Chapter 10

IS 
AND 
COMPETITIVE POSITION
 Chapter Contents 
2

¾ SWOT Analysis 

¾ Turning Business Strategy into Information Strategy 

¾ Developing An Information System Strategy 
Developing An Information System Strategy

¾ Competitive advantage 
Competitive advantage

¾ IT As A Change trigger 
g gg
SWOT Analysis
SWOT Analysis 
3

Strength Weaknesses
Things that are going well or Things going badly or not
work well in an information working in an information
system system
t iincluding
l di llack
k off k
key staff
t ff
or skills

Threats
Opportunities Events outside the information
Events outside information system that need to be defended
systems
t th
thatt can b
be exploited
l it d tto against
i
the advantage of the company
IS/IT Strategic Resulting From SWOT Analysis 
g g y
4

Evaluation of IS capability
Strength Weaknesses
pportuniities

Attack Beware
T Faces

“Go for it” “Don’t do it”

Have good IS IS capability weak
capability and an therefore risk of
Op
Situattional IT

opportunity to failure
exploit

Explore
Threats

Protect
“If we have time” “Watch yourself”
IS capability Weak IS capability
strong therefore – need to obtain
can protect when resources to
want to counter threat
Turning Business Strategy into Information Strategy 
5

Key points:

¾ IS strategy determination recognizes the strategic nature of 
IS in modern businesses. 

¾ IS needs strategic planning to ensure that resources are 
used effectively. 
Turning Business Strategy into Information Strategy‐ 2 
6

Benefits of a formal strategy: 
¾ Goal congruence between IS and corporate objectives 
¾ Create competitive advantage  
¾ Expenditure focused on key business areas 
¾ IT development exploited when required 
IT development exploited when required

Earl recognized three information strategies:
Earl recognized three information strategies:
¾ IS, IT and IM strategy 
Developing An Information System Strategy 
7

Information system and corporate strategy 

Information system can affect corporate strategy as follows:

¾ Providing new opportunities 
¾ Providing information to help formulate corporate strategy
Providing information to help formulate corporate strategy
¾ Pursuing competitive advantages 
An IS Planning Model 
8

S t corporate
Set t strategy
t t

IInformation
f ti Define information needs
and data
architecture Application
Define Set IS strategy
gy architecture
information Considers
requirements by applications
setting output needed to turn
then determining IT architecture
hit t data into
inputs needed to Defines the hardware, information
produce those software, Peripherals
outputs and networkingg
requirements for
organization
Competitive Advantage
9

Based on work of Porter

Suggested IT affect rules of competition in three areas:

1. IT changes industry structure, and in doing so alters the

rules of completion.
2 IT creates competitive advantage by giving companies
2.
new ways to outperform, their rivals/
3. IT spawns new businesses, often from within a company’s
existing operations.
Competitive Advantage
10

¾ Competitive Advantage: is the force to put the organization

in a position where it exerts more competitive forces on
others they do on it.
it

¾ The
e Va
Value
ue Chain:
C a : Firm iss regarded
ega ded as a se
series
es o
or cchain
a o of
activities, which each activity value to the product or service
being provided by the firm.
Porter’s Value Chain Model 
11

Firm 
infrastructure
Planning models 
g
Human 
resources 
Automated employees scheduling 
management 

Technology 
development Electronic market research
Procurement
Procurement 
O li
On‐line purchasing
h i
Automated  Flexible  Automated  Remote  Remote 
warehouse manufacturing order  terminal for  servicing of 
purchasing sales staff equipments

Inbound  Operation
logistic Outbound  Marketing and  Service
logistic  Sales

Support Activities Primary Activities
Generic Strategies 
g
12

Two main methods competitive advantage can be obtained: 
Two main methods competitive advantage can be obtained:
1. Low cost (having the lowest unit production costs in the 
industry) 
2. Differentiation (persuading customers that the product is 
better, different or unique). 

¾ Each strategy used for whole market or focused on a 
g (p )
market segment (pr niche). 
Using Information for Competitive Advantage 
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Products can be classified according to information intensity, 
Products can be classified according to information intensity
i.e.

¾ How much information is needed to make a product, and

¾ How much information is contained within a finished 
h f d h f h d
product. 
Porter and Millar Information Intensity Matrix 
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The model compares:

The model compares: 

¾ How much information is in the product (x axis) with
p ( )

¾ Number of information exchanges that take place to make 
product (y axis). 
d

Can place any industry in the matrix, then determine if and 
Can place any industry in the matrix then determine if and
how the information system is likely to be critical to the 
buskiness. 
Porter and Millar Information Intensity Matrix ‐
y 2
15

Information intensity
y of product
p

LOW HIGH
hain 
of value ch

LOW

Toys Fashion 
Perishables 
Perishables
ormation intensity o

HIGH

Oil  Banking
refining Education
Info
IT AS A Change Trigger 
16

Zuboff  Model 
Zuboff Model
¾ Theory of how computerization affects organizations

¾ There are three main changes:

1. Automate
2. Informate
3. Transformate
T f t
IT AS A Change Trigger ‐ 2 
17

Zuboff theory of
change

Automate Informate Transformate

Managers request Computer provide

Automation of more or better the organization
costly manual information, some with opportunities
processes .
p processes to change the way
redesigned to meet processes operate /
those requests. business carried
Main benefit out.
reduce cost for Company become
more effective and Main benefit is
business. competitive
profitable.
fit bl
advantage.
Lewin’s 3‐Step Model of Change
18

Lewin’s theory of 
Lewin’s theory of
change

1‐ Unfreeze 2‐ Change  3‐ Re‐freeze

Create motivation
C i i Move to new
for change by behavior. Must Reinforce new
identified what that pattern of work or
convincing staff of behavior is and then
the undesirability communicate new behavior by some
of the current attitudes culture and y
reward system.
situation. Staff concept to staff. May still
only accept change Needs: encounter
if company 1- users involvement resistance from
threatened or can staff.
see change will g
2- management
commitment
make things
better. 3- organizational
impact analysis
Theory of Users Resistance
19

Theory Explanation Overcome by:

People-oriented Factors internal to users e.g. User training persuasion
theory fear of new system (not always effective)

System-oriented Factors inherent in system Involve users in system

theory design e.g. poor interface design. Improve interface
d
design

Interaction theoryy Resistance caused byy Create reward systems.

y
interaction between people Promote user
and systems factors, e.. Fear of participatioin
losing power because of new
system
system.
20