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Information Systems for Strategic Advantage. BUS 782. Strategic Information System. Information systems that provide a firm with competitive products and services which give it a strategic advantage over its competitors in the marketplace.

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Strategic Information System

  • Information systems that provide a firm with competitive products and services which give it a strategic advantage over its competitors in the marketplace.

    • Information systems that promote business innovation, improve operational efficiency.

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Strategic Advantage and Strategic Necessity

  • Strategic advantage refers to obtaining a sustainable competitive edge over competitors. The ability to obtain a greater than normal return on investment.

  • A strategic necessity is a system that must be installed to remain competitive and stay in business.

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Auction sites

  • Yahoo, Ebay

  • Necessity:

    • Ability to search and view items, view seller info and bid history, place a bid, online payment.

  • Advantage:

    • Ebay

      • Ebay store

      • PayPal

      • Micropayments

      • SkyPe:

        • Special SkyPe services for eBay sellers and buyers

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  • Amazon Associates:

    •'s affiliate marketing program. By linking to Amazon products and services you can add compelling content for your site visitors enjoyment and receive up to 8.5% in referral fees for doing so.

    • aStore

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Being the First

  • Internet Search Engines:

    • Yahoo, Google

    • Teoma

    • Mooter

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New Way of Doing Business

  • Dell:

    • Customization

  • America West website --

    • Select your seats

    • Web check-In (Travel Tools and Services)

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Comparing Websites

  • Travel:Yahoo vs Expedia

    • Hotels

    • Cars

    • Vacations

    • Cruises

  • Real Estate:Century 21 vs ReMax

    • Buy: neighborhood, school

    • Sell

    • Finance

    • Learn

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Competitive forces model by Michael Porter

Threat of

New Entrants

Bargaining Power

of Suppliers

Rivalry among

Existing Competitors

Bargaining Power

of Customers

Threat of Substitute


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Competitive Strategies

  • Cost leadership strategy:

    • Become a low cost producer of products and services

    • Find ways to help suppliers or customers reduce their costs

  • Product differentiation strategy.

  • Innovation strategy: Finding new way of doing business, enter new market.

  • Alliance strategy: Establish alliances with customer, suppliers, competitors, other company.

  • Growth strategy: expanding, diversifying, integrating.

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Strategic Roles for Information Systems

  • Improving business operations

  • Promoting business innovation

  • Locking in customers and suppliers

    • Interorganizational IS, EDI, automatic inventory replenishment system

  • Creating switching costs

    • make customers dependent on the continued use of innovative IS.

  • Raising barriers to entry

    • discourage competitors from entering a market

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The Value Chain and Strategic IS

  • It views a firm as a series, or chain, or network of basic activities that add value to its products and services, and thus add a margin of value to the firm.

    • Margin is the value of the firm’s products and services less their costs, as perceived by the firm’s customers.

  • Support activities:

    • Administration, human resource management ,etc.

  • Primary activities:

    • Inbound logistics, operations, outbound logistics, marketing, etc.

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Administrative Coordination & Support Services

Human Resource Management


Technology Development

Procurement of Resources












The Value Chain

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Becoming an Agile Competitor

  • Agility in competitive performance is the ability of a business to prosper in rapidly changing, continually fragmenting global markets for high-quality, high-performance, customer-configured products and services. An agile company can:

    • 1. Make a profit in markets with broad product ranges and short model lifetimes

    • 2. Process orders in arbitrary lot sizes

    • 3. Offer individualized products while maintaining high volumes of production.

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IT and Agility

  • Agile companies depend heavily on information technology to:

    • 1. Enriched its customers with customized solutions to their needs.

      • Mass customization

    • 2. Cooperate with other businesses to bring products to market as rapidly and cost-efficient as possible.

    • B2B E-Commerce

      • Electronic Exchange: An electronic forum where manufacturers, suppliers, and competitors buy and sell goods.

      • Example: WorldWide Retail Exchange (WWRE)

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IT Doesn’t Matter – Nicholas Carr

  • The basis for a sustainable competitive advantage is not ubiquity but scarcity.

  • The core functions of IT have become available to all.

  • Computer programs today are industry specific, most “right out of box””. That is they are commodities.

  • Costs of doing business – paid by all but provide distinction to none.

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Carr’s Rules for Firms

  • Spend less

  • Follow, don’t lead

  • Focus on the risks of IT, not the opportunities:

    • Webvan - wiki

    • Peapod