Chapter2 COMPETING WITH INFORMATION TECHNOLOGY

Goal: Introduces fundamental concepts of competitive advantage through information technology and illustrates major strategic applications of information systems. Learning outcome: These chapters will prepare you to move on to study chapters on information technologies. Objective: – Identify several basic competitive strategies and explain how they use information technologies to confront the competitive forces faced by a business. – Identify several strategic uses of Internet technologies and give examples of how they can help a business gain competitive advantages. – Identify the business value of using Internet technologies to become an agile competitor or form a virtual company.

Content Fundamentals of Strategic Advantage – Competitive Strategy Concepts – Strategic Uses of Information Technology – Building a Customer-Focused Business Using Information Technology for Strategic Advantage – Reengineering Business Processes – Becoming an Agile Company – Creating a Virtual Company – Knowledge Management Systems

Competitive Strategy Concepts

Competitive forces: – The rivalry of competitors within its industry – The threat of new entrants into an industry and its markets – The threat posed by substitute products that might capture market share – The bargaining power of customers: Refers to the pressure consumers can exert on businesses to get them to provide higher quality products, better customer service, and lower prices. – The bargaining power of suppliers Basic Strategy: – Cost Leadership Strategy: Becoming a low-cost producer of products and services in the industry or finding ways to help suppliers or customers reduce their costs or increase the costs of competitors. – Differentiation Strategy: Developing ways to differentiate a firm’s products and services from those of its competitors or reduce the differentiation advantages of competitors. – Innovation Strategy: Finding new ways of doing business(developing unique products and services or entering unique markets). – Growth Strategies: Significantly expanding a company’s capacity to produce goods and services, expanding into global markets, diversifying into new products and services, or integrating into related products and services. – Alliance Strategies: Establishing new business linkages and alliances with customers, suppliers, competitors, consultants, and other companies.

Strategic Uses of Information Technology

Example

Other Strategic Uses of Information Technology

Building a Customer-Focused Business

The Value Chain and Strategic IS

Reengineering Business Processes

Example

Becoming an Agile Company How information technology can help a company be an agile competitor, with the help of customers and business partners.

Creating a Virtual Company

Knowledge Management Systems