Information Systems

Lecture 4
Ashcroft International Business School

Tools for Strategic Analysis

Information and Competitive Advantage

Value Chain
 Ashcroft International Business School
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Learning Outcomes
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• Describe the three different levels of
Introduction
Intro
business strategy – corporate, business and
Strategies
operational/functional
Comp Adv
• Distinguish between the key elements of
Value Chain
strategy – vision, mission, strategies and
V.C. Primary
policies
.C. Secondary
• Define IS strategy and be able to describe
Questions
how it fits with overall strategy
• Recognise the difference between Porter’s
competitive strategies
• Appreciate the value chain
 Ashcroft International Business School
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Strategy
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• “the direction and scope of an organization
Intro
over the long-term, which achieves
Strategies
Strategies
advantage for the organization through its
Comp Adv
configuration of resources within a changing
Value Chain
environment to the needs of markets and
V.C. Primary fulfill stakeholder expectations.”
.C. Secondary (Johnson et al, 2006)
Questions
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Strategy
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• “… the determination of the basic long-
Intro
term goals and objectives of an enterprise,
Strategies
Strategies
and the adoption of courses of action and
Comp Adv
allocation of resources necessary for
Value Chain
carrying out these goals.”
V.C. Primary
• (Chandler, 1962)
.C. Secondary
• “…the strong focus on profitability not just
Questions
growth, an ability to define a unique value
proposition, and a willingness to make
tough trade-offs in what not to do.”
(Porter, 2001)
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Therefore, strategy……..
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• is concerned with long-term direction
Intro

Strategies
Strategies
• is strongly influenced by considering the
environment
Comp Adv

Value Chain
• deals with the overall plan for deploying
V.C. Primary
resources
.C. Secondary
• entails making trade-offs
Questions • is about achieving unique positioning
against competitors
• has the central goal of achieving
competitive advantage over rivals
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Types of business strategy

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Corporate Strategy
Intro For the whole organization –
Corporation
Strategies
Strategies all business lines and
resource allocation to those
Comp Adv
lines
Value Chain Business
Business Business Business
V.C. Primary Unit A Unit B Unit C strategy
Strategy for a
.C. Secondary
particular business
Questions Operational/
unit
Functional
Function Function Function
A B C
strategy
Strategy for a single
function within an
Strategic Business
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Strategy Hierarchy
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• Different strategies must be compatible – to
Intro
support the whole organisation
Strategies
Strategies
• Strategies are normally formulated “Top-down”
Comp Adv – higher levels set goals for lower levels
Value Chain • But lower level strategies may well influence

V.C. Primary those at higher levels – “Bottom-up”

.C. Secondary • IS strategy must be compatible with the

Questions business strategy of the SBU it serves and also

with the overall corporate strategy and other
functional areas within the SBU
 Ashcroft International Business School
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Strategy elements
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• Mission
Intro
 Statement of what the business intends to
Strategies
Strategies
achieve and what differentiates it from other
Comp Adv businesses
Value Chain • Vision
V.C. Primary  Image of the future direction that everyone can
.C. Secondary remember and follow
Questions
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Nokia
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•Vision
Intro
•Our promise is to help people feel close to what is important to
Strategiesthem
Strategies

Comp Adv •Nokia is a consumer led company. There is a progressive and

continuous increase in consumer involvement with technology
Value Chain and communications globally. People are broadening their

V.C. Primary modes of communication to include the web and, social

networks are becoming central to how people communicate.
.C. Secondary
•People want to be truly connected, independent of time and
Questions place, in a way that is very personal to them. And, Nokia’s
promise is to connect people in new and better ways.

http://www.nokia.com/A4126317
 Ashcroft International Business School
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Google’s Mission
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• Google's mission is to organize the world's
Intro
information and make it universally accessible and
Strategies useful.
Strategies

Comp Adv • As a first step to fulfilling that mission, Google's

Value Chain founders Larry Page and Sergey Brin developed a

new approach to online search that took root in a
V.C. Primary
Stanford University dorm room and quickly spread
.C. Secondary to information seekers around the globe. Google is
Questions now widely recognized as the world's largest search
engine -- an easy-to-use free service that usually
returns relevant results in a fraction of a second.
 Ashcroft International Business School
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Strategy elements
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• Vision
Intro

Strategies
Strategies
• Mission
Comp Adv
• Used to guide the formulation of…..
Value Chain • Strategies
V.C. Primary  Resource allocation that defines organisation’s
relationships with its environment over time
.C. Secondary

Questions
• Policies
 Guidelines and procedures used in carrying out a
strategy
 Ashcroft International Business School
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BIS, IS and IT strategy

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• Business information strategy
Intro
 Defines how information, knowledge and
Strategies
Strategies applications portfolio will be used to support
Comp Adv
business objectives
• IS strategy
Value Chain
 “Determination of the most appropriate processes
V.C. Primary and resources to ensure that information provision
.C. Secondary supports business strategy” (Bocij, 2006)
Questions
 Usually a stream of projects
• IT strategy
 “Determination of the most appropriate
technological infrastructure comprising hardware,
networks and software applications” (Bocij, 2006)
 Ashcroft International Business School
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IS strategy and relationships

tion
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Lecture
4 Bocij et al, 2006
Intro
Internal resource
Strategies
Strategies analysis Micro
Comp Adv environmen
Macro Business t
Value Chain
environme Strategy
V.C. Primary nt Corporate
.C. Secondary objectives
Questions
Information Information Information
requiremen Strategy requiremen
ts ts
IS IS strategy IT
Strategy objectives Strategy
 Ashcroft International Business School
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Porter’s Competitive Strategies

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• Overall cost leadership
Intro
 IS can reduce the direct costs of manufacture
Strategies
and indirect costs of other functions.
Advantage
Comp Adv
• Overall differentiation
Value Chain
 IS can help to add unique features directly
V.C. Primary (tailoring to customer’s needs of wants) or allow
.C. Secondary other functions to do so indirectly (e.g. setting a
Questions
high level of service quality)
• Focus or niche
 IS can help to identify and create niches directly
and to create them indirectly through other
functions
 Ashcroft International Business School
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Porter’s Competitive Strategies

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• Generic strategies to build competitive
Intro
advantage (Porter, 1980)
Strategies
Competitive Advantage
Advantage
Comp Adv
Defined by
Value Chain Defined by Cost Distinctiveness
V.C. Primary
Target Market

.C. Secondary Industrywide Low-cost

Differentiation
Questions (Broad) leadership

Specific niche Differentiation-

or Segment Cost-based
based focus
(Narrow) focus
 Ashcroft International Business School
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tion
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Nokia- strategy
Lecture
4
• Overall differentiation strategy
Intro

Strategies
• Nokia offer customers better quality and
advanced phone features – so they are
Comp Adv
differentiating the offering against
Value Chain
competitors
V.C. Primary
• IS can help Nokia:
.C. Secondary
 Understand the Customer wants/needs through
Questions
CRM
 Ensure higher quality through IS to monitor and
control quality
http://www.nokia.com/A4126317
 Ashcroft International Business School
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Value Chains (Porter, 2001)

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• Basic tool for understanding the impact of
Intro information technology on companies
Strategies • When a company competes in any industry it
Comp Adv
performs a set of interrelated value-adding
activities
Value Chain
Value Chain  E.g. manufacture of a component; operating a sales force
V.C. Primary • The value chain is a framework for identifying
.C. Secondary
these activities and their effect on:
 Cost
Questions  Buyers
• IT and the Internet have a pervasive effect on the
value chain as they can be used to link the
activities to each other and communicate between
activities
 Ashcroft International Business School
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tion
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Value Chain Management (Porter,2001)
Lecture
4
• Value chains consist of primary and support
Intro
activities
Primary activities Secondary activities

Strategies
Firm infrastructure
Comp Adv

Value Chain
Value Chain Human Resource Management

V.C. Primary Technology Development

.C. Secondary Procurement
Questions

After
Inbound Outbound Marketing
Operations Sales
Logistics Logistics and Sales
Service
 Ashcroft International Business School
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Value Chain – Primary Activities

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• Inbound logistics
Intro  Receiving raw materials and/or partly finished goods;
storing them; and transferring them to the manufacturing
Strategies section
Comp Adv
• Operations
 Producing finished goods from raw materials and/or partly
Value Chain finished goods
• Outbound logistics
V.C. Primary
V.C. Primary
 Storing finished goods and then distributing them to
.C. Secondary customers
• Marketing and sales
Questions
 Promoting the firm’s products; soliciting orders from
prospective customers
• After-sales service
 Maintaining the value of the product to the customer after
it has been delivered
 Ashcroft International Business School
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Value Chain – Secondary Activities

tion
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• Firm infrastructure
Intro
 General management; accounting and finance;
Strategies legal department; health and safety; etc.
Comp Adv • Human Resource Management
Value Chain  Recruiting; training and developing; appraising;
V.C. Primary
career planning; etc.
• Technology development
.C. Secondary
.C. Secondary
 Research and development, relating to both
Questions
products and processes
• Procurement
 Acquiring the goods and services that the firm
needs in order to operate effectively; applicable
to both primary and support activities
 Ashcroft International Business School
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tion
System
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How do systems add value? (Porter,2001)
Lecture
4
• Cross-activity integration through
Intro
information systems and the internet
Primary activities Secondary activities

Strategies
Firm infrastructure
Comp Adv

Value Chain
Value Chain Human Resource Management

Technology Development

Enterprise Systems
V.C. Primary

.C. Secondary Procurement

Questions

Supply Chain Customer Relationship

Management Systems Management Systems

Marketing After
Inbound Outbound
Operations and Sales Sales
Logistics Logistics
Service
 Ashcroft International Business School
Informa
tion
System
s
How do systems add value? (Porter,2001)
Lecture
4
• Cross-activity integration through
Intro
information systems and the internet
Primary activities Secondary activities

Strategies
Firm infrastructure
Comp Adv

Value Chain
Value Chain Human Resource Management

V.C. Primary Technology Development

.C. Secondary Procurement
Questions Knowledge Management Systems

Marketing After
Inbound Outbound
Operations and Sales Sales
Logistics Logistics
Service
 Ashcroft International Business School
Informa

References
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Bocij, P., Chaffey, D. Greasley, A. and Hickie, S.,
Intro 2006.Business Information Systems Technology,
Development and Management for e-business. 3rd ed.
Strategies
Johnson, G. Scholes, K. and Whittington, R. 2006.
Comp Adv Exploring Corporate Strategy: Text and Cases.
Value Chain London: Prentice Hall
Porter, M. 1980. Competitive Strategy. New York: Free
V.C. Primary
Press
.C. Secondary Porter, M., 2001. “Strategy and the Internet”, Harvard

Questions Business Review, vol. 79, no. 3, pp. 63-80

Laudon, K.C. and Laudon, J.P., 2007. Essentials of
Business Information Systems. 7th ed. London:
Prentice Hall
http://www.nokia.com/A4126317
 Ashcroft International Business School
Informa

?
tion
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Lecture
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Intro

Strategies
?
Comp Adv
?
? ?
Value Chain

V.C. Primary Questions

?
.C. Secondary

Questions
Questions