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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-1
Real World Cases
Competing with
Information
Technology
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-2
Real World Cases
Learning Objectives
1. Identify several basic competitive
strategies and explain how they can
use information technologies to
confront the competitive forces faced
by a business.
2. Identify several strategic uses of
Internet technologies, and give
examples of how they give competitive
advantages to a business.
3. Give examples of how business
process reengineering frequently
involves the strategic use of Internet
technologies.
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-3
Real World Cases
Learning Objectives
4. Identify the business value
of using Internet
technologies to become an
agile competitor or to form a
virtual company.
5. Explain how knowledge
management systems can
help a business gain
strategic advantages.
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-4
Real World Cases
Fundamentals
of Strategic Advantage
Strategic IT
Supports Efficient Business
Operations
Workgroup or Enterprise
Collaboration
Effective Business Decisions
Real World Case 1- GE,
Dell, I ntel, and Others
Click to go to
Case 1
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-5
Real World Cases
Competitive Strategy Concepts
Strategic Information Systems
Support Competitive
Position
Can Be Any Kind of
Information System
Gain Competitive
Advantage
Reduce a Competitive
Disadvantage
Strategic Advantage
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-6
Real World Cases
Strategic Advantage
Cost
Leadership
Differentia-
tion
Innovation
Growth
Alliance
Other
Strategies
Rivalry of
Competitors
Threat of
New
Entrants
Threat of
Substitutes
Bargaining
Power of
Customers
Bargaining
Power of
Suppliers
Competitive Forces
C
o
m
p
e
t
i
t
i
v
e

S
t
r
a
t
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i
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s

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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-7
Real World Cases
Strategic Advantage
Other Competitive Strategies
Lock in Customers
Lock in Suppliers
Switching Costs
Barriers to Entry
Leverage Investment
in IT
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-8
Real World Cases
Wal-Mart and Others
Satellite Network Linking all
Point-of-Sale Terminals
Immediate Sales and
Inventory Information
Extended to Customers and
Suppliers
Interenterprise Information
Systems
Stockless Inventory
Replenishment Systems
Strategic Advantage
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-9
Real World Cases
Value Chain & Strategic IT
Support Processes
Administrative
Coordination and
Support Services
Human Resources
Management
Technology Development
Procurement of
Resources
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-10
Real World Cases
Value Chain & Strategic IT
Primary Business Processes
Inbound Logistics
Operations
Outbound Logistics
Marketing and Sales
Customer Service
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-11
Real World Cases
Value Chain & Strategic IT
S
U
P
P
O
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T

P
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C
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S
S
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S

P
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I
M
A
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Y

B
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I
N
E
S
S

P
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O
C
E
S
S
E
S

Administrative Coordination & Support Services
Human Resources Management
Technology Development
Procurement of Resources
Collaborative Workflow Intranet
Employee Benefits Intranet
Product Development Extranet with Partners
E-Commerce Web Portals for Suppliers
Inbound
Logistics
Automated
J ust-in-Time
Warehousing
Operations
Outbound
Logistics
Marketing
& Sales
Customer
Service
Computer-
Aided
Flexible
Manufactu-
ring
Online
Point-of-Sale
And Order
Processing
Target
Marketing
Customer
Relation-
ship
Manage-
ment
The Value Chain of a Firm
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-12
Real World Cases
Using IT for
Strategic Advantage
Strategic Uses of IT
Major Competitive
Differentiator
Use IT to Develop
Competitive Advantage
Real World Case 2-
I ntec Engineering:
Click to go to
Case 2
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-13
Real World Cases
Using IT for
Strategic Advantage
Building a Customer-
Focused Business
Building Customer Value
Fast Response to
Individual Customer
Needs
Use of Internet, Intranets,
and Extranets
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-14
Real World Cases
Using IT for
Strategic Advantage
Hilton Hotels
Hilton.Com Reservation
System
Services Tailored
Automatically to Last Visit
High Level of Personalization
Deeper Personal Relationship
Direct-to-Customer Business
Model Via the Web
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-15
Real World Cases
Building Customer Value
Build a Web
Community of
Customers, etc.
Customers
Check Own
History
Web Personal-
ization Builds
Loyalty
Employee
View of
Customer is
Complete
Customer
Database
Transaction
Database
Customer
Orders
Through
Partners
Customer
Database by
Preferences &
Profitability
Customer
Place Orders
Directly
Customers
Linked With
Distribution
Intranets
Internet
Intranets
Extranets
Intranets
Extranets
Internet
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-16
Real World Cases
Reengineering Business Processes
Level of Change
Process
Change
Primary Enabler
Time Required
Path to
Execution
Risk
Business
Improvement
Business
Reengineering
Incremental Radical
Improved New
Version of Process
Brand New
Process
High Moderate
Information Technology Statistical Control
Clean Slate Existing Processes
Broad, Cross-
Functional
Narrow, Within
Functions
Typical Scope
Long Short
Cultural Cultural Structural
Participation
Bottom-up Top-down
Horizon
Past and Present Future
Frequency of
Change
One-time or
Continuous
Periodic One-time
Change
Starting Point
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Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-17
Real World Cases
Order Management Process
P
R
O
P
O
S
A
L
C
O
M
M
I
T
M
E
N
T
C
O
N
F
I
G
U
R
A
T
I
O
N
C
R
E
D
I
T
C
H
E
C
K
I
N
G
D
E
L
I
V
E
R
Y
B
I
L
L
I
N
G
C
O
L
L
E
C
T
I
O
N
S
B
u
s
i
n
e
s
s

P
r
o
c
e
s
s
e
s

B
u
s
i
n
e
s
s

F
u
n
c
t
i
o
n
s

SALES
MANUFACTURING
FINANCE
LOGISTICS
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-18
Real World Cases
Johnson Controls:
Success with Reengineering
Web-Based Reengineering
Project
Fixing a Problem During
Engineering Costs 1/10 of
Correction at the Prototype
Stage
Web-Based Collaboration Saved
80% on R&D Investments
Order Management Process
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-19
Real World Cases
Reengineering Order
Management
Customer Relationships Using
Intranets and the Internet
Supplier Managed Inventories Using
the Internet
Cross-Functional ERP Software
Integrating Manufacturing,
Distribution, Finance, and Human
Resource Processes
Customer-Access to Web Order Entry,
Status-Checking, Payment, and
Services
Customer, Product, and Order Status
Databases accessed via Intranets and
Extranets by Employees and Suppliers
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-20
Real World Cases
Agilent Technologies:
Failure in Reengineering
Rocky ERP Reengineering
Project
Lost $105 Million in Revenue
and $70 Million in Profits
Implementation Disruptions
More Extensive than Expected
ERP Changes Affect People,
Processes, Policies, and
Company Culture
Reengineering Order
Management
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-21
Real World Cases
Becoming an Agile
Company
1. Customers Perceive Products and
Services as Solutions to their
Individual Problems
2. Cooperates with Customers,
Suppliers, and Even Competitors
to Bring Products to Market
Quickly and at Lowest Cost
3. Organized to Thrive on
Uncertainty
4. Leverages the Impact of its People
and Knowledge
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-22
Real World Cases
Becoming an Agile
Company
Dell Computer
Agility in Action
Customer-Focused Company
Champion of Mass
Customization
Build-to-Order Business Model
25,000 on a Typical Day
Tight Supply Chain
Management
Rarely More than Two Hours
Worth of Parts Inventory
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-23
Real World Cases
The Virtual Company
Interenterprise IS
Boundary of a Firm
Customer
Response
and Order-
Fulfillment
Teams
Manufacturing
Teams
Engineering
Teams
Cross-Functional
Teams
Alliance -
Complementary
Services
Alliance -
Major
Customer
Alliance -
Major
Supplier
Alliance -
Small
Suppliers
Alliance -
Subcontractors
Intranets
E
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r
a
n
e
t
s

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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-24
Real World Cases
Virtual Company Strategies
Share Infrastructure and Risk with
Alliance Partners
Link Complementary Core
Competencies
Reduce Concept-to-Cash Time
Through Sharing
Increase Facilities and Market
Coverage
Gain Access to New Markets and
Share Market or Customer Loyalty
Migrate from Selling Products to
Selling Solutions
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-25
Real World Cases
Virtual Company Strategies
Cisco Systems: Virtual
Manufacturing Alliances
Alliances Create a Virtual
Manufacturing Company
Three Companies Involved in
the Alliance
Provides and Agile Build-to-
Order Capability in Fiercely
Competitive Industry
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-26
Real World Cases
Knowledge Creating Company
Learning Organizations
Knowledge Management
Explicit Knowledge
Knowledge Management
Systems (KMS)
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-27
Real World Cases
Knowledge Management
Document Management
Information
Creation, Sharing,
and Management
Enterprise
Intelligence
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-28
Real World Cases
Siemens AG: Global Knowledge
Management System
Stop Employee Problem of
Knowledge Hoarding
Created ShareNet Web Site
Profitable Real-time
Worldwide Collaboration
Real World Case 3-
Yellow, J etBlue and
Gentex:
Knowledge Management
Click to go to
Case 3
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-29
Real World Cases
Summary
Strategic Uses of Information Technology
Cut Costs
Differentiate and Innovate
Products and Services
Promote Growth
Develop Alliances
Lock in Customers & Suppliers
Create Switching Costs
Create Barriers to Entry
Leverage IT Investment
Develop Competitive Advantage
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-30
Real World Cases
Summary
Building a Customer-Focused Business
Develop Business Value
Make Customer Value the
Strategic Focus
Use of Internet, Intranets,
and Extranets to Track and
Serve Customer Needs and
Interests
Provide Services Tailored to
Specific Customer Needs
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-31
Real World Cases
Summary
Reengineering Business
Processes
Enable Radical Changes to
Business Processes
Improves Efficiency and
Effectiveness
IT Supports Innovative
Changes in Work Flows, Job
Requirements, and
Organizational Structures in
a Company
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-32
Real World Cases
Summary
Becoming an Agile Company
Rapid Response to Market
Changes
Broad Product Ranges
Short Model Lifetimes
Heavy Dependence Upon IT
to Respond to Customers
Unique Situations
Enhance Cost Effectiveness
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-33
Real World Cases
Summary
Creating a Virtual Company
Use of Internet and IT
Provide Computing and
Communications Resources
IT Enables Management of
a Network of People,
Knowledge, Financial, and
Physical Resources
Takes Advantage of
Rapidly Changing Markets
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-34
Real World Cases
Summary
Building a Knowledge-Creating
Company
Creates a Lasting
Competitive Advantage
Innovative Use of
Organization Knowledge
Supports Development and
Management of New
Organization Knowledge
Integrates Into New
Products and Services
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-35
Real World Cases
KEY TERMS
Agile Competitor
Business Process Reengineering
Competitive Forces
Competitive Strategies
Creating Switching Costs
Customer-Focused e-business
Identifying e-business and e-
commerce Strategies
Knowledge-Creating Company
Knowledge Management System
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-36
Real World Cases
KEY TERMS
Leveraging Investment in IT
Locking in Customers and
Suppliers
Raising Barriers to Entry
Strategic Information System
Strategic uses of Information
Technology
Strategic uses of Internet
Technologies
Total Quality Management
Value Chain
Virtual Company
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-37
Real World Cases
Real World Case 1
G.E., Dell, I ntel, and Others: The
Competitive Advantage of I .T.
Click to go to
Case 1
Real World Case 2
I ntec Engineering Company: The
Strategic Value of Knowledge
I nformation Systems
Click to go to
Case 2
Optional Case Studies
Real World Case 3
Yellow, J etBlue, and Gentex:
Using I .T. for Competitive
Advantage
Real World Case 4
CDW and Harrahs Entertainment:
Developing Strategic Customer-
Loyalty Systems
Click to go to
Case 3
Click to go to
Case 4
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-38
Real World Cases
Computer Hardware
Chapter 3
Module II Information Technologies
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Strategic
Advantage
Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-39
Real World Cases
GE - Dell - Intel
and Others:
1. Do you agree with the
argument made by Nick
Carr to support his
position that I T no longer
gives companies a
competitive
advantage?
Why or why not?
The Competitive Advantage of
I nformation Technology
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Competitive
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The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-40
Real World Cases
GE - Dell - Intel
and Others:
IT costs now the same as other traditional costs
and as such do not have as great an impact on a
companys strategic planning.
If all companies in an industry invest in similar
levels of IT then IT cannot be a strategic
advantage to a given company.
The IT infrastructure changes rapidly and
requires a continual investment in new IT and
impacts a companys strategic planning.
The IT infrastructures continual improvements
allow a company to adjust the mix of traditional
resources such as physical and human resources.
Discussion points would
include the following:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-41
Real World Cases
GE - Dell - Intel
and Others:
The Competitive Advantage of
I nformation Technology
2. Do you agree with the
argument made by the
business leaders in this
case in support of the
competitive advantage
that I T can provide to a
business? Why or why
not?
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Competitive
Strategy
Concepts
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Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-42
Real World Cases
GE - Dell - Intel
and Others:
The productivity lifeblood for a service oriented
company is IT and not plants and equipment.
How it is used determines the competitive
advantage of the IT infrastructure.
Some segments of the IT infrastructure are
reaching maturity and not much can be gained
by additional changes; however other areas
arent close to maturity and gains in competitive
advantage can still be made.
All companies are not at the same level of IT
usage and you cannot generalize that increased
IT expenditures no longer have value to a
company.
Discussion points would
include the following:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-43
Real World Cases
GE - Dell - Intel
and Others:
The Competitive Advantage of
I nformation Technology
3. What are several ways that
I T could provide a
competitive advantage to a
business? Use some of the
companies mentioned in this
case as examples. Visit their
websites to gather more
information to help you
answer.
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-44
Real World Cases
GE - Dell - Intel
and Others:
Improve the customer relationship
management system.
Create new uses for information to
remain competitive.
Leveraging the knowledge-capital as an
integral part of strategic planning.
Determining the best mix of knowledge,
software and hardware to be
highly competitive.
Ways to provide a competitive
advantage may include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-45
Real World Cases
GE - Dell - Intel
and Others:
Improve the customer relationship
management system.
Create new uses for information to
remain competitive.
Leveraging the knowledge-capital as an
integral part of strategic planning.
Determining the best mix of knowledge,
software and hardware to be
highly competitive.
Improve the value chain for the
company.
Ways to provide a competitive
advantage may include:
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Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-46
Real World Cases
1. What is the potential value
for competitive advantage
that a business might gain
from knowledge
management systems? Why
might this value be
difficult to measure?
Intec Engineering:
The Strategic Value of Knowledge
Management Systems
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Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-47
Real World Cases
Quickly building new knowledge into its
products and services.
Facilitate organizational learning and
knowledge creation.
Provide rapid feedback to knowledge
workers by encouraging behavior changes in
employees and improving business
performance.
Help company become more innovative as an
agile provider of high-quality products and
customer services.
Help company become a formidable
competitor in the marketplace.
Intec Engineering:
Discussion points would
include the following:
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Competitive
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Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-48
Real World Cases
Intec Engineering:
The Strategic Value of Knowledge
Management Systems
2. Do you approve of how
I ntec Engineering is
measuring the value of
their KMS? Why or why
not? How else could the
strategic value of their
KMS be measured?
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Competitive
Strategy
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Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-49
Real World Cases
The value of the KMS can be
quantified.
The quality of the KMS is not
adequately measured.
The focus on measuring the value of
the KMS permits Intec to consider
the value of their employees time.
The real value is one of Intec being
able to expand its knowledge base
through questions being answered.
Intec Engineering:
Points to consider would include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-50
Real World Cases
Intec Engineering:
The Strategic Value of Knowledge
Management Systems
3. Does Intecs knowledge
management system
give them a competitive
advantage? Give several
examples from the case
to support your answer.
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Competitive
Strategy
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Technology
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Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-51
Real World Cases
The Beijing project with
different specifications
Intec Engineering:
The Strategic Value of Knowledge
Management Systems
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-52
Real World Cases
The Beijing project with
different specifications
The prospective customer in
Australia
Intec Engineering:
The Strategic Value of Knowledge
Management Systems
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-53
Real World Cases
The Beijing project with
different specifications
The prospective customer in
Australia
Ability to reduce the time of
projects for clients so
daily revenue is
generated sooner by
the client
Intec Engineering:
The Strategic Value of Knowledge
Management Systems
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Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-54
Real World Cases
Progressive - Yellow
JetBlue and Gentex:
Using I nformation Technology
for Competitive Advantage
1. What strategies in the
use of I T for
competitive advantage
are being used by each
of the companies in this
case? Explain your
choices.
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Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-55
Real World Cases
Progressive
Lower Costs
Differentiate
Innovate
Promote Growth
Leverage investment in IS
people, hardware, software,
databases, and networks from
operational uses into strategic
applications.
Progressive - Yellow
JetBlue and Gentex:
Choices would include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-56
Real World Cases
Yellow
Lower Costs
Innovate
Leverage investment in IS
people, hardware, software,
databases, and networks
from operational uses into
strategic applications.
Progressive - Yellow
JetBlue and Gentex:
Choices would include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-57
Real World Cases
J etBlue
Lower Costs
Differentiate
Innovate
Develop interenterprise
information systems to
create switching costs.
Progressive - Yellow
JetBlue and Gentex:
Choices would include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-58
Real World Cases
Gentex
Lower Costs
Promote Growth
Leverage investment in IS
people, hardware, software,
databases, and networks
from operational uses into
strategic applications.
Progressive - Yellow
JetBlue and Gentex:
Choices would include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-59
Real World Cases
Progressive - Yellow
JetBlue and Gentex:
Using I nformation Technology
for Competitive Advantage
2. Visit the website of one
these companies for more
information on their
business. What other
competitive strategies
could you recommend for
this company? Explain
your recommendations.
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Strategy
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Technology
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Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-60
Real World Cases
Progressive
Develop Alliances
Develop interenterprise systems
creating switching costs that
lock in customers.
Include IT components in
services to make substitution of
competing services more
difficult.
Progressive - Yellow
JetBlue and Gentex:
Choices would include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-61
Real World Cases
Yellow
Differentiate
Develop alliances
Develop interenterprise systems
creating switching costs that lock
in customers.
Include IT components in
services to make substitution of
competing services more
difficult.
Progressive - Yellow
JetBlue and Gentex:
Choices would include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-62
Real World Cases
J etBlue
Promote Growth
Develop Alliances
Include IT components in services to
make substitution of competing
services more difficult.
Leverage investment in IS people,
hardware, software, databases, and
networks from operational uses into
strategic applications.
Progressive - Yellow
JetBlue and Gentex:
Choices would include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-63
Real World Cases
Gentex
Innovate
Develop Alliances
Leverage investment in IS people,
hardware, software, databases, and
networks from operational uses into
strategic applications.
Include IT components in services to
make substitution of competing
services more difficult.
Progressive - Yellow
JetBlue and Gentex:
Choices would include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-64
Real World Cases
Progressive - Yellow
JetBlue and Gentex:
Using I nformation Technology
for Competitive Advantage
3. How could other
companies apply the
competitive strategies being
used by the companies in
this case? Use examples
from both a large and small
business perspective to
illustrate your answer.
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Competitive
Strategy
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Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-65
Real World Cases
Maintain or increase investment in IT to
improve operating activities if they can be
improved.
Use investment in IT to be innovative to
distinguish company from competition.
IT can be used to develop alliances with
customers and suppliers.
Leverage investment in IS people,
hardware, software, databases, and
networks from operational uses into
strategic applications.
Progressive - Yellow
JetBlue and Gentex:
Large business perspective
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-66
Real World Cases
Maintain or increase investment in
IT to improve operating activities if
they can be improved.
Use the investment in IT to establish
alliances for the first time.
Use IT to differentiate your
company from the competition.
Use IT to be innovative to
distinguish your company from the
competition.
Progressive - Yellow
JetBlue and Gentex:
Small business perspective
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Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-67
Real World Cases
The use of IT can permit a larger
company to develop
interenterprise systems.
Progressive - Yellow
JetBlue and Gentex:
Using I nformation Technology
for Competitive Advantage
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Strategic Uses of
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Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-68
Real World Cases
The use of IT can permit a larger
company to develop
interenterprise systems.
IT can create barriers to restrict
competition from entering the
marketplace.
Progressive - Yellow
JetBlue and Gentex:
Using I nformation Technology
for Competitive Advantage
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Competitive
Strategy
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Strategic Uses of
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Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-69
Real World Cases
The use of IT can permit a larger
company to develop
interenterprise systems.
IT can create barriers to restrict
competition from entering the
marketplace.
IT can be leveraged to advance the
company into more profitable uses
for strategic applications.
Progressive - Yellow
JetBlue and Gentex:
Using I nformation Technology
for Competitive Advantage
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Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-70
Real World Cases
CDW and Harrahs
Entertainment:
Developing Strategic Customer-
Loyalty Systems
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1. Does CDWs customer
loyalty program give
them a competitive
advantage? Why or why
not?
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Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-71
Real World Cases
Loyalty program is a system that
differentiates CDW from its
competitors.
CDW used IT in an innovative way
to move beyond a CRM package to a
system that measures customer
satisfaction and loyalty.
The loyalty program provides CDW
with an alliance strategy with its
customers by locking in the
customers to the CDW system.
CDW and Harrahs
Entertainment:
Discussion points to consider:
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Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-72
Real World Cases
CDW and Harrahs
Entertainment:
Developing Strategic Customer-
Loyalty Systems
2. What is the strategic
value of Harrahs
approach to
determining and
rewarding customer
loyalty?
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Competitive
Strategy
Concepts
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Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-73
Real World Cases
Differentiate Harrah from its
competitors in terms of service to
different groups of customers.
Promote growth through improved
targeting of multiple customer
groups on a real-time basis.
Creating switching costs in multiple
customer groups to lock customers
in all groups into continuing to
have loyalty to Harrahs.
CDW and Harrahs
Entertainment:
Discussion points to consider:
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Competitive
Strategy
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Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-74
Real World Cases
CDW and Harrahs
Entertainment:
Developing Strategic Customer-
Loyalty Systems
3. What else could CDW
and Harrahs do to
truly become customer-
focused businesses?
Visit their websites to
help you suggest several
alternatives.
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-75
Real World Cases
CDW
Online competitive pricing or auction
features as products age.
Web site redesign to improve
appearance.
Better leverage IT so that every order
is filled as quickly as possible by
creating alliances with suppliers that
permit direct shipment to customers
to ensure best price and delivery for
loyal customers.
CDW and Harrahs
Entertainment:
Suggestions could include:
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Competitive
Strategy
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Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-76
Real World Cases
Harrahs -
Leverage IT investments by
expanding the analytical mining of
the data.
CDW and Harrahs
Entertainment:
Suggestions could include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-77
Real World Cases
Harrahs -
Leverage IT investments by
expanding the analytical mining of
the data.
Differentiate Harrahs from its
competitors by using the data
mining to expand products and
services offered to repeat customers.
CDW and Harrahs
Entertainment:
Suggestions could include:
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Competitive
Strategy
Concepts
Strategic Uses of
Information
Technology
The Value Chain
Section II
Customer
Focused Business
Reengineering
Processes
The Virtual Co.
Building a
Knowledge-
Creating Co.
KEY TERMS
Copyright 2005, McGraw-Hill/Irwin, Inc. 2-78
Real World Cases
Harrahs -
Leverage IT investments by
expanding the analytical mining of
the data.
Differentiate Harrahs from its
competitors by using the data
mining to expand products and
services offered to repeat customers.
Use IT to develop new products and
services that will attract new
customers to Harrahs.
CDW and Harrahs
Entertainment:
Return to
Cases Page
Suggestions could include: