CHAPTER 2
Organizational Strategy, Competitive
Advantage, and Information Systems
Review/Announcements
 What is the difference between IS and IT?
•
Information Technology – any computer based tool that people
use to work with the IS (device)
•
Information System – collects, processes, stores, analyzes and
disseminates information (applications/software/system)
 Questions/Comments
Chapter Opening Case
Respond to business pressures
Align IT strategy with company
strategy
Media Bakery
Competitive Advantage
 Competitive advantage is an advantage over
competitors in some measure such as:



 Can be, using technology, achieved through:
2.1 Business Processes
Business Process
 Accounting: Managing accounts payable
 Finance: Producing business forecasts
 Marketing: Managing customers
 Operations: Processing inventory
 MIS: Applying disaster recovery procedures
Cross-Functional Business Processes
2.1 Business Processes – Student
Registration (offline)
Schedule
Appt. w/
Advisor
Discuss
Degree Plan
Select
Courses from
Catalog
Update
Degree Plan
Update
Course
Roster
2.1.1 How do you ensure business process
excellence?
Business Process Reengineering
Business Process Management
2.1 BPR – Student Registration
BPM– SAP Solution Manager
Alert Graphics
Single Monitoring Alerts
Alert overview
Monitoring Session
2.2 Business Pressures, Organizational
Responses, and IT Support
Business Pressures
1.
2.
3.
2.2.1 Market Pressures
 The Global Economy and
Strong Competition
 The Changing Nature of the
Workforce
 Powerful Customers
(Source: Studio Frank/Image Source L
imited)
The Stages of Globalization
(From Thomas Friedman in The World is Flat)
3.0
2.0
2000 - Now
1800 - 2000
1.0
1492 - 1800
© WAVEBREAKMEDIA/Age Fotostock America, Inc.
Thomas Friedman’s Ten Flatteners
 Fall of the Berlin Wall
 Netscape goes public
 Development of work-flow software
 Uploading
 Outsourcing
 Offshoring
 Supply Chaining
 Insourcing
 Informing
 The Steroids
Flattener:
Uploading
PASSSIVE PARTICIPANTS
ACTIVE/ENGAGED USERS
WEB 2.0
OPEN SOURCE
Flattener:
Supply Chaining
Flattener:
Insourcing
Flatteners:
The Steroids
Flatteners:
The Steroids (continued)
Instant messaging and file sharing
Voice over Internet Protocol
Flatteners:
The Steroids (continued)
Videoconferencing (Telepresence)
Wireless Technologies
Source: PRNews Foto/Polycom, Inc./NewsCom
(Source: Marianna Day Massey/Zuma Press.)
2.2.1 Flatteners Exercise
Access www.go4customer.com.
 What does this company do and where is it located?
 Who are its customers?
 Which of Friedman’s flatteners does this company fit?
2.2.2 Technology Pressures
What do you think are the most prevalent
technology pressures?
Technological Innovation and Obsolescence
Obsolescence:
Electronic Numerical
Integrator and Computer
Innovation: PC/Laptop
Information Overload
Social Media Overload
Source: © Maria R.T. Deseo/PhotoEdit)
How many indexed web pages exist?
http://www.internetsociety.org/map/global-internet-report/
http://www.worldwidewebsize.com/
2.2.3 Societal/Political/Legal
Pressures
1.
2.
3.
4.
Social Responsibility
See CBS video on disposal of e-waste
Green IT
Corporate
Carbon Mgmt
Social Responsibility:
Digital Divide
One Laptop per
Child initiative
Government Regulations
Regulations are changing corporate technology polices
Examples of Regulations:
• Sarbanes-Oxley Act (Enron)
• Health Insurance Portability and Accountability Act
(HIPAA)
Responses to Business Pressures
1. Strategic Systems
2. Customer Focus
3. Make-to-Order and
mass customization
4. E-Business and E-Commerce
2.3 Competitive Advantage and
Strategic Information Systems
How do we analyze competitiveness?
Porter’s Competitive Forces Model
Porter’s Competitive Forces Model
 The rivalry among firms in an industry is
high when there is fierce competition and low
when there is not.
Porter’s Competitive Forces Model
 Threat of entry of new competitors is high
when it is easy to enter a market and low when
significant barriers to entry exist.

A barrier to entry is a product or service feature that
customers expect from organizations in a certain
industry.
Does technology and systems
increase/decrease threat of entry?
Porter’s Competitive Forces Model
 The bargaining power of suppliers is high
when buyers have few choices and low when
buyers have many choices.

Internet impact is mixed. Buyers can find
alternative suppliers and compare prices more
easily, reducing power of suppliers.
Porter’s Competitive Forces Model
 The bargaining power of customers/buyers is
high when buyers have many choices and low
when buyers have few choices.
Does the Internet increase or decrease power
of buyers? Why?
What about switching costs?
Porter’s Competitive Forces Model
 The threat of substitute products or services is high
when there are many substitutes for an organization’s
products or services and low where there are few
substitutes.
Which type of industries are at risk?
Information-based industries
are in the greatest danger
Strategies countering 5 Competitive
Forces (creating advantage)
 Cost Leadership
 Differentiation
 Innovation
 Operational Effectiveness
 Customer-orientation
Applying the Value Chain - Costco
 What is Costco’s competitive strategy?
 Who are Costco’s major competitors (i.e. rival)?
 How would Costco’s information systems contribute to
Costco’s competitive strategy, given the nature of its
business?
2.4 Business – Information
Technology Alignment
© Toh Kheng Ho/Age Fotostock America,Inc
Applying to all majors
Business Processes
CHAPTER REVIEW
What is an example of a business process
used at UNCW?
CHAPTER REVIEW
What are the differences between:

BPM

BPR
CHAPTER REVIEW
What are 3 business pressures discussed today?
1.
2.
3.
CHAPTER REVIEW
Strategies for countering competitive forces
using technology:
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
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