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Chapter 1: Creating Business Advantage with IT

Chapter 1: Creating Business Advantage with IT. Major Models. Macroeconomic Model Evolution (pg. 27) Value Chain (pg. 30) Market Roles (pg. 31) Industrial vs. Network Economy (pg. 32) Porter’s Five Competitive Forces (pg. 33) Strategic Grid (pg. 34). Porter’s Model. Along Industry

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Chapter 1: Creating Business Advantage with IT

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  1. Chapter 1: Creating Business Advantage with IT MIS 524

  2. Major Models • Macroeconomic Model Evolution (pg. 27) • Value Chain (pg. 30) • Market Roles (pg. 31) • Industrial vs. Network Economy (pg. 32) • Porter’s Five Competitive Forces (pg. 33) • Strategic Grid (pg. 34) MIS 524

  3. Porter’s Model Along Industry Boundaries Threat of Substitutes Along the Extended Value Chain Traditional Rivalry Among Competitors Bargaining Power Of Suppliers Bargaining Power Of Buyers Threat of New Entrants MIS 524

  4. A Closer Look at the Value / Supply Chain Along the Extended Value Chain Focal Firm Suppliers Buyers IT can help integrate and strengthen the supply chain. What does this imply for suppliers and buyers? MIS 524

  5. Integration Focal Firm Suppliers Buyers Integration means the boundaries between the focal firm and its suppliers and buyers becomes more “permeable” and “transparent”. What does THIS imply? MIS 524

  6. Strengthening Focal Firm Suppliers Buyers Strengthening means that suppliers’ and buyers’ freedom to act outside the supplying, buying relationship becomes restricted; hence unique identity becomes lowered. What does THIS imply for the suppliers and buyers? MIS 524

  7. OffLoading Focal Firm Suppliers Buyers Offloading means that processes that used to be costs or risks for the focal firm become costs or risks for suppliers and/or buyers. Coupled with other effects, what does that mean? MIS 524

  8. Integration Strengthening Offloading Brittleness, Overcontrol, Lack of Variety Culture of Lack of Risk Taking Potential Downside? Effects of IT MIS 524

  9. Value Chain DATA INFORMATION KNOWLEDGE Informa-tion Activities Core Opera-ting Activities Infra-structure Activities Inbound Operations Outbound Sales After SalesLogistics Logistics Service Facilities & Technology People Equipment What is the relationship among these three levels? How does it come about? How is it maintained? MIS 524

  10. Producers Distributors Market Roles The Market Suppliers Customers MIS 524

  11. Components of a Business Model CONCEPT: Opportunity & Strategy CAPABILITIES: Resources needed VALUE: Benefits to stakeholders MIS 524

  12. Strategic Impact of IT • Support: No strategic impact now or planned • Turnaround: No strategic impact now, but in the future • Factory: Current strategic impact, but nothing new planned • Strategic: Now and in the future MIS 524

  13. Strategic Grid FACTORY “Reengineer” STRATEGIC “Change Management” Low Operations Impact High SUPPORT: “Improvement” TURNAROUND “New Venture Development” Low Strategy Impact High MIS 524

  14. Strategic Grid -Evolution FACTORY STRATEGIC Low Operations Impact High SUPPORT TURNAROUND Low Strategy Impact High MIS 524

  15. Critical Questions • What is “Strategic”? • What are “core operations”? • What are “strategic activities”? • Can an entire organization be so characterized? MIS 524

  16. Making the Case for IT • Type I Benefit: from IT infrastructure investment (to IT itself) • Type II Benefit: From doing business using IT infrastructure • Commerce: Production and Marketing • Content/Knowledge: Intelligence • Community: Human Process MIS 524

  17. Analyzing the Impact of IT on Strategic Decision Making • Can IT Be Used to Reengineer Core Value Activities and Change the Basis of Competition? (economies of scale, scope, style) • Can IT Change the Nature of Relationships and the Balance of Power among Buyers and Suppliers? MIS 524

  18. Analyzing the Impact of IT on Strategic Decision Making, Cont’d • Can IT Build or Reduce Barriers to Entry? • Can IT Increase or Lower Switching Costs? • Can IT Add Value to Existing Products and services? • Can IT Create NEW Products and Services? MIS 524

  19. THEMES • Market Structure and Industry Dynamics • Evolving Business Models • IT Impact • Prioritizing IT Investments • Assimilation and Organizational Learning • Buy vs. Make • Partnership among Key Constituencies as IT Evolves • Protecting IT Assets and Managing Risks • Pervasive Computing: Opportunities & Risks MIS 524

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