Strategic Uses of

Information Systems
INTECH 410 – Management Information System
STRATEGY AND STRATEGIC MOVES
Strategy
• A plan designed to help an organization outperform its
competitors

Problem – obstacle to desired mode of operation that

calls an attention.
Opportunity – imagination, creativity, and vision.

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STRATEGY AND STRATEGIC MOVES
(cont…)

Strategic Seize opportunities

Information
Systems Can be developed from scratch,
or they can evolve from existing
ISs

This focuses on
- strategic management;
- utilization of information systems
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STRATEGY AND STRATEGIC MOVES
(cont…)

Strategic advantage – using a strategy

to maximize strength.

Competitive advantage – the result of

the use of a strategic advantage.

MIAM-2018 4
Achieving a Competitive
Advantage

Many strategic moves can work together to achieve a competitive

advantage 5
Initiative#1: Reduce Cost

• Lower costs results in lower price

• Bigger Market Share
• Customers want to pay little for service
• Implement automation to become more
productive
• Web can automate customer service

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Initiative#2: Raise Barriers to
Entrants
Less competition is better for company

Techniques include obtaining copyrights and patents on

inventions, techniques, and services

Patenting

Amazon.com(“one click” purchasing); Price Barriers (Contractual

Barriers, Barriers of Location)
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 Initiative#3: Establish High
Switching Cost

•Switching costs – expenses incurred when

customer stops buying from one company and
starts buying from another.
•Explicit – early termination of contract; fixed
and nonrecurring.
•Implicit – Indirect costs in time and money of
adjusting to a new product.
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Initiative#4: Create New Products
and Services
• Having unique product or service gives competitive
advantage.
• Lasts only until competition offers an identical or similar
product or service for a comparable or lower price
• First Mover - creates assets
• Brand Name
• Better Technology
• Delivery Methods
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Initiative#4: Create New Products
and Services (cont…)
Critical Mass - body of clients that attracts other
clients
• Example - Google vs Internet Explorer
•Organization never stopped improving its search
algorithms and periodically has offered new
services.
• Example - Google search engine ("google it") has become
synonymous with “search for it on the Web
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Initiative#5: Differentiate
products and Services
Appl Coc
Product differentiation – a
persuading customers that e Cola
product is better than competitors.
Toyot
Brand recognition Microsoft
a
• Example of brand name success:
Samsun Uniql
g o

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Iniative#6: Enhance
Products or Services

•Enhance existing products or services to increase

value to consumer.
•Examples:
– Auto manufacturers enticing customers with a longer
warranty
– Real estate agents providing useful financing
information to potential buyers
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Iniative#7: Establish Alliances

Alliance – two or more companies combining

services.
•Makes product more attractive
•Reduces costs
•Provides one-stop shopping
Affiliate program – linking to other companies and
rewarding the linker for click-throughs.
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Strategic alliances combine services to create synergies
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Iniative#8: Lock in Suppliers or
Buyers
Bargaining power – leverage to influence buyers
and suppliers.
•Achieved by being major competitor or
eliminating competitors.
•Lock in clients by creating high standards.

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 STRATEGIC INFORMATION SYSTEMS
(SIS)
• An IS that helps achieve long-term competitive
advantage.
• SIS embodies two types of ideas:
– Potentially-winning business move
– How to harness IT to implement that move
• Two conditions for SIS:
– Serve an organizational goal
– Work with the managers of the other functional units
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 CREATING
STRATEGIC INFORMATION SYSTEMS (SIS)
• Top management involvement

– From initial consideration through development and

implementation

• Must be part of the overall organizational strategic

plan

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 RE-ENGINEERING AND
ORGANIZATIONAL CHANGE

Goal of re-engineering
To implement an SIS and
achieve a competitive • Achieve efficiency leaps of
advantage, organization 100% or higher
must rethink the entire • “If we reestablished this
business process from
way in which it operates. scratch, how would we do
it?”

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 COMPETITIVE ADVANTAGE AS
MOVING TARGET
• Competitive advantage is often short-lived.
–competitors imitate the leader, and the advantage
diminishes
• SISs developed as strategic advantages quickly become
standard business.
–Banking industry (ATMs, banking by phone, online banking)
• Continuous search for new ways of utilizing information
technology to their advantage
–American Airlines’ reservation system
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 THE BLEEDING EDGE
• Bleeding edge: failure in an organization’s effort to be on
the technological leading edge.
• Business owners must develop new features to keep the
system on the leading edge.
• Adopting a new technology involves great risk
– No experience from which to learn
– No guarantee new technology will work or customers and
employees will welcome it.
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Activity #1
Answer review questions and discussion questions based
on the following assignments (Handwritten, yellow pad):
DEADLINE: August 13, 2019
If your Surname Review Discussion
starts with: Questions Questions

A–F 1, 3, 16 19, 23

G–L 6, 9, 17 21, 27

M–R 4, 7, 10 28, 32

S–Z 5, 8, 18 30, 33
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