Chapter 2: Organizational Strategy, Competitive Advantage, and Information Systems IS-300

Porter’s Competitive Forces Model

1. Threat of Entry of New competitors: high when entry barriers are low and low when barriers are high

   1. New Bank has high barriers bc of an array of MIS-related services

2. Bargaining Power of Suppliers: strong if few suppliers exist; weaker when buyers have many options. Supply chain magnifies this

3. Bargaining Power of Customers/Buyers: strong when customers have choices and low switching costs, and loyalty programs help reduce this power

4. Threat of Substitute Products or Services: high when many alternatives exist

5. Rivalry Among Existing Firms within the industry: high with many aggressive rivals; lower when markets are less crowded (product differentiation key to standing out)

   

Buyer Power

Ability of buyers to affect the price of an item

• switching cost: manipulating costs that make customers reluctant to switch to another product

• loyalty program: rewards customers based on the amt of business they do with a particular organization

Supplier Power

The suppliers’ ability to influence the prices they charge for supplies

• Supply Chain—consists of all parties involved in the procurement or a product or raw material

competitive strategy

a statement identifying a business’s approach to compete, its goals, and the plans and policies required to attain those goals

Strategies for Competitive Advantage

• cost leadership: compete on price efficiency

• differentiation: unique products/services

• innovation: new products, features, or ways of doing business

• operational effectiveness: perform activities better than rivals

• customer-orientation: build loyalty through personalized services

Porter’s Four Competitive Strategies

Porter’s Value Chain Model

definition: a sequence of activities transforming inputs into outputs of value

primary activities: production/distribution: inbound logistics, operations, outbound logistics, marketing & sales, customer service

support activities: support primary activities such as infrastructure, HR, tech development, procurement

Business process

definition: an ongoing collection of related activities that create a product or service of value to the organization, its business partners, and/or its customers

three elements of the business process

• inputs: materials, services, and information that flow and are transformed as a result of a process

• resources: the people and material that perform process activities

• outputs: the products or a service created by the process

metrics to assessing process

1. Efficiency: doing things well (low cost, low speed, low resources)

2. Effectiveness: doing things that matter (higher quality output)

IS three areas of business processes

• executing the process

• capturing and storing process data

• monitoring process performance

Cross-Functional Processes

• span multiple departments

• No single functional area is responsible

• steps executed in a coordinated, collaborative way

• Procurement & fulfillment cross-functional processes

Improving process through better collaboration

tools like Microsoft HoloLens enable real-time teamwork across functions

Types of Process Models: Process Maps

Step-by-step flow (ordering e-tickets online)

Types of Process Models: Swim Lane

• similar to a flowchart in that it maps out a process, decisions, and loops; however, a swim lane map places events and actions in "lanes" to delineate a person/group responsible, or a specific sub-process.

• A swim lane map has three elements: time, people (or job functions), and tasks/processes.  It may also show what data you need.
  

  

Types of Process Models: Process Decomposition Diagram

• shows pure process, break down high-level process into sub-processes

  

Types of Process Models: Data Flow Diagram

• uses the decomposition diagram and adds what entities are out of your system and data

• shows process in sequence and the necessary inputs/outputs of the process

Measures of Excellence in Executing Business Process

• customer satisfaction

• cost reduction

• cycle and fulfillment time reduction

• quality

• differentiation

• productivity

Business Process Reengineering (BPR)

• radical redesign; “clean slate” approach

• high risk, costly, top-down, time-consuming, high failure rate but transformative

BPR: Taco Bell Example

• example: taco bell - restructured kitchen-to-dining ratio, eliminated 3 management levels, shifted to centralized cooking.

• reengineered its marketing to become value-driven

• Result: sales increase $500 million to $3 billion 10 years later, restaurants grew from 1,500 restaurants to 3,600 from 1983-1993, profit growth 31% per yr over same period

Business Process Improvement (BPI)

• 5 basic phases of successful BPI: define, measure, analyze, improve, control

• incremental, continuous improvement

• focuses on reducing variation in process outputs by identifying the underlying cause of the variation

• low-risk, low-cost, less time than BPR, bottom-up, quantifiable results

Toyota BPI Example

• ex: Toyota—process improvement through lean manufacturing (waste reduction & efficiency) (JIT, Kaizen, Jidoka, Standardized Work)

• •Just-In-Time (JIT) Production: Minimizes inventory costs and reduces waste

  •Kaizen (Continuous Improvement): Encourages all employees to suggest and implement improvements

  •Jidoka (Automation with a Human Touch): Combines automation with human oversight to ensure quality

  •Standardized Work: Establishes best practices for each process to maintain consistency

  These principles have allowed

Business Process Management (BPM)

• continuous cycle of BPI with IT support

• Includes: process modeling, business activity monitoring (BAM), and Business Process Management Suites (BPMS)

• Trend: Social BPM—collaboration through social media tools

National Geographic Reengineering

• Problem: images not properly resizing, download times were long, marketing was hindered due to platform mismatches, and needed to restructure web development

• approach: used third-party commerce and open source software, and restructured web development

• results: increase 232%, 65% in mobile page views, streamlined content, improved communications

geo-engineering

to combat climate change. this refers to a set of emerging technologies that could manipulate the environment and partially offset the impacts of climate change 

business pressures and responses

• pressures: market, technology, and societal pressures

• organizational responses: strategic use of IT, process innovation, and organizational flexibility