Chapter 3. Strategic Information Systems for Competitive Advantage. Learning Objectives. Describe strategic information systems (SIS) and explain their advantages. Describe Porter’s competitive forces model & how IT helps companies improve their competitive positions.
Strategic Information Systems for Competitive Advantage
(1) Withdrawal from the leisure travel business
(2) Implementation of web-based travel technology, such as:
DACODA A Globalization Network
Electronic Messaging Services Customer-Res
E-Ticket Tracking Solution IntelliCenters
1. Long Range Planning
2. Response Management
3. Proactive Innovation
- Information Technologies
IT is a competitive weapon
IT supports strategic change, e.g, re-engineering
IT networks with business partners
IT provides cost reduction
IT provides competitive business intelligenceThe Role of IT
Many companies monitor the activities of competitors
The Internetis central to supporting competitive
Search for a competitive advantage in an industry, which leads to control of the market.
Look for a competitive necessity, which will help your company keep up with the competitors.
Sustainable Strategic Advantage
Maintain profitable & sustainable position against the forces that determine industry competition.
Providing products and/or services at the lowest cost in the industry.
Being unique in the industry
Selecting a niche market and achieving
cost leadership and/or differentation.
Developing new products & services
Step 1:The players in each force are listed.
Step 2: An analysis is made which relates Porter’s determining factors.
Step 3: A strategy is devised to defend against these factors.
Step 4: Support information technologies are employed.
PRIMARY ACTIVITIES companies
In bound logistics (in puts)
Operations (manufacturing & testing)
Outbound logistics (storage & distribution)
Marketing & sales
ServicePorter’s Value Chain Model
SUPPORT ACTIVITIES companies
Human Resources Management
ProcurementPorter’s Value Chain Model
A firm’s value chain is part of a larger stream of activities, which Porter calls a “Value System”.
Includes the suppliers that provide the necessary inputs AND their value chains.
Applies to both products & services, for any organization, PUBLIC or PRIVATE.
Is the basis for the Supply Chain Management.VALUE SYSTEM
Integrates marketing, sales, manufacturing, logistics, finance.
Provides managers with information about suppliers, customers & competitors.
Enables employees to access valuable information.
Frito Lay’s use of IT allows for an optimal functioning of the value chain.CASE: Frito Lay uses IT & the Value Chain
( Systems1)Establish Customer Requirements
(2) Specify Customer Requirements
(3) Select a source, match customer with a supplier
(4) Place an order
(5) Authorize and pay for goods & services
(6) Acquire goods or services
(7) Test & accept goods or servicesStages in Customer Resources Life Cycle (1-7)
(8) SystemsIntegrate into and manage inventory
(9) Monitor use and behavior
(10) Upgrade if needed
(11) Provide maintenance
(12) Transfer or dispose of product or service
(13) Accounting for purchasesStages in Customer Resources Life Cycle (8-13)
Centralized call center, self diagnosing elevators’ malfunctions and maintenance analysis
Terminals in customers’ hospitals
Cash management accounts system
Computerized reservation system (SABRE)
Tracks electrical generators, saving $5 million/ yr.
Reduced customer complaints by 50%
Reduced black out time from 70 to 48 min.
The investment involved inimplementing Strategic Information Systems (SIS) is high.
Planning for an SIS is a majorconcern of organizations.
As companies become larger and more sophisticated, they develop resources to duplicate the systems of their competitors quickly.
Gaining competitive advantage through the use of IT may involve unethical or even illegal actions.
Companies can use IT to monitor the activities of other companies and may invade the privacy of individuals working there.