Chapter 3 - Productivity, Innovation, Strategy Flashcards
labor productivity
ratio of gross domestic product (GDP) of a country, DIVIDED by the total PAID HOURS worked by people in that country
The Conference Board of Canada has suggested that labor productivity is the primary indicator of ____
our per capita income
increasing labor productivity is the best measure of ____
Canada’s future growth
(T/F) Canada has been doing well increasing labor productivity
false
labor productivity in Canada measures the value that Canadian workers generate per hour, currently it is ____
$50 per hour
US labor productivity is _____
Norways labor productivity is _____
$67/hour
$75/hour
the annual growth in Canada’s labor productivity between 1950 and 1975 was
4%
annual growth in Canada’s labor productivity between 1975 and 2000 was
1.6%
in 2008, Canada was ranked __ among its peer countries
14th
(T/F) Increasing productivity is about working harder and spending more
false - its about working smarter
what determines a country’s level of productivity in the future?
the ability to innovate and adapt to changing economic conditions
(T/F) most experts agree that to enhance productivity, Canada must foster a culture of INNOVATION, open its industries to more COMPETITION, and increase amount of machinery and equipment (particularly in ICT sector)
true
ICT stands for ______
and provides ______
Information and Communication Technology
Provides products and services that other industries rely on to get their work done
raising the economy’s ICT capital intensity means ___
increasing the amount of technology that supports people working
(T/F) Roach found no evidence of an increase in labor productivity associated with the massive increase in investment in information technology (IT)
true
(T/F) Roach said that “We see computers everywhere except in the productivity statistics”
false - Robert Solow said that
productivity paradox
the lack of evidence of an increase in worker productivity associated with the massive increase in investment in information technology
business value
tangible benefits for organizations through either more efficient use of resources or more effective delivery of their services to customers
what is the cause of observed lack of productivity increase from IT investments?
measurement error
- which may be due to increasingly service based economy
- which may be due to often-invisible or intangible benefits associated with IT
what are the 3 different ways in which the value of IT can be realized
- through productivity - IT allows a company to create more and/or better output from same inputs and create them faster than before the tech was in place
- through the structure of competition - IT can alter the way corporations compete; when one firm invests, another firm will also invest to keep up; IT enabled people to rent movies from home (netflix)
- through benefits to the end customer - IT makes processes more efficient and changes the nature of competition; with increased competition, the reduction of costs associated with new processes is often passed on to the final consumer (consumer rather than provider, often reaps benefits of higher investment in IT)
(T/F) successful organizations need to understand specifically what business value they are seeking and how IT can help secure that value
true
in order to understand what business value they are seeking and how IT can help secure that value, organizations need to ____
consistently and successfully require knowledge of both IT and business
innovation
relative advantage compatibility complexity trialability observability
why is the ICT industry sector considered an important industry for productivity and innovation?
because it includes thecnologies that can enhance individual and organizational productivity across many industries
what does “the invisible sector” mean
ICT sector is called that because it does not produce as much DIRECT output as other industries, instead, it indirectly supports activities in other industries with tools that make these other industries more productive
(T/F) Canadian policymakers look to the ICT industry as a secondary driver of innovation and increased productivity
false - ICT is a primary driver
(T/F) in the past, success in ICT was often directly related to a person’s level of technical skills whereas now, skills required are only business skills
false - businesses are increasingly looking for people who can drive technological innovation with their organization (combination of both technology and more traditional business skills)
CCICT stands for _____
and is what?
Canadian Coalition for Tomorrow’s ICT Skills
a nonprofit organization created to support the development of skills for the information and computing technology industry
who founded CCICT? and when?
Bell Canada in 2007
BTM stands for ____
and is what?
Business Technology Management
a category of skills focused on the ability to effectively innovate using information technology in organizations
a set of learning outcomes designed by a group of CCICT and drew on skills frameworks such as SFIA
SFIA stands for ____
and is what??
Skills Framework for the Information Age
a set of skills thought to be useful for those employees focused on developing and maintaining information technology
(T/F) CCICT has now merged with the ITAC
true
ITAC stands for ____
Information Technology Association of Canada
companies organize work through ____
business processes
productivity can be increased either through increased _____ or increased _____ business processes
efficient
effective
efficiency
a measure of productiveness also refers to accomplishing a business process either more QUICKLY with the same resources or as quickly with FEWER resources
(T/F) efficiency is relatively easy to measure once you have decided which measures are important
true
efficiency means _____
doing things right
= using the right amount of resources, facilities, and information to complete the job satisfactorily
effectivness
doing the right things
offering new or improved goods or services that the customer values and often requires companies to consider changing their business processes to deliver something new and improved
(T/F) doing things right and doing the right things are NEVER in conflict
false
business processes are related to the concept of value chain, what is a value chain
a network of value-creating activities; improve effectiveness or value of a good or service
explain how business processes and value chains are related
each step in the chain is a business process (adds value)
backward integration (upstream)
organizations that expand into activities related to the basic RAW material of a process - such as a tire company that decides to manufacture its own cubber
forward integration (downstream)
move closer to end customers - a mining company that begins to cut and finish its own diamonds rather than sell raw stones wholesale
the more value a company adds to a good or service in its value chain, the price the company can charge ____
increases
margin
the difference between the price the customer is willing to pay and the cost the company incurs moving the goods or services through the value chain
raw diamonds are sold at a much (lower/higher)? margin than finished diamonds
lower
how does margin affect profit
the greater the margin, the higher the profit
the concept of value chain was formalized by ____
Michael Porter at Harvard
Porter: two types of activities that support value chain
Primary activities - value is added directly to the product (e.g. shipping raw materials, designing tires, manufacturing tires, shipping, installing tires)
Support activities - support Primary activities (e.g. workers wages in factory, machine purchasing at factory, machine maintenance, firm infrastructure, human resources)
what are some primary activities
inbound logistics - receiving and storing inventory
operations - using inputs to create final product
outbound logistics - retrieving and distributing product to customers
marketing and sales - convincing customer and enabling purchase
service - supporting customer use
how does increasing efficiency and effectiveness of support systems increase profit margins
enabling development of more efficient or more effective support activities
(T/F) organizational strategy beings with an assessment of the fundamental characteristics and structure of an industry
true
what is one model used to assess an industry structure?
Porter’s Five Forces Model - the five competitive forces determine industry profitability
Porter’s Five Forces Model
bargaining power of customers threat of substitutions bargaining power of suppliers threat of new entrants rivalry among existing firms
the intensity of the five forces determines
how profitable the industry is
how sustainable that profitability will be
an organization responds to the five forces (or the structure) of an industry by choosing a _____
competitive strategy
competitive strategy
cost leadership across an industry
cost leadership within an industry segment
differentiation of a better product/service across industry
differentiation within an industry segment
(T/F) all information systems in the organization must facilitate and be aligned with the organizations competitive strategy
true
changes to industry structure often occur through
innovation
Bower and Christensen’s two general types of technological innovations
sustaining technologies
disruptive technologies
sustaining technologies
changes in technology that maintain the rate of improvement in customer value
disruptive technologies
a product that introduces a very new package of attributes from the accepted mainstream products
diffusion of innovation
the process by which an innovation is communicated through certain channels over time among the members of a social system
defined by Everett Rogers
how quickly the innovation catches on
Five stages through which diffusion of innovation occurs
knowledge - when you first hear
persuasion - when you become interested
decision - consider pros and cons
implementation - use and consider whether or not to
continue to use
confirmation - when you are happy with the innovation
competitive advantage via products and services
create new product or service
enhance existing products or services
differentiate products or services
competitive advantage via business processes
lock in customers and buyers - switching costs (expensive to switch)
barriers to entry (difficult or expensive for new participants)
establish alliances with other organizations to create standards, promote product awareness and needs, develop market size, reduce purchasing costs
reducing costs
Nicholas Carr “IT doesn’t matter”
suggested that the evolution of IT in business follows a pattern similar to earlier disruptive technologies
as disruptive technologies are being developed, they open opportunities for companies to gain strong competitive advantage but as availability of technologies increases and their cost decreases, these technologies become more like commodities -> technologies become invisible and no longer provide advantages
(T/F) long term competitive advantage lies with the technology and not in how a company and its people adopt the technology
false
sustained competitive advantage
development of people and procedures that are well supported by the underlying technology
requires companies to find a distinctive way to compete
developing increasingly sophisticated integration of IT and the people and procedures in the organization
