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Business Information Systems - ITM 102

Chapter Overview

  • Course Title: ITM 102 Business Information Systems
  • Instructor: Mahdi Abouei
  • Season: Winter 2025

Ethical, Social, and Political Issues in Information Systems

  • Key Questions:
    • What issues are raised by information systems in ethical, social, and political aspects?
    • What principles guide ethical decisions?
    • How do contemporary technologies challenge privacy and intellectual property?
    • Impact of information systems on laws related to accountability and quality of life.

Chapter 3: Information Systems, Organizations, and Strategy

Learning Outcomes

  • Understand how:
    • Porter’s Competitive Forces Model aids competitive strategy.
    • The Value Chain Model enhances organizational value.
    • Synergies, Core Competencies, and Network Economics contribute to strategies.
    • Challenges of strategic information systems and addressing them.

Porter’s Competitive Forces Model

  • Five Forces:

    1. Traditional competitors
    2. New market entrants
    3. Substitute products/services
    4. Customers
    5. Suppliers

  • Purpose: Framework for understanding competition in an industry.

Details on Competitive Forces

  • Traditional Competitors:

    • Constant innovation from all firms in the market.

  • New Market Entrants:

    • High entry barriers (e.g., tech industries) versus low brand recognition for newcomers.

  • Substitutes:

    • Options customers may turn to, especially if prices rise.

  • Customers:

    • Market power impacting pricing and competition.

  • Suppliers:

    • Their market power affects a firm's pricing flexibility.

Information System Strategies for Competitive Forces

Four Generic Strategies

  1. Low-Cost Leadership:

    • Achieve lower prices through operational efficiencies (e.g., inventory systems).

  2. Product Differentiation:

    • Unique products and mass customization opportunities.

  3. Focus on Market Niche:

    • Target a specific segment; e.g., Hilton's OnQ system.

  4. Strengthen Customer & Supplier Intimacy:

    • Build loyalty and increase switching costs (e.g., Toyota, Amazon).

The Internet’s Impact

  • Effects:
    • Changed traditional competitive advantage models in industries.
  • Challenges: Intensified market rivalry and facilitated new entrants.
  • Opportunities: Growth of brands and customer loyalty.

Smart Products and the Internet of Things (IoT)

  • IoT:
    • Use of internet-connected devices enhances product differentiation.
  • Competition: Increased rivalry and switching costs, reduced supplier powers.

The Business Value Chain Model

  • Roles: Identifies where competitive strategies can be effectively applied.
    • Differentiates between primary and support activities.
  • Improvement: Use data to enhance operational efficiency and customer relations.

The Value Web

  • Concept: Linked value chains of firms forming a more dynamic, customer-oriented network.
  • Function: More collaborative and responsive than traditional linear value chains.

Synergies and Core Competencies

  • Synergies: Collaborative benefits realized when unit outputs serve as inputs for each other, such as mergers (e.g., Bank of NY and JP Morgan).
  • Core Competencies: Areas where a firm excels (e.g., knowledge sharing in firms like Procter & Gamble).

Network-Based Strategies

  • Network Economics:
    • Low cost of adding users with a significant increase in value from a larger community.
  • Virtual Company Model: Firms acting without traditional boundaries by utilizing networks closely (e.g., Li & Fung).
  • Business Ecosystems: Firms form interrelated networks to offer integrated services and products, shaping strategic advantages.

Challenges with Strategic Information Systems

  • Maintaining Competitive Advantage:
    • Competitors may copy successful strategies.
  • Alignment of IT with Business Goals:
    • Necessary to ensure IT supports strategic objectives.