competitive Advantages?
Example: ABC’s Information System
To maintain customer account data
IS collects information for ABC (adds value)
IS saves customers time by automatically filling in part of form (adds value for customer)
Package and information delivery system
IS helps customer to select delivery address and generate shipping labels (adds value for customer)
What value does shipper get?
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24. ABC Web Page to Select Recipient from Customer’s Records
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25. ABC Web Page to Select a Contact from Customer’s Records
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26. ABC Web Page to Specify Email Notification
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27. ABC Web Page to Print Shipping Label
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28. Review: How Does This System Create a Competitive Advantage?
Enhancing existing products
Differentiating products
Locking in customers
Raising barriers to market entry
Increasing profit margins by decreasing costs and decreasing errors
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29. How Does Knowledge in This Chapter Help FlexTime and You?
Seek ways to save costs without compromising competitive strengths over rivals.
State their goal differently: Examine all value-generating activities to see if there isn’t some way of reducing costs, without reducing value generated.
You know a process for tracing development from analysis of industry structure all the way through to requirements for information systems. All activities in firm need to facilitate the organization’s competitive strategy.
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30. Guide: Your Personal Competitive Advantage
Who will be your competitors when you seek a job after you graduate from college?
What will be your competitive advantage in the job market?
What can you do before you graduate to develop your competitive advantage?
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31. Active Review
Q1 How does organizational strategy determine information systems structure?
Q2 What five forces determine industry structure?
Q3 What is competitive strategy?
Q4 How does competitive strategy determine value chain structure?
Q5 How do value chains determine business processes and information systems?
Q6 How do information systems provide competitive advantages?
How does the knowledge in this chapter help FlexTime and you?
Copyright Pearson Education, Inc. for Prentice Hall