Chapter Strategy and Information Systems “How Would We Do That? Where’s the Data?” • Buyers don’t 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 business processes generate value? Q6: How does competitive strategy determine business processes and the structure of information systems? Q7: How 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 GearUp’s 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 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 ABC’s 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 before you graduate to develop your competitive advantage? Copyright © 2014 Pearson Education, Inc Publishing as Prentice Hall 3-31 Guide: Your Personal Competitive Advantage (cont’d) • 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: Online retail store Computing infrastructure leasing 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 ... 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... High-Service Bike Rental Copyright © 2014 Pearson Education, Inc Publishing as Prentice Hall 3-18 Using MIS InClass 3: Competitive Strategy Over the Web Briefly visit each pair – www.sportsauthority.com... 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