CourseSlidesCh2.pptx

Management Information Systems

Chapter 2 Strategy and Information Systems

Study Questions:

Q2-1 How does organizational strategy determine information systems structure?

Q2-2 What five forces determine industry structure?

Q2-3 How does analysis of industry structure determine competitive strategy?

Q2-4 How does competitive strategy determine value chain structure?

Q2-5 How do business processes generate value?

Q2-6 How does competitive strategy determine business processes and the structure of information systems?

Q2-7 How do information systems provide competitive advantages?

Q2-8 2029?

Q1: How Does Organizational Strategy Determine Information Systems Structure?

Q2: Industry Structure Porter’s Five Forces Model

Examples of Five Forces

Force Example of Strong Force Example of Weak Force
Bargaining Power of Customers Toyota as a customer to purchase auto paint from it’s supplier Your bargaining power over the university policies and procedures
Threat of substitutions Frequent traveler’s choices of auto rental Patients with special disease choosing the only drug effective
Bargaining power of suppliers Textbook providers deciding the price of textbooks The bargaining power of the Chinese manufacturers over Walmart
Threat of new entrants Corner latte stand facing strong threats Professional Football teams
Rivalry Used car dealers, real estate agents, Chinese manufacturers, etc. Internal Revenue Service

Q3: Industry Structure Determines Competitive Strategy

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Q4: Porter’s Value Chain Model

Value Chain is a network of value-creating activities (primary and support activities)

Margin and Linkages:

Margin:

= value created by each activity less the cost of the activity

Company strive for margins by either improving the value or reducing the cost.

Primary activities are those directly create value

Support activities are those indirectly create value

Linkage

Interactions across value activities

It pushes people to think outside their silos, streamlining business processes to create higher value, or reduce costs.

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Example of Value Chain Structure

Q5: How do Business Processes Create Values?

Business Process: a network of activities that generate value by transforming inputs into outputs.

Business Process Redesign by integrating data and

providing better information.

Old Process with silo database

New Process with linked database

Q6: How Business Processes are affected by competitive strategies?

To sum up, all IT/IS investments must align

with the strategic goals of your business!

Process

Implementations

Product

Implementations

Q7: How do IS/IT provide competitive advantages?

Researchers have identified the following eight ways to increase competitive advantages:

Create a new product or service

Enhance products or services

Differentiate products or services

Lock in customers and buyers

Lock in suppliers

Raise barriers to market entry

Establish alliances

Reduce costs

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