1
Q
What is Strategic Analysis?
A
Collect and review information about internal
processes and resources and external
marketplace factors in order to inform strategy
definition.
- External competitive forces, e.g.
– Porter five forces
– Porter’s competitive strategies - Internal business processes, e.g.
– Value-chain analysis
– Critical success factors (CSFs) analysis
2
Q
What does Porter State?
A
- Porter states that IT and IS are important as
every activity creates and uses information.
– IT changes industry structure
– IT creates competitive advantage
– IT spawns whole new businesses, often from within
a company’s existing operations - IT plays a particularly crucial role in
– scheduling
– controlling
– optimising
– measuring
– co-ordinating
3
Q
What are Porter’s Five Forces of Competition?
A
- Rivalry of Competitors
– Positive, natural, healthy - Threat of new entrants
– Apple into phone business - Threat of substitutes
– Salon shampoo vs. Dunnes Stores brand
– DVD vs. BluRay vs Internet TV - Customer bargaining power
– Buy from competitors or don’t buy - Suppliers bargaining power
– Your competitor pays in days not weeks
4
Q
Using Competitive Strategies
A
- Not mutually exclusive
– One alone won’t usually fix the problem
– Generally need a combination - Innovation not necessarily differentiated
– Kindle v. iPad
– Android vs Windows smartphone - Differentiation not necessarily innovative
– Shipping more efficient but not different
– Telecom companies compete
5
Q
Competitive Strategies: Cost Leadership
A
- Low-cost leadership
– Use cost saving operational IT to get the lowest
operational costs and prices. - Wal-Mart
– Inventory system sends orders to suppliers when
purchase recorded at cash register.
– Efficient customer response system. - Use decision making IS to optimise systems for
lowest cost e.g. Business Analytics
– minimise costs and inventory at warehouses
– shortest route delivery for couriers
– maximise airline fleet usage
6
Q
Competitive Strategies: Differentiation
A
- Use IS to enable new products and services, or
greatly change the customer convenience in
using your existing products and services.
E.g., Google’s continuous innovations - Use information systems to customise,
personalise products to fit specifications of
individual consumers.
– Mass customisation at Lands’ End
– Footprint 3D – print your own runners! - Use IT to offer distinct products
– Multiple mobile phone tariffs
7
Q
Competitive Strategies: Focus on Market Niche
A
- Use IS to enable specific market focus, and serve
narrow market better than competitors.
– Analyses customer buying habits, preferences
(Business analytics)
– Advertising pitches to precise target markets - CRM Hilton Hotel’s OnQ System, Tesco clubcard
– Analyses data collected on guests to determine
preferences and guest’s profitability
– e-commerce can be used to reach niche customers
all over the world - Understand your customer!
8
Q
Competitive Strategies: Aligning IT
A
- Basic: Align IT with business objectives
– 75% of businesses fail to align their IT with their
business objectives, lowering profitability. - To align IT:
– Identify business goals and strategies.
– Break strategic goals into concrete activities and
processes.
– Determine metrics for measuring progress.
– Identify how IT can help achieve business goals.
– Measure actual performance
9
Q
The Internet and Competitive Advantage
A
- Existing competitors: widens market, increasing
competitors and price pressure - New entrants: reduces barriers to entry
- Substitute products and services: facilitates
creation of new products and services - Customers’ bargaining power: bargaining power
shifts to customer - Suppliers
– Internet procurement
– reduced barriers to entry and elimination of
intermediaries
10
Q
Other IT strategies
A
- Use inter-enterprise systems to increase
switching costs to lock in customers or suppliers - Make investments in ICT that build barriers to
entry against competitors. - Use ICT in products and services to make the
substitution more difficult - Leverage investment in IS people, hardware,
software, databases and networks from
operational uses in strategic applications. - Introduce enhanced business models using ICT.
11
Q
Examples of IT Support
A
- Human Resources
– Staff scheduling system - Procurement
– E-markets and e-procurement - Inbound & outbound logistics
– Supply chain management
– Supplier Extranet - Sales and marketing
– Marketing analytics
– Customer relationship management
12
Q
What is a Value Web?
A
- A firm’s value chain is linked to the value chains
of its suppliers, distributors, and customers. - Value web
– Collection of independent firms that use
information technology to coordinate their value
chains to produce a product collectively.
– Value webs are flexible and adapt to changes in
supply and demand. - The value web is a
networked system
that can synchronize
the value chains of
business partners
within an industry to
respond rapidly to
changes in supply and
demand.
13
Q
What is the Insurance Value Chain?
A
- Marketing
– Big data, customer segmentation - Sales
– CRM, web sales, social networks - Underwriting
– Artificial intelligence, IOT, Big data, Blockchain - Claim management
– Fraud detection, mobile apps - Risk management
– Artificial intelligence and big data:
14
Q
What is Critical Success Factors Analysis?
A
- Indicators of the
performance of an
organisation and its
processes - How the business
excels and outper-
forms competition
- Core competencies
in specific activities
or managing links
between activities
15
Q
Network-Based Strategies
A
- Take advantage of firms’ abilities to network with
one another - Include use of:
– Network economics
– Virtual company model
– Business ecosystems - Marginal cost of adding new participant almost
zero, with much greater marginal gain - Value of community grows with size
- Value of software grows as installed customer
base grows - Unlike traditional law of diminishing returns
16
Q
Examples of IT Risk
A
- Hardware risk
– Faults
– Inadequate capacity
– Natural events
– External attack - Software
– Inadequate business model
– Bad design
– Bad programming
– External Attack - Personnel failure
17
Q
Benefits of Outsourcing
A
- Lower operational and labour costs;
- Continue focusing on core business
processes - You specialise in your business
- someone else specialises in ICT
- Free up internal resources for other
purposes - Gain access to resources not available
internally
18
Q
Risks of Outsourcing
A
- Some of the potential negative outcomes
of outsourcing include: - No control over product or service quality,
which can affect customer satisfaction; - The outsourcing transition phase may fail if
schedules and budgets are not achieved due to
insufficient planning and/or resources. - Project planning and management are
critical disciplines to enable successful
project results and manage risks - Political, socio-economic, or other factors may
amplify outsourcing risks - Privacy and data protection regulations may not
be as strict in some areas
– Illegal to send EU data where there are no proper
controls - Language barriers
- Cultural differences in work practices etc. make
collaboration difficult.
19
Q
Types of Outsourcing
A
- Infrastructure
– Infrastructure Management
– Cloud Computing IaaS - Software
– Application Development & Maintenance
– Help Desk
– Cloud computer SaaS - Data
– Data Centre Management
– Security management
MIS30080
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Decks in class (12)
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