Professional Documents
Culture Documents
Agenda
Evolution of Strategic Management Strategic Information Management Why has IT/IS become more strategic in nature? Strategic IS/IT vs. Traditional IS/IT What is IS/IT strategy ? IS Strategy vs. IT Strategy
Agenda
Alignment of IS/IT with Business Strategic Alignment Model Case Study
Business Strategy
IT Strategy
Supply Oriented Technology Focussed
IS Strategy:
Mainly concerned with aligning IS development with business needs and with seeking strategic advantage from IT. It represents the demand side. Mainly concerned with the technology which is going to be used, the enabling mechanism. It represents the supply side
IT Strategy:
42% : business and IS strategy are NOT properly aligned 8% : no opinion/dont know 50%: OK!
Competitive Forces
New entrants
Threat of New entrants
Suppliers
Bargaining Power of Suppliers
Direct Competitors
Buyers/ Customers
Bargaining power of Competitors
Substitute Products
Suppliers
Direct Competitors
Buyers/ Customers
How can IS/IT build in switching costs for customers? How can IS/IT change balance of power w/ customers?
Business Implication
Additional Capacity Reduced Prices New basis for Competition Need for substantial resources
IS/IT Opportunities
Provide Entry Barriers by: Exploiting existing economies of Scale Differentiate products Building Loyalty/ high switching costs Control distribution channels Force Prices down Building Loyalty/ high switching costs Demand higher quality Lower Costs Higher Service levels Facilitate product selection/ customize Undercutting products & service Differentiate products
Key force
Business Implication
Reduced availability
IS/IT Opportunities
Use SCM to reduce cost of selling for supplier Forward Planning Backward Integration Apply EDI for cost reduction Building Loyalty/ high switching costs Lower Costs Facilitate product selection/ customize products & service to increase value to customer
Key force
Business Implication
IS/IT Opportunities
Intense Price competition Reduce costs improve price performance Competition Product development Use information to from rivals Distribution and
service critical differentiate Segment Markets and tailor to meet their requirements Get closer to end customer
Competitive Advantage
To gain competitive advantage over its rivals, a firm must either provide comparable value to the customer, but perform activities more efficiently than its competitors (lower cost), or perform activities in a unique way that creates greater buyer value and commands a premium price (differentiation). Enterprises, through their strategies, can influence the five forces and the industry structure, at least to some extent. There are three basic strategic stances that enterprises can adopt.
Differentiation Niche/Focus
Differentiation
Customer Database Market Intelligence System POS displays and kiosks Competition Analysis Telemarketing Call Centre Diffrential Pricing Dealer Support E-sales
Boston Matrix
High
WILD CAT
Market Growth
STAR
or PROBLEM CHILD
CASH COW
DOG
Low
Source: W&G, p. 68
Market Growth
Support customer focus: understand demand! Promote growth, variety, volume Business innovation satisfy/differentiate Business productivity Control customers and suppliers DEFEND Position!!!
Niche? or
Low High
Market Share
Forget it!
Low
Source: W&G, p. 71
Support Activities
Infrastructure - Legal, Accounting, Finance Human Resource Management Recruitment, Training Product and Technology Development R&D, IT, Process design etc. Procurement - Vendor evaluation, Subcontracting Inbound Outbound Sales and Operations Services Logistics Logistics Marketing
e u l a V d e A = t s o C n i g r a M
Value Activities
Primary Activities
Inbound Logistics - Receive, store and distribute inputs e.g. material handling, warehousing Operations - production activities to create the product such as machining, packaging, testing Outbound logistics - store and distribute to the market incl. order processing, vehicle scheduling
Value Activities
Primary Activities
Marketing and Sales - activities associated with providing a means by which buyers can purchase the product e.g. advertising , selling, merchandising, promotion Service - installation, repair, spare parts maintenance, training
Value Activities
Support Activities
Procurement - Purchasing inputs Technology Developments Human Resources Infrastructure
A Company gains Competitive advantage when they perform these activities at a lower cost than the competitors in a way that permits diffrentiation
By analysing the value chain of the company we can see whether either the physical or information processing component of IS/IT can transform the value chain to the organisations advantage The value activities are interdependent and connected by linkages. Linkages exist when the way in which one activity is performed affects the cost or effectiveness of other activities
Implications for IT
Can IS/IT contribute to performing an activity more quickly or more efficiently or perhaps at a cheaper cost than before ? Can IS/IT improve information flow through the primary activities Can IS/IT be used to affect how support activities assist primary activities
The value chain is a valuable way of identifying where better information and systems are needed, especially to show where integration through systems could provide potential advantage over competitors (or reduce current disadvantage)
Distributors
Agencies and distributors Business Unit
End Customers
Export distribution channels
Suppliers of components
Competitors
Suppliers
invoices
payment
POs
I/b
orders
Tech. queries
I/B
Customers
Distributors
SWOT Analysis
Strengths Weaknesses High Labour Productivity Limited Product range Industrial Peace lack of R& D Access to technology Lack of skills for new prod. Identification frustration at the lower levels financial Stability Opportunities Threats Diversification into new markets Competition from international players economic liberalization New technologies Change in government policies Labour unrest
SWOT Analysis
Based on the SWOT Analysis a company profile is developed SWOT analysis is expected to highlight the direction of desired changes SWOT Analysis provides the basis for the identification of Key Result Areas and Business Objectives
Diversification
By 2003 diversify into Services Business with a break even By 2004 create an infrastructure for backward integration
Overview
Purpose: to foster interpretation of objectives, tactics, operational activities in terms of key information needs and the strengths and weaknesses of existing systems Very powerful, versatile technique Widely used Can be used at different levels of analysis
industry level, organizational level, BU level, individual (see p.
187 W&G)
Objectives? CSFs ?
Step 3: Consolidate CSFs across objectives, prioritize according to ranking of associated IS Impor- objectives, (develop measures) tance? Step 4: Develop tactics Step 5: Consider importance of information or systems in achieving the CSFs considered
e.g. By performing a SWOT analysis of existing systems against the CSFs.