Organizational Strategy, Competitive Advantage,

and Information Systems

 OPENING CASE

Case: BlackBerry Meets Android

The Problem:
• Innovative in 1999, BlackBerry phones with their
proprietary operating system BB10 are now having
to compete with Apple’s iPhone and many Android
operating system telephones
• From being a surprising and sought-out leader,
BlackBerry has plunged to a company with losses
that resulted in the lay off of thousands of
employees.
 OPENING CASE

Transformative Solutions:
• First, BlackBerry met its Android competition head-
on by providing an Android-based phone, the Priv.
• Second, the company enhanced its mobile
communications enterprise solutions for
organizations to manage and securely use their
full range of mobile devices.
• Third, the company broadened its line of
smartphones in early 2016, providing four models
with physical keyboards in addition to the Android
phone.
 CHAPTER OPENING CASE

Reversing Sinking Results

• In 2015, the company lost money, while its
financial quarters in 2016 were somewhat
improved.
• BlackBerry decided to discontinue its
manufacturing of smartphones, instead becoming
totally a software provider.
 COMPETITIVE ADVANTAGE

• An Organizational strategy is a planned

approach that the organization takes to achieve its
goals and its mission statement.
• Competitive advantage is an advantage over
competitors in some measure such as cost,
quality, or speed; leads to control of a market and
to larger-than-average profits.
 BUSINESS PROCESSES

• A business process is a collection of related

activities (inputs, resources and outputs) that produce
a product or service of value to the organization, its
business partners and/or its customers.
Examples of business processes in functional areas:
• Accounting: managing accounts payable & receivable
• Finance: Producing business forecasts
• Marketing: Handling customer complaints
• OM: Processing physical inventory
• Human Resources: Overseeing workplace safety
• MIS: Training computer users
BUSINESS PROCESS FOR ORDERING
E-TICKET FROM AIRLINE WEBSITE

Insert Fig 2.1 here

INFORMATION SYSTEMS (IS) AND BUSINESS
PROCESSES
• IS are enablers of an organization’s business
processes
• Breaking down the business process into three
areas, we look at how IS can help in each of them:
Execution of a process (such as doing the work:
calculations, comparisons or creation of data,
documents or other output).
Example: When a sale is made, compare inventory
quantity on hand to re-order levels. If inventory is
less than the re-order level, generate purchase
requisitions for the purchasing department.
INFORMATION SYSTEMS (IS) AND BUSINESS
PROCESSES (Continued)

Capturing and storing process data (such as format

the data, store it in the correct data file on a physical
storage device such as a hard drive).
Example: Once the purchase requisition has been
approved by the purchasing department, increase
the quantity on order field and store the purchase
requisition data in the open purchase requisition file.
INFORMATION SYSTEMS (IS) AND BUSINESS
PROCESS (Continued)

Monitoring process performance (such as examine,

analyze and assess the business process to ensure
compliance and to evaluate the process).
Example: Reports can be automatically produced to
identify purchase requisitions where goods have not
been received, where too much or too little has been
received, and or purchase requisitions waiting to be
approved.
 CROSS-FUNCTIONAL PROCESSES

• A cross-functional business process is one in

which no single functional area is responsible for
its execution. Multiple functional areas collaborate
to perform the process.
• For example, the materials procurement process
includes all of the tasks involved in acquiring
needed materials externally from a vendor.
Procurement comprises five steps that are
completed in three different functional areas of the
firm: warehouse, purchasing, and accounting.
BUSINESS PROCESS REENGINEERING, BUSINESS PROCESS
IMPROVEMENT AND BUSINESS PROCESS MANAGEMENT

• How does an organization ensure business process

excellence?
Business Process Reengineering (BPR) is a radical strategy
for improving the efficiency and effectiveness of an
organization’s business processes. It is known as the
“clean slate” approach.
Business Process Improvement (BPI) is a more incremental
approach, with lower risk and cost than BPR. Six Sigma is
a popular methodology for BPI.
Business Process Management (BPM) is a management
technique that includes methods and tools to support the
design, analysis, implementation, management, and
optimization of business processes
 Measures of Excellence in
Executing Business Processes

• Customer Satisfaction
• Cost Reduction
• Cycle and fulfillment time reduction
• Quality
• Differentiation
• Productivity
Business Process Improvement (BPI)

Five basic phases of successful BPI

Define
Measure
Analyze
Improve
Control
 BPR versus BPI
BPI BPR
• Low risk / low cost • High risk / high cost
• Incremental change • Radical redesign
• Bottom-up approach • Top-down approach
• Takes less time • Time consuming
• Quantifiable results • Impacts can be
• All employees overwhelming
trained in BPI • High failure rate
BUSINESS PROCESS MANAGEMENT (BPM)

• A management system used to support

continuous BPI initiatives for core business
processes over time
• Important components of BPM:
Process modeling
Web-enabled technologies
Business Activity Monitoring (BAM)
BUSINESS PROCESS MANAGEMENT (BPM)
(Continued)

• Business Process Management Suite

(BPMS)
An integrated set of applications used for BPM
• Emerging Trend of Social BPM
Technologies enabling employees to collaborate
across functions internally and externally using
social media tools
 IT’S ABOUT BUSINESS

BPR, BPI and BPM at Chevron

Chevron is one of the world’s largest oil and gas companies,
involved in exploration, production, manufacturing, transporting and
distributing petrochemical products.
BPR efforts began in 1995, to better integrate and radically improve
multiple internal supply chain processes to reflect Chevron’s
business goals.
By 2013 these had evolved into a unified, companywide BPM
approach to operational excellence and continuous improvement,
focusing on efficiency, safety, risk and environment, with
companywide employee participation and management support.
 BUSINESS PRESSURES, ORGANIZATIONAL
RESPONSES, AND IT SUPPORT

• Business Pressures:
Market: pressures are generated by the global
economy, intense competition, the changing nature
of the workforce, and powerful customers
Technology: pressures involving Technological
Innovation and Obsolescence and Information
Overload
Societal: includes social responsibility, government
regulation/deregulation, spending for social
programs, spending to protect against terrorism,
and ethics
BUSINESS PRESSURES, ORGANIZATIONAL
RESPONSES, AND IT SUPPORT
 MARKET PRESSURES

• The Global Economy and Strong Competition; the

need for real-time operations
• The Changing Nature of the Workforce
• Powerful Customers
 GLOBALIZATION

• Individuals can connect and compete anywhere,

anytime
• Competition is increased as people and
organizations can provide resources worldwide
• The Internet has “flattened” the world, making
anywhere accessible to anyone anytime
CHANGING NATURE OF THE WORKFORCE

• Workforce is Becoming More Diversified

• Women
• Single Parents
• Minorities
Persons with Disabilities
• IT is Enabling Telecommuting Employees
 POWERFUL CUSTOMERS

• Increasing consumer sophistication & expectations

• Consumer is more knowledgeable about
• Products and services
• Price comparisons
• Electronic auctions
 TECHNOLOGY PRESSURES

• Technological Innovation and Obsolescence

• Information Overload
 TECHNOLOGICAL INNOVATION AND
OBSOLESCENCE

• Obsolescence: old analog camera

• Innovation: digital camera
• Example: How were older versions of the camera
replaced with digital?
SOCIETAL/POLITICAL/LEGAL PRESSURES

1. Social Responsibility
2. Government Regulation and Deregulation
3. Protection Against Terrorist Attacks
4. Ethical Issues
 ORGANIZATIONAL RESPONSES

• Strategic Systems
• Customer Focus
• Make-to-order and mass customization
• Reebok http://www.reebok.ca
• See Bodymetrics
http://www.youtube.com/watch?v=BU4PW51PVz
E
• E-business and E-commerce
 COMPETITIVE ADVANTAGE AND STRATEGIC
INFORMATION SYSTEMS

• Porter’s Competitive Forces Model

• Porter’s Value Chain Model
• Strategies for Competitive Advantage
• Business-Information Technology Alignment
 COMPETITIVE STRATEGY AND STRATEGIC
INFORMATION SYSTEMS

• Competitive Strategy: documents a business’s

approach to compete and how it will accomplish
those goals, for example, in increasing market
share
• Competitive Advantage: helps a company function
profitably within a market and generate larger-
than-average profits.
• Strategic Information Systems (SIS): provide a
competitive advantage by helping an organization
implement its strategy, achieve its goals and
improve its performance and productivity.
PORTER’S COMPETITIVE FORCES MODEL
PORTER’S COMPETITIVE FORCES MODEL

• Threat of entry of new competitors The threat

that new competitors will enter your market is
high when entry is easy and low when there are
significant barriers to entry.
Entry barrier: a product or service that customers
have come to expect and that must be provided
by all new competitors, increasing the cost to
enter a new market
Internet increases the threat that new competitors
will enter a market because it is easy to for new
competitors to set up a web presence
PORTER’S COMPETITIVE FORCES MODEL
(continued)

2. The bargaining power of suppliers is high when

buyers have few choices from whom to buy and
low when buyers have many choices.
Impact of the Internet is mixed
Buyers can find alternative suppliers and compare
prices easily, reducing the power of suppliers
Companies can use the Internet to integrate their
supply chain, suppliers prosper and their power
increases (they can charge higher prices), locking
in their customers
PORTER’S COMPETITIVE FORCES MODEL
(continued)

3. The bargaining power of customers (buyers)

is high when buyers have many choices from
whom to buy and low when buyers have few
choices.
Since the Internet increases access to information,
customer power is increased since customers
can look for the lowest price
As sellers implement online loyalty programs, they
can lock in their customers, reducing customer
power
PORTER’S COMPETITIVE FORCES MODEL
(continued)

4. The threat of substitute products or services is

high when there are many alternatives for an
organization’s products or services and low where
there are few alternatives.
The Internet increases the use of substitutes since
buyers can readily search for them online
Information-based industries are in the greatest
danger from this threat (e.g. music, e-books,
software, since the Internet can be used to send
digital information quickly and efficiently
PORTER’S COMPETITIVE FORCES MODEL
(continued)

5. The rivalry among firms in an industry is high

when there is intense competition among many
firms in an industry. The threat is low when the
competition is among fewer firms and is not as
intense.
Rivalry has increased since rivals can easily see
via the Internet what their competitors are doing
and replicate such systems. In the past
proprietary systems were easier to keep secret,
lengthening the time that such systems
provided a strategic advantage to
organizations.
PORTER’S VALUE CHAIN MODEL
 STRATEGIES FOR COMPETITIVE
ADVANTAGE, Examples

• Cost Leadership – Walmart

• Differentiation – WestJet, Dell
• Innovation – CITI
• Operational Effectiveness – Deloitte
• Customer-orientation - Amazon
STRATEGIES FOR COMPETITIVE ADVANTAGE
 BUSINESS – INFORMATION TECHNOLOGY
ALIGNMENT

• Business–information technology alignment is

the tight integration of the IT function with the
organization’s strategy, mission, and goals of the
organization. That is, the IT function directly
supports the business objectives of the
organization.
 CHARACTERISTICS OF EXCELLENT
ALIGNMENT

• Organizations:
• view IT as an engine of innovation that continually
transforms the business, often creating new revenue
streams.
• view their internal and external customers and their
customer service function as supremely important.
• rotate business and IT professionals across departments
and job functions.
• provide overarching goals that are completely clear to
each IT and business employee.
• ensure that IT employees understand how the company
makes (or loses) money.
• create a vibrant and inclusive company culture.
 IT Governance

• A structure of relationships and processes to direct and

control the enterprise in order to achieve the enterprise’s
goals by
• adding value
• while balancing risk versus return over IT and its processes.
• Helps organizations effectively manage their IT
operations to align with their business strategies.
Managing IT throughout the organization, includes:
planning, acquisition, implementation, ongoing support as well
as monitoring and evaluation
 CLOSING REMARKS

• Functional areas of any organization:

• are composed of a variety of business processes
• must work together in an integrated fashion in order for
the firm to respond adequately to business pressures &
to gain competitive advantage in its marketplace
• use a variety of strategic information systems to
achieve goals
• know how to analyze the organization’s strategy and
value chain, as well as the strategies and value chains
of competitors.
• participate in IT governance to achieve effective
business-IT alignment