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Strategic Uses of Information System

Learning Objectives:

Discuss the different business strategy and

strategic moves.

Discuss the advantages of Information System to

business.

Enumerate the diff. ways to achieve a competitive

advantage.

Discuss bleeding edge.

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Strategy and Strategic Moves

Strategy

Is a plan to gain an advantage over the enemy.

In business, a strategy is a plan designed to

help an organization surpass its competitors.

As anyone in business can tell you, it is easier

to identify a problem than to create an

opportunity.

(imagination, creativity, vision)

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* Strategic planning

- Developing new product, identifying

unmet consumer need, changing a service

to attract or retain existing clients.

- A company achieves strategic advantage

by using strategy to maximize its

strengths, resulting in a competitive

advantage.

* A strategic move is not always acompetitive move.

*Web

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Achieving a competitive advantage

1. Reduce Costs One way to increase market is to lower prices.

* Automation of any business process

* Customer service

*Web (FAQs)

Online service gives business 2 major benefits:

- Changes service from being labor intensive to

technologyintensive.

- Customers easy access to a service 24/7.

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2. Raise Barriers to market entrantsAn organization might gain advantage by making

it difficult or impossible for other

organizations to produce the product or service

it provides.

* Legal protection (intellectual property)

* Copyright (Microsoft)

* High expense of entering the market.

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3. Establishing High Switching CostsSwitching cost are expenses gain when a customer

stops buying a product or service from one

business and starts buying it from another.

* Explicit switching cost (deal)

* Implicit switching ( cost in time and moneyspent in adjusting to a new product)

* Printer

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4. Create new products or services

Creating a new and unique product or services

that many organizations and individuals need

gives a great competitive advantage.

* Lotus corporation (lotus 1-2-3 Electronic

spreadsheet)

* Ebay (First mover)

- acquired a large no. sellers and bidders

- experience

- superior brand name

- critical mass

Netscape (IE)

* Infoseek (Google)

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5. Differentiate products or services

Persuade consumers that its product or service

is better than competitors (product

differentiation).

*

Brand name success*IBMs

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6. Enhance Products or Services

Enhancing existing products or services.

*Web

* Add and enhance their online services.

7. Establish Alliances

Companies can gain competitive advantage by

combining services to make them more attractive

than purchasing services separately.

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This alliance gives customers benefits:

1. Combined services is cheaper.

2. One stop shop.

- Strategic alliances combine services to create

synergies.

*travel industry

* Alliance between FedEx and HP

*Web links (Affiliate program)

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8. Lock in suppliers or buyers

Organizations can achieve competitive advantage

if they are powerful enough to lock in either

suppliers to their mode of operations or buyers

to their product.

* Leverage to influence buyers and suppliers

* Few competitors or the firm is a major

competitor in its industry (Suppliers).

* Create an impression that an org. product is

better than their competitors or customer fear

high switching cost (buyers).

Ex.

Enterprise applications.

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Another way to lock in clients is to create a

standard.

Ex.

Microsoft web browser

Adobes PDF

Macromedia Inc. (Flash)

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Creating and Maintaining Strategic IS

Strategic IS

- Is any information system that can help an

organization achieve a long term competitive

advantage.

Can be created:- From scratch

- modifying existing system

Strategic IS combine 2 types of ideas:

1. Ideas for making potentially winning business

decision

2. Ideas for harnessing IT to implement the

decisions.

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For an IS to be an SIS 2 conditions must be

met:

1. IS must serve an org. goal rather than simply

provide information.

2. The org. IS unit must work with managers of other

functional units to pursue the organizations goal.

The Bleeding Edge

- When failure occurs because an organization tries to

be on the technological leading edge, it is referred

to as the bleeding edge.

Adopting new technologies involves great risk:- There is no experience from which to learn

- No guarantees that the technology will work well.

- No certainty that customers and employees will

welcome it.

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End of the Topic!