BA 180.

1: Information
Technology in Business I

BA 180.1: Information
Technology in Business I

Information Technology
and the Dynamics of
Competition

Erik Paolo Capistrano

1 Information Technology and the Dynamics of Competition
Customer Focus BA 180.1: Information
Technology in Business I

IT and Strategy

Erik Paolo Capistrano

2 Information Technology and the Dynamics of Competition
Customer Focus BA 180.1: Information
Technology in Business I

IT and Strategy
• Technology is no longer an afterthought in business
strategy, but the cause and driver
• IT can change the way businesses compete

Erik Paolo Capistrano

3 Information Technology and the Dynamics of Competition
Customer Focus BA 180.1: Information
Technology in Business I

Why Customer Focus?

• “The driving force behind world economics growth has
changed from manufacturing volume to improving
customer value.”
• “As a result, the key success factor for many firms is
maximizing customer value.”

Erik Paolo Capistrano

4 Information Technology and the Dynamics of Competition
Customer Focus BA 180.1: Information
Technology in Business I

The Customer and the IT

Erik Paolo Capistrano

5 Information Technology and the Dynamics of Competition
Customer Focus BA 180.1: Information
Technology in Business I

Why Customer Focus?

Be #1 in the eyes Understanding comes Sam Walton: Be an agent
of the customer from living with for your customers
customers
Culture Scott Cook: We owe the
Vision/ customer success
Mission
Become Paranoia about
Amazon: We’re a consumer competitors is healthy The fact that we are
consumer company … intimate multi-divisional,
Hybrid Structure multi-market, and
not a book company
designs Systems & multi-product is not
Market GE Incentives the customer’s fault
Learning Quick
– 3M
Bloomberg Market
Capability
in data Intelligence Externally-oriented
terminals incentives
Strategy
Market Wal-Mart Development
Relating diffusion of
Process Front-line
Capability lessons
USAA Fidelity behavior
Marketing as Drivers of
investment retention
Amex
Erik Paolo Capistrano
6 Information Technology and the Dynamics of Competition
Reengineering BA 180.1: Information
Technology in Business I

Business Process Reengineering (BPR)

• A fundamental thinking and radical redesign of
business processes to achieve dramatic improvements
in cost, quality, speed, and service.
• A combination of a innovation promotion strategy and a
strategy of making major improvements to business
processes to strengthen the organization’s position in
the marketplace.

Erik Paolo Capistrano

7 Information Technology and the Dynamics of Competition
Reengineering BA 180.1: Information
Technology in Business I

Business Process Reengineering (BPR)

• IT plays a major role in reengineering most business
processes
• Can substantially increase process efficiencies
• Improves communication
• Facilitates collaboration

Erik Paolo Capistrano

8 Information Technology and the Dynamics of Competition
Quality Management BA 180.1: Information
Technology in Business I

Total Quality Management (TQM)

• A more strategic approach to business improvement to
emphasize the customer’s viewpoint.
• This is aimed to increase an organization’s capability to
meet or exceed customer requirements and
expectations for a product or service.

Erik Paolo Capistrano

9 Information Technology and the Dynamics of Competition
Effects of IT BA 180.1: Information
Technology in Business I

Effects of IT in BPR and TQM

• Examples:
§ Customer relationship management systems
using corporate intranets and the Internet.
§ Supplier-managed inventory systems using the
Internet and extranets.
§ Cross-functional ERPs for integrating
manufacturing, distribution, finance, and human
resource processes.
§ Customer-accessible E-Commerce website for
order entry, status checking, payment, and
service. Erik Paolo Capistrano
10 Information Technology and the Dynamics of Competition
Virtual Companies BA 180.1: Information
Technology in Business I

Virtual Companies Infrastructure

Customer Alliance with
Response and Major and
Alliance with Order Fulfillment Small
Subcontractors Teams Manufacturing Customers
Teams

Cross-Functional
Alliance with Teams
Major and Engineering
Alliance with
Small Teams
Competitors
Suppliers
Providing
Complementary
Services

Erik Paolo Capistrano

11 Information Technology and the Dynamics of Competition
Virtual Companies BA 180.1: Information
Technology in Business I

Creating Virtual Companies

• A virtual company uses IT to link…
• People
• Organizations
• Assets
• Ideas
• Inter-enterprise information systems link…
• Customers
• Suppliers
• Subcontractors
• Competitors
Erik Paolo Capistrano
12 Information Technology and the Dynamics of Competition
Virtual Companies BA 180.1: Information
Technology in Business I

Why Virtual Companies?

• Share infrastructure and risks.
• Link complementary 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.

Erik Paolo Capistrano

13 Information Technology and the Dynamics of Competition
Knowledge Management BA 180.1: Information
Technology in Business I

Knowledge Management
• An approach to achieve lasting competitive advantage
to become knowledge-creating companies or learning
organizations.
• An approach to exploit either explicit (data, documents,
manuals) or tacit (“how-to”) knowledge.
• Creating techniques, technologies, and rewards for
getting employees to share what they know and to
make better use of that accumulated workplace
knowledge.

Erik Paolo Capistrano

14 Information Technology and the Dynamics of Competition
Knowledge Management BA 180.1: Information
Technology in Business I

Knowledge Management System

New Problems / Knowledge
Solutions
Base
Internet
Internet
Internet
Development Technical
Engineers Support Customers
Intranet

Intranet
Internet
Product Other
Managers Vendors
Erik Paolo Capistrano
15 Information Technology and the Dynamics of Competition
Strategic Success BA 180.1: Information
Technology in Business I

Sustaining Strategic Success Performance

• Sustainability
Foundation Management
Factors Actions and
Environment • Size Strategies
• Industry • Geographical scope
Structure • Preempting the
• Product Scope market
• Competitive
Restriction • Vertical scope • Creating switching
• Organizational costs
• Unique
Situations structure • Exploiting
• Learning curve knowledge

• Technological • Developing
resources response strategies

• Knowledge resources • Managing risks

Erik Paolo Capistrano

16 Information Technology and the Dynamics of Competition
Basic Strategies and IT BA 180.1: Information
Technology in Business I

Erik Paolo Capistrano

17 Information Technology and the Dynamics of Competition
Basic Strategies and IT BA 180.1: Information
Technology in Business I

Erik Paolo Capistrano

18 Information Technology and the Dynamics of Competition