Information Systems for
Strategic Advantage
BUS 782
Strategic Information System
• Information systems that provide a firm
with competitive products and services
which give it a strategic advantage over
its competitors in the marketplace.
– Information systems that promote
business innovation, improve operational
efficiency.
Strategic Advantage and Strategic
Necessity
• Strategic advantage refers to obtaining a
sustainable competitive edge over
competitors. The ability to obtain a greater
than normal return on investment.
• A strategic necessity is a system that must
be installed to remain competitive and stay
in business.
Auction sites
• Yahoo, Ebay
• Necessity:
– Ability to search and view items, view seller info and
bid history, place a bid, online payment.
• Advantage:
– Ebay
• Ebay store
• PayPal
•
Micropayments
• SkyPe: http://pages.ebay.com/skype/
– Special SkyPe services for eBay sellers and buyers
• Amazon Associates:
– Amazon.com's affiliate marketing program.
By linking to Amazon products and services
you can add compelling content for your site
visitors enjoyment and receive up to 8.5% in
referral fees for doing so.
– aStore
Being the First
• Internet Search Engines:
– Yahoo, Google
– Teoma
– Mooter
New Way of Doing Business
• Dell:
– Customization
• America West website -http://www.americawest.com/awa/
• Select your seats
• Web check-In (Travel Tools and Services)
Comparing Websites
• Travel:Yahoo vs Expedia
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Hotels
Cars
Vacations
Cruises
• Real Estate:Century 21 vs ReMax
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Buy: neighborhood, school
Sell
Finance
Learn
Competitive forces model by
Michael Porter
Threat of
New Entrants
Bargaining Power
of Suppliers
Rivalry among
Existing Competitors
Threat of Substitute
Products
Bargaining Power
of Customers
Competitive Strategies
• Cost leadership strategy:
– Become a low cost producer of products and services
– Find ways to help suppliers or customers reduce their costs
• Product differentiation strategy.
• Innovation strategy: Finding new way of doing
business, enter new market.
• Alliance strategy: Establish alliances with customer,
suppliers, competitors, other company.
• Growth strategy: expanding, diversifying,
integrating.
Strategic Roles for Information
Systems
• Improving business operations
• Promoting business innovation
• Locking in customers and suppliers
– Interorganizational IS, EDI, automatic inventory
replenishment system
• Creating switching costs
– make customers dependent on the continued use of
innovative IS.
• Raising barriers to entry
– discourage competitors from entering a market
The Value Chain and Strategic
IS
• It views a firm as a series, or chain, or network
of basic activities that add value to its
products and services, and thus add a margin
of value to the firm.
– Margin is the value of the firm’s products and
services less their costs, as perceived by the firm’s
customers.
• Support activities:
– Administration, human resource management ,etc.
• Primary activities:
– Inbound logistics, operations, outbound logistics,
marketing, etc.
The Value Chain
Administrative Coordination & Support Services
Human Resource Management
Technology Development
Procurement of Resources
Inbound
Outbound
Operations
Logistics
Logistics
Marketing
Customer
and
Service
Sales
Becoming an Agile Competitor
• Agility in competitive performance is the
ability of a business to prosper in rapidly
changing, continually fragmenting global
markets for high-quality, high-performance,
customer-configured products and services.
An agile company can:
– 1. Make a profit in markets with broad product
ranges and short model lifetimes
– 2. Process orders in arbitrary lot sizes
– 3. Offer individualized products while maintaining
high volumes of production.
IT and Agility
• Agile companies depend heavily on
information technology to:
– 1. Enriched its customers with customized
solutions to their needs.
• Mass customization
– 2. Cooperate with other businesses to bring
products to market as rapidly and cost-efficient as
possible.
– B2B E-Commerce
• Electronic Exchange: An electronic forum where
manufacturers, suppliers, and competitors buy and sell
goods.
• Example: WorldWide Retail Exchange (WWRE)
IT Doesn’t Matter – Nicholas Carr
• The basis for a sustainable competitive
advantage is not ubiquity but scarcity.
• The core functions of IT have become
available to all.
• Computer programs today are industry
specific, most “right out of box””. That is
they are commodities.
• Costs of doing business – paid by all but
provide distinction to none.
Carr’s Rules for Firms
• Spend less
• Follow, don’t lead
• Focus on the risks of IT, not the
opportunities:
– Webvan - wiki
– Peapod