Chapter 3 - Strategy

Question 1

How organizational strategy determines informations systems (flow chart)

Answer 1

Industry Structure -> Competitive Strategy -> Value Chains -> Business Processes -> Information Systems

Question 2

Porter’s Five Forces of Industry Structure

Answer 2

• Bargaining power of customers
• Threat of substitutions
• Bargaining power of suppliers
• Threat of new entrants
• Rivalry

Question 3

Porter’s Four Competitive Strategies

Answer 3

(industry-wide vs. focus & cost vs. differentiation)

• Lowest cost across the industry
• Better product/service across the industry
• Lowest cost within an industry segment
• Better product/service within an industry segment

Question 4

Value

Answer 4

The amount of money that a customer is willing to pay for a resource, product, or service.

Question 5

Margin

Answer 5

The difference between the value that an activity generates and the cost of the activity.

Question 6

Value Chain

Answer 6

A network of value-creating activities.Consists of five primary activities and four support activities.

Question 7

Five Primary Activities of the Value Chain

Answer 7

• Inbound Logistics
• Operations/Manufacturing
• Outbound Logistics
• Sale and Marketing
• Customer Service

Question 8

Support Activities

Answer 8

Contribute indirectly to the production, sale, and service of the product. Support activities include procurement, technology, human resources and firm infrastructure.

Question 9

Linkages

Answer 9

Interactions across value activities. i.e. to reduce inventory costs

Question 10

Business Process

Answer 10

A network of activities that generate value by transforming inputs into outputs. The cost of the business process is the cost of the inputs plus the cost of the activities. The margin of the business process is the value of the outputs minus the cost.

Question 11

Activity (in a Business Process)

Answer 11

A business function that receives inputs and produces outputs. An activity can be performed by a human, by a computer system, or by both. The inputs and outputs can be physical or they can be data.

Question 12

Repository

Answer 12

A collection of something. A database is a repository of data and a raw material repository is an inventory of raw materials.

Question 13

Principles of Competitive Advantage

Answer 13

Product Implementations

1. Create a new product or service
2. Enhance products or services
3. Differentiate products or services

Process Implementations

4. Lock in customers and buyers
5. Lock in suppliers
6. Raise barriers to market entry
7. Establish alliances
8. Reduce costs