Chapter 3 In Class Notes (Complete) Flashcards
Q1: How Does Organizational Strategy
Determine Information Systems
Structure?
• Information systems exist to help organizations
achieve their competitive strategies
• Competitive strategy determines the structure,
features, and functions of every information system.
How is the 5 step process in how an organizational strategy determines information systems structure.
- Industry Structure
- Competitive strategy
- Value Chains
- Business Processes
- Information Systems
Q2: What Five Forces Determine Industry
Structure?
• Porter’s five forces model facilitates competitive assessment – Bargaining power of customers – Threat of substitutions – Bargaining power of suppliers – Threat of new entrants – Rivalry among existing firms
Give example of strong force for each Force
toyota's purchase of auto paint frequent traveler's choice of auto rental students purchasing gasoline corner latte stand used car dealers
Give examples of week force
- your power over the procedures and policies of your university
- patients using the only drug effective for their type of cancer
- Grain farmers in a surplus year
- professional football team
- internal revenue service
Q3: How Does Analysis of Industry
Structure Determine Competitive
Strategy?
• An organization responds to the structure of its industry by
choosing a competitive strategy
• According to Porter, effective companies are those whose
goals, objectives, culture and activities are consistent with
an organization’s strategy
• When organizations make strategic decisions that are
inconsistent with their goals, objectives, culture and
activities, the consequences can be disastrous
• Porter’s Four Competitive Strategies
Determine which of the 4 competitive strategies a decision is depending on if it’s focused on cost or differentiation and industry-wide or focused
- Lowest cost across the industry
- Lowest cost within an industry segment
- Better product/service across the industry
- Better product/service within an industry segment.
Q4: How Does Competitive Strategy
Determine Value Chain Structure?
. All next questions are under this question
Value =
The amount of money that a customer is willing to pay for a resource, product or service
Margin =
The difference between the value that an
activity generates and the cost of the activity.
Value Chain =
A network of value-creating activities.
What are the 5 primary activities of the value chain.
- Inbound Logistics
- Operations/Manufacturing
- Outbound Logistics
- Sales and Marketing
- Customer Service
Next 5 questions. Tell me what Primary activity is explained?
.
Collecting , storing, and physically distributing the products to buyers.
Outbound Logistics
Assisting customers’ use of the products and thus maintaining and enhancing the products’ value.
Customer Service
Receiving, storing, and disseminating inputs to the products
Inbound logistics
Inducing buyers to purchase the products and providing a means for them to do so
Sales and marketing
Transforming inputs into the final products
Operations/Manufacturing
• 4 Support activities that contribute indirectly to the
production, sale, and service of a product.
Procurement
technology
human resources
firm infrastructure
Next 4 questions. What support activity is explained?
.
research and development, developing new techniques, methods, and procedures.
Technology
general management, finance, accounting, legal, and government affairs
Firm infrastructure
recruiting, compensation, evaluation, and training
Human resources
finding vendors, setting up contractual arrangements, negotiating prices
Procurement
Linkages =
interactions across value activities
Q5: How Do Business Processes
Generate Value?`
• Business processes generate value by transforming
inputs into outputs
– The cost of a business process is the cost of the inputs
plus the cost of the activities
– Margin is the value of the outputs minus the cost
• A business process is a network of activities
• Each activity is a business function that receives
inputs and produces outputs
Q6: How Does Competitive Strategy
Determine Business Processes and the
Structure of Information Systems?
• Organizations analyze their industry, then choose a
competitive strategy
• Create business processes to span value-generating
activities to support given strategy
• Processes determine scope and requirements of the
information systems
See slide 29-31 for more details.
Q7: How Do Information Systems Provide
Competitive Advantages?
• Information systems create competitive advantages as
either part of a product or by providing support to a product.
– For example, a car rental agency might utilize an information
system that produces information about the car’s location and
provides driving instructions to destinations (part of product)
– Alternatively, an information system might be used to schedule
car maintenance (supports the product)
Principles of Competitive Advantage (Product vs.
Process) There are 3 product implementations and 5 process implementations. What are they?
Product 1. create a new product or service 2. enhance a product or service 3. differentiate products or services Process 4. Lock in customers and buyers 5. Lock in suppliers 6. Raise barriers to market entry 7. Establish alliances 8. Reduce costs
Two Roles for Information Systems
Regarding Products
Ex:
a. IS as part of a car rental product
b. IS that supports a car rental product
Competitive Advantage via Business
Processes 4 of them
• Lock in customers
– Create high switching costs
• Lock in suppliers
– Make it easy to connect to and work with your
organization
• Create entry barriers
• Make it difficult and expensive for new competition
• Create better business processes to establish
alliances
define business process
a network of activities that generate value by transforming inputs into outputs.
The cost of business process is
the cost of inputs plus the cost of the activities.
Each activity in a business process isa business function that
receives inputs and produces outputs
A repository is
a collection of something; a database is a repository of data and a raw material repository is an inventory of raw materials.
