Tuesday, 2nd October 2018 Information System, Organisations and Strategy

Hello guys! It is already October which meannnnn my birthday is getting closer<3

Today I will share to you what i studied in the fifth week! enjoy my blog<3

Information System, Organisations and Strategy

1. The 5 Force Business Environment

This means the environment of business will back to the cycle of 5 forces approach which related to the competitive rivalry, then of course there will be a threat of new entry, the supplier power which if the supplier is selling the product in a higher cost, we better to sell it buy ourself, next followed by the threat of substitution that might be established by other competitor. For instance, the rice can be substitute by the porridge, the last but not least the buyer power will might increasing or decreasing are considering the number of customer and followed by the below element.

This is the example of the Nestle's 5 forces approach: 

2. The Information System Strategy

• Low-Cost Leadership

Use information systems to achieve the lowest operational costs and the lowest prices. The classic example is Walmart. By keeping prices low and shelves well stocked using a legendary inventory replenishment system, Walmart became the leading retail business in the United States. Walmart’s continuous replen- ishment system sends orders for new merchandise directly to suppliers as soon as consumers pay for their purchases at the cash register. Point-of-sale termi- nals record the bar code of each item passing the checkout counter and send a purchase transaction directly to a central computer at Walmart headquarters.

• Product Differentiation

Use information systems to enable new products and services, or greatly change the customer convenience in using your existing products and services. For instance, Google continuously introduces new and unique search services on its Web site, such as Google Maps. 

• Focus on Market Niche

Use information systems to enable a specific market focus, and serve this narrow target market better than competitors. Information systems support this strategy by producing and analyzing data for finely tuned sales and marketing techniques. Information systems enable companies to analyze customer buying patterns, tastes, and preferences closely so that they efficiently pitch advertising and marketing campaigns to smaller and smaller target markets.

• Increasing Switching Cost

Use information systems to tighten linkages with suppliers and develop intimacy with customers. Strong linkages to customers and suppliers increase switching costs (the cost of switching from one product to a competing product), and loyalty to your firm.

3. How to Achieving Competitive Advantage

• by Value Chain Method 

The value chain model highlights specific activities in the business where competitive strategies can best be applied (Porter, 1985) and where information systems are most likely to have a strategic impact. This model identifies specific, critical leverage points where a firm can use information technology most effectively to enhance its competitive position.

Here is the example of:

• Extending the value chain: Value Web

Looking at the industry value chain encourages you to think about how to use information systems to link up more efficiently with your suppliers, strategic partners, and customers. Strategic advantage derives from your ability to relate your value chain to the value chains of other partners in the process. For instance, if you are Amazon.com, you want to build systems that:

• Make it easy for suppliers to display goods and open stores on the Amazon site
• Make it easy for customers to pay for goods
• Develop systems that coordinate the shipment of goods to customers
• Develop shipment tracking systems for customers
  Internet technology has made it possible to create highly synchronized industry value chains called value webs. A value web is a collection of independent firms that use information technology to coordinate their value chains to produce a product or service for a market collectively. It is more customer driven and operates in a less linear fashion than the traditional value chain.
  
  
  Here is the example of value web of tata motors:
  
  
  
  
  
  
  
• 0. Synergies, Core Competencies and Network Based Strategies
     - Synergies
     
     
     The idea of synergies is that when the output of some units can be used as inputs to other units, or two organizations pool markets and expertise, these relationships lower costs and generate profits. For instance:Time Warner and AOL ; Smart Telcom and Fren
     -Core Competencies
     
     Another way to use information systems for competitive advantage is to think about ways that systems can enhance core competencies. The argument is that the performance of all business units will increase insofar as these business units develop, or create, a central core of competencies. A core competency is an activity for which a firm is a world-class leader. Core competen- cies may involve being the world’s best miniature parts designer, the best package delivery service, or the best thin-film manufacturer. In general, a core competency relies on knowledge that is gained over many years of practical field experience with a technology. For instance: For example, Procter & Gamble which produces pantene, gillette, pampers, who is a world leader in brand management and consumer product innovation, uses a series of systems to enhance its core competencies. 

     -Network Based Strategy

     Network-based strategies include the use of network economics, a virtual company model, and business ecosystems.
     

     nNetwork Economic (Leveraging large quantity to decrease cost)

     nVirtual Company (Uses other partner company resources without tied or contract) 

     
     

     nBusiness ecosystem (Which is that each business in the "ecosystem" affects and is affected by the others, creating evolving relationship in which each business must be flexible and adaptable in order to survive); The concept of a business ecosystem builds on the idea of the value web described earlier, the main difference being that cooperation takes place across many industries rather than many firms. For instance, both Microsoft and Walmart provide platforms composed of information systems, technologies, and services that thousands of other firms in different industries use to enhance their own capabilities. Microsoft has estimated that more than 40,000 firms use its Windows platform to deliver their own products, support Microsoft products, and extend the value of Microsoft’s own firm. 

     

     
     

     So, What Should IS do?

     - Sustaining Competitive Advantage

     The competitive advantages that strategic systems confer do not necessarily last long enough to ensure long-term profitability. Because competitors can retaliate and copy strategic systems, competitive advantage is not always sustainable. Markets, customer expectations, and technology change; globalization has made these changes even more rapid and unpredictable.

     -Look at Business Objectives

     The more successfully a firm can align information technology with its business goals, the more profitable it will be, and only one quarter of firms achieve alignment of IT with the business. Also, measure its value and contribution. Successful firms and managers understand what IT can do and how it works, take an active role in shaping its use, and measure its impact on revenues and profits.