Untitled Flashcards Set

Chapter 1:

Globalization Challenges and Opportunities a Flattened World

Slide 1 - 31

Internet and global communications have greatly
reduced economic and cultural advantages of
developed countries -
• Drastic reduction of costs of operating and transacting on
global scale
• Competition for jobs, markets, resources, ideas
• Dependence on imports and exports
• Requires a new understanding of skills, markets, and opportunities

Business Drivers of Information Systems

Businesses invest in IT to achieve six important
business objectives:
1. Operational excellence:

-             Improved efficiency results in higher profits.

-              Information systems and technologies help improve
efficiency and productivity.

2. New Products, Services, and Business Models:

- Information systems and technologies enable firms to
create new products, services, and business models.

- Business model: how a company produces, delivers, and
sells its products and services.

3. Customer and Supplier Intimacy:

- Customers who are served well become repeat customers
who purchase more

-  Close relationships with suppliers result in lower costs

4.  Improved Decision Making:

- If managers rely only on forecasts, best guesses,
and luckily, they will misallocate employees, services, and inventory.

- Real-time data improves ability of managers to
make decisions.

5. Competitive Advantage:

- Advantages over competitors:
• Charging less for superior products, better
performance, and better response to suppliers and
customers
• Can result from achieving business objectives 1 – 4

6. Survival:

- Businesses may need to invest in information systems out of necessity; simply the cost of doing business.
- Keeping up with competitors
• Citibank’s introduction of ATMs
- Compliance with federal and state regulations and
reporting requirements
• Toxic Substances Control Act
• Sarbanes-Oxley Act
• HIPAA requirements

7. Environmental, Social and Governance (ESG) Leadership

- Pressure from employees, customers, investors, and governments with respect to business conduct in:
– Environment:
• Energy use, carbon footprint, sustainability, recycling practices,
pollution, and natural resource conservation
– Social responsibility
• Is the company a good corporate citizen and actor in terms of its employees, suppliers, customers, and the community
– Governance
• Relates primarily to the actions of the company’s leadership,
executive pay, internal controls, shareholder rights, and diversity, equity, and inclusion (DEI).

5. Which business functions/ departments receive the
greatest benefits from Information Systems?

- Customer Service
- Finance & Accounting
- Sales & Marketing
- IT Operations
- Operations Management
- HR
- Security

IT’s Impact/Advantages for Businesses:

Reduce Costs/Improve Productivity
• Improve Customer Satisfaction/Loyalty
• Create Competitive Advantage
• Streamline Supply Chain
• Generate Growth
• Global Expansion

What is an Information System?

 An information system is more than just information technology

Information technology: The hardware and software a business uses to achieve objectives.

Information System: Interrelated set of components or
resources that collect (or retrieve), process, store, and
distribute information in an organization.

Information systems transform or process data into
information for specific uses in an organization
through a set of activities.
Activities in an Information System:

Activities in an information system that produce information:

-             Input

-             Processing

-             Output

-             Feedback

What is Data?

A stream of raw facts; raw facts that describe the
characteristics of an event; the raw input for entry into an information system.

Usually serve as input to an information system
-  Examples:
• Number of hours worked
• Number of items sold
• Names of customers
-  Data can be represented in various formats –
alphanumeric, image, audio, video

What is Information?

-             Data that has been converted into a meaningful and useful
context
• A collection of data organized in such a way that they have
value beyond the facts themselves
• Data that has been processed, interpreted, or formatted into a meaningful context for users

-             Information is the output of an information system
• Business decisions and outcomes are only as good as the quality of the information used

Characteristics of Quality Information
• Accurate
• Complete
• Relevant
• Timely

Information System:

-             Technology

-             Organizations

-             People

Components of an information system:

-             Technology Dimension

·      IT Infrastructure: Foundation or platform that information systems are built on.

·      Hardware (HW):

The physical components of an information system.
HW components include processors, input and output devices, storage devices, etc.

·      Software (SW):

The instructions that operate the information system;
“programs”

System (SW) controls the hardware (Windows 10, Mozilla
Firefox, etc.)
Application (SW) allows users to perform specific tasks to increase productivity or perform a task (payroll, invoicing. etc)

·      Data and Databases:

HW components for storage

SW governing the organization and access of data on
physical storage media (Access, Paradox, Oracle, others)

·      Networking & Telecommunications technology:

The combination of HW and SW needed for the electronic
transmission of signals for data transfer and
communications
Allows two or more computers or devices to
communicate
Internet, WWW, intranets, extranets
Voice, video communication

-             People Dimension

·      Human Resources

Information systems require skilled people to build maintain, and use them

·      IS Specialists/Personnel

·      End Users

·      Employee attitudes, skills, training all affect ability to use systems productively

-             Organizational Resources

·      Organizational Resources

·      Organizational Structure – Processes, Functions, and Hierarchies: Organizations coordinate work
through business processes, functional departments & a
structured hierarchy (division of labor)

·      Business processes: logically related sets of tasks that define how specific business tasks are performed
• Examples: fulfilling an order, hiring an employee
• May be informal or include formal rules
• Business functions: also referred to as departments
• A way to group/organize similar business processes to take advantage of efficiencies
• Business hierarchy or level: define levels of authority, decision
making, responsibility, and access to resources

·      Organizational Cultural: reflects the firm’s underlying
assumptions and values – ways of doing things

Problem solving: four-step process
1. Problem identification

Agreement that problem/opportunity exists
• Definition of the situation
• Causes of the situation
• What can be done given resources of firm
• We can use the author’s 3 Dimensions model to
help us identify/understand the problem

Typical technology problems
• Insufficient or aging hardware
• Outdated software
• Inadequate database capacity
• Insufficient telecommunications
capacity
• Incompatibility of old systems with
new systems
• Rapid technological change

Typical people problems
•Lack of employee training
•Difficulties of evaluating
performance
•Legal and regulatory
compliance
•Work environment, ergonomics
•Poor or indecisive management
•Lack of employee support and
participation

Typical organizational problems
•Outdated business processes
•Unsupportive culture and attitudes
•Political in-fighting
•Turbulent business environment, change
•Complexity of task
•Inadequate resources

2. Solution design

Generate possible alternatives/solutions
Consider as many as possible to understand range
of solutions
3. Solution Evaluation and Choice

Analyze each alternative based on feasibility
 Cost, time, skills, other resources
 Choose
4. Implementation

Building or purchasing solution
• Testing solution, employee training, documentation
• Change management
• Measurement of outcomes
• Feedback, evaluation of solution

Problem solving is a continuous process, not a
single event
• Sometimes chosen solution doesn’t work or needs
adjustment
Critical thinking: Sustained suspension of judgment with
an awareness of multiple perspectives and alternatives
• Without critical thinking, it’s easy to jump to conclusions,
misjudge a problem, and waste resources.

Four elements of critical thinking:
1. Maintaining doubt and suspending judgment
2. Being aware of different perspectives - including technology,
people and organization perspectives
3. Testing alternatives – experiment, gather data and reassess
situations
4. Being aware of organizational and personal limitations

How Information Systems will Affect Business Careers
• Success in today’s job market requires a broad set of skills.
• Job candidates must have problem-solving skills as well as
technical skills so that they can complete specific tasks.
• Common requirements:
•Understand how IS/IT can help firms achieve their business objectives
•Understand the central role of databases
•Develop skills in information analysis and understanding the impact of environmental factors
•Ability to work with IS specialists and systems designers who build & implement information systems
•Understand current ethical, social, legal environment and issues and how IT can be used to meet these issues

Global E-Business and Collaboration

Slides 1-45

Organizing a Business: Business Processes

Business Process:

Logically related set of tasks that define how specific business tasks are performed

·      The tasks each employee performs, in what order, and on what
schedule - Ex. Steps in hiring an employee.

Some processes tied to a Functional area

·      Sales and marketing: identifying customers

Some processes are Cross-Functional

·      Fulfilling customer orders

Components of a Business

An example: The Order Fulfillment Process

-             Sales

-             Accounting

-             Manufacturing and Production

·      Fulfilling a customer order involves a complex set of steps that requires the close coordination of the sales, accounting, and manufacturing functions.

Levels in a firm:

Firms coordinate work by developing a hierarchy in which
authority is concentrated at the top.

Business organizations are hierarchies consisting of three principal levels: senior management, middle management, and operational
management and workers.
Information systems serve each of these levels.
Scientists and knowledge workers often work with middle management.

Senior Management

Middle Management

-             Scientists and knowledge workers

Operational Management

-             Production and Service workers

-             Data Workers

The Business Environment – Factors Outside the Organization

Environmental Scanning: The acquisition and analysis of events and trends in the environment external to an organization.

Immediate environment factors:

-             Customers

-              Suppliers

-             Competitors

-             Stockholders

-              Regulations

Global Environment factors:

-             Technology and science

-              Economy

-             Politics

-             International change

-              Regulations

Systems for Management Decision Making and Business Intelligence

-             Transaction processing systems (TPS)

·      Keep track of basic activities and transactions of the organization

-             Business Intelligence Systems (BI):
Data and SW tools for organizing, analyzing, and providing access to data to help managers and other users make informed decisions.

-             Management information systems (MIS)

-              Decision support systems (DSS)

-             Executive support systems (ESS)

Systems for Management Decision Making and Business Intelligence: TPS

-             Transaction Processing Systems (TPS)

·      Serve operational managers and personnel

·      Support routine, well-defined tasks

·      Keep track of basic activities and transactions of organization (e.g., sales, receipts, cash deposits, payroll,
credit decisions, flow of materials in a factory)

·      Principal purpose is to answer routine questions and to track the flow of transactions through the organization.

·       E.g., inventory questions, granting credit to customer

·      Update organizational databases

·       Monitor firm’s status of internal operations and firm’s
relationship with external environment

·      One of the first types of computer-based information systems

A TPS for payroll processing captures employee payment transaction data (such as a timecard).
System outputs include online and hard copy reports for management and employee paychecks.

Transaction Processing Systems (TPS), cont.

-             Processing: The capturing of transaction & event
data using technology to (1) process the data
according to defined business rules, (2) store the
processed information, (3) update existing
information to reflect the new information

-             Processing can be either:
• Batch: grouped and processed together at a
later time
• Online (real-time): processed individually in
real-time, as it occurs

-             Batch transaction Processing: Method of processing in
which business transactions are accumulated over a period
of time and processed as a single unit or batch.

·      Uses master files and transaction files which are sorted in
sequence

·      Can be done remotely (Remote Job Entry RJE)

·      Advantages/Disadvantages

-             On-line transaction processing (OLTP): Processing in
which each transaction is processed immediately (in real
time), without the delay of accumulating transactions into a
batch

·      Can be done remotely (Remote Job Entry RJE)

·       Advantages/Disadvantages

-             Management Information Systems (MIS):

·      Help with monitoring, controlling, decision making, and
administrative activities

·       Provide middle managers with reports on their
department’s performance to monitor and help predict
future performance

·      Summarize and report on basic operations using data
from TPS

·      Provide answers to routine questions that have been
specified in advance and have a predefined procedure for
answering them

·       Provide weekly, monthly, annual results, but may enable
drilling down into daily or hourly data

·      Typically not very flexible systems with little analytic
capability (don’t need to be, because they are supporting
more structured information needs)

Decision Support Systems (DSS):

·      Support non-routine decision-making for middle
management

·       Focus on problems that are unique and rapidly
changing or have multiple variables/components that
may change

·       Use a variety of statistical models to analyze data to
support decision-making

·       Focus on helping users make better decisions

·      Especially helpful at Step 3 of the problem solving process when evaluating multiple alternatives

Executive Support Systems (ESS):

·      Help senior managers address strategic issues and long-
term trends

·       E.g., what products should we make in five years?

·       Address non-routine decision making that require
judgement, evaluation and insight because there is no
agreed-on procedure for arriving at a solution

·      Provide generalized computing capacity that can be
applied to changing array of problems & situations

·      Draw summarized information from MIS, DSS, and data
from external events

·       Information is presented in form of a “digital dashboard”

Systems for Linking the Enterprise

Enterprise Applications –
• Systems that span functional areas, focus on
executing business processes across the firm; may
include multiple levels of management
• Help businesses become more flexible and
productive by coordinating their business
processes more closely and integrating groups of
processes to focus on efficient management of
resources and customer service

Types:

Enterprise Systems aka Enterprise Resource Planning
Systems (ERP)
• Supply Chain Management Systems (SCM)
• Customer Relationship Management Systems (CRM)
• Knowledge Management Systems (KM)

Enterprise Resource Planning Systems (ERP)

Are based on a suite of integrated SW modules and
a common central database
• Integrate data from key business processes into a
single system
• Speed communication of information throughout
the firm
• Enable greater flexibility in responding to customer
requests, greater accuracy in order fulfillment
• Enable managers of large firms to assemble overall
view of operations

Supply Chain Management Systems (SCM)
Manage relationships with suppliers, purchasing
firms, distributors, and logistics companies
• Manage shared information about orders,
production, inventory levels, etc.
Goal is to move correct amount of product from source to
point of consumption as quickly as possible and at
lowest cost
• Type of interorganizational system:
Automating flow of information and goods across
organizational boundaries

Customer Relationship Management Systems (CRM)

Help manage relationship with customers
• Coordinate business processes that deal with
customers to optimize revenue and customer
satisfaction, and increase sales
• Combine sales, marketing, and service record data
from multiple communication channels to provide
unified view of customer, eliminate duplicate efforts
• Optimize revenue
• Improve customer satisfaction
• Increase customer retention
• Identify and retain most profitable customers

Knowledge Management Systems (KM)
- Manage both tangible & intangible knowledge
assets – firm knowledge that is unique, difficult to
imitate, and can be leveraged into long term
strategic benefits
• Knowledge about producing and delivering products
• Source of value and advantage for firms
- Knowledge management systems:
• Help capture, storage, distribute, and apply the firm’s
knowledge so that it can be leveraged for strategic benefit
• Include systems for:
• Managing and distributing documents, graphics,
other digital knowledge objects
• Creating knowledge directories of employees with
specialized expertise
• Distributing knowledge

Technology platforms that increase integration and expedite the flow of information

Intranet:
• Internal company web site that is accessible only by
employees/authorized internal users
• Define and limit user access carefully
• Uses Internet protocols and technologies for
collecting, storing, and disseminating useful
information to support business activities
• Also called “corporate portals”
• May be accessed from remote locations

Extranet:
• The part of your company web site that is
accessible to authorized external users
• Uses the Internet and Web technologies and
protocols to connect intranets of business
partners

Type of interorganizational system (IOS)
• Facilitates information exchange between
business partners
Benefits of Intranets and Extranets:
-  Expedited communication & coordination of information
among business partners/users
• Improved access to information for authorized users
• Improved timeliness and accuracy of information
• Allows central management of documents and data
allowing single updates, which are then available to all
authorized users
• Global reach allowing access from anywhere
• Cross platform integration
- Cost reduction
• Lower cost deployment of information

E-business:
• Use of digital technology and Internet to drive major
business processes

E-commerce:
• Subset of e-business
• Buying and selling goods and services through Internet

E-government:
• Using Internet technology to deliver information and
services to citizens, employees, and businesses

What is Collaboration?

Collaboration – working with others to achieve
shared and explicit goals
- Can be informal groups or formal teams
- Growing importance of collaboration in today’s organizations
- Many benefits of collaboration
• Productivity
• Quality
• Innovation
• Customer Service
• Financial performance
- Must build a “Collaborative Culture

A Collaborative Culture versus a traditional Command-and-Control Culture
- “Command-and-Control” culture
• Requires lower level employees to carryout orders from above
• Little or no value placed on teamwork or lower-level participation in decision making
• Rewards based on individual performance
- “Collaborative” culture
• Senior managers rely on teams of employees to achieve results
• Policies, products, design, processes and systems rely on teams
• Team-building is a priority and valued
• Teams are rewarded for their performance and individuals are
rewarded for their performance on their team.

Requirements for Successful Collaboration – must “build” a collaborative culture and business “build” a collaborative culture and business processes

-             Film Performance

Collaboration Quality

Collaboration Capability

·      Open culture

·      Decentralized Structure

·      Breadth of Collaboration

     Collaboration Technology

·      Use of collaboration technology for implementation and operations

·      Use of collaborative technology for strategic planning

Successful collaboration requires an appropriate organizational structure and culture, along with appropriate collaboration technology

Tools and Technologies for Collaboration and Teamwork

-             E-mail and instant messaging (IM)

-             Wikis

-             Virtual worlds

-              Collaboration and social business environments

·      Virtual meeting systems (WebEx, Zoom, MS TEAMS,
Skype for Business, etc.)

·       Cloud collaboration services (Google Drive, Google
Docs, MS OneDrive, DropBox, etc.)

·       Microsoft SharePoint

·       IBM (Lotus) Notes

·       Enterprise social networking tools (Salesforce Chatter,
MS Yammer, Jive, etc.)

-             Groupware – software to support team interaction and
dynamics including scheduling, calendars, decision
making, archiving, communication

Groupware: Collaboration Systems/Group Support Systems

Assist decision makers working in groups or teams
• Use computer and communication technologies to
formulate, process and implement a decision-
making task
• Support complex interactions between people
across different functions, locations, time zones
• Dimensions of Group Support
• Time Dimension
• Space (Location) Dimension

Dimensions of Group Support: Time Dimension

Synchronous Groupware – Systems that allow and
support simultaneous group interactions; examples:
shared whiteboards, on-line chat, electronic meeting
support systems, video communication systems
• Asynchronous Groupware – Systems that do not
require users to be on the system working at the
same time; examples: e-mail, newsgroups, workflow
systems, group calendars, collaborative writing tools,
blogs, wikis, electronic bulletin boards

Dimension of Group Support: Space (Location) Dimension

Co-located - Systems that support users
working at the same place
• Remote - Systems that allow and support
users working at different locations; different
place

Time/Space Collaboration Matrix

GROUPWARE: SYNCHRONOUS/CO-LOCATED

Synchronous (same time) & Co-located (same place) [blue
quadrant – upper left on matrix]

-             Technological support for live meetings in electronic
meeting facilities using Electronic Meeting System SW
• Decision rooms
• “War” rooms

-             Advantages:

Reduction of negative group behaviors
• More participation by team members
• Can include more participants
• More/varied ideas
• Faster
• More productive use of meeting time

General Characteristics/Features of an Electronic Meeting
- System to support decision making in a Synchronous/Co-
located decision environment

Idea generation/brainstorming
• Parallel communication
• Idea organization
• Prioritization, ranking
• Anonymous input
• Voting
• Reduction of negative group behaviors
• Enables larger group size
• Access to external information
• Automated record keeping

GROUPWARE: SYNCHRONOUS/REMOTE

-             Synchronous (same time) & Remote (different place) [green
quadrant – lower left on matrix]

Conference calls

·      Instant messaging, on-line chat

·      Videoconferences, desktop conferences, web conferences

·      Zoom, MS TEAMS, WwebEx, etc.

·      Telepresence

·      Virtual Worlds

-             Advantages:

·      Decreased travel costs, decreased time away from office

·       Inclusion of participants based on expertise rather than location

·      Increased collaboration

Asynchronous (different time) & Co-located (same place)
[pink/lavender quadrant – upper right on matrix]

-             Asynchronous technologies to support communication
occurring at different times

·      e-mail, voice mail, fax, text messaging, newsgroups,
group calendars, scheduling and appointment books,
workflow management systems, to-do lists, database
access; shared document access; blogs; wikis

·      Project room as “home base” or “team room”

-             Advantages:

Can support continuous projects/tasks, projects where there is a sequence involved
• Can take advantage of co-location to share resources such as HW, SW dedicated to the project

ROUPWARE: ASYNCHRONOUS/REMOTE

Asynchronous (different time) & Remote (different place)
[peach/tan quadrant – lower right on matrix]

-             Asynchronous technologies to support communication
occurring at different times and in different places

·      e-mail, voice mail, fax, text messaging, newsgroups, group
calendars, scheduling and appointment books, workflow
management systems, blogs, wikis, Internet based collaboration environments for shared document and data access

-             Advantages:

Support for coordination for asynchronous tasks

 Improved communication and information flow

Improved access to information and project resources regardless of time or location

The Information Systems Function in Business

IS Specialists/personnel:
Information Systems Department – the formal organizational
function/unit responsible for information technology services
–– Programmers
–– Systems analysts
–– Information Systems managers Information Systems managers
• Leaders of teams of programmers and analysts, project managers, physical facility managers, telecommunications managers, database specialists, managers of computer operations and data entry staff
– Senior I.S. managers: CIO, CTO, CSO, PO,CKO,CDO
• Other players
– End users
– External specialists

Senior I.S. Managers

Chief Information Officer (CIO) - senior manager who
oversees all uses of IT and ensures the strategic
alignment of IT with business goals and objectives
Chief Technology Officer (CTO) – responsible for
ensuring the throughput, speed, accuracy, availability,
and reliability of IT – the technical aspects
Chief Security Officer (CSO) – responsible for ensuring
the security of IT systems, and for enforcing the firm’s
information security policy
Chief Privacy Officer (CPO) – responsible for ensuring
the ethical and legal use of information, complying with
existing data privacy laws
Chief Knowledge Officer (CKO) - responsible for the
firm’s knowledge management program; helps design
programs and systems to find new sources of
knowledge and make better use of existing knowledge
Chief Data Officer (CDO) – responsible for enterprise-
wide governance and use of information to maximize
the value of the organization's data

Services provided by the information systems department:
• Computing and telecommunications services
• Data management services
• Application software services
• Physical facilities management services
• IT management services
• IT standards services
• IT educational services
• IT research and development services

Chapter 3: Achieving Competitive Advantage with Information Systems

Slide 1-16

Why do some firms do better than others?
Competitive advantage – the ability to do something better, faster, more economically or uniquely when compared with competitors; a product or service that an organization’s customers place a greater
value on than similar offerings from a competitor
First-mover advantage – occurs when an organization can significantly impact its market share by being first to market with a competitive advantage

Organizations monitor their competition through environmental scanning

Environmental scanning – the acquisition and analysis
of events and trends in the environment external to an
organization
Three common tools used in industry to analyze and
develop competitive advantages include:
• Porter’s Competitive Forces (Five Forces) Model
• Porter’s business strategies & information systems strategies
• Value chain analysis

Porter’s 5 Competitive Forces Model

1.     Substitute Products

2.     Rivalry Among Existing Competitors (The Firm – Competitors)

3.     New Market entrants

4.     Customers

5.     Suppliers

In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not only by competition with its traditional direct competitors but also by four other forces in the
industry’s environment: new market entrants, substitute products, customers, and suppliers.

Porter’s 5 Competitive Forces Model
1. Threat of Substitute Products or Services1. Threat of Substitute Products or Services

-             Threat of substitute products or services – substitutes the
customer can purchase instead of your product or service

·      Threat is high when there are many alternatives the
customer can choose from

·      Threat is low when there are few alternatives to choose
from

-             To reduce the threat of substitutes, firms may use Switching
costs – costs that can make customers reluctant to switch
to another product or service – do not have to be $ costs

·      The expense a customer or company incurs in lost time and/or expenditure of resources when changing from one supplier or system to a competing one

2. Existing of Traditional Competitors

- Existing companies/competitors that are producing the
substitutes

·      Rivalry is high when competition is fierce in a market

·       Rivalry is low when competition is not as fierce

Who are those companies/competitors? What are they doing?

Some industries experience more competition than others –
but that can change.

3. Threat of New Market Entrants

Likelihood of new companies/competitors
- Threat is high when it is easy for new
companies/competitors to enter a market (low entry
barriers)
- Threat is low when there are significant entry barriers to
entering a market (high entry barriers)
Entry barrier – something that would make it difficult for
a new company to start up in your industry; a product
or service feature that customers have come to expect
from organizations in a particular industry and must be
offered by an entering organization to compete and
survive; specialized skills/knowledge/facilities, etc.

4. Bargaining Power of Customers

How much choice does the customer have?
- Bargaining Power of Customers is high when
customers/buyers have many choices to buy from
- Bargaining Power of Customers is low when their choices
to buy from are few

Firms want to reduce Customer Bargaining Power
- make product be different or at least look different
- create switching costs
- reward customer loyalty through loyalty programs

5.     Bargaining Power of Suppliers

How much power can a firm’s suppliers exert?
- Bargaining Power of Suppliers is high when the firm has
few choices of suppliers to buy from
- Bargaining Power of Suppliers is low when the firm has
many choices of suppliers to buy from

Firms want Bargaining Power of Suppliers to be low, so the
firm has many choices of suppliers and can
negotiate/choose
Suppliers want Bargaining Power of Suppliers to be high, so
they (the supplier) can dictate the price, quality, terms of the sale

Strategies for Dealing with Competitive Forces
• Porter’s Business Strategies
• Information Systems Strategies

Porter’s Business Strategies

Organizations typically follow one of Porter’s Business
Strategies:
• Two Dimensions: Market Scope, Possible Competitive Adv.
– Industry or Market Scope: Broad Market or Focused (market
niche)
– Possible Competitive Advantage:
Cost Leadership or Differentiation

Industry or Market Scope

Broad Market strategy – sell to the overall, general
marketplace, a broad range of customers market-wide
 Focused Market strategy – choose a narrow target and
concentrate on serving its needs rather than those of the
broad marketplace, “market niche”

Possible Basis of Competitive Advantage

Cost Leadership – use cost as a way to attract
customers; use information systems to achieve the
lowest operational costs and the lowest prices
-  In the Broad marketplace: Broad Cost Leadership –
reasonable cost products/services
-  In a Focused marketplace, or Market Niche: Focused
Cost Leadership – lowest cost products/services
(generics or house brands)

Possible Basis of Competitive Advantage

Differentiation – make your product/service appear “different”
to attract customers, make it stand out – seem less like a
substitute to the competitor’s offerings...
• Develop new products, services, or features; or greatly change
the customer convenience in using your existing products and
services
• In the Broad marketplace: Broad Differentiation
• In a Focused marketplace, or Market Niche: Focused
Differentiation

Information Systems Strategies

Information Systems Strategies – using IT to:
– Align IT with Business Objectives
• Ensure the technology serves the business
• The use of IT should support the organization’s
strategy and goals
– Strengthen Customer & Supplier Intimacy
• Use IT to create strong links with customers and
suppliers to increase switching costs and
loyalty

Using Information Systems to Achieve Competitive Advantage

The Internet’s Impact on Competitive Advantage

·      Enables new products and services

·      Increases potential substitute products

·       Lowers barrier to entry

·       Changes balance of power of customers and suppliers

·      Transforms some industries

·       Creates new opportunities for creating new markets, building brands, and large customer bases