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AchievingCompetitiveAdvantagewithInformationSystemsSTUDENTLEARNINGOBJECTIVESEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsHowdoesPorter’scompetitiveforcesmodelhelpcompaniesdevelopcompetitivestrategiesusinginformationsystems?Howdothevaluechainandvaluewebmodelshelpbusinessesidentifyopportunitiesforstrategicinformationsystemapplications?Howdoinformationsystemshelpbusinessesusesynergies,corecompetencies,andnetwork-basedstrategiestoachievecompetitiveadvantage?Howdocompetingonaglobalscaleandpromotingqualityenhancecompetitiveadvantage?Evaluatetheroleofbusinessprocessmanagement(BPM)inenhancingcompetitiveness.STUDENTLEARNINGOBJECTIVESEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsVIDEOCASESANDLEARNINGTRACKSEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsLearningTracksChallengesofInformationSystemsforCompetitiveAdvantagePrimeronBusinessProcessDesignandDocumentationPrimeronBusinessProcessManagementVideoCasesCase1:NationalBasketballAssociation:CompetingonGlobalDeliverywithAkamaiOSStreamingCase2:ITandGeo-MappingHelpaSmallBusinessSucceedCase3:MaterialsHandlingEquipmentCorp:EnterpriseSystemsDriveCorporateStrategyforaSmallBusinessInstructionalVideo1:SAPBusinessOneERP:FromOrderstoFinalDeliveryandPaymentCanWalmartStayOnTop?ProblemSuccessfulformulaforinventoryreplenishmentisnotworkingforfreshproducebecauseoflowstaffinglevelsneededforlow-coststrategy;customerscomplainingaboutpoorqualityandavailabilitySolutionsNewinventorymanagementsystemtotrackdaysproductsareintransitandstockNewin-storeprocedurestokeepexistingsmallerstocksofproducefreshSecretshopperstoreviewproducequalityEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsInformationsystemslikeWalmart’scontinuousinventoryreplenishmentsystem,whichaffordslowerstafflevels,canintroduceunforeseenproblemsIllustratesdigitaltechnology’sroleingainingandmaintainingacompetitiveadvantageIllustrateshowdifficultitistosustaincompetitiveadvantage,especiallyinanarenaofquicklychangingtechnologies.EssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsCanWalmartStayOnTop?EssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsCanWalmartStayOnTop?FivecompetitiveforcesshapefateoffirmTraditionalcompetitorsCompetitorsinmarketspacecontinuouslydevisenewproducts,newefficiencies,switchingcosts.NewmarketentrantsSomeindustrieshavelowbarrierstoentry:Forexample:foodindustryversusmicrochipindustryNewercompaniesmayhaveadvantages:Newerequipment,youngerworkforce,andsoon.Porter’sCompetitiveForcesModelUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsSubstituteproductsandservicesSubstitutescustomerscanpurchaseifyourpricestoohigh.Forexample:InternetmusicserviceversusCDs.CustomersCancustomerseasilyswitchtocompetitor’sproducts?Cancustomersforcefirmandcompetitorstocompeteonpricealone(transparentmarketplace).SuppliersThemoresuppliersafirmhas,thegreatercontrolitcanexerciseoversuppliers.Porter’sCompetitiveForcesModelUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsFigure3-1InPorter’scompetitiveforcesmodel,thestrategicpositionofthefirmanditsstrategiesaredeterminednotonlybycompetitionwithitstraditionaldirectcompetitorsbutalsobyfourforcesintheindustry’senvironment:newmarketentrants,substituteproducts,customers,andsuppliers.Porter’sCompetitiveForcesModelUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsInformationSystemStrategiesforDealingwithCompetitiveForcesBasicstrategy:AlignITwithbusinessobjectives75percentofbusinessesfailtoaligntheirITwiththeirbusinessobjectives,leadingtolowerprofitability.ToalignIT:Identifybusinessgoalsandstrategies.Breakstrategicgoalsintoconcreteactivitiesandprocesses.Identifymetricsformeasuringprogress.DeterminehowITcanhelpachievebusinessgoals.Measureactualperformance.UsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsInformationSystemStrategiesforDealingwithCompetitiveForcesLow-costleadershipUseinformationsystemstoachievethelowestoperationalcostsandthelowestprices.Example:WalmartInventoryreplenishmentsystemsendsorderstosupplierswhenpurchaserecordedatcashregister.Minimizesinventoryatwarehouses,operatingcosts.Efficientcustomerresponsesystem.UsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsInformationSystemStrategiesforDealingwithCompetitiveForcesProductdifferentiationUseinformationsystemstoenablenewproductsandservices,orgreatlychangethecustomerconvenienceinusingyourexistingproductsandservices.Example:Google’scontinuousinnovations,Apple’siPhone.Useinformationsystemstocustomize,personalizeproductstofitspecificationsofindividualconsumers.Forexample:Nike’siDprogramforcustomizedsneakersUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsInformationSystemStrategiesforDealingwithCompetitiveForcesFocusonmarketnicheUseinformationsystemstoenablespecificmarketfocus,andservenarrowtargetmarketbetterthancompetitors.Analyzescustomerbuyinghabits,preferencesAdvertisingpitchestosmallerandsmallertargetmarketsExample:HiltonHotel’sOnQSystemAnalyzesdatacollectedongueststodeterminepreferencesandguest’sprofitabilityUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsInformationSystemStrategiesforDealingwithCompetitiveForcesStrengthencustomerandsupplierintimacy.StronglinkagestocustomersandsuppliersincreaseswitchingcostsandloyaltyToyota:usesIStofacilitatedirectaccessfromsupplierstoproductionschedulesPermitssupplierstodecidehowandwhentoshipsuppliestoplants,allowingmoreleadtimeinproducinggoods.Amazon:keepstrackofuserpreferencesforpurchases,andrecommendstitlespurchasedbyothersUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsInformationSystemStrategiesforDealingwithCompetitiveForcesSomecompaniespursueseveralstrategiesatsametime.Walmart,Apple,AmazonSuccessfullyusingIStoachievecompetitiveadvantagerequiresprecisecoordinationoftechnology,organizations,andpeople.UsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsEnablesnewproductsandservicesEncouragessubstituteproductsLowersbarriertoentryChangesbalanceofpowerofcustomersandsuppliersTransformssomeindustriesCreatesnewopportunitiesforcreatingnewmarkets,buildingbrands,andlargecustomerbasesTheInternet’sImpactonCompetitiveAdvantageUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsHighlightsspecificactivitiesinabusinesswherecompetitivestrategiescanbestbeappliedandwhereinformationsystemsarelikelytohaveastrategicimpact.

PrimaryactivitiesSupportactivitiesBenchmarkingBestpractices

TheBusinessValueChainModelUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsUsingInformationSystemstoAchieveCompetitiveAdvantageFigure3-2Thisfigureprovidesexamplesofsystemsforbothprimaryandsupportactivitiesofafirmandofitsvaluepartnersthatwouldaddamarginofvaluetoafirm’sproductsorservices.TheValueChainModelEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsInteractiveSession:TechnologyAutomakersBecomeSoftwareCompaniesUsingInformationSystemstoAchieveCompetitiveAdvantageReadtheInteractiveSessionandthendiscussthefollowingquestions:Howissoftwareaddingvaluetoautomakers’products?Howaretheautomakersbenefitingfromsoftware-enhancedcars?Howarecustomersbenefiting?Whatvaluechainactivitiesareinvolvedinenhancingcarswithsoftware?Howmuchofacompetitiveadvantageissoftwareprovidingforautomakers?EssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsAfirm’svaluechainislinkedtothevaluechainsofitssuppliers,distributors,andcustomers.ValuewebCollectionofindependentfirmsthatuseinformationtechnologytocoordinatetheirvaluechainstoproduceaproductcollectively.Valuewebsareflexibleandadapttochangesinsupplyanddemand.ExtendingtheValueChain:TheValueWebUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsUsingInformationSystemstoAchieveCompetitiveAdvantageFigure3-3Thevaluewebisanetworkedsystemthatcansynchronizethevaluechainsofbusinesspartnerswithinanindustrytorespondrapidlytochangesinsupplyanddemand.TheValueWebEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsSynergies:WhenoutputofsomeunitscanbeusedasinputstootherunitsWhentwofirmscanpoolmarketsandexpertise(e.g.,recentbankmergers)LowercostsandgenerateprofitsEnabledbyinformationsystemsthattiestogetherdisparateunitssotheyactaswholeSynergies,CoreCompetencies,and

Network-BasedStrategiesUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsCorecompetency:Activitiesforwhichfirmisworld-classleader.Forexample:world’sbestminiaturepartsdesigner,bestpackagedeliveryservice.Reliesonknowledgethatisgainedovermanyyearsofexperienceaswellasknowledgeresearch.Anyinformationsystemthatencouragesthesharingofknowledgeacrossbusinessunitsenhancescompetency.Forexample:Procter&Gambleusesintranettohelppeopleworkingonsimilarproblemsshareideasandexpertise.Synergies,CoreCompetencies,and

Network-BasedStrategiesUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsNetwork-basedstrategies:Networkeconomics:Marginalcostsofaddinganotherparticipantarenearzero,whereasmarginalgainismuchlargerForexample:largernumberofparticipantsinInternet,greatervaluetoallparticipantsVirtualcompany:Usesnetworkstolinkpeople,resources,andallywithothercompaniestocreateanddistributeproductswithouttraditionalorganizationalboundariesorphysicallocationsSynergies,CoreCompetencies,and

Network-BasedStrategiesUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsDisruptivetechnologies:Technologieswithdisruptiveimpactonindustriesandbusinesses,renderingexistingproducts,services,andbusinessmodelsobsolete:PersonalcomputersWorldWideWebInternetmusicservicesFirstmoversversusfastfollowersFirstmoversofdisruptivetechnologiesmayfailtoseepotential,allowingsecondmoverstoreaprewards(fastfollowers)DisruptiveTechnologies:RidingtheWaveUsingInformationSystemstoAchieveCompetitiveAdvantageEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsPriortotheInternet,competinggloballywasonlyanoptionforhugefirmsabletoaffordfactories,warehouses,anddistributioncentersabroad.TheInternetdrasticallyreducescostsofoperatingglobally.Globalizationbenefits:ScaleeconomiesandresourcecostreductionHigherutilizationrates,fixedcapitalcosts,andlowercostperunitofproductionSpeedingtimetomarketTheInternetandGlobalizationCompetingonaGlobalScaleEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsAppleiPhone’sGlobalSupplyChainCompetingonaGlobalScaleAppledesignstheiPhoneintheUnitedStates,andreliesonsuppliersintheUnitedStates,Germany,Italy,France,andSouthKoreaforotherparts.FinalassemblyoccursinChina.EssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsFigure3-4GlobalBusinessandSystemStrategiesCompetingonaGlobalScaleDomesticexportersHeavycentralizationofcorporateactivitiesinhomecountryMultinationalsConcentratesfinancialmanagementatcentralhomebasewhiledecentralizingproduction,sales,andmarketingtoothercountriesFranchisersProductcreated,designed,financed,andinitiallyproducedinhomecountrybutrelyonforeignunitsforfurtherproduction,marketing,andhumanresourcesTransnationalsRegional(notnational)headquartersandperhapsworldheadquarters;optimizingresourcesasneededEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsGlobalSystemConfigurationsCompetingonaGlobalScaleCentralizedsystems:AlldevelopmentandoperationatdomestichomebaseDuplicatedsystems:DevelopmentathomebasebutoperationsmanagedbyautonomousunitsinforeignlocationsDecentralizedsystems:EachforeignunitdesignsownsolutionsandsystemsNetworkedsystems:DevelopmentandoperationsoccurinintegratedandcoordinatedfashionacrossallunitsEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsGlobalBusinessOrganizationSystemsConfigurationsCompetingonaGlobalScaleFigure3-5ThelargeXsshowthedominantpatterns,andthesmallXsshowtheemergingpatterns.Forinstance,domesticexportersrelypredominantlyoncentralizedsystems,butthereiscontinualpressureandsomedevelopmentofdecentralizedsystemsinlocalmarketingregions.EssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsWhatIsQuality?CompetingonQualityandDesignProducerperspective:ConformancetospecificationsandabsenceofvariationfromspecsCustomerperspective:Physicalquality(reliability),qualityofservice,psychologicalqualityTotalqualitymanagement(TQM):QualitycontrolisendinitselfAllpeople,functionsresponsibleforqualitySixsigma:Measureofquality:3.4defects/millionopportunitiesEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsReducecycletimeandsimplifyproductionprocess.BenchmarkUsecustomerdemandstoimproveproductsandservices.Improvedesignqualityandprecision.Computer-aideddesign(CAD)systemsImproveproductionprecisionandtightenproductiontolerances.HowInformationSystemsImproveQualityCompetingonQualityandDesignEssentialsofManagementInformationSystemsChapter3AchievingCompetitiveAdvantagewithInformationSystemsCompetingonBusinessProcessesTechnologyaloneisoftennotenoughtomakecompaniesmoreefficient,competitive,orqualityoriented.Organizationalchangesareoftennecessary,fromminorchangesinworkhabitstoredesigningentirebusinessprocesses.BPM:BusinessprocessmanagementAimstocontinuouslyimproveprocessesUsesvarietyoftoolsandmethodologiesto:UnderstandexistingprocessesDesi

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