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Lecture 5B Strategy

Lecture Overview

  • Dr. Abhijit Sengupta, University of Surrey

  • Focus on IT and its strategic role in business.

Generic Strategies

Cost Strategy

  • High Cost vs Low Cost

  • Cost Leadership and Differentiation strategies

  • Broad vs Narrow market focus

Market Focused Strategy

  • Aimed at strengthening customer and supplier relationships.

Value Chain Analysis

  • Components of Value Chain:

    • Administrative Functions: Legal, accounting, financial management.

    • Human Resources: Personnel management, recruitment, training.

    • Product & Process Design: Market testing, R&D, production engineering.

    • Procurement: Supplier management, funding, subcontracting.

  • Value Added Less Cost: Profit Margin

    • Inbound Logistics: Receiving raw materials.

    • Operations: Manufacturing, quality control.

    • Outbound Logistics: Dispatching finished goods.

    • Sales & Servicing: Order handling, marketing, customer management.

Technology in Business Strategy

Administrative and Management Tools

  • Electronic scheduling and messaging systems.

  • Workforce planning systems in HR.

Primary Activities in Value Chain

  • Automated ordering systems in procurement.

  • Digital technology for inbound operations, outbound logistics, and marketing.

Common Business Strategies

  • Reducing costs and creating barriers to entry.

  • Establishing alliances and differentiating products/services.

Strategic Uses of IT

  • Tangible Benefits: Increased sales, market share, efficiency, and lower operational costs.

  • Intangible Benefits: Improved decision-making, communication, branding.

  • The paradox of IT raising or lowering barriers to entry.

  • Importance of sustaining value creation through IT.

Critical Readings in IT Strategy

  • "Does IT Matter?" - Michael E. Porter (2001)

  • "IT Doesn't Matter" - Nicholas G. Carr (2003)

IT Spending and Strategic Value

  • Discussion of IT as an infrastructural technology.

  • IT as a commodity and utility.

  • New approaches to IT spending: lower costs, vulnerability focus.

Network-Based Strategies

  • Leveraging networks for competitive advantage through:

    • Network economics.

    • Virtual company models.

Disruptive Technologies

  • Definitions and examples across various sectors like Banking, Healthcare, and Retail.

  • The significance of technologies such as 3-D printing and telemedicine.

Using the Internet for Growth Strategies

Growth Strategies Supported by Internet

  • Market Development and Diversification strategies targeting new markets.

  • Enhancements in customer loyalty through improved online services.

Strategic Agility (Donald Sull)

  • Concept of maintaining flexibility amid uncertainty in business strategy.

Key Points Summary

  • Long-term strategy direction includes cost differentiation, alliances, and the impact of IT.

  • Recognition that IT's strategic value can become a liability over time.