Chapter 2: Competing with Information Technology Flashcards
What is strategic role of information systems
involves using information technology to develop products, services, and capabilities that give a company major advantages over the competitive forces it faces in the global marketplace
This role is accomplished through a strategic information architecture: the collection of ____________ that supports or shapes the competitive position and strategies of a business enterprise
strategic information systems
can be any kind of information system (e.g., TPS, MIS, and DSS) that uses information technology to help an organization gain a competitive advantage, reduce a competitive disadvantage, or meet other strategic enterprise objective
strategic information system
Enumeration: Competitive Forces
- Rivalry of Competitors
- Threat of New Entrants
- Threat of Substitutes
- Bargaining Power of Customers and Suppliers
Competition is a positive characteristic in business, and competitors share a natural, and often healthy, rivalry. This rivalry encourages and sometimes requires a constant effort to gain competitive advantage in the marketplace. This ever-present competitive force requires significant resources on the part of a firm.
Rivalry of Competitors
Guarding against the threat of new entrants also requires the expenditure of significant organizational resources. Not only do firms need to compete with other firms in the marketplace, but they must also work to create significant barriers to the entry of new competition. This competitive force has always been difficult to manage, but it is even more so today. The Internet has created many ways to enter the marketplace quickly and with relatively low cost. In the Internet world, a firm’s biggest potential competitor may be one that is not yet in the marketplace but could emerge almost overnight.
Threat of New Entrants
The ______________ is another competitive force that confronts a business. The effect of this force is apparent almost daily in a wide variety of industries, often at its strongest during periods of rising costs or inflation. When airline prices get too high, people substitute car travel for their vacations. When the cost of steak gets too high, people eat more hamburger and fish. Most products or services have some sort of substitute available to the consumer.
Threat of Substitutes
a business must guard against the often opposing forces of customer and supplier
bargaining powers. If customers’ bargaining power gets too strong, they can drive prices to unmanageably low levels or just refuse to buy the product or service. If a key supplier’s bargaining power gets too strong, it can force the price of goods and services to unmanageably high levels or just starve a business by controlling the flow of parts or raw materials essential to the manufacture of a product.
Bargaining Power of Customers and Suppliers
Enumeration: Competitive Strategies
- Cost Leadership Strategy
- Differentiation Strategy
- Innovation Strategy
- Growth Strategies
- Alliance Strategies
- Other Strategies
Becoming a low-cost producer of products and services in the industry or finding ways to help suppliers or customers reduce their costs or increase the costs of competitors.
Cost Leadership Strategy
Developing ways to differentiate a firm’s products and services from those of its
competitors or reduce the differentiation advantages of competitors. This strategy may allow a firm to focus its products or services to give it an advantage in particular segments or niches of a market
Differentiation Strategy
Finding new ways of doing business. This strategy may involve developing unique
products and services or entering unique markets or market niches (recess). It may also involve making radical changes to the business processes for producing or distributing products and services that are so different from the way a business has been conducted that they alter the fundamental structure of an industry.
Innovation Strategy
Significantly expanding a company’s capacity to produce goods and services, expanding into global markets, diversifying into new products and services, or integrating into related products and services.
Growth Strategies
Establishing new business linkages and alliances with customers, suppliers, competitors, consultants, and other companies. These linkages may include mergers, acquisitions, joint ventures, formation of virtual companies, or other marketing, manufacturing, or distribution
agreements between a business and its trading partners.
Alliance Strategies
TorF. Competitive strategies are not mutually exclusive.
True
