GROUP 2 UNIT 3: COMPETING WITH IT Flashcards
information technology can change the way businesses compete.
Strategic IT
We should also view information systems ______ , that is, as vital competitive networks, as a means of organizational renewal, and as a necessary investment in technologies; such technologies help a company adopt strategies and business processes that enable it to reengineer or reinvent itself to survive and succeed in today’s dynamic business environment.
strategically
The strategic role of information systems involves using information technology to develop products, services, and capabilities that give a company major advantage over the competitive forces it faces in the global marketplace
Competitive Strategy Concepts
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 threat of substitutes 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
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
So _______ strategic information system 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 objectives.
strategic information system
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
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
Finally, 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
Above figure also illustrates that businesses can counter the threats of competitive forces that they face by implementing one or more of the five basic ________.
competitive strategies
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
Competitive strategies are not mutually exclusive. An organization may make use of one, some, or all of the strategies in varying degrees to manage the forces of competition.
Therefore, a given activity could fall into one or more of the categories of competitive strategy.
Alliance Strategies
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
If an organization offers its online package tracking system in a manner that allows its customers to access shipment information via not only a computer but a mobile phone as well, then such an action could fall into both the differentiation and innovation strategy categories
Alliance Strategies
Strategic Uses of Information Technology - The key strategies that can be implemented with information technology includes:
a. locking in customers or suppliers,
b. building switching costs,
c. raising barriers to entry, and
d. leveraging investment in information technology
Lock in customers or suppliers
These business relationships can become so valuable to customers or suppliers that they deter (discourage) them from abandoning a company for its competitors or intimidate (frighten) them into accepting less profitable business arrangements.
Lock in customers or suppliers
More recent projects characterize a move toward more innovative uses of information technology.
Lock in customers or suppliers
In other words, investments in information systems technology can make customers or suppliers dependent on the continued use of innovative, mutually beneficial inter-enterprise information systems
. Building switching costs
By making investments in information technology to improve its operations or promote innovation, a firm could also raise barriers to entry that would discourage or delay other companies from entering a market
Raising barriers to entry
Such actions tend to discourage firms already in the industry and deter external firms from entering the industry.
Raising barriers to entry
In many cases, this happens when a company invests in advanced computer based information systems to improve the efficiency of its own business processes. Then, armed with this strategic technology platform, the firm can leverage investment in IT by developing new products and services that would not be possible without a strong IT capability.
Companies that consistently offer the best value from the customer’s perspective are those that keep track of their customers’ individual preferences; keep up with market trends; supply products, services, and information anytime and anywhere; and provide customer services tailored to individual needs.
Leveraging investment in information technology
Thus, ______ have created a strategic opportunity for companies, large and small, to offer fast, responsive, high-quality products and services tailored to individual customer preferences
Internet technologies
In combination, CRM systems and Internet, intranet, and extranet Web sites create new ______ for interactive communications within a company, as well as communication with customers, suppliers, business partners, and others in the external environment.
channels
In the value chain conceptual framework, some _______ are primary processes; others are support processes.
business activities
Typically, customers use the Internet to ask questions, lodge complaints, evaluate products, request support, and make and track their purchases.
Building a customer-focused business
A _______helps its e-commerce customers help themselves while also helping them do their jobs. Finally, a successful business nurtures an online community of customers, employees, and business partners that builds great customer loyalty as it fosters (encourage the development of) cooperation to provide an outstanding customer experience.
customer-focused business
In contrast______ are those business activities that help support the day to-day operation of the business and that indirectly contribute to the products or services of the organization
support processes
So __________ should try to develop a variety of strategic uses of the Internet and other technologies for those basic processes that add the most value to a company’s products or services and thus to the overall business value of the company
managers and business professionals
____enable a company and its global business partners to use the Web to design products and processes jointly.
Extranets
Finally, ¬¬¬______ can dramatically improve procurement of resources by providing online marketplaces for a firm’s suppliers.
e-commerce Web portals
These include automated just-in-time _______ to support inbound logistic processes that involve inventory storage, computer-aided flexible manufacturing systems, as well as online point-of-sale and order processing systems to improve the outbound logistics processes that handle customer orders.
warehousing systems
Finally, a coordinated and integrated ______ can dramatically improve customer service
customer relationship management system
It shows how various types of information technologies might be applied to specific business processes to help a firm gain _____ in the marketplace.
competitive advantages
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
for example, implementing a system that allows customers to track their orders or shipments online could be considered a form of differentiation if the other competitors in the marketplace do not offer this service. If they do offer the service, however, online order tracking would not serve to differentiate one organization from another
Alliance Strategies
Not everything innovative will serve to differentiate one organization from another. Likewise, not everything that serves to differentiate organizations is necessarily viewed as innovative. These types of observations are true for any combination of the competitive strategies, thus making them complementary to each other rather than mutually exclusive.
Alliance Strategies
Early attempts to use information systems technology in these relationships focused on significantly improving the quality of service to customers and suppliers in a firm’s distribution, marketing, sales, and service activities.
Lock in customers or suppliers
Investments in information technology can allow a business to lock in customers and suppliers (and lock out competitors) by building valuable new relationships with them.
Lock in customers or suppliers
A major emphasis in strategic information systems has been to find ways to create switching costs in the relationships between a firm and its customers or suppliers
Building switching costs
They then become reluctant (unwilling or hesitant) to pay the costs in time, money, effort, and inconvenience that it would take to switch to a company’s competitors.
Building switching costs
Typically, these barriers increase the amount of investment or the complexity of the technology required to compete in an industry or a market segment.
Leveraging investment in information technology
Investing in information technology enables a firm to build strategic IT capabilities so that they can take advantage of opportunities when they arise
Leveraging investment in information technology
An important current example is the development of corporate intranets and extranets by many companies, which enables them to leverage their previous investments in Internet browsers, PCs, servers, and client/server networks
Leveraging investment in information technology
The _________ means to keep customers loyal, anticipate their future needs, respond to customer concerns, and provide top-quality customer service.
Customer focused-business
_______ can make customers the focal point of customer relationship management (CRM) and other e-business applications.
Internet technologies
Such communications enable continual interaction with customers by most business functions and encourage _______ with customers in product development, marketing, delivery, service, and technical support.
cross-functional collaboration
Using ____________, specialists in business functions throughout the enterprise can contribute to an effective response. This ability encourages the creation of cross-functional discussion groups and problem-solving teams dedicated to customer involvement, service, and supporT
the Internet and corporate intranets
The value chain concept, developed by ______
Michael Porter
_______ are those business activities that are directly related to the manufacture of products or the delivery of services to the customer
Primary processes
This framework can highlight where _____ can best be applied in a business.
competitive strategies
For example, the figure illustrates that ______ can increase the communications and collaboration required to improve administrative coordination and support services dramatically.
collaborative workflow intranets
The ____ in Figure above also identifies examples of strategic applications of information systems technology to primary business processes.
value chain model
An ______ intranet can help the human resources management function provide employees with easy, self-service access to their benefits information
employee benefits
_______ can also support marketing and sales processes by developing an interactive targeted marketing capability on the Internet and the Web
Information systems
Information systems
the value chain concept
GOODLUCK SA MIDTERMS EXAM!!
PAPASA TAYOO!
