Information Systems for Competitive Advantage Using MIS 4e Chapter 3 Information Systems for Competitive Advantage

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Q1: How Does Organizational Strategy Determine Information Systems Structure? Organizations examine the structure of their industry and determine a competitive strategy Competitive strategy determines value chains determine business processes Structure of business processes determines design of supporting information systems Figure 3-1 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Q2: What Five Forces Determine Industry Structure? Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Q2: What Five Forces Determine Industry Structure? (cont’d) Five Forces at FlexTime Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Q3: How Does Analysis of Industry Structure Determine Competitive Strategy? Porter’s Four Competitive Strategies Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Q4 How Does Competitive Strategy Determine Value Chain Structure? Value is amount of money a customer is willing to pay for a resource, product, or service. Difference between value an activity generates and its cost is called margin. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Support Activities in the Value Chain Support Activity Description Technology R & D, New Techniques, Methods, Procedures Procurement Raw Materials Human Resources Training, Recruiting, Compensation Firm Infrastructure General Management, Finance, Accounting, Legal, Government Affairs Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Bicycle Maker’s Value Chain Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Value Chain Linkages Interactions across value activities readily supported by information systems Manufacturing systems use linkages to reduce costs Sales forecasts to plan production Production plan used to determine raw materials needs Material needs used to schedule purchases Just-in-time inventory Reduced Inventory sizes and costs Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Three Examples of Business Processes for Bicycle Manufacturer Materials ordering process transforms cash into a raw materials inventory Manufacturing process transforms raw materials into finished goods Sales process transforms finished goods into cash Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Improved Ordering Process Purchase Bicycle Parts activity queries both raw materials inventory database and finished goods inventory database Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Q6 How Does Competitive Strategy Determine Business Processes and Structure of Information Systems? Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Q6 How Does Competitive Strategy Determine Business Processes and Structure of Information Systems? (cont’d) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

High-Service Business Bike Rental Extensive use of information systems Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Bottom Line Organizations analyze their industry and choose a competitive strategy Given a strategy, business processes to span value-generating activities are designed Those processes determine scope and requirements of each organization’s information systems Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall