1. CHAPTER 3 STRATEGIC & COMPETITIVE OPPORTUNITIES Gaining a competitive advantage through effective business strategies is what this chapter is about. Using IT to Generate Organizational Horsepower

2. THE FLEETING COMPETITIVE ADVANTAGE l This chapter examines 7 strategies, enabled by IT, that promote organizational competitiveness. Introduction A COMPETITIVE ADVANTAGE is providing the best perceived perfect service at the customer’s moment of value. 3-2

3. ORGANIZATIONAL HORSEPOWER (OHP)... l ORGANIZATIONAL FORCE is meeting as many customer expectations as possible. l ORGANIZATIONAL SPEED is meeting customer expectations quickly. OHP3-4 is a measure of organizational competitiveness generated through organizational force and speed.

4. 7 IT-ENABLED OHP STRATEGIES l Just-in-time (JIT) approachX l Teams X l Information partnershipsXX l Timeless & locationless operationsXX l Transnational firmX l Virtual organizationX l Learning organizationX OHP3-5 FORCE SPEED See Figure 3.2 (page 83) to compare these strategies.

5. WHAT IS QUALITY? QUALITY is meeting customer expectations. Quality is not goodness, prettiness, or luxury. Quality3-6 Quality is the foundation of all OHP strategies and a fundamental building block to organizational competitiveness.

6. TOTAL QUALITY MANAGEMENT (TQM) is... l meeting customer expectations through l continuous improvement and l organization-wide quality ownership. Quality3-7

7. STATISTICAL PROCESS CONTROL (SPC) 1.A CONTROL CHART - a graphic means of identifying causes to problems that are controllable. 2.A HISTOGRAM - a graphic representation of frequency distributions. Quality3-8 is a method of gathering and analyzing quality requirements. SPC tools (such as those below) help you meet customer expectations.

8. CONTINUOUS IMPROVEMENT TOOLS l A FISHBONE DIAGRAM - a line diagram that begins with a problem (the effect) and branches out into problem causes.(page 87) l A PARETO CHART - sorted frequencies of various problem causes with percentages of each. l A SCATTER DIAGRAM - a tool used to depict data patterns and is created by plotting paired data on a two-axis graph.(e.g. # of complaints vers hrs trained) Quality3-9

9. Organization-Wide Quality Ownership Supports TQM by... 1.Promoting individual employee commitment and power. 2.Communicating that sense of ownership to customers. 3.The recognition that quality is everyone’s job. Quality3-10

10. The JUST-IN-TIME (JIT) Approach Is... l Internal l External JIT3-11 producing or delivering a product or service when the customer wants it. The JIT approach may be viewed from two perspectives: An OHP strategy for organizational speed.

11. JIT OVERCOMES SEVERAL PROBLEMS l Unsold inventories must be stored in costly warehouses. l New products are delayed until existing inventories are sold. l Quality lapses occur when defects aren’t caught until quality control catches up with the inventory. JIT3-12

12. IT SYSTEMS ENABLE JIT l PRODUCTION SCHEDULING systems provide detailed plans for producing all components of a final product. l MATERIAL REQUIREMENTS PLANNING (MRP) systems take the production schedule and determine which raw materials and components are required and when. l MANUFACTURING RESOURCE PLANNING (MRP II) systems tie material requirements from MRP systems into other organizational systems. JIT3-13

13. TEAMS IN AN ORGANIZATION l The shared goal gives the team focus. l Task interdependence means each team member relies on one another to complete their work and achieve the shared team goal. Teams3-14 A TEAM is a group of people with a shared goal and task interdependence. An OHP strategy for organizational force.

14. PROJECT TEAMS l Project teams compliment and don’t replace a departmental structure. Teams3-15 PROJECT TEAMS accomplish one-time goals and disband once the project is complete.

15. PERMANENT TEAMS l Permanent teams are an alternative to a departmental structure. Teams3-16 PERMANENT TEAMS are designed to support permanent processes and are not intended to disband.

16. IT SYSTEMS ENABLE TEAMS l Groupware supports group decision-making. l Work flow automation software speeds processing. l Videoconferencing and electronic meeting software reduce the need for in-person team meetings. l Group scheduling software facilitates scheduling. Teams3-17

17. INFORMATION PARTNERSHIPS Information Partnerships 3-18 An INFORMATION PARTNERSHIP is an agreement between organizations for the sharing of information to strengthen each partner organization. An OHP strategy for organizational force and/or speed.

18. AN INFORMATION PARTNERSHIP FOR SPEED l Electronic data interchange (EDI) automates the transaction information flow between partner organizations. l Partners do not modify their product offerings or their target markets. l Business volume increases because transactions take less time and have fewer errors. Information Partnerships 3-19

19. AN INFORMATION PARTNERSHIP FOR FORCE l Information is shared between partner organizations to reach a larger market. l Information is available because it is routinely captured and stored. l EDI and interorganizational systems (IOSs) using networking technology support this strategy. Information Partnerships3-20

20. AN INFORMATION PARTNERSHIP FOR BOTH l Partner organizations share information that is strategic in nature and affects their fundamental business strategy. l New product offerings or services result. l Innovations are generated faster - organizational speed. l Partners reach more customers - organizational force. Information Partnerships3-21

21. TIMELESS & LOCATIONLESS OPERATIONS l TIMELESS OPERATIONS operate without regard to time. Timeless operations serve customers whenever the customers want. l LOCATIONLESS OPERATIONS operate without regard to location. Locationless operations serve customers wherever the customers want. Timeless & Locationless3-22 An OHP strategy for organizational force or speed.

22. SUCCESSFUL TIMELESS OPERATIONS l Kansas City Power & Light –With wireless technologies, meter reading can take place any time. l Cisco Systems –Customers now service themselves whenever they want. Timeless & Locationless3-23 See Table 3.1 on page 95.

23. SUCCESSFUL LOCATIONLESS OPERATIONS l Hot Hot Hot –1,500 people daily drop by its Web site. l Dell Computers –Dell doesn’t manufacture anything anywhere - it simply assembles pre-made components. l Paul, Hastings, Janofsky & Walker –Lawyers working anywhere they want. Definitely not in the office. Timeless & Locationless3-24 See Table 3.1 on page 95.

24. THE PAPERLESS OFFICE l Eliminating paper reduces the cost of storing that paper. l Electronic materials can be searched electronically saving time. Timeless & Locationless3-25 The PAPERLESS OFFICE is an office where all materials are maintained in electronic instead of paper form.

25. SUPPORTING THE TELECOMMUTER 1.Communication technology 2.Constant communication 3.Goal setting and monitoring 4.Physical meetings 5.Information access Timeless & Locationless3-26 Telecommuting, or working away from the main office, requires the creation of an individual, remote workplace - a virtual workplace. Five components support this virtual workplace:

26. THE TRANSNATIONAL FIRM l Operations are geographically dispersed. l The dispersed operations extend the firm’s market reach and thus its organization force. Transnational Firm3-27 A TRANSNATIONAL FIRM is a firm that produces and sells products and services all over the world in coordinated cooperation. An OHP strategy for organizational force.

27. INTERNATIONAL CONFIGURATIONS l GLOBAL - all operations depend upon headquarters for resources and direction. l MULTINATIONAL - all operations operate independently, reporting only financial information to headquarters. l TRANSNATIONAL - all operations share information and resources equally. Transnational Firm3-28 See Photo Essay 3-1, page 100.

28. TRANSNATIONAL FIRM CRITICAL SUCCESS FACTORS 1.Balancing local uniqueness with global uniformity –Use translation software with Web communication 2.Creating a global infrastructure –Global DSSs, MISs, and WSSs Transnational Firm3-29

29. TRANSNATIONAL FIRM CHALLENGES 1.Fostering interoperational communication 2.Integrating OHP strategies internationally 3.Moving information across borders, called TRANSBORDER DATA FLOWS, that is subject to custom regulations just like any other product. Transnational Firm3-30

30. THE VIRTUAL ORGANIZATION Virtual Organization3-31 A VIRTUAL ORGANIZATION is a network of independent organizations linked together by IT to exploit market opportunities by sharing skills, costs, and market access. “If you think of a transnational firm as located everywhere, think of a virtual organization as located nowhere.” An OHP strategy for organizational speed.

31. Virtual Organization3-32 Locationless Operations Unlimited life Employee run Share assignments Virtual Organization Unlimited life Partnership run Share knowledge & resources Outsourcing Specified lifetime Contractual operation Share only what’s required DEFINING A VIRTUAL ORGANIZATION

32. IT SYSTEMS FOR THE VIRTUAL ORGANIZATION l Linking incompatible hardware and software. l Fostering creativity without human contact. l Effectively communicating concepts online. Virtual Organization3-33 Joining independent organizations can create IT systems integration challenges, including:

33. THE LEARNING ORGANIZATION Learning Organization3-34 The LEARNING ORGANIZATION is an organization whose people are continually discovering how to learn together while, at the same time, altering their organization as a result of what they learn. An OHP strategy for organizational speed.

34. BARRIERS THAT PROHIBIT ORGANIZATIONS FROM “LEARNING” l A command and control structure. l Always assigning blame. l The failure to learn from your experience. Learning Organization3-35

35. COMMAND IT TO CONTROL IT l Efficiency is gained at the cost of flexibility. l Information flows only from top to bottom. Learning Organization3-36 A command and control structure is an organizational learning barrier because: Use IT systems to increase the bottom to top flow of information.

36. IT SHOULDN’T BE A BLAME GAME l It promotes individual not organizational learning. l Assigning blame assumes you are to blame and not me. Learning Organization3-37 Assigning blame for all errors in an organization is an organizational learning barrier because: Use whiteboard software to solve problems jointly.

37. LEARNING FROM YOUR EXPERIENCES l Seeing the “big picture” requires experiencing both causes and effects. l Effects from events are often separated by time and distance from the cause. Learning Organization3-38 Failing to learn from your experiences is an organizational learning barrier because: Utilize artificial intelligence to identify patterns and find unique solutions to complicated problems.

38. STEPS IN SELECTING AN OHP STRATEGY 1.How do your customers define perfect service? 2.Does your organization have a strategic plan and how do those goals translate into OHP force and speed? 3.Which OHP strategy best fits the answers to the first two questions? 4.Does your organization have the resources to adopt the strategy you’ve selected? OHP Strategy Implementation3-39

39. ADOPTING AN OHP STRATEGY 1.Is the strategy to be applied partially or comprehensively? 2.Which technologies does the strategy require? 3.Should a continuous improvement process or business process reengineering be used to adopt the strategy? OHP Strategy Implementation3-40 Once selected, adopting an OHP strategy considers three issues. They are:

40. BUSINESS PROCESS REENGINEERING BPR3-41 BUSINESS PROCESS REENGINEERING (BPR) is the reinventing of processes within a business. BUSINESS PROCESSES are sequences of activities that take raw materials from a supplier and serve outcomes to a customer.

41. STEPS IN PERFORMING BPR 1.Defining the OHP strategy you wish to adopt. 2.Identifying the affected processes that need to be reengineered. 3.Identifying the goal for each process. 4.Identifying process participants and a facilitator for each process. 5.Mapping the “as-is” process. 6.Designing the “to-be” process. BPR3-42

42. TO SUMMARIZE l Competitive advantages are fleeting. l 7 OHP strategies enabled by IT are: –Just-in-time approach –Teams –Information partnerships –Timeless & locationless operations –Transnational firm –Virtual organization –Learning organization 3-43

43. TO SUMMARIZE l Quality through TQM is the foundation for all OHP strategies. l Each OHP strategy generates various magnitudes of organizational force and speed - the components of OHP. l Adopting an OHP strategy may be done either continuously or radically. l TQM is the continuous adoption process. l BPR is the radical adoption process. 3-44