Chapter Strategy and Information Systems “And we’ve got a lot of process and systems work to do." • • • • Differentiates itself by having a large inventory of parts Competitive strategy is threatened by 3D printing Manufacturing 3D printing line means building new business processes and systems Innovations threaten competitive strategies Copyright © 2015 Pearson Education, Inc 3-2 Study Guide Q1: 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: 2024? Copyright © 2015 Pearson Education, Inc 3-3 Q1: How Does Organizational Strategy Determine Information Systems Structure? Copyright © 2015 Pearson Education, Inc 3-4 Q2: What Five Forces Determine Industry Structure? Competitive Forces • Competition from vendors of substitutes • Competition from new competitors • Competition from existing rivals Bargaining Power Forces • Bargaining power of suppliers • Bargaining power of customers Copyright © 2015 Pearson Education, Inc 3-5 Use 5-forces Model to Identify Sources of Strong Competition Copyright © 2015 Pearson Education, Inc 3-6 Assessing the Five Forces at AllRoad Copyright © 2015 Pearson Education, Inc 3-7 Q3: How Does Analysis of Industry Structure Determine Competitive Strategy? Porter's Four Competitive Strategies Copyright © 2015 Pearson Education, Inc 3-8 Bottom Line • • To be effective goals, objectives, culture, and activities must be consistent with strategy In MIS, this means all information systems must reflect and facilitate the organization's competitive strategy Copyright © 2015 Pearson Education, Inc 3-9 Yikes! Bikes! • You are the 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 the owner’s actions illegal? Unethical? Copyright © 2015 Pearson Education, Inc 3-10 Q7: How Do Information Systems Provide Competitive Advantages? Principles of Competitive Advantage Copyright © 2015 Pearson Education, Inc 3-19 How Does an Actual Company Use IS to Create Competitive Advantages? • Maintains customer account data IS collects information for ABC (adds value) IS saves customers time by automatically filling in part of form (adds value for customer) • Package & information delivery system IS helps customer to select delivery address and generate shipping labels What value does shipper get? Copyright © 2015 Pearson Education, Inc 3-20 Two Roles for Information Systems Regarding Products Copyright © 2015 Pearson Education, Inc 3-21 ABC, Inc., Web Page to Select a Contact from the Customer’s Records Copyright © 2015 Pearson Education, Inc 3-22 ABC, Inc., Web Page to Specify Email Notification Copyright © 2015 Pearson Education, Inc 3-23 ABC, Inc., Web Page to Print a Shipping Label Copyright © 2015 Pearson Education, Inc 3-24 Q8: 2024? • Models of business strategy, competitive advantages, and relationship to processes and IS unlikely to change • • Pace of business will accelerate New ideas and innovations and require businesses to be constantly on alert for changes that may affect their strategy • Be a modern-day prospector and use technology to create new products Copyright © 2015 Pearson Education, Inc 3-25 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 © 2015 Pearson Education, Inc 3-26 Active Review Q1: 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: 2024? Copyright © 2015 Pearson Education, Inc 3-27 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 Copyright © 2015 Pearson Education, Inc inventory 3-28 Is FBA Right for AllRoad Parts? • Outsource to AllRoad, thus avoiding cost of developing own processes, facilities, and order fulfillment information systems Copyright © 2015 Pearson Education, Inc 3-29 FBA Fees for Products Like Sporting Goods as of May 2013 Copyright © 2015 Pearson Education, Inc 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 © 2015 Pearson Education, Inc 3-31 Using the Guide: Your Personal Competitive Advantage (cont'd) How these elements of competitive advantage apply to you personally? • • • • • Switching costs? Differentiating products? Creating barriers? Establishing alliances? Reducing costs, increasing revenues? Copyright © 2015 Pearson Education, Inc 3-32 3-33 ... process and systems work to do." • • • • Differentiates itself by having a large inventory of parts Competitive strategy is threatened by 3D printing Manufacturing 3D printing line means building... To be effective goals, objectives, culture, and activities must be consistent with strategy In MIS, this means all information systems must reflect and facilitate the organization's competitive... 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