KNOWLEDGE AREA 5:BUSINESS STRATEGY

Neha Chopra (12609200) Arpit Goyal (12609159)
6/1/2013 Knowledge area 5 1

What is strategy
Strategy is : knowing where you are, knowing where you could choose to be, and knowing how you intend to get there.

 It states how business should be conduct to achieve the desired goals. Without a strategy, management has no roadmap to guide them.
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Importance of strategy in information system
 The benefits of IT-related investments are not financial but strategic.  If an organization gets the access to a piece of management information that was previously unavailable it might drive the organization towards success.

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Knowledge area 5

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delays and poor management information because of a lack of proper systems integration.  Duplication of effort.  Technologies will become a constraint to the business because of a failure to maintain compatibility where it is needed 6/1/2013 Knowledge area 5 4 .Consequences of lack of strategy.  Competitors. suppliers and customers may gain avoidable and undesirable advantages. inaccuracy.

its environment and the general business strategy . Knowledge area 5 5 .IT and IS Strategies IT IS 6/1/2013 • define how system needs will be met and the information technology that will be required to acquire. develop and operate existing and future applications • what information systems the business needs for the foreseeable future based on proper analysis of the business.

Development of IS strategies  External environment – WHY we must act? External inputs Internal inputs What must be done? Strategy formulation and implementation is driven by “why”. targeted by “what” and constrained by “how”  If all these factors can be taken into account. then the resulting plans for systems implementation should be both viable and appropriate. 6/1/2013 Knowledge area 5 6 .

The Strategy process Current situation where are we now? Opportunity spotting where we could be? Decision time where we want to be? 6/1/2013 Knowledge area 5 7 .

Information system strategy in context 6/1/2013 Knowledge area 5 8 .

STRATEGY PROCESS & IMPLEMENTATION 6/1/2013 Knowledge area 5 9 .

Assessment of current information technology will reveal shortfalls (or surpluses) that demand management action. Business Process Model-provide a framework for analyzing cost and efficiency and the prospects for improving both with new information systems.Current situation: Where are we now? SWOT Analysis-can be used to summarize the internal and external factors that might affect strategic intentions. Knowledge area 5 6/1/2013 10 .

6/1/2013 Knowledge area 5 11 .Opportunity spotting: Where we could be? Scenario planning will be a useful approach that allows discussion to work through different scenarios and begin to understand some of the implications and potential benefits Business Process Model to see what the consequence might be for organizational structures and for external business partners.

Decision time: where we want to be? Decision will be based on a systematic review of business objectives. 6/1/2013 Knowledge area 5 12 . Critical success factor analysis is a technique that will lead to a more specific understanding of information needs and areas of business where improved systems will deliver the most benefit.

Establishing the IS/IT strategic planning process The planning process must deliver valuable intermediate results throughout the process. 6/1/2013 Knowledge area 5 13 . not just at the end. It is therefore a matter of:  what is involved  How it is to be achieved  What the expected product are to be.

preferably led by an experienced and respected business manager. located within the IT department. which then owns the strategy Employ consultants to bring in the necessary skills to facilitate the process. 6/1/2013 Knowledge area 5 14 . Set up a task force or steering group to do the job.How to get started with strategic planning The organization must setup a special IS/IT planning function to carry out the task.

it is also very expensive and takes up too much of the management's time. 6/1/2013 Knowledge area 5 15 . • The planning exercise takes too long for management to sustain interest . • The resulting plan fails to spell out resourcing and financial implications.Problems faced during implementation of strategy • Top management commitment to implementing the plan cannot be obtained.

Assessment of priorities What is most important to do? What is capable of being done? What is likely to get success? 6/1/2013 Knowledge area 5 16 .

• Value analysis: The way in which value is delivered in our industry. with risks and timescales. • Business modelling: how the business works and. • Implementation: finally tools to assist in the planning of implementation.Strategic analysis tools • Strategic drivers: Tools to identify the strategic forces that are . if at all possible. • Portfolio management: This gives a simple but very effective overview of the benefits that will be delivered to the business. bearing upon our business. and in our business. the extent and the quality of the information that it is working with. 6/1/2013 Knowledge area 5 17 .

 It deals well with the internal issues and the external issues. although it is common to start with strengths and weaknesses.SWOT (Strategic drivers: Where are we now? Where could we be?)  The analysis of strengths. weaknesses.  The opportunities and threats is the most useful to start with because understanding the external situation gives a context for internal assessment. opportunities and threats is the straightforward deployed techniques for strategic analysis. 6/1/2013 Knowledge area 5 18 .

 Environmental factors.  Competitive strategy and industry position.  Temporal factors.  Managerial position 6/1/2013 Knowledge area 5 19 .Critical success factor analysis Five key sources of Critical Success Factors  The industry.

6/1/2013 Knowledge area 5 20 . and also how information systems might affect the competitive positioning of one organisation and another. identifying information that is needed. where it might come from. Helps reveal the relationships between organisations and in the business itself.Value chain analysis Value chain analysis helps to analyse the role of information in a business and in the industry within which it works.

The value chain 6/1/2013 Knowledge area 5 21 .

and provides a framework for organizing the detail within them 6/1/2013 Knowledge area 5 22 .Internal value chain  The internal value chain shows how the various activities and functions in a business unit contribute to the customer's requirements.  The model identifies two different types of business activity primary and support . and how costs are incurred in so doing.

promoting • Services • Information intensive: activities such as forecasting. capacity planning. scheduling. 6/1/2013 Knowledge area 5 23 . pricing and costing must be linked throughout the chain.Primary activities • • • • Inbound logistics Operations Outbound logistics Sales and marketing: making customers and consumers aware of the product or service and how they can obtain it.

Michael Porter’s Five Competitive Forces Threat of new entrants Suppliers bargaining power Rivalry among existing competitors Customers’ bargaining power 6/1/2013 Threat of substitutes Knowledge area 5 24 .

Business modelling We need a basis upon which to decide about:     Business processes and those who should be involved in them Business information and those who should be responsible for it System interdependencies. and required changes to organizational responsibilities 6/1/2013 Knowledge area 5 25 .

Typical Business Areas • • • • • • Marketplace Products / Services Procured inputs Corporate resources Corporate performance Corporate processes 6/1/2013 Knowledge area 5 26 .

Deals with MARKETPLACE Specifies needs with supports PRODUCT / SERVICE produces SUPPORT PROCESSES buys PROCURED INPUT specifies VALUE ADDED PROCESSES Assessed by PERFORMANCE Assessed by services 6/1/2013 CORPORATE RESOURCE Knowledge area 5 services 27 .

Boston box • This 2x2 matrix allows us to explore the differences between current and future potential. It originated in the Boston Consulting Group. The four quadrants in the box are based on two criteria: • What is the growth potential and potential cash requirement to market the product? • What is the current market share and how much cash is the product generating? 6/1/2013 Knowledge area 5 28 .

Wild cat : A product that is new. that might most usefully be retired Knowledge area 5 29 . untried. Cash cow: A product that is working well in an established market and is generating cash well. Rising star: A product that has been launched. is winning market share successfully but still requires investment to sustain the momentum. 6/1/2013 Dog: a product past its best. but full of future potential.

Types of system required during different stages of PLC ( Product life cycle) Information needs are different for different stages of product life cycle  Emergence  Growth  Maturity  Decline 6/1/2013 Knowledge area 5 30 .

6/1/2013 Knowledge area 5 31 . • Analysis tools: Choosing and successfully applying appropriate tools for analyzing.Managerial issues in strategic management • Strategic alignment: setting well aligned information systems strategies in place. formulating and refining information system strategies.

• Ownership and responsibility: Placing ownership and responsibility for information systems strategies. 6/1/2013 Knowledge area 5 32 . clearly articulating appropriate targets that indicate the success or failure of those strategies.Contd… • Balance: Maintaining a balance between the internal and external strategic drivers that bear upon the organization and determine the actual requirement of strategic management.

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