1. Using Information Technology for Competitive Advantage
Chapter 2
Interview
In order for IT to create competitive advantage, it must be properly aligned with a company’s overall business strategy.
Companies that get the most out of their IT investments generally follow five basic steps:
Analyzing market opportunities
Defining and assessing strategy
Allocating resources
Managing investment decisions and IT projects
Measuring and communicating results
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

2. Interview
Elizabeth Lauer Ivey Senior Information Technology Strategist HVS International
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

3. Interview (cont.)
Defines Competitive Advantage as: A property’s (or chain’s) ability to attain and maintain a strong bottom line.
Examples: Efficient Reservation System Lower operating overhead Guest recognition system
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

4. 1. Introduction to Competitive Advantage
Use technology to:
lower your cost structure
increase revenues and market share
create unique value propositions for guests
create unprecedented returns for investors or shareholders
Creating competitive advantage requires creative, “out-of-the-box” thinking
After competitive advantage has been created, it must be sustained or destroyed and either reinvented or replaced with something before anyone has time to copy it and catch up to your lead.
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

5. 2. Technology Takes Center Stage
Convergence: The coming together of numerous technologies to make great things happen.
Digital Convergence
Miniaturization
Portability
Declining Costs
Push Technology
More Powerful Applications
Speed, agility, connectivity, and the ability to amass and subsequently employ knowledge, are key competitive ingredients.
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

6. Tradition Six prevailing philosophies Essential to survival
Requires an act of faith (or gut feeling) that an investment will prove beneficial
Intuitive appeal and seemingly obvious outcomes
Required or mandated
Response to competitors
Undergo intense scrutiny and analysis
All tend to be reactive and not based on the organization’s strategy
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

7. Enlightenment Impossible to achieve high-touch without high-tech
Proactive rather than reactive
Strategic rather than support-oriented
IT and strategy must be intertwined and evolve in definition together
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

8. 3. Concept of Co-Alignment
To be successful, a firm must be well aligned, both internally and externally, with the forces driving change in its business environment.
Firm Performance and Competitive Advantage
Strategic Choices and Competitive Methods
Resource Allocation Decisions
Environmental Events
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

9. Michael Porter Generic Strategies Five Forces Model Low-Cost Producer
Product Differentiation
Market Niche Focus
Five Forces Model
Barriers to Entry
Competition
Buyer Power
Supplier Power
Substitute
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

10. 4. Achieving Competitive Advantage
What makes your firm a better choice over other options in the marketplace?
What is the deciding factor, the thing that really makes the difference?
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

11. Assessing Competitive Advantage
Outcome Approach (Macro Level)
Trait Approach (Micro Level)
CAPITA
Efficiency
Functionality
Threat
Pre-emptiveness
Synergy
Resource-Based View
Not only how a firm competes but also the assets it has to compete (X-Factor)
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

12. Examples of Competitive Advantage
Economies of Scale
Functionality
Accuracy of Information
Proprietary Technology
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

13. 5. Sustainability
The ability of a firm’s workforce to creatively exploit the capabilities of information technology to create new products and services that sell well; it will not be derived from the technologies themselves.
It will come in one of these forms:
Innovations that result from a firm’s ability to effectively leverage its unique resources
Competitive asymmetry or differences between firms as a result of their unique resources
The ability to preempt competitive responses
Once the competitive advantage is lost, the industry’s sophistication becomes greater
Leading firms continually seek ways to destroy their competitive advantages (creative destruction) and create new ones before the competition does this for them. Multi-pronged approaches (sequential thrusts) make it more difficult for competitors to react with counter-responses.
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

14. 6. Summary
No longer fruitful to resist IT or take a “wait and see approach”
People are key Further info
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458