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Chapter 2 Strategic Use of Information Resources v2 (2) (Compatibility Mode)
Chapter 2 Strategic Use of Information Resources v2 (2) (Compatibility Mode)
Introduction
In 1994 Dell stopped selling PCs through retail stores It moved to using an integrated IT platform that allows customers to specify and order a PC Strategic use of f IS produced d d Cost savings from f reduced d d inventories resulting in lower prices Business environment changed from Make to Stock (MTS) to Assembly to order (ATO) This innovation was a competitive advantage for Dell, which used its information resources to achieve high volumes without the high costs of the industrys traditional distribution channels
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SIS- era
Improve operational efficiency [DP era] Improve management information provisioning [MIS era] Improve competitiveness [SIS era]
[NETWORK era]
1970s
Effectiveness
1980s
Effectiveness
1990s
Strategic Transform industry/orga nization
2000
Value creation/str ategic Create collaborative partnerships hi Adding Value
Solve problems and create opportunities Increasing productivity and decision making
Justify IT expenditure
Dominant technology
Mainframebased
Minicomputerbased
Strategic advantage must be crafted by combining all of the firms resources including: production resources, human resources, and information resources
Strategic advantage must be crafted by combining all of the firms resources including: production resources, human resources, and information resources Information resources include not only data, but also technology, people, and processes
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Internet
TFA
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Eliminate physical inspection by buyers: Pictorial displays and ratings by trusted onsite sources combined with the Buyer-At-a-Distance Auction (BADA) system allows buyers to remotely bid on lots eliminate expensive link in the value chain
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IS infrastructure Information and knowledge P Proprietary i t t technology h l Technical skills of the IT staff End users of the IS Relationship between IT and business managers Business processes
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A manager might consider the following to understand the type of advantage the information resource might create:
What makes the information resource valuable? Who appropriates the value created by the information resource? Is the information resource equally distributed across firms? Is the information resource highly mobile? How quickly does the information resource depreciate?
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Using multiple approaches to evaluating the strategic landscape is helpful in determining g strategic g opportunities. pp
Using multiple approaches to evaluating the strategic landscape is helpful in determining g strategic g opportunities. pp Here, we look at three such approaches: Porters five forces model of the competitive advantage of firms Porters value chain model of internal organizational operations
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http://www.investopedia.com/features/industryhandbook/porter.asp
http://www.tutor2u.net/business/strategy/porter_five_forces.htm
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Porters Value Chain Model looks at increasing competitive advantage by reorganizing g g the activities related to create, , support and deliver a firms product or service.
Porters Value Chain Model looks at increasing competitive advantage by reorganizing the activities related to create, support and deliver a firms product or service service. These activities can be divided into two broad categories (See Figure 2.6): Primary activities that relate directly to how value is created for a product or service. Support activities that make the primary activities possible and that manage the coordinate of different activities.
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The Value Chain model suggest that competition can come from two sources: Lowering the cost to perform an activity and Adding value to a product or service so buyers will be willing to pay more.
The Value Chain model suggest that competition can come from two sources: Lowering the cost to perform an activity and Adding value to a product or service so buyers will be willing to pay more. Lowering costs only achieves competitive advantage if the firm possesses information on the competitors costs Adding value is a strategic advantage if a firm possesses accurate information regarding its customer such as: which products are valued? Where can improvements be made?
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Operations
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Purchasing
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STRATEGIC ALLIANCES
Many industries are experiencing the growth of strategic alliances that are directly linked to sharing information resources across existing value systems. E.g., Delta recently formed an alliance with e-Travel Inc to promote Deltas inline reservation system. This helps reduce Deltas agency fees while offering e-Travel new corporate leads.
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Risks
Supply Chain Management: technology, especially Web-based, allows the supply chain of a companys customers and suppliers to be linked through a single network that optimizes costs and opportunities for all companies in the supply chain Co-opetition: a new strategy whereby companies cooperate and compete at the same time with companies in their value net
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Awakening a sleeping giant a large competitor with deeper pockets may be nudged into implementing IS with even better features Demonstrating bad timing sometimes customers are not ready to use the technology designed to gain strategic advantage Implementing IS poorly information systems that fail because they are poorly implemented Failing to deliver what users what systems that dont meet the firms target market likely to fail Running afoul of the law Using IS strategically may promote litigation
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End d of f Chapter h 2
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