INFSY540
Information Resources in Management
Lesson 12 Chapter 11
Strategic Analysis
Strategy
Tactics
Operations
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Outline
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Operations, Tactics, Strategy and Change
The Competitive Environment
External Agents
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Methods to Gain Competitive Advantage
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How IS can help
The Search for Innovation
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Customers
Suppliers
Rivals (new entrants. Substitute products)
Government Regulations
How IS can help
Costs and Dangers of Strategies
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How IS can hurt
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Lewin’s model for
organizational change
•Organizations must be able to change as their environment changes.
•Change can happen at any level: Operational, Tactical, Strategic
•Change can be incremental (continuous improvement, TQM)
or sweeping (business process reengineering)
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Strategies
Competitors
Suppliers
Company
Customers
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Porter’s Five Forces Model
Threat of
New Entrants
Bargaining Power
of Suppliers
Rivalry Among
Existing Competitors
Bargaining Power
of Buyers
Threat of Substitute
Products or Services
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Methods to Gain Competitive Advantage
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Barriers to Entry
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Prevent others from entering
the industry. Movie
distribution
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Consumers incur learning
and data transfer costs.
Baxter Healthcare
Add new features or create
new products with IT.
Federal Express & Merrill
Lynch
Quality Management
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IS to cut costs. Wal-Mart
Product Differentiation
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Switching Costs
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Lower Production Costs
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Distribution Channels
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Additional costs of creating
an information system.
People’s Express
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Monitoring production lines
and analyzing data. Digital
Equipment Corp.
Value Chain
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Expanding forward or back
the value chain to find
greater profits. Boeing
Information Systems
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Developing Strategies
Corporate Strategy Development
monitor
rivals
• expectations • strengths
• goals
• weaknesses
• rivalry
• opportunities
• critical success factors
Market Measures
- Market share
- Concentration
- Growth
- Profitability
Performance Measures
- ROA
- ROI
- EPS
- Growth
- Subjective
Business Strategies
and Priorities
Process Changes
Data Needs
IS Changes
- Cost leadership
- Differentiation
- Innovation
- Linkages
- Re-engineering
- Organization
- Decentralization
System
Development
& Implementation
Business Operations & Rules
Existing Data and IS
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Search for Innovation
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Research
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Analysis & modeling, project
management, work group
support, databases, decision
support.
Manufacturing
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Engineering & Design
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CAD/CAM, testing, networks,
work group support.
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Mass customization, links to
customers & suppliers,
quality monitoring, expert
systems for maintenance,
production databases,
business integration.
Logistics & Supply
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Just-in-time linkages,
forecasts, models, links for
design, transaction
processing.
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Search for Innovation
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Marketing
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Frequent buyer database,
target market & media
analysis, survey design and
analysis, multimedia
promotion design, links to
customers and designers.
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Service
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Management
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Sales & Orders
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Portable computers for
sales, ES for order
customization, work group
tools for customer support.
Phone support, GIS locators,
scheduling, ES diagnostics,
databases.
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EIS, e-mail, bulletin boards,
decision support systems,
personal productivity tools,
work group support
Links to service providers
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Accountants
Consultants
Lawyers, . . .
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Dangers
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Conclusions
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Dangers:
Capital Cost
Money for research
Money for information technology
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Danger:
Competition
Follows
IS Costs
You
Time
Transaction
Processing
Network & link
sales people
Experimental
technology
& global links
IS Costs
Rival
Time
Network & DSS
Link to suppliers
& customers
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Danger: Changing Industry &
Government Intervention
New technology
New services
Customer
Customer
Customer
Industry 1
(expands into
industry 2)
Customer
Customer
Industry 2
(new
competitor)
Same technology
Customer
Customer
Customer
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Need to control access.
Need to worry about network
interceptions and hackers.
Danger:
Security
Production Firm
Hackers
or competitors
Security
firewall
Data we wish to share.
Data we want to protect.
Customer
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Conclusions?
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IT can help achieve strategic competitive advantage.
Use of IS to add value is strongly influenced by
organizational structure, culture and change.
Oftentimes, IT is a smokescreen for the action that
provides the real strategic competitive advantage.
IS can provide more value than just cost cutting
Strategic gains based on IT solutions are often fleeting
and require continual improvements.
Others...
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Questions about Strategic Analysis ?
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Questions to Consider
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How do companies compete?
What are the ways to achieve competitive advantage?
How can IT be used to help achieve competitive
advantage?
What are the costs and risks of using these methods?
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Methods to Gain
Competitive
Advantage
Barrier
To Entry
Supplier
Supplier
Supplier
Ties To
Suppliers
Decreased
Costs
Firm
Control Of
Distribution
Improved
Quality
Rival
Wholesale
Ties To
Customers
Innovation and
Differentiation
Consumer
Consumer
Consumer
Increased
Switching Costs
Consumer
Consumer
Consumer
Consumer
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Barriers to Entry
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Economies of Scale (size)
Economies of Scope (breadth)
Product Differentiation
Capital requirements
Cost Disadvantages (independent of size)
Distribution Channel Access
Government Policy
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Value Chain
Firm Infrastructure
Human Resources Management
Technology Development
Procurement
Inbound
Logistics
Operations
Outbound Marketing
Logistics & Sales
Service
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Process Innovation
Suppliers
Production
Logistics/
Supply
Research
Engineering
and Design
Management
Manufacturing
Marketing
Customer
Service
Sales and
Order
Management
Customers
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Research
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Analysis and models
Statistical analysis of data
Project management and budgeting
Work-group collaboration and communication
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Engineering and Design
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CAD/CAM
Integrated design database
Production databases and model testing
Expert Systems for manufacturability
Work group communication
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Manufacturing
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Links to customers
Links to suppliers
Mass customization
Robotics
Diagnostic Expert Systems
Quality monitoring and control
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Logistics and Supply
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Just-In-Time Inventory and EDI
Configuration and design
Searching for availability, pricing, . . . networks
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Marketing
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Frequent buyer databases
Point-of-Sale and trends
Statistical analysis of data
Geographic Information Systems
Links to external marketing agencies
Multimedia development of promotions
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Sales and Orders
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Sales force automation, hand-held computers
Customer workstation access
Expert Systems for product and option selection
Expert Systems for configuration and shipping
Front-line support: ES, e-mail, work groups
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Service
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Portable computers for service anywhere
Databases (e.g., customer service)
Location monitoring of service personnel
Product internal, automatic diagnostics
Expert System diagnostic tools
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Management
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Executive Information Systems
Simulation (and rivalry games)
Links to external partners (accounting, law, . . .)
Electronic conferencing
Work group communication, e-mail
Standardization, Modularization, Franchises
Knowledge Workers
Client-server instead of hierarchical computing
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