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.