CORPORATE STRATEGIC

INFORMATION SYSTEMS
PLANNING (ITS 582)
3.0 STRATEGIC PERSPECTIVES
⦿ Information Systems (IS) and Information Technology
(IT)
⦿ Information Technology (IT) Strategy

⦿ Information System (IS) Strategy

⦿ Corporate Strategy

⦿ Business Strategy

⦿ Strategic alignment

© Sy. Ruzaini S. A., UiTM

Information system (IS) and Information technology
(IT)

© Sy. Ruzaini S. A., UiTM

Information system (IS) and Information technology
(IT)
Information system (IS) and Information technology
(IT)

Information systems is the multi-disciplinary study of the collection, processing and

storage of data; of the use of information by individuals and groups, especially
within an organizational context; and of the impact, implications and management
of artifacts and technologies applied to those activities (Roger Clark 1995)

Information systems is a collection of interrelated components (hardware,

software, procedures, people, databases) that work together to “collect” (or
retrieve), process, store and distribute information to support decision making and
control an organization (Laudon & Laudon 1994)

© Sy. Ruzaini S. A., UiTM

Information system (IS) and Information technology
(IT)

Information technology (IT) is "the study, design, development,

implementation, support or management of information systems".

Information technology is a general term that describes any technology that

helps to produce, manipulate, store, communicate, and/or disseminate
information.

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Management Information system (MIS)

MIS is the development and the use of effective information systems in

organizations.
(Awad, 1988)

MIS … is now defined to include everything which deals with computer-assested

flow and presentation of information …
Wolstenholme, Henderson & Gavin, 1993)

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Management Information system (MIS)

Levels and planning horizons of management activities

Management Planning
Hierarchy Horizon
Long-term

Strategic
Planning

Management
Control and
Tactical
Planning

Operational Planning
and Control Short-term
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Management Information system (MIS)
Decision type continuum

Management Decision
Hierarchy Type
Unstructured
(non-programme
d)

Strategic

Tactical

Operational Structured
(programmed)

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Management Information system (MIS) :
Strategy role of categories of systems players

Board Budget policies,

Policy on priorities,
objective setting MIS needs and
and monitoring master plans

New service needs Budget advice

and nomination of and equipment
project benefits options for MIS
needs

User IS

Needs, systems Options of project

problems, choice of designs, cost and
design and project benefits of proposals
control

MIS Triad
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Information Technology strategies

What is IT Strategy?

The IT strategy identifies and defines the application and

information architecture, the technical infrastructures and IT
organisation required to support the business strategy and
objectives. In formulating an IT strategy, one must bear in mind
that a strategy is only useful in that it guides and directs specific
actions that provide value.

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Information Technology strategies

◻ IT Strategy is a planning document that explains how IT should be

utilized as part of an organization's overall business strategy
Concerned with outlining the vision of how technology can
support organization’s demand for information and systems;
Refers to as IT Supply

◻ IT Strategy
sets direction for IT function in an organization
provides the infrastructure, services and is activity based and is
more focused on the technology.
addresses provision of IT capabilities and resources (HW, SW,
Telco) and services (operations, systems development, and
support).
helps create shareholder value - it helps maximize the return
on IT investments.
Information Technology strategies

IT strategy should covers current planned and future plan to ensure

both the existing investment in technology is maintained and fully
exploited, and new beneficial capabilities are provided

IT strategy should be reviewed frequently to take in to account of

changing business priorities and new technology opportunities

IT strategy should provide a set of “Guiding Principles”.

▪ A set of architectures and standards with which all projects must comply
▪ Directing the nature and shape of all technology activities
▪ Ensure the IT strategy is and remains coherent, consistent and relevant.

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Information Technology strategies

Example of Guiding Principle:

Simple technology and Human/Technology Interface

Simple to use
Ergonomic
Training
Provide training to increase acceptance
E-learning technology
Security
Level of access
Business continuity
Used resilience product
Maintenance
Establish suitable support and maintenance arrangement

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Information system strategies

◻ IS strategy can be defined as a strategy to implement information

systems that recognizes organizational requirements
IS strategy is business based and application oriented.
It provides support for the business directions and helps achieve
the business goals and objectives.
Defines and prioritizes requirement investments to achieve ideal
portfolio, expected benefits, requirement changes, within
constraints of resources and systems interdependencies;
◻ Defines the organization’s requirement or demand for information and
systems to support the overall strategy of the business
An IS strategy should include the business needs for the future
aligned
Information system strategies

Business Strategy

Organizational IS Strategy
Strategy

The Information System Strategy Triangle

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Information system strategies
Business Strategy

❖ Business strategy drives organizational strategy and IS strategy. The organization

and its IS should clearly support defined business goals and objectives.
❖ Business Strategy is a well-articulated vision of where a business seeks to go and
how it expects to get there
❖ Management constructs this plan in response to market forces, customer
demands, and organizational capabilities.
❖ Market forces create the competitive situation for the business. Some
markets, such as those faced by airlines, makers of personal computers, and
issuers of credit cards, are characterized by many competitors and a high level
of competition such that product differentiation becomes increasingly difficult.
Other markets, such as those for package delivery, automobiles, and
petroleum products, are similarly characterized by high competition, but
product differentiation is better established.
❖ Customer demands comprise the wants and needs of the individuals and
companies who purchase the products and services available in the
marketplace.
❖ Organizational capabilities include the skills and experience that give the
corporation a currency that can add value in the marketplace.
❖• Models: Porter’s Generic Strategies Model; D’Aveni’s hypercompetition model

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INFORMATION SYSTEM STRATEGIES

Porter’s Generic Strategies Model

Information system strategies

Business Strategy

❖ Porter’s Generic Strategies Model

❖ Cost Leadersership :
❖ The organization aims to be the lowest-cost producer in the marketplace.
❖ The organization enjoys above-average performance by minimizing costs.
❖ Only one cost leader exists within an industry.
❖ Example : Through mass distribution, economies of scale, and IS to
generate operating efficiencies, Wal-Mart epitomizes the cost-leadership
strategy.

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Information system strategies

Business Strategy

❖ Porter’s Generic Strategies Model

❖ Differentiation :
❖ The organization qualifies its product or service in a way that allows it to
appear unique in the marketplace.
❖ The organization identifies which qualitative dimensions are most important
to its customers, and then finds ways to add value along one or more of
those dimensions.
❖ In order for this strategy to work, the price charged customers by the
differentiator must seem fair relative to the price charged by competitors.
❖ Example : Progressive Insurance is able to differentiate itself from other
automobile insurance companies by breaking out of the industry mold. Its
representatives are available 24/7 (i.e., 24 hours a day, 7 days a week) to
respond to accident claims. They arrive at an accident scene shortly after
the accident with powerful laptops, intelligent software, and the authority to
settle claims on the spot. This strategy spurred Progressive’s growth and
widened its profit margins.
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Information system strategies

Business Strategy

❖ Porter’s Generic Strategies Model

❖ Focus :
❖ Allows an organization to limit its scope to a narrower segment of the
market and tailor its offerings to that group of customers.
❖ This strategy has two variants:
❖ cost focus, in which the organization seeks a cost advantage within its
segment,
❖ differentiation focus, in which it seeks to distinguish its products or
services within the segment.
❖This strategy allows the organization to achieve a local competitive advantage,
even if it does not achieve competitive advantage in the marketplace overall.
❖Example :
❖ Marriott International – The check-in kiosks
❖ Ritz-Carlton – use CRM known as CLASS

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Information system strategies
 Information system strategies

Organizational Strategy

❖Organizational strategy must complement business strategy.

❖The way a business is organized either supports the implementation of its business
strategy or it gets in the way.
❖Includes the organization’s design as well as the choices it makes to define, set up,
coordinate, and control its work processes.
❖The organizational strategy is a plan that answers the question: “How will the
company organize in order to achieve its goals and implement its business
strategy?”
❖Models: Business diamond; managerial levers

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 Information system strategies
Organizational Strategy

❖Business diamond
❖ identifies the crucial components of an organization’s plan as its
business processes, its values and beliefs, its management control
systems, and its tasks and structures.
❖ This simple framework is useful for designing new organizations and for
diagnosing organizational troubles.
❖ For example, organizations that try to change their cultures but fail to
change the way they manage and control cannot be effective.

The Business Diamond

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Information system strategies
 Information system strategies
IS Strategy

❖IS strategy must complement business strategy. When IS support business

goals, the business appears to be working well. IS strategy can itself affect
and is affected by changes in a firm’s business and organizational
strategies. Moreover, information systems strategy always has
consequences—intended or not—on business and organizational strategies.
❖The plan the organization uses in providing information systems and services
❖Models: A basic framework for understanding IS decisions relating
architecture (the “what”) and the other resource considerations (“who” and
“where”) that represent important planning constraints

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Information system strategies
IS Strategy

Information Systems Strategy Matrix

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Information system strategies

Strategic Relationships

❖Organizational strategy and information strategy must complement each

other.
❖They must be designed so that they support, rather than hinder each
other.
❖If a decision is made to change one corner of the triangle, it is necessary
to evaluate the other two corners to ensure that balance is preserved.
❖Changing business strategy without thinking through the effects on the
organizational and IS strategies will cause the business to struggle until
balance is restored.
❖Likewise, changing IS or the organization alone will cause an imbalance.

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Organizational Strategy

Corporate Strategy

Business Strategy

Functional
Strategy

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Corporate Strategy
❖ Corporate strategy is concerned with what types of business the
organisation is in.
❖ It denotes the most general level of strategy in an organisation.
❖ Affects scope of firms activities i.e. types of products, services and
markets
❖ Seeks to match activities of the firm with its environment.
❖ correct products for market (competitive environment)
❖ sufficient returns for shareholders (financial environment)
❖ ecologically friendly activities (social environment)

❖ Only the global objectives and the general orientation in order to

achieve them are defines

❖ Provides the framework for the business style that reflects the business
strategy and, in turn, does so much to influence the business strategy,
particularly the extent of outsourcing, diversification, scale and scope
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Corporate Strategy

•Concern with:
❑Reach: These are the problems that are corporate responsibilities; they may
include identifying the overall goals of the corporation, the types of businesses
in which the corporations should be involved and the way in which the business
will be integrated and managed.
❑Competitive Contact: This shows where in the corporation competition is to
be localized.
❑Managing business activities and business interrelationships: In this
stage, the corporate strategy seeks to develop synergies by dividing and
coordinating employees and other resources from corner to corner business
units, finding financial resources across business units, and using business
units to balance other corporate business activities.
❑Management Practice: In this stage, the corporations make a decision how
business units are to be governed - through straight corporate interventions
(centralization) or through more or less autonomous governance
(decentralization) that relies on persuasion and rewards.

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Corporate Strategy
A firm might adopt any of three forms of corporate strategy:

1. Single-business.
2. Related diversification.
3. Unrelated diversification.

The Single-Business Strategy:

This calls for a organization to rely on only one single business, product, or
service for all its revenue.

Advantage : The firm can concentrate all its resources and expertise on that one
product or service.

Disadvantage : This strategy increases the organization's weakness to its

competition and to changes in the external environment.
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Corporate Strategy

Related Diversification :

The most common corporate strategy calls for the firm to operate in several different
businesses, industries, or markets at the same time. However, the operations are
related to each other in some fundamental way. Most of the time, this type of strategy
permits the organization to leverage a distinctive competence in one market in order
to strengthen its competitiveness in others. The goal of related diversification and the
basic connection linking different operations often are defined in the firm’s mission
statement.

Unrelated Diversification :

A firm operates in several unrelated industries and markets.

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 Corporate Strategy
Related Diversification

Example : Hewlett-Packard and Texas Instruments are two firms that compete in various segments of
the electronics industry, that employ generic strategies in many of their product lines.

Hewlett-Packard Texas Instruments

Marketing ❖ Industrial and some consumer markets ❖ Consumer and industrial markets
Strategy ❖ High-tech, custom products    ❖ High-volume, low-cost standard products
❖ Premium price, lag experience curve ❖ Low price,push experience curve
❖ Promote quality/ realiability/ service    ❖ Promote availability/ price
Production ❖ Small plants ❖ Large plants for large volume
Strategy ❖ Small batch / job-shop technology ❖ Mass production technology with automation
❖ Build capacity with demand and robotics
❖ Build capacity ahead od demand
Financial ❖ Self-funding within division ❖ Allocate cash among divisions according to
Strategy ❖ Make profits early on through high need
margins ❖ Fund ahead of experience curve
R&D Strategy ❖ First to market with new products ❖ Improve existing products in proven markets
❖ Primarily product R&D ❖ Both product and process R&D
❖ Features and quality driven ❖ Cost driven
❖ Design or product performance ❖ Design for cost reduction

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Business Strategy

❖ A strategic business unit may be a division, product line, or other profit

center that can be planned independently from the other business units of
the firm.

❖ At the business unit level, the strategic issues are less about the
coordination of operating units and more about developing and sustaining a
competitive advantage for the goods and services that are produced. At
the business level, the strategy formulation phase deals with:

❖ Positioning the business against rivals

❖ Anticipating changes in demand and technologies and adjusting the
strategy to accommodate them
❖ Influencing the nature of competition through strategic actions such as
vertical integration and through political actions such as lobbying.

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Business Strategy

❑Deals with the single SBU and how, by coping with its industry environment,
it can successfully contribute to the corporate strategy
❑It should have an identifiable and definable product range, market segment
and competitor set.
❑A useful way of classifying business strategies (Porter, 1985):
❑ Cost leadership or differentiation of products
❑ May encompass an entire market or be focused upon a particular
segment of it
❑Each SBU will have its own coherent business strategy.

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Functional Strategy

❑The functional level of the organization is the level of the operating divisions
and department.
❑The strategic issues at the functional level are related to business processes
and the value chain.
❑Functional level strategies in marketing, finance, operations, human
resources and R&D involve the development and coordination of resources
through which business unit level strategies can be executed efficiently and
effectively.

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SUMMARY
SUMMARY
◻ Corporate Strategy - is concerned with the overall purpose and scope of the
business to meet stakeholder expectations. This is a crucial level since it is
heavily influenced by investors in the business and acts to guide strategic
decision-making throughout the business. Corporate strategy is often stated
explicitly in a "mission statement".
◻ Business Unit Strategy - is concerned more with how a business competes
successfully in a particular market. It concerns strategic decisions about
choice of products, meeting needs of customers, gaining advantage over
competitors, exploiting or creating new opportunities etc.
◻ Functional Strategy - is concerned with how each part of the business is
organised to deliver the corporate and business-unit level strategic
direction. Functional strategy therefore focuses on issues of resources,
processes, people etc.