Business School

Information Systems, Technology and Management

INFS1602
INFORMATION SYSTEMS IN BUSINESS
Week 2
Information Systems, Organizations, and
Strategy

Recap from Chapter 1

q Information Systems in Global Business
Difference between the IS discipline and other business
disciplines
Innovation is the key in the new business environment to
creating sustainable competitive advantage in the knowledge
economy
Technology alone is not sufficient to drive innovations
Business value is extracted from the meaningful interplay
between technology and organizational actors

Agenda for this Lecture

q Information Systems, Organizations, and Strategy
Understanding organizational concerns (internal efficiencies and
external alignment)
Terminologies and Definitions
Understand internal organizational activities
Technological strategies to improve internal efficiencies
Causes of misalignment due to environmental turbulence
Technological strategies to buffer against turbulence

IS Professionals are also Business

Professionals
Need to think like a business professional
Analyze Goal Setting Strategize Execute Evaluate
To allow your organization to gain a competitve advantage

Organizations and Strategies

Organization Social entity with a collective goal that exists

within a contextual environment
Reflects an articulated purpose and possesses an
established mechanism for achieving it

Adaptation to environmental change and uncertainty

requires:
Optimizing INTERNAL INTERDEPENDENCIES
Maintaining EFFECTIVE ALIGNMENT with the external
environment
Both requirements have to be guided by organizational
STRATEGY

Important Business Concepts

Strategy Specific patterns of decision making to leverage on
core competencies to attain competitive advantage
Core Competencies Unique skills and proficiencies that can
be utilized in value-creation activities
Competitive Advantage Ability to excel better than your
competitor in specific domains
More importantly, is the competitive advantage sustainable?

Business Value Chain Model Optimzing Internal

Interdependencies
Views firm as series of activities that add value to products or services
Highlights activities where competitive strategies can best be applied
Primary activities vs. secondary activities
At each stage, determine how information systems can improve
operational efficiency and improve customer and supplier intimacy

Analyzing the Organizations Environment

(Level of Environmental Turbulence)

The 5 Forces
1. Traditional competitors
All firms share market space with competitors
who are continuously devising new products,
services, efficiencies, trying to lower your
switching costs
2. New market entrants
Some industries have high barriers to entry, e.g.
computer chip business, pharmaceutical firms
New companies have new equipment, younger
workers, but little brand recognition

The 5 Forces
3. Availability of substitute products and services
Substitutes customers might use if your
prices become too high, e.g. Netflix
substitutes for Cable TV
4. Customer power (Are customers locked in?)
Can customers easily switch to
competitors products
Can they force businesses to compete on
price alone in transparent marketplace?
5. Supplier power
Market power of suppliers when firm
cannot raise prices as fast as suppliers
Firms do not have alternate suppliers

10

Four Basic Competitive Strategies

(for dealing with competitive forces)
1) LOW-COST LEADERSHIP
2) PRODUCT DIFFERENTIATION
3) FOCUS ON MARKET NICHE
4) STRENGTHEN CUSTOMER & SUPPLIER INTIMACY

Establish High Switching Costs

12

Switching costs: incurred when customer

stops buying from company and starts
buying from another company
Explicit: charge customer for switching
Implicit: indirect costs over period of
time

High switching costs lock in customers

Ecosystem versus Platform (Textbook does not

differentiate them well)

13

Ecosystem Elements surrounding a product or service that

reinforce its value.

Platform Channel whereby value from different elements in the

Ecosystem could be consolidated and delivered to the consumers
e.g. hardware platform, software platform etc.

Elements within the ecosystem

support one another

Ecosystem is resilient to
changes in the environment

Business School
Information Systems, Technology and Management

Thank You
and
Have a Good Week!