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Chapter 2 Competing With Information Technology

This chapter discusses how companies can use information technology to gain competitive advantages. It identifies five main competitive strategies: cost leadership, differentiation, innovation, growth, and alliance. It then explains how companies can implement these strategies by becoming customer-focused, reengineering business processes, creating virtual companies, and managing knowledge through information systems. The key ways IT contributes include enabling cross-functional processes, linking partners, and sharing expertise.

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Esra' A-Shbli
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70 views25 pages

Chapter 2 Competing With Information Technology

This chapter discusses how companies can use information technology to gain competitive advantages. It identifies five main competitive strategies: cost leadership, differentiation, innovation, growth, and alliance. It then explains how companies can implement these strategies by becoming customer-focused, reengineering business processes, creating virtual companies, and managing knowledge through information systems. The key ways IT contributes include enabling cross-functional processes, linking partners, and sharing expertise.

Uploaded by

Esra' A-Shbli
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 25

Chapter 2 Competing with

Information Technology

.
Learning Objectives
 Identify several basic competitive strategies
and explain how they use information
technologies.
 Identify several strategic uses of Internet
technologies.
 Identify the business value of using Internet
technologies
 Explain how knowledge management systems
can help a business gain strategic advantages.

Caapter 2 Competing with Information Technology 2


Strategic IT
 Technology is no longer an afterthought in
business strategy, but the cause and driver
 IT can change the way businesses compete
 A strategic information system is any
information system that uses IT to help an
organization…
 Gain a competitive advantage
 Reduce a competitive disadvantage
 Or meet other strategic enterprise objectives

Chapter 2 Competing with Information Technology 3


Competitive Forces
 To succeed, a business must develop strategies
to counter these forces…
 Rivalry of competitors within its industry
 New entrants into an industry and its markets
 Substitute products that may capture market
share
 Bargaining power of customers
 Bargaining power of suppliers

Chapter 2 Competing with Information Technology 4


Competitive Forces and Strategies

Chapter 2 Competing with Information Technology 5


Five Competitive Strategies
 Cost Leadership
 Become low-cost producers
 Help suppliers or customers reduce costs
 Increase cost to competitors
 Example: Priceline uses online seller bidding

so the buyer sets the price


 Differentiation Strategy
 Differentiate a firm’s products from its
competitors’
 Focus on a particular segment or niche of
market
 Example: Moen uses online customer design

Chapter 2 Competing with Information Technology 6


Competitive Strategies (cont’d)
 Innovation Strategy
 Unique products, services, or markets
 Radical changes to business processes
 Example: Amazon’s online, full-service

customer systems
 Growth Strategy
 Expand company’s capacity to produce
 Expand into global markets
 Diversify into new products or services
 Example: Wal-Mart’s merchandise ordering

via global satellite tracking


Chapter 2 Competing with Information Technology 7
Competitive Strategies (cont’d)
 Alliance Strategy
 Establish linkages and alliances with
customers, suppliers, competitors,
consultants, and other companies
 Includes mergers, acquisitions, joint ventures,
virtual companies
 Example: Wal-Mart uses automatic
inventory replenishment by supplier

Chapter 2 Competing with Information Technology 8


Using Competitive Strategies
 These strategies are not mutually exclusive
 Organizations use one, some, or all
 A given activity could fall into one or more
categories of competitive strategy
 Not everything innovative serves to differentiate
one organization from another
 Likewise, not everything that differentiates
organizations is necessarily innovative

Chapter 2 Competing with Information Technology 9


Ways to Implement Basic Strategies

Chapter 2 Competing with Information Technology 10


Customer-Focused Business
 What is the business value in being customer-
focused?
 Keep customers loyal trusty

 Anticipate their future needs


do in advance

 Respond to customer concerns


 Provide top-quality customer service
 Focus on customer value
 Quality, not price, has become the primary
determinant of value
 Consistently reliable

Chapter 2 Competing with Information Technology 11


Providing Customer Value
 Companies that consistently offer the best value
from the customer’s perspective…
 Track individual preferences
 Keep up with market trends
 Supply products, services, and information
anytime, anywhere
 Tailor customer services to the individual
modify

 Use Customer Relationship Management


(CRM) systems to focus on the customer

Chapter 2 Competing with Information Technology 12


Building Customer Value via the
Internet

Chapter 2 Competing with Information Technology 13


Strategic Uses of IT
 A company that emphasizes strategic highlights

business use of IT would use it to gain a


competitive differentiation
 Products
 Services
 Capabilities

Chapter 2 Competing with Information Technology 14


Reengineering Business Processes
 Called BRP or simply Reengineering
 Fundamental rethinking and radical redesign
of business processes
 Seeks to achieve improvements in cost,
look for

quality, speed, and service


 Potential payback is high, but so is risk of
disruption and failure
disturbance

 Organizational redesign approaches are an


important enabler of reengineering
 Includes use of IT, process teams, case
managers
Chapter 2 Competing with Information Technology 15
The Role of IT
 IT plays a major role in reengineering most
business processes
 Can substantially increase process largely

efficiencies
 Improves communication
 Facilitates collaboration

Chapter 2 Competing with Information Technology 16


A Cross-Functional Process
 Many processes are reengineered with…
 Enterprise resource planning software
 Web-enabled electronic business and
commerce systems

Chapter 2 Competing with Information Technology 17


Reengineering Order Management
 IT that supports this process…
 CRM systems using intranets and
(customer relationship management)

the Internet
 Supplier-managed inventory systems using the
Internet and extranets
 Cross-functional ERP software to
(enter price resource planning)

integrate manufacturing, distribution, finance, and


human resource processes
 Customer-accessible e-commerce websites for
order entry, status checking, payment, and service
 Customer, product, and order status databases
accessed via intranets and extranets
18
Creating a Virtual Company
 A virtual company uses IT to link…
 People
 Organizations
 Assets effect

 Ideas
 Inter-enterprise information systems link…
 Customers
 Suppliers
 Subcontractors
 Competitors

Chapter 2 Competing with Information Technology 19


A Virtual Company

Chapter 2 Competing with Information Technology 20


Virtual Company Strategies
 Basic business strategies
 Share information and risk with alliance union

partners
 Link complimentary core competencies
 Reduce concept-to-cash time through sharing
 Increase facilities and market coverage
 Gain access to new markets and share market
or customer loyalty
 Migrate from selling products to selling solutions

Chapter 2 Competing with Information Technology 21


Two Kinds of Knowledge
 Explicit Knowledge
clear

 Data, documents, and things written down or


stored in computers
 Tacit Knowledge
 The “how-to” knowledge in workers’ minds
 Represents some of the most important
information within an organization
 A knowledge-creating company makes

such tacit knowledge available to others

Chapter 2 Competing with Information Technology 22


Knowledge Management
 Successful knowledge management
 Creates techniques, technologies, systems,
and rewards for getting employees to share
what they know
 Makes better use of accumulated workplace
and enterprise knowledge

Chapter 2 Competing with Information Technology 23


Knowledge Management
Techniques

Chapter 2 Competing with Information Technology 24


Knowledge Management Systems
 Knowledge management systems (KMS)
 A major strategic use of IT
 Manages organizational learning and know-how
 Helps knowledge workers create, organize, and
make available important knowledge
 Makes this knowledge available wherever and
whenever it is needed
 Knowledge includes
 Processes, procedures, patents , official documents

reference works, formulas, best practices,


forecasts, and fixes
Chapter 2 Competing with Information Technology 25

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