CHAPTER 3 STRATEGIC & COMPETITIVE OPPORTUNITIES Gaining a competitive advantage through effective business strategies is what this chapter is about. Using

CHAPTER 3CHAPTER 3

STRATEGIC & STRATEGIC & COMPETITIVE COMPETITIVE

OPPORTUNITIESOPPORTUNITIESGaining a competitive advantage through effective Gaining a competitive advantage through effective

business strategies is what this chapter is about.business strategies is what this chapter is about.

Using IT to Generate Using IT to Generate Organizational Organizational

HorsepowerHorsepower

THE FLEETING COMPETITIVE THE FLEETING COMPETITIVE ADVANTAGEADVANTAGE

This chapter examines 7 strategies, enabled by IT, that promote organizational competitiveness.

Introduction

A COMPETITIVE ADVANTAGE is providing the best perceived perfect service at the customer’s moment of value.

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ORGANIZATIONAL ORGANIZATIONAL HORSEPOWER (OHP)...HORSEPOWER (OHP)...

ORGANIZATIONAL FORCE is meeting as many customer expectations as possible.

ORGANIZATIONAL SPEED is meeting customer expectations quickly.

OHP3-4

is a measure of organizational competitiveness generated through organizational force and

speed.

7 IT-ENABLED OHP STRATEGIES7 IT-ENABLED OHP STRATEGIES

Just-in-time (JIT) approach X Teams X Information partnerships X X Timeless & locationless operations X X Transnational firm X Virtual organization X Learning organization X

OHP3-5

FORCE SPEED

See Figure 3.2 (page 83) to compare these strategies.

WHAT IS QUALITY?WHAT IS QUALITY?

QUALITY is meeting customer expectations.

Quality is not goodness, prettiness, or luxury.

Quality3-6

Quality is the foundation of all OHP strategies and a fundamental building block to

organizational competitiveness.

TOTAL QUALITY MANAGEMENT TOTAL QUALITY MANAGEMENT (TQM) is...(TQM) is...

meeting customer expectations through continuous improvement and organization-wide quality ownership.

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STATISTICAL PROCESS STATISTICAL PROCESS CONTROL (SPC)CONTROL (SPC)

1.A CONTROL CHART - a graphic means of identifying causes to problems that are controllable.

2.A HISTOGRAM - a graphic representation of frequency distributions.

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is a method of gathering and analyzing quality requirements. SPC tools (such as those below)

help you meet customer expectations.

CONTINUOUS IMPROVEMENT CONTINUOUS IMPROVEMENT TOOLSTOOLS

A FISHBONE DIAGRAM - a line diagram that begins with a problem (the effect) and branches out into problem causes.(page 87)

A PARETO CHART - sorted frequencies of various problem causes with percentages of each.

A SCATTER DIAGRAM - a tool used to depict data patterns and is created by plotting paired data on a two-axis graph.(e.g. # of complaints vers hrs trained)

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Organization-Wide Quality Organization-Wide Quality Ownership Supports TQM by...Ownership Supports TQM by...

1.Promoting individual employee commitment and power.

2.Communicating that sense of ownership to customers.

3.The recognition that quality is everyone’s job.

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The JUST-IN-TIME (JIT) The JUST-IN-TIME (JIT) Approach Is...Approach Is...

Internal External

JIT3-11

producing or delivering a product or service when the customer wants it.

The JIT approach may be viewed from two perspectives:

An OHP strategy for organizational speed.

JIT OVERCOMES SEVERAL JIT OVERCOMES SEVERAL PROBLEMSPROBLEMS

Unsold inventories must be stored in costly warehouses. New products are delayed until existing inventories are sold. Quality lapses occur when defects aren’t caught until quality control catches up with the

inventory.

JIT3-12

IT SYSTEMS ENABLE JITIT SYSTEMS ENABLE JIT PRODUCTION SCHEDULING systems provide detailed plans for producing all components of a final product. MATERIAL REQUIREMENTS PLANNING (MRP) systems take the production schedule and determine which

raw materials and components are required and when. MANUFACTURING RESOURCE PLANNING (MRP II) systems tie material requirements from MRP systems into

other organizational systems.

JIT3-13

TEAMS IN AN ORGANIZATIONTEAMS IN AN ORGANIZATION

The shared goal gives the team focus. Task interdependence means each team member relies on one

another to complete their work and achieve the shared team goal.

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A TEAM is a group of people with a shared goal and task interdependence.

An OHP strategy for organizational force.

PROJECT TEAMSPROJECT TEAMS

Project teams compliment and don’t replace a departmental structure.

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PROJECT TEAMS accomplish one-time goals and disband once the project is complete.

PERMANENT TEAMSPERMANENT TEAMS

Permanent teams are an alternative to a departmental structure.

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PERMANENT TEAMS are designed to support permanent processes and are not intended to

disband.

IT SYSTEMS ENABLE TEAMSIT SYSTEMS ENABLE TEAMS Groupware supports group decision-making. Work flow automation software speeds processing. Videoconferencing and electronic meeting software reduce the need for in-person team meetings. Group scheduling software facilitates scheduling.

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INFORMATION PARTNERSHIPSINFORMATION PARTNERSHIPS

Information Partnerships3-18

An INFORMATION PARTNERSHIP is an agreement between organizations for the

sharing of information to strengthen each partner organization.

An OHP strategy for organizational force and/or speed.

AN INFORMATION AN INFORMATION PARTNERSHIP FOR SPEEDPARTNERSHIP FOR SPEED

Electronic data interchange (EDI) automates the transaction information flow between partner organizations.

Partners do not modify their product offerings or their target markets. Business volume increases because transactions take less time and have fewer errors.


AN INFORMATION AN INFORMATION PARTNERSHIP FOR FORCEPARTNERSHIP FOR FORCE

Information is shared between partner organizations to reach a larger market. Information is available because it is routinely captured and stored. EDI and interorganizational systems (IOSs) using networking technology support this

strategy.


AN INFORMATION AN INFORMATION PARTNERSHIP FOR BOTHPARTNERSHIP FOR BOTH

Partner organizations share information that is strategic in nature and affects their fundamental business strategy. New product offerings or services result. Innovations are generated faster - organizational speed. Partners reach more customers - organizational force.


TIMELESS & LOCATIONLESS TIMELESS & LOCATIONLESS OPERATIONSOPERATIONS

TIMELESS OPERATIONS operate without regard to time. Timeless operations serve customers whenever the customers want.

LOCATIONLESS OPERATIONS operate without regard to location. Locationless operations serve customers wherever the customers want.

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An OHP strategy for organizational force or speed.

SUCCESSFUL TIMELESS SUCCESSFUL TIMELESS OPERATIONSOPERATIONS

Kansas City Power & Light– With wireless technologies, meter reading can take place any time.

Cisco Systems– Customers now service themselves whenever they want.


See Table 3.1 on page 95.

SUCCESSFUL LOCATIONLESS SUCCESSFUL LOCATIONLESS OPERATIONSOPERATIONS

Hot Hot Hot– 1,500 people daily drop by its Web site.

Dell Computers– Dell doesn’t manufacture anything anywhere - it simply assembles pre-made components.

Paul, Hastings, Janofsky & Walker– Lawyers working anywhere they want. Definitely not in the office.


See Table 3.1 on page 95.

THE PAPERLESS OFFICETHE PAPERLESS OFFICE

Eliminating paper reduces the cost of storing that paper. Electronic materials can be searched electronically saving time.


The PAPERLESS OFFICE is an office where all materials are maintained in electronic instead of

paper form.

SUPPORTING THE SUPPORTING THE TELECOMMUTERTELECOMMUTER

1.Communication technology2.Constant communication3.Goal setting and monitoring4.Physical meetings5.Information access


Telecommuting, or working away from the main office, requires the creation of an individual, remote workplace - a virtual workplace. Five components support this virtual workplace:

THE TRANSNATIONAL FIRMTHE TRANSNATIONAL FIRM

Operations are geographically dispersed. The dispersed operations extend the firm’s market reach and

thus its organization force.

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A TRANSNATIONAL FIRM is a firm that produces and sells products and services all over the world in coordinated cooperation.

An OHP strategy for organizational force.

INTERNATIONAL INTERNATIONAL CONFIGURATIONSCONFIGURATIONS

GLOBAL - all operations depend upon headquarters for resources and direction. MULTINATIONAL - all operations operate independently, reporting only financial

information to headquarters. TRANSNATIONAL - all operations share information and resources equally.


See Photo Essay 3-1, page 100.

TRANSNATIONAL FIRM TRANSNATIONAL FIRM CRITICAL SUCCESS FACTORSCRITICAL SUCCESS FACTORS

1.Balancing local uniqueness with global uniformity– Use translation software with Web communication

2.Creating a global infrastructure– Global DSSs, MISs, and WSSs


TRANSNATIONAL FIRM TRANSNATIONAL FIRM CHALLENGESCHALLENGES

1.Fostering interoperational communication

2.Integrating OHP strategies internationally

3.Moving information across borders, called TRANSBORDER DATA FLOWS, that is subject to custom regulations just like any other product.


THE VIRTUAL ORGANIZATIONTHE VIRTUAL ORGANIZATION

Virtual Organization3-31

A VIRTUAL ORGANIZATION is a network of independent organizations linked together by IT to exploit market opportunities by sharing skills,

costs, and market access.

“If you think of a transnational firm as located everywhere, think of a virtual organization as

located nowhere.”



LocationlessOperations

Unlimited life

Employee run

Share assignments

Virtual OrganizationUnlimited life

Partnership run

Share knowledge & resources

Outsourcing

Specified lifetime

Contractual operation

Share only what’s required

DEFINING A VIRTUAL DEFINING A VIRTUAL ORGANIZATIONORGANIZATION

IT SYSTEMS FOR THE VIRTUAL IT SYSTEMS FOR THE VIRTUAL ORGANIZATIONORGANIZATION

Linking incompatible hardware and software. Fostering creativity without human contact. Effectively communicating concepts online.


Joining independent organizations can create IT systems integration challenges, including:

THE LEARNING ORGANIZATIONTHE LEARNING ORGANIZATION

Learning Organization3-34

The LEARNING ORGANIZATION is an organization whose people are continually

discovering how to learn together while, at the same time, altering their organization as a result

of what they learn.


BARRIERS THAT PROHIBIT BARRIERS THAT PROHIBIT ORGANIZATIONS FROM ORGANIZATIONS FROM

“LEARNING”“LEARNING” A command and control structure. Always assigning blame. The failure to learn from your experience.


COMMAND IT TO CONTROL ITCOMMAND IT TO CONTROL IT

Efficiency is gained at the cost of flexibility. Information flows only from top to bottom.


A command and control structure is an organizational learning barrier because:

Use IT systems to increase the bottom to top flow of information.

IT SHOULDN’T BE A BLAME IT SHOULDN’T BE A BLAME GAMEGAME

It promotes individual not organizational learning. Assigning blame assumes you are to blame and

not me.


Assigning blame for all errors in an organization is an organizational learning barrier because:

Use whiteboard software to solve problems jointly.

LEARNING FROM YOUR LEARNING FROM YOUR EXPERIENCESEXPERIENCES

Seeing the “big picture” requires experiencing both causes and effects. Effects from events are often separated by time and distance from the

cause.


Failing to learn from your experiences is an organizational learning barrier because:

Utilize artificial intelligence to identify patterns and find unique solutions to complicated

problems.

STEPS IN SELECTING AN OHP STEPS IN SELECTING AN OHP STRATEGYSTRATEGY

1.How do your customers define perfect service?

2.Does your organization have a strategic plan and how do those goals translate into OHP force and speed?

3.Which OHP strategy best fits the answers to the first two questions?

4.Does your organization have the resources to adopt the strategy you’ve selected?

OHP Strategy Implementation3-39

ADOPTING AN OHP STRATEGYADOPTING AN OHP STRATEGY

1.Is the strategy to be applied partially or comprehensively?

2.Which technologies does the strategy require?

3.Should a continuous improvement process or business process reengineering be used to adopt the strategy?

OHP Strategy Implementation3-40

Once selected, adopting an OHP strategy considers three issues. They are:

BUSINESS PROCESS BUSINESS PROCESS REENGINEERINGREENGINEERING

BPR3-41

BUSINESS PROCESS REENGINEERING (BPR) is the reinventing of processes within a

business.

BUSINESS PROCESSES are sequences of activities that take raw materials from a supplier and serve outcomes to a customer.

STEPS IN PERFORMING BPRSTEPS IN PERFORMING BPR

1.Defining the OHP strategy you wish to adopt.

2.Identifying the affected processes that need to be reengineered.

3.Identifying the goal for each process.

4.Identifying process participants and a facilitator for each process.

5.Mapping the “as-is” process.

6.Designing the “to-be” process.

BPR3-42

TO SUMMARIZETO SUMMARIZE Competitive advantages are fleeting. 7 OHP strategies enabled by IT are:

– Just-in-time approach

– Teams

– Information partnerships

– Timeless & locationless operations

– Transnational firm

– Virtual organization

– Learning organization

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TO SUMMARIZETO SUMMARIZE Quality through TQM is the foundation for all OHP

strategies. Each OHP strategy generates various magnitudes of

organizational force and speed - the components of OHP.

Adopting an OHP strategy may be done either continuously or radically.

TQM is the continuous adoption process. BPR is the radical adoption process.

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Documents

CHAPTER 3 STRATEGIC & COMPETITIVE OPPORTUNITIES Gaining a competitive advantage through effective business strategies is what this chapter is about. Using