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Chapter 2
Competing with Information Technology
2
Does IT provide organizations
with a competitive advantage?
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Long-term competitive strategies
Lock in customers/suppliers/partners And lock out competitors Deter them from switching to competitors Build in switching costs Make customers and suppliers dependent on
the use of innovative IS Staying a step ahead of competitors Creating “the place” (first mover
advantage) Ebay Facebook
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Competitive Advantage and Competitive Necessity
What is Competitive Advantage? What is the problem with
competitive advantage?
What is Competitive Necessity?
What is the relationship between Competitive Advantage and Competitive Necessity?
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II. Porter’s Competitive Forces Model
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II. Competitive Strategy Concepts
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II. Competitive Strategy Concepts
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IV. Building A Customer-Focused Business – Strategic Focus
on Customer Value
Recognizing that Quality, not Price, has become the primary factor in a customer’s perception of value
Internet technologies can make customers the focal point of e-business applications
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V. Porter’s Value Chain and Strategic IS
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V. The Value Chain and Strategic IS
Value Chain – the series/chain/network of activities that add value to products/services
Primary Processes – directly related to manufacture of products or delivery of services
Support Processes – business activities that that support daily operations of the firm and indirectly contribute to products/services
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II. Reengineering Business Processes
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II. Reengineering Business Processes
Business Process Reengineering (BPR) High Potential Payback, but High Risk of
Failure Organizational Redesign
Process Teams Case Managers
The Role of Information Technology – IT plays a major role in BPR
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To Build or to Buy – Is That Really the Question?
What is the traditional answer?
Why might reality be more complicated?
Why does VISA custom build in-house?
Why does VISA busy of-the-shelf?
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III. Becoming An Agile Company
4 Basic Strategies: Customer Perception of Goods and Services Partnering with Customers, Suppliers, and Even
Competitors Organize to Thrive on Change and Uncertainty Leverage Impact of Personnel and Their
Knowledge
Types of Agility Customer Partnering Operational
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III. Becoming An Agile Company
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IV. Creating A Virtual Company Virtual Company – Uses the Internet,
intranets and extranets to create virtual workgroups and support alliances with business partners
Virtual Company Strategies Share infrastructure and risk with alliance partners Link complimentary core competencies Reduce concept-to-cash time through sharing Increase facilities and market coverage Gain access to new markets and share market or
customer loyalty Migrate from selling products to selling solutions
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IV. Creating A Virtual Company
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IV. Creating A Virtual Company
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V. Building a Knowledge-Creating Company
Explicit Knowledge – written down or stored on computers
Tacit Knowledge – “how-to” knowledge residing in the workers; very important but little incentive to share this information so it is never written down
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Types of Knowledge
(Nonaka, 1994)(Nonaka, 1994)
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V. Building a Knowledge-Creating Company
Knowledge Management – 3 levels: Enterprise Knowledge Information Creation, Sharing, and Management Document Management
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VI. Knowledge Management Systems
Making personal knowledge available is the central activity of a knowledge-creating company
This takes place continuously at all levels of the organization
Knowledge management has become a major strategic use of information technology
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VI. Knowledge Management Systems
Goal of Knowledge Management – to create, organize, and disseminate important business knowledge whenever and wherever it is needed in the organization
Knowledge Management systems: Facilitate organizational learning and knowledge
creation Provide rapid feedback top knowledge workers Encourage employee behavioral change Significantly improve business performance
