Week 09 Flashcards
Explain strategic analysis and the external and internal considerations
Collect and review information about internal processes and resources and external marketplace factors in order to inform strategy definition
External - competitive forces: Porter five forces and competitive strategies
Internal processes- value chain analysis and CSF analysis
What are Porter and Millars Five Forces?
Bargaining power of customers
Threat of substitutes
Threat of new entrants
Rivalry between existing competitors
Power of suppliers
What are porters five forces of competition?
- Rivalry of Competitors
- Threat of new entrants
- Threat of substitutes
- Customer bargaining power - limited number of suppliers limits customer choices
- Suppliers bargaining power - your competitor pays supplier in days not weeks for example
Give a number of competitive strategies
Cost Leadership
Focus or Niche
Alliance
Growth
Innovation
Differentiation
What actions does IT play a crucial role in?
– scheduling
– controlling
– optimising
– measuring
– co-ordinating
What are the different environmental threats a business faces?
Buy Side: Supplier threats
Sell Side: Customer threats
Competitive threats: New business models, new entrants, new digital products
Explain competitive strategies in particular innovation and differentiation
One strategy alone won’t usually fix the problem.
Generally need a combination.
- Innovation not necessarily differentiated
– Kindle v. iPad
– Android vs Windows smartphone - Differentiation not necessarily innovative
– Shipping more efficient but not different
– Telecom companies compete
Define low-cost leadership in terms of IT and give an example
Low-cost leadership
– Use cost saving operational IT to get the lowest
operational costs and prices.
- Walmart
– Inventory system sends orders to suppliers when
purchase recorded at cash register.
– Efficient customer response system.
Explain the importance of cost leadership strategy and Business analytics in the Warehouse/Shipping Industry
A business can use decision making IS to optimise systems for
lowest cost e.g. Business Analytics
Ex: DHL minimise costs and inventory at warehouses
Explain how Product Differentiation strategy can be actioned on using IT with an example
Use IS to enable new products and services, or
greatly change the customer convenience in
using your existing products and services.
E.g., Google’s continuous innovations
Use information systems to customise,
personalise products to fit specifications of
individual consumers.
Use IT to offer distinct products
Explain how focus on market niche strategy can be actioned on with IT with an example
Use IS to enable specific market focus, and serve
narrow market better than competitors.
– Analyses customer buying habits, preferences
(Business analytics)
ex: CRM Hilton Hotel’s OnQ System, Tesco clubcard
– Analyses data collected on guests to determine
preferences and guest’s profitability
How to align IT with the business Objectives
– Identify business goals and strategies.
– Break strategic goals into concrete activities and processes.
– Determine metrics for measuring progress.
– Identify how IT can help achieve business goals.
– Measure actual performance
How does the internet effect business’s competitive advantage
Existing competitors: widens market, increasing
competitors and price pressure
- New entrants: reduces barriers to entry
- Substitute products and services: facilitates
creation of new products and services - Customers’ bargaining power: bargaining power
shifts to customer - Suppliers
– Internet procurement
– reduced barriers to entry and elimination of
intermediaries
Name some other IT strategies to remain comeptitive
Use inter-enterprise systems to increase
switching costs to lock in customers or suppliers ex: Apple customers keep buying mac
* Make investments in ICT that build barriers to
entry against competitors.
* Use ICT in products and services to make the
substitution more difficult
* Investment in IS people, hardware, software, databases and networks from operational uses in strategic applications.
* Introduce enhanced business models using ICT.
Explain the value chain of activities in a business
In a business there are primary processes (directly add value) and support processes(indirectly add value)
Give example of primary business processes
Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, Customer Service
Examples of IT support
Human Resources
– Staff scheduling system
* Procurement
– E-markets and e-procurement
* Inbound & outbound logistics
– Supply chain management
– Supplier Extranet
* Sales and marketing
– Marketing analytics
– Customer relationship management
Explain the value web?
Collection of independent firms that use
information technology to coordinate their value
chains to produce a product collectively.
– Value webs are flexible and adapt to changes in
supply and demand.
Give an example of a company that uses links from customers to suppliers making experience convenient
Strong linkages to customers and suppliers
increase switching costs and loyalty by making customer experience more convenient.
Amazon: keeps track of user preferences for
purchases, and recommends titles purchased by others
What is the insurance value chain
Market using customer segmentation and big data
Sales - CRM and web sales
Underwriting - IOT and AI and bLOCKCHAIN
Claim management - Fraud detection
Risk Management - AI and data
Explain critical success factors? Give an example
Indicators of the performance of an
organisation and its processes.
How the business excels and outperforms competition
Explain networks based strategies of IS strategies
Take advantage of firms’ abilities to network with
one another
* Include use of:
– Network economics
– Virtual company model
– Business ecosystems
Explain the importance and purpose of operational systems
They have a cost saving objective in a business. A certain performance level is required and organisations rely on these IS’s. Competitive advantage if better than competitors
Operational failures pose a huge risk
Crowdstrike outage 2024
19 July 2024, cybersecurity company
CrowdStrike rolled out an update to Microsoft
Windows hosts around the world.
– faulty configuration file crashed the machines
– so machine could not receive corrected update
- 8.5 million Windows devices affected
– Multiple airlines: American Airlines, United Airlines,
Delta Airlines, Ryanair..
– Multiple banks
– Belfast airport
– Harvard university
Explain Management Support Systems
Focus on better decision making to better
organise business
- The re-organisation makes it more efficient
– Better information provision - Risk of bad information leading to bad decisions
Explain what Hardware risks exist
– Faults - bad equipment
– Inadequate capacity
– Natural events
– External attack
– Personnel failure
Explain what Software risks exist
– Inadequate business model
– Bad design
– Bad programming
– External Attack
– Personnel failure
Explain IT outsourcing and why people do it
IT outsourcing is the process of delegating a
company’s IT function to third parties or external agencies;
Outsourcing enables companies to realise the
benefits of reengineering by tapping into and leveraging IT strategic expertise not available internally.
Explain offshoring
Outsourcing internationally is offshoring - can be done in ICT business
What are the benefits of offshoring?
Lower operational and labour costs;
- Continue focusing on core business
processes
-You specialise in your business
-someone else specialises in ICT - Free up internal resources for other
purposes - Gain access to resources not available
internally
What are the risks of offshoring?
- No control over product or service quality,
which can affect customer satisfaction; - The outsourcing transition phase may fail if schedules and budgets are not achieved due to
insufficient planning - Political, socio-economic, or other factors may amplify outsourcing risks
- Privacy and data protection regulations may not be as strict in some areas
- Language barriers
- Cultural differences in work practices etc. make
collaboration difficult.
What are the types of outsourcing in IT?
Infrastructure
Software
Data
