1. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-1 Real World Cases Competing with Information Technology

2. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-2 Real World Cases Learning Objectives 1.Identify several basic competitive strategies and explain how they can use information technologies to confront the competitive forces faced by a business. 2.Identify several strategic uses of Internet technologies, and give examples of how they give competitive advantages to a business. 3.Give examples of how business process reengineering frequently involves the strategic use of Internet technologies.

3. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-3 Real World Cases Learning Objectives 4.Identify the business value of using Internet technologies to become an agile competitor or to form a virtual company. 5.Explain how knowledge management systems can help a business gain strategic advantages.

4. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-4 Real World Cases Fundamentals of Strategic Advantage Strategic IT Supports Efficient Business Operations Workgroup or Enterprise Collaboration Effective Business Decisions Real World Case 1- GE, Dell, Intel, and Others Click to go to Case 1

5. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-5 Real World Cases Competitive Strategy Concepts Strategic Information Systems Support Competitive Position Can Be Any Kind of Information System Gain Competitive Advantage Reduce a Competitive Disadvantage Strategic Advantage

6. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-6 Real World Cases Strategic Advantage Cost Leadership Differentia- tion Innovation Growth Alliance Other Strategies Rivalry of Competitors Threat of New Entrants Threat of Substitutes Bargaining Power of Customers Bargaining Power of Suppliers Competitive Forces Competitive Strategies

7. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-7 Real World Cases Strategic Advantage Other Competitive Strategies Lock in Customers Lock in Suppliers Switching Costs Barriers to Entry Leverage Investment in IT

8. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-8 Real World Cases Wal-Mart and Others Satellite Network Linking all Point-of-Sale Terminals Immediate Sales and Inventory Information Extended to Customers and Suppliers Interenterprise Information Systems Stockless Inventory Replenishment Systems Strategic Advantage

9. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-9 Real World Cases Value Chain & Strategic IT Support Processes Administrative Coordination and Support Services Human Resources Management Technology Development Procurement of Resources

10. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-10 Real World Cases Value Chain & Strategic IT Primary Business Processes Inbound Logistics Operations Outbound Logistics Marketing and Sales Customer Service

11. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-11 Real World Cases Value Chain & Strategic IT COMPETITIVE ADVANTAGE SUPPORT PROCESSES PRIMARY BUSINESS PROCESSES Administrative Coordination & Support Services Human Resources Management Technology Development Procurement of Resources Collaborative Workflow Intranet Employee Benefits Intranet Product Development Extranet with Partners E-Commerce Web Portals for Suppliers Inbound Logistics AutomatedJust-in-TimeWarehousing Operations Outbound Logistics Marketing & Sales Customer Service Computer-AidedFlexibleManufactu-ring OnlinePoint-of-Sale And Order Processing TargetMarketing CustomerRelation-shipManage-ment The Value Chain of a Firm

12. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-12 Real World Cases Using IT for Strategic Advantage Strategic Uses of IT Major Competitive Differentiator Use IT to Develop Competitive Advantage Real World Case 2- Intec Engineering: Click to go to Case 2

13. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-13 Real World Cases Using IT for Strategic Advantage Building a Customer- Focused Business Building Customer Value Fast Response to Individual Customer Needs Use of Internet, Intranets, and Extranets

14. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-14 Real World Cases Using IT for Strategic Advantage Hilton Hotels Hilton.Com Reservation System Services Tailored Automatically to Last Visit High Level of Personalization Deeper Personal Relationship Direct-to-Customer Business Model Via the Web

15. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-15 Real World Cases Building Customer Value Build a Web Community of Customers, etc. Customers Check Own History Web Personal- ization Builds Loyalty Employee View of Customer is Complete Customer Database Transaction Database Customer Orders Through Partners Customer Database by Preferences & Profitability Customer Place Orders Directly Customers Linked With Distribution Intranets Internet IntranetsExtranets IntranetsExtranets Internet

16. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-16 Real World Cases Reengineering Business Processes Level of Change Process Change Primary Enabler Time Required Path to Execution Risk Business Improvement Business Reengineering IncrementalRadical Improved New Version of Process Brand New Process HighModerate Information TechnologyStatistical Control Clean SlateExisting Processes Broad, Cross- Functional Narrow, Within Functions Typical Scope Long Short CulturalCultural Structural Participation Bottom-upTop-down Horizon Past and PresentFuture Frequency of Change One-time or Continuous Periodic One-time Change Starting Point

17. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-17 Real World Cases Order Management Process PROPOSALPROPOSAL COMMITMENTCOMMITMENT CONFIGURATIONCONFIGURATION CREDITCREDIT CHECKINGCHECKING DELIVERYDELIVERY BILLINGBILLING COLLECTIONSCOLLECTIONS Business Processes Business Functions SALES MANUFACTURING FINANCE LOGISTICS

18. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-18 Real World Cases Johnson Controls: Success with Reengineering Web-Based Reengineering Project Fixing a Problem During Engineering Costs 1/10 of Correction at the Prototype Stage Web-Based Collaboration Saved 80% on R&D Investments Order Management Process

19. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-19 Real World Cases Reengineering Order Management Customer Relationships Using Intranets and the Internet Supplier Managed Inventories Using the Internet Cross-Functional ERP Software Integrating Manufacturing, Distribution, Finance, and Human Resource Processes Customer-Access to Web Order Entry, Status-Checking, Payment, and Services Customer, Product, and Order Status Databases accessed via Intranets and Extranets by Employees and Suppliers

20. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-20 Real World Cases Agilent Technologies: Failure in Reengineering Rocky ERP Reengineering Project Lost $105 Million in Revenue and $70 Million in Profits Implementation Disruptions More Extensive than Expected ERP Changes Affect People, Processes, Policies, and Company Culture Reengineering Order Management

21. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-21 Real World Cases Becoming an Agile Company 1.Customers Perceive Products and Services as Solutions to their Individual Problems 2.Cooperates with Customers, Suppliers, and Even Competitors to Bring Products to Market Quickly and at Lowest Cost 3.Organized to Thrive on Uncertainty 4.Leverages the Impact of its People and Knowledge

22. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-22 Real World Cases Becoming an Agile Company Dell Computer – Agility in Action Customer-Focused Company Champion of Mass Customization Build-to-Order Business Model 25,000 on a Typical Day Tight Supply Chain Management Rarely More than Two Hours Worth of Parts Inventory

23. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-23 Real World Cases The Virtual Company Interenterprise IS Boundary of a Firm Customer Response and Order- Fulfillment Teams Manufacturing Teams Engineering Teams Cross-Functional Teams Alliance - Complementary Services Alliance - Major Customer Alliance - Major Supplier Alliance - Small Suppliers Alliance - Subcontractors Intranets Extranets

24. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-24 Real World Cases Virtual Company Strategies Share Infrastructure and Risk with Alliance Partners Link Complementary Core Competencies Reduce Concept-to-Cash Time Through Sharing Increase Facilities and Market Coverage Gain Access to New Markets and Share Market or Customer Loyalty Migrate from Selling Products to Selling Solutions

25. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-25 Real World Cases Virtual Company Strategies Cisco Systems: Virtual Manufacturing Alliances Alliances Create a Virtual Manufacturing Company Three Companies Involved in the Alliance Provides and Agile Build-to- Order Capability in Fiercely Competitive Industry

26. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-26 Real World Cases Knowledge Creating Company Learning Organizations Knowledge Management Explicit Knowledge Knowledge Management Systems (KMS)

27. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-27 Real World Cases Knowledge Management Document Management Information Creation, Sharing, and Management Enterprise Intelligence

28. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-28 Real World Cases Siemens AG: Global Knowledge Management System Stop Employee Problem of Knowledge Hoarding Created ShareNet Web Site Profitable Real-time Worldwide Collaboration Real World Case 3- Yellow, JetBlue and Gentex: Knowledge Management Click to go to Case 3

29. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-29 Real World CasesSummary Strategic Uses of Information Technology Cut Costs Differentiate and Innovate Products and Services Promote Growth Develop Alliances Lock in Customers & Suppliers Create Switching Costs Create Barriers to Entry Leverage IT Investment Develop Competitive Advantage

30. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-30 Real World CasesSummary Building a Customer-Focused Business Develop Business Value Make Customer Value the Strategic Focus Use of Internet, Intranets, and Extranets to Track and Serve Customer Needs and Interests Provide Services Tailored to Specific Customer Needs

31. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-31 Real World CasesSummary Reengineering Business Processes Enable Radical Changes to Business Processes Improves Efficiency and Effectiveness IT Supports Innovative Changes in Work Flows, Job Requirements, and Organizational Structures in a Company

32. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-32 Real World CasesSummary Becoming an Agile Company Rapid Response to Market Changes Broad Product Ranges Short Model Lifetimes Heavy Dependence Upon IT to Respond to Customer’s Unique Situations Enhance Cost Effectiveness

33. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-33 Real World CasesSummary Creating a Virtual Company Use of Internet and IT Provide Computing and Communications Resources IT Enables Management of a Network of People, Knowledge, Financial, and Physical Resources Takes Advantage of Rapidly Changing Markets

34. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-34 Real World CasesSummary Building a Knowledge-Creating Company Creates a Lasting Competitive Advantage Innovative Use of Organization Knowledge Supports Development and Management of New Organization Knowledge Integrates Into New Products and Services

35. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-35 Real World Cases KEY TERMS Agile Competitor Business Process Reengineering Competitive Forces Competitive Strategies Creating Switching Costs Customer-Focused e-business Identifying e-business and e- commerce Strategies Knowledge-Creating Company Knowledge Management System

36. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-36 Real World Cases KEY TERMS Leveraging Investment in IT Locking in Customers and Suppliers Raising Barriers to Entry Strategic Information System Strategic uses of Information Technology Strategic uses of Internet Technologies Total Quality Management Value Chain Virtual Company

37. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-37 Real World Cases Real World Case 1 G.E., Dell, Intel, and Others: The Competitive Advantage of I.T. Click to go to Case 1 Real World Case 2 Intec Engineering Company: The Strategic Value of Knowledge Information Systems Click to go to Case 2 Optional Case Studies Real World Case 3 Yellow, JetBlue, and Gentex: Using I.T. for Competitive Advantage Real World Case 4 CDW and Harrah’s Entertainment: Developing Strategic Customer- Loyalty Systems Click to go to Case 3 Click to go to Case 4

38. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-38 Real World Cases Computer Hardware Chapter 3 Module II – Information Technologies

39. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-39 Real World Cases GE - Dell - Intel and Others: 1.Do you agree with the argument made by Nick Carr to support his position that IT no longer gives companies a competitive advantage? Why or why not? The Competitive Advantage of Information Technology Return to Cases Page Return to Chapter 2

40. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-40 Real World Cases GE - Dell - Intel and Others: IT costs now the same as other traditional costs and as such do not have as great an impact on a company’s strategic planning. If all companies in an industry invest in similar levels of IT then IT cannot be a strategic advantage to a given company. The IT infrastructure changes rapidly and requires a continual investment in new IT and impacts a company’s strategic planning. The IT infrastructure’s continual improvements allow a company to adjust the mix of traditional resources such as physical and human resources. Discussion points would include the following:

41. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-41 Real World Cases GE - Dell - Intel and Others: The Competitive Advantage of Information Technology 2.Do you agree with the argument made by the business leaders in this case in support of the competitive advantage that IT can provide to a business? Why or why not?

42. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-42 Real World Cases GE - Dell - Intel and Others: The productivity lifeblood for a service oriented company is IT and not plants and equipment. How it is used determines the competitive advantage of the IT infrastructure. Some segments of the IT infrastructure are reaching maturity and not much can be gained by additional changes; however other areas aren’t close to maturity and gains in competitive advantage can still be made. All companies are not at the same level of IT usage and you cannot generalize that increased IT expenditures no longer have value to a company. Discussion points would include the following:

43. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-43 Real World Cases GE - Dell - Intel and Others: The Competitive Advantage of Information Technology 3.What are several ways that IT could provide a competitive advantage to a business? Use some of the companies mentioned in this case as examples. Visit their websites to gather more information to help you answer.

44. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-44 Real World Cases GE - Dell - Intel and Others: Improve the customer relationship management system. Create new uses for information to remain competitive. Leveraging the knowledge-capital as an integral part of strategic planning. Determining the best mix of knowledge, software and hardware to be highly competitive. Ways to provide a competitive advantage may include:

45. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-45 Real World Cases GE - Dell - Intel and Others: Improve the customer relationship management system. Create new uses for information to remain competitive. Leveraging the knowledge-capital as an integral part of strategic planning. Determining the best mix of knowledge, software and hardware to be highly competitive. Improve the value chain for the company. Ways to provide a competitive advantage may include: Return to Cases Page Return to Chapter 2

46. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-46 Real World Cases 1.What is the potential value for competitive advantage that a business might gain from knowledge management systems? Why might this value be difficult to measure? Intec Engineering: The Strategic Value of Knowledge Management Systems Return to Cases Page Return to Chapter 2

47. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-47 Real World Cases Quickly building new knowledge into its products and services. Facilitate organizational learning and knowledge creation. Provide rapid feedback to knowledge workers by encouraging behavior changes in employees and improving business performance. Help company become more innovative as an agile provider of high-quality products and customer services. Help company become a formidable competitor in the marketplace. Intec Engineering: Discussion points would include the following:

48. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-48 Real World Cases Intec Engineering: The Strategic Value of Knowledge Management Systems 2.Do you approve of how Intec Engineering is measuring the value of their KMS? Why or why not? How else could the strategic value of their KMS be measured?

49. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-49 Real World Cases The value of the KMS can be quantified. The quality of the KMS is not adequately measured. The focus on measuring the value of the KMS permits Intec to consider the value of their employees’ time. The real value is one of Intec being able to expand its knowledge base through questions being answered. Intec Engineering: Points to consider would include:

50. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-50 Real World Cases Intec Engineering: The Strategic Value of Knowledge Management Systems 3.Does Intec’s knowledge management system give them a competitive advantage? Give several examples from the case to support your answer.

51. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-51 Real World Cases The Beijing project with different specifications Intec Engineering: The Strategic Value of Knowledge Management Systems

52. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-52 Real World Cases The Beijing project with different specifications The prospective customer in Australia Intec Engineering: The Strategic Value of Knowledge Management Systems

53. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-53 Real World Cases The Beijing project with different specifications The prospective customer in Australia Ability to reduce the time of projects for clients so daily revenue is generated sooner by the client Intec Engineering: The Strategic Value of Knowledge Management Systems Return to Cases Page Return to Chapter 2

54. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-54 Real World Cases Progressive - Yellow JetBlue and Gentex: Using Information Technology for Competitive Advantage for Competitive Advantage 1.What strategies in the use of IT for competitive advantage are being used by each of the companies in this case? Explain your choices. Return to Cases Page

55. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-55 Real World Cases Progressive – Lower Costs Differentiate Innovate Promote Growth Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications. Progressive - Yellow JetBlue and Gentex: Choices would include:

56. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-56 Real World Cases Yellow – Lower Costs Innovate Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications. Progressive - Yellow JetBlue and Gentex: Choices would include:

57. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-57 Real World Cases JetBlue – Lower Costs Differentiate Innovate Develop interenterprise information systems to create switching costs. Progressive - Yellow JetBlue and Gentex: Choices would include:

58. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-58 Real World Cases Gentex – Lower Costs Promote Growth Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications. Progressive - Yellow JetBlue and Gentex: Choices would include:

59. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-59 Real World Cases Progressive - Yellow JetBlue and Gentex: Using Information Technology for Competitive Advantage for Competitive Advantage 2.Visit the website of one these companies for more information on their business. What other competitive strategies could you recommend for this company? Explain your recommendations.

60. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-60 Real World Cases Progressive – Develop Alliances Develop interenterprise systems creating switching costs that lock in customers. Include IT components in services to make substitution of competing services more difficult. Progressive - Yellow JetBlue and Gentex: Choices would include:

61. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-61 Real World Cases Yellow – Differentiate Develop alliances Develop interenterprise systems creating switching costs that lock in customers. Include IT components in services to make substitution of competing services more difficult. Progressive - Yellow JetBlue and Gentex: Choices would include:

62. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-62 Real World Cases JetBlue – Promote Growth Develop Alliances Include IT components in services to make substitution of competing services more difficult. Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications. Progressive - Yellow JetBlue and Gentex: Choices would include:

63. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-63 Real World Cases Gentex – Innovate Develop Alliances Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications. Include IT components in services to make substitution of competing services more difficult. Progressive - Yellow JetBlue and Gentex: Choices would include:

64. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-64 Real World Cases Progressive - Yellow JetBlue and Gentex: Using Information Technology for Competitive Advantage for Competitive Advantage 3.How could other companies apply the competitive strategies being used by the companies in this case? Use examples from both a large and small business perspective to illustrate your answer.

65. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-65 Real World Cases Maintain or increase investment in IT to improve operating activities if they can be improved. Use investment in IT to be innovative to distinguish company from competition. IT can be used to develop alliances with customers and suppliers. Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications. Progressive - Yellow JetBlue and Gentex: Large business perspective –

66. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-66 Real World Cases Maintain or increase investment in IT to improve operating activities if they can be improved. Use the investment in IT to establish alliances for the first time. Use IT to differentiate your company from the competition. Use IT to be innovative to distinguish your company from the competition. Progressive - Yellow JetBlue and Gentex: Small business perspective –

67. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-67 Real World Cases The use of IT can permit a larger company to develop interenterprise systems. Progressive - Yellow JetBlue and Gentex: Using Information Technology for Competitive Advantage for Competitive Advantage

68. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-68 Real World Cases The use of IT can permit a larger company to develop interenterprise systems. IT can create barriers to restrict competition from entering the marketplace. Progressive - Yellow JetBlue and Gentex: Using Information Technology for Competitive Advantage for Competitive Advantage

69. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-69 Real World Cases The use of IT can permit a larger company to develop interenterprise systems. IT can create barriers to restrict competition from entering the marketplace. IT can be leveraged to advance the company into more profitable uses for strategic applications. Progressive - Yellow JetBlue and Gentex: Using Information Technology for Competitive Advantage for Competitive Advantage Return to Cases Page

70. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-70 Real World Cases CDW and Harrah’s Entertainment: Developing Strategic Customer- Loyalty Systems Return to Cases Page 1.Does CDW’s customer loyalty program give them a competitive advantage? Why or why not?

71. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-71 Real World Cases Loyalty program is a system that differentiates CDW from its competitors. CDW used IT in an innovative way to move beyond a CRM package to a system that measures customer satisfaction and loyalty. The loyalty program provides CDW with an alliance strategy with its customers by locking in the customers to the CDW system. CDW and Harrah’s Entertainment: Discussion points to consider:

72. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-72 Real World Cases CDW and Harrah’s Entertainment: Developing Strategic Customer- Loyalty Systems 2.What is the strategic value of Harrah’s approach to determining and rewarding customer loyalty?

73. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-73 Real World Cases Differentiate Harrah from its competitors in terms of service to different groups of customers. Promote growth through improved targeting of multiple customer groups on a real-time basis. Creating switching costs in multiple customer groups to lock customers in all groups into continuing to have loyalty to Harrah’s. CDW and Harrah’s Entertainment: Discussion points to consider:

74. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-74 Real World Cases CDW and Harrah’s Entertainment: Developing Strategic Customer- Loyalty Systems 3.What else could CDW and Harrah’s do to truly become customer- focused businesses? Visit their websites to help you suggest several alternatives.

75. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-75 Real World Cases CDW – Online competitive pricing or auction features as products age. Web site redesign to improve appearance. Better leverage IT so that every order is filled as quickly as possible by creating alliances with suppliers that permit direct shipment to customers to ensure best price and delivery for loyal customers. CDW and Harrah’s Entertainment: Suggestions could include:

76. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-76 Real World Cases Harrah’s - Leverage IT investments by expanding the analytical mining of the data. CDW and Harrah’s Entertainment: Suggestions could include:

77. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-77 Real World Cases Harrah’s - Leverage IT investments by expanding the analytical mining of the data. Differentiate Harrah’s from its competitors by using the data mining to expand products and services offered to repeat customers. CDW and Harrah’s Entertainment: Suggestions could include:

78. END BACKNEXT Strategic Advantage Competitive Strategy Concepts Strategic Uses of Information Technology The Value Chain Section II Customer – Focused Business Reengineering Processes The Virtual Co. Building a Knowledge- Creating Co. KEY TERMS Copyright 2005, McGraw-Hill/Irwin, Inc.2-78 Real World Cases Harrah’s - Leverage IT investments by expanding the analytical mining of the data. Differentiate Harrah’s from its competitors by using the data mining to expand products and services offered to repeat customers. Use IT to develop new products and services that will attract new customers to Harrah’s. CDW and Harrah’s Entertainment: Return to Cases Page Suggestions could include: