Strategy and Information Systems

Chapter 3

3-2

“We Can't Be Everything to Everybody.”

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

• Known for providing security monitoring.

• Current focus on security contracts.

• Mateo wants to focus on law enforcement agencies, search &

rescue, federal government.

• Good money in agricultural surveying, industrial inspection, real

estate videos, and wedding videos. too.

3-3

Study Questions

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

Q1: How does organizational strategy determine information systems structure?

Q2: What five forces determine industry structure?

Q3: How does analysis of industry structure determine competitive strategy?

Q4: How does competitive strategy determine value chain structure?

Q5: How do business processes generate value?

Q6: How does competitive strategy determine business processes and the

structure of information systems?

Q7: How do information systems provide competitive advantages?

Q8: 2026?

3-4

Q1: How Does Organizational Strategy Determine

Information Systems Structure?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

Strategy Determines Information Systems

3-5

Q2: What Five Forces Determine Industry

Structure?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

Competitive Forces

• Competition from vendors who manufacture substitutes.

• Competition from new competitors.

• Competition from existing rivals.

Bargaining Power Forces

• Bargaining power of suppliers.

• Bargaining power of customers.

3-6

Use 5-forces Model to Identify Sources of

Strong Competition

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

3-7

Assessing

the Five

Forces at

Falcon

Security

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

3-8

Q3: How Does Analysis of Industry Structure

Determine Competitive Strategy?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

Porter's Four

Generic

Competitive

Strategies

3-9

Yikes! Bikes!

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

• Yikes! Bikes, a manufacturer of high-end mountain bicycles.

• You are operations manager.

• New owners plan to pursue lowest-cost vendor strategy by importing low-

cost, low quality bikes.

• New owners are not being honest with employees about cutting jobs.

• Say you might be promoted to new general manager. Should you trust

them?

Q: Are the owner’s actions illegal? Unethical?

3-10

Q4: How Does Competitive Strategy Determine

Value Chain Structure?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

Linkages

3-11

Task Descriptions for Primary Activities of the

Value Chain

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

3-12

Q5: How Do Business Processes Generate Value?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

Three

Examples

of

Business

Processes

3-13

Improved Material Ordering Process Using

Integrated Databases

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

Two

Integrated

Databases

3-14

Q6:How Does Competitive Strategy Determine Business

Processes and the Structure of Information Systems?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

Low-Cost Rental Operations Value Chain

3-15

High-Service Rental Value Chain

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

High-Cost Rental Operations Value Chain

3-16

Business Process and Information Systems for

High-Service Bike Rental

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

3-17

So What? Driving Strategy

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

• Identify some implications of driverless vehicles.

• What vulnerabilities could be exploited by equipping one of

these vehicles with Internet access?

• What are some logistical issues that could arise from a delivery

vehicle without a human operator?

3-18

So What? Driving Strategy

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

4. What other complex tasks exist might prove feasible for

automation?

5. How might the proliferation of driverless cars affect the

automotive insurance industry?

6. Do you think a driverless vehicle is something everyone would

want, even if sold at affordable price?

3-19

Q7: How Do Information Systems Provide

Competitive Advantages?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

Principles of

Competitive

Advantage

3-20

How Does an Actual Company Use IS to Create

Competitive Advantages?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

• Enhances existing products.

• Differentiates products.

• Locks in customers.

• Raises barriers to market entry.

• Increases profit margins by decreasing costs and decreasing

errors.

3-21

How Does an Actual Company Use IS to Create

Competitive Advantages? (cont'd)

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

• Maintains customer account data– IS collects information for ABC (adds value).

– IS saves customers time by automatically filling in part of form (adds value for customer).

• Package & information delivery system– IS helps customer to select delivery address and generate shipping

labels.

– What value does shipper get?

3-22

Two Roles for Information Systems Regarding

Products

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

3-23

Web Page to Select a Contact from the

Customer’s Records

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

3-24

ABC Web Page to Select a Contact from

Customer’s Records

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

3-25

Web Page to Specify Email Notification

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

3-26

Web Page to Print Shipping Label

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

3-27

Q8: 2026?

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

• Pace of change and integration of new technology fast and

increasing.

• Augmented reality devices, like Google Glass and Microsoft's

HoloLens, will change competitive landscape.

• New businesses based on advances in self-driving cars,

drones, 3D printing.

• New products constructed in someone’s garage.

• Take advantage of opportunities new products create.

3-28

Security Guide: Hacking Smart Things

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

• Internet of Things (IoT)

‒ Internet-enabled devices.

‒ Outfitting every object with Internet access hazardous, even

dangerous, proposition.

• Unintended risks associated with incorporating this capability

into things.

3-29

Internet of Threats

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

• What about securing data stored on Internet-enabled smart

devices?

– How to protect 10, 20, or 30 different Internet-enabled

devices in your home?

– Could hacker hijack webcam in your living room or, actually

hijack your car?

– What businesses and government agencies could benefit?

3-30

Internet of Threats (cont’d)

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

• What some benefits or risks for businesses adopting new

Internet-enabled devices?

• How about supply chain, customer service. What else?

3-31

Guide: Your Personal Competitive Advantage

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

• Who will be your competitors when you seek a job after

graduating from college?

• What will be your competitive advantage in the job market?

• What can you do before you graduate to develop a competitive

advantage?

• Your knowledge of IS, might facilitate cost savings that more

than compensate for your salary.

3-32

Guide: Your Personal Competitive Advantage

(cont'd)

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

How do these elements of competitive advantage apply to

you personally?

• Switching costs?

• Differentiating products?

• Creating barriers?

• Establishing alliances?

• Reducing costs, increasing revenues?

3-33

Active Review

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

Q1: How does organizational strategy determine information systems structure?

Q2: What five forces determine industry structure?

Q3: How does analysis of industry structure determine competitive strategy?

Q4: How does competitive strategy determine value chain structure?

Q5: How do business processes generate value?

Q6: How does competitive strategy determine business processes and the

structure of information systems?

Q7: How do information systems provide competitive advantages?

Q8: 2026?

3-34

Case Study 3: The Amazon of Innovation

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

3-35

Case Study 1: The Amazon of Innovation (cont'd)

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

Amazon’s business lines three categories:

1. Online retailing

– Own inventory

– Associates program

– Consignment

2. Order fulfillment

3. Cloud services

Copyr igh t © 2015 Pearson Educa t ion , I nc .

3-36

Fulfillment Fees for Regular-sized Goods for a

Company Like Falcon Security

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .

C o p y r i g h t © 2 0 1 7 P e a r s o n E d u c a t i o n , I n c .