Chapter 3 Strategy and Information Systems How Would We Do That? Wheres the Data? Buyers dont communicate with operations when negotiating with vendors Buyers need data to look at prices and costs of dealing with individual vendors Need more data and people involved in
negotiating deals Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-2 Study Questions QI: How does organizational strategy determine information systems structure? Q2: What five forces determine industry structure?
Q3: How does analysis of industry structure determine competitive strategy? Q4: How does competitive strategy determine value chain structure? Q5: How do business processes generate value? Q6: How does competitive strategy determine business processes and the structure of information systems? Q7: How do information systems provide competitive advantages? Q8: 2023? Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall
3-3 Q1: How Does Organizational Strategy Determine Information Systems Structure? Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-4
Q2: What Five Forces Determine Industry Structure? Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-5 Examples of Five Forces Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall
3-6 Five Forces at GearUp Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-7 Q3: How Does Analysis of Industry Structure
Determine Competitive Strategy? Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-8 GearUps Competitive Strategy Low Cost/Focused Do everything to keep costs down Focus within sporting goods category
Focus on buyers interested in special, short-term sales Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-9 Ethics Guide: Yikes! Bikes You are operations manager for Yikes! Bikes, a manufacturer of high-end mountain bicycles.
New owners plan to pursue lowest-cost vendor strategy by importing low-cost, lower quality bikes. New owners are not being honest with employees about cutting jobs. Say you might be promoted to new general manager. Should you trust them? Q: Are owners actions illegal? Unethical? Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall
3-10 Q4: How Does Competitive Strategy Determine Value Chain Structure? Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-11 Value Chain Structure?
Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-12 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 Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-13 Q5: How Do Business Processes Generate Value?
Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-14 Improved Material Ordering Process Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-15
Q6: How Does Competitive Strategy Determine Business Processes and the Structure of Information Systems? Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-16
Operations Value Chains for Bicycle Rental Companies: High Service Rentals Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-17 Business Process and Information Systems for High-Service Bike Rental
Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-18 Using MIS InClass 3: Competitive Strategy Over the Web 1. Briefly visit each pair. www.sportsauthority.com vs. www.soccer.com www.target.com vs. www.sephora.com www.woot.com vs. www.amazon.com
www.petco.com vs. www.healthyfoodforpets.com www.llbean.com vs. www.rei.com 2. Select two pairs from the list. For each pair of companies, answer the questions on p. 84. Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-19 Q7: How Do Information Systems Provide
Competitive Advantages? Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-20 Competitive Advantage via Processes Implementation 1. Lock in customers o Create high switching costs
2. Lock in suppliers o Make it easy to connect to and work with your organization 3. Create entry barriers Make it difficult and expensive for new competition 4. Create better business processes to establish alliances Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall
3-21 How Does an Actual Company Use IS to Create Competitive Advantages? ABC, Inc. created competitive advantage in shipping industry through: Superior customer service Ease of customer business use by minimizing data entry: Drop-down lists, automatic fill-ins, contact lists
for customers Minimizing data-entry errors Following slides show Web pages of ABCs information system. Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-22 Two Roles for Information Systems
Regarding Products Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-23 How Does an Actual Company Use IS to Create Competitive Advantages? Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall
3-24 Automatic Retrieval of Customer Data Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-25 ABC, Inc., Web Page to Specify Email
Notification Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-26 ABC, Inc., Web Page to Print a Shipping Label Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall
3-27 How Does This System Create a Competitive Advantage?
Enhances existing products Differentiates products Locks in customers Raises barriers to market entry Increases profit margins by decreasing costs and decreasing errors Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-28
Q8: 2023? Unlikely GearUp will exist New opportunities for IT-based organizations Reduce medical costs by supporting governmental functions, like Medicare and related programs Web-based services to track medical bills, Medicare and supplemental insurance payments, track unpaid bills
Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-29 Security Guide: Differentiating on Security! Major data centers harden their sites; computer criminals turn to less strongly protected assets held by small organizations
and individuals Habit of effective security behavior easy way to gain a competitive advantage Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-30 Guide: Your Personal Competitive Advantage
Who will be your competitors when you seek a job after graduating from college? What will be your competitive advantage in the job market? What can you do before you graduate to develop your competitive advantage? Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-31
Guide: Your Personal Competitive Advantage (contd) How could these concepts help you get and keep a job? Switching costs? Differentiating products? Creating barriers? Establishing alliances? Reducing costs, increasing revenues?
Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-32 Case Study 3: Fulfillment by Amazon (FBA): Primary product offerings: 1. Online retail store 2. Computing infrastructure leasing
3. Order fulfillment services Amazon buys, takes ownership, physical possession, inventories good, sells from inventory Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-33 Is FBA Right for GearUp?
Outsource to Amazon, thus avoiding cost of developing own processes, facilities, and order fulfillment information systems. Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-34 FBA Fees for Products Like Sporting Goods as of May 2012
Copyright 2014 Pearson Education, Inc. Publishing as Prentice Hall 3-35 3-36
