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Chapter Preview
Recall from Chapter 1 that MIS is the development and use of information systems that enable organizations to achieve their goals and objectives. In Chapter 2, you learned how information systems can help people collaborate. This chapter focuses on how information systems support competitive strategy and how IS can create competitive advantages. As you will learn in your organizational behavior classes, a body of knowledge exists to help organizations analyze their industry, select a competitive strategy, and develop business processes. In the first part of this chapter, we will survey that knowledge and show how to use it, via several steps, to structure information systems. Then, in the last section, we will discuss how companies use information systems to gain a competitive advantage.
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Study Questions
Q1 How does organizational strategy determine information systems structure?
Q2 Q3 Q4 Q5 Q6 What five forces determine industry structure? How does analysis of industry structure determine competitive strategy? How does competitive strategy determine value chain structure? How do business processes generate value? How does competitive strategy determine business processes and the structure of information systems? How do information systems provide competitive advantages? 2020?
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Q1 How does organizational strategy determine information systems structure?
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How does organizational strategy determine information systems structure? What five forces determine industry structure?
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To be effective, organization goals, objectives, culture, and activities must be consistent with organization strategy.
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FlexTime Strategy
Focus, differentiated Focus downtown Urban, city workers Sophisticated environment Adults only Provide superior product, intense, to-themax workouts that leave clients pumped and excited
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Value Chain
Competitive strategy implemented by creating value
Valueamount of money a customer is willing to pay for a resource, product, or service Margindifference between value an activity generates and cost of activity Value chaina network of value-creating activities Primary activities Support activities
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Inbound logisticsreceiving, handling raw materials and other inputs Value in parts, time required to contact vendors, maintaining relationships with vendors, ordering parts, receiving shipment, and so forth Operationstransform or assemble materials into finished products Outbound logisticsdeliver finished products to customers Marketing and salescreate marketing strategies and sell products or services to customers Servicesafter-sale customer support
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How does organizational strategy determine information systems structure? What five forces determine industry structure? How does analysis of industry structure determine competitive strategy? How does competitive strategy determine value chain structure?
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Notice that activities get data resources from databases and put data into databases
Business processes vary in cost and effectiveness. In fact, the streamlining of business processes to increase margin (add value, reduce costs, or both) is key to competitive advantage. Example of using a linkage across business processes to improve process margin:
Querying both databases allows purchasing department to make decisions on raw materials quantities and customer demand. By using this data, purchasing can reduce size of raw materials inventory, reducing production costs and thus adding margin to the value chain.
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How does organizational strategy determine information systems structure? What five forces determine industry structure? How does analysis of industry structure determine competitive strategy? How does competitive strategy determine value chain structure? How do business processes generate value? How does competitive strategy determine business processes and the structure of information systems? How do information systems provide competitive advantages? 2020?
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 3-27
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Bottom Line
Organizations analyze their industry and choose a competitive strategy. Given that strategy, they design business processes that span value-generating activities. Those processes determine scope and requirements of each organizations information systems.
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How does organizational strategy determine information systems structure? What five forces determine industry structure? How does analysis of industry structure determine competitive strategy? How does competitive strategy determine value chain structure? How do business processes generate value? How does competitive strategy determine business processes and the structure of information systems?
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Competitive Techniques
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Following slide shows some of the Web pages of ABCs information system.
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How does organizational strategy determine information systems structure? What five forces determine industry structure? How does analysis of industry structure determine competitive strategy? How does competitive strategy determine value chain structure? How do business processes generate value? How does competitive strategy determine business processes and the structure of information systems? How do information systems provide competitive advantages?
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2020?
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 3-42
Optimist view
Could develop information systems that track client workouts and their intensity and relate that data into net cardiovascular benefits. Could correlate workout data with dietary data and client weight loss or gain. Maybe provide data to medical insurers and help its active clients to obtain reductions in medical insurance premiums. FlexTime could, but should it? Is it worthwhile for FlexTime to develop such systems?
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Pessimistic View
Suppose economic downturn proves too much for FlexTime and it is forced to reconfigure into a shadow of its former self
No longer a single business entity. Maybe it becomes a federation of trainers, workout spaces, dieticians, and recreational sports leagues. Federation uses free data storage, data communication, and emerging collaboration tools and systems to appear as a virtual organization to clients, but is composed of independently owned and operated small business entities. Who knows?
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New owners are being deceitful about their plans to turn the company into a low-cost, low-service producer.
Most employees will lose their job. You know the new owners are not being truthful. You have been told you might be promoted to new general manager. Should you trust the new owners?
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Benefits of Access
Intellectual capital resides on Internet readily available Benefits for businesses
Cheaper product customer support Reduces warehousing costs Reduces mailings costs
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Does it make sense for benefactors, such as Bill and Melinda Gates, to provide access to those in poverty?
What keeps the elderly from accessing the Internet? Should the government help the elderly? What could be done to provide Internet access for the poorly educated? What role, if any could local governments have? State? Federal? United Nations?
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Active Review
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How does organizational strategy determine information systems structure? What five forces determine industry structure? How does analysis of industry structure determine competitive strategy? How does competitive strategy determine value chain structure? How do business processes generate value? How does competitive strategy determine business processes and the structure of information systems? How do information systems provide competitive advantages? 2020?
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 3-53
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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
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