Mis Unit 2

COMPETITIVE STRATEGY
CONCEPTS
The strategic role of information system involves using
information technology to develop products, services, and
capabitlities that give a company major advantages over the
competitive forces if faces in the global marketplace.
This is accomplished through a strategic information
architecture-the collection of strategic information systems
that support or shape the competitive position and strategies
of a business enterprise. So a strategic information system
can be any kind of information system (TPS, MIS, DSS etc.)
that uses information technology to help an organization gain
a competitive advantage, reduce a competitive disadvantage,
or meet other strategic enterprise objectives.
COMPETITIVE FORCES AND
STRATEGIES
A compnay can service and succeed in the long
run only if it successfully develops strategies to confront
five competitive forces that shape the structure of
competition in its industry. In Michael Porter’s classic
model of competitive strategy, any business that wants
to survive and succeed must develop and implement
strategies to effectively counter (1) the rivalry of
competitors within its industry. (2) the threat of new
entrants into an industry and its markets, (3) the threat
posed by substitute products which might capture
market share (4) the bargaining power of customers, and
(5) the bargaining power of suppliers.
BUSINESSES CAN
DEVELOP
COMPETITIVE
STRATEGIES TO
COUNTER THE
FORCES THEY
CONFRONT IN
THE
MARKETPLACE.
Figure 2.1 also illustrates that business can counter the
threats of competitive forces that they face by
implementing five basic competitive strategies.
Cost Leadership Strategy : Becoming a low-cost
products and services in the industry.
Differentiation Strategy : Developing ways to differentiate
a firm’s products and services from its competitors’ or
reduce the differentiation advantages of competitors.
Innovation Strategy :Finding new way of doing business.
Growth Strategies : Significantly expanding a company’s
capacity to produce goods and services.
Alliance Strategies : Establishing new business linkages
and alliances with customers, suppliers, competitors
consultants, and other companies.
Figure 2.2 A summary of how information technology can be
used to implement the five basic competitive strategies.
THE VALUE CHAING AND
STRAEGIC IS
The value chain concept was developed by
Michael Porter (21) . It views a firm as a series, chain, or
network of basic activities that add value to its products
and services, and thus add a margin of value both to the
firm and its customers. In the value chain conceptual
framework, some business activities are primary
processes, others are support processes.
VALUE CHAIN EXAMPLES
Figure 2.6 provides examples of how and where
information technologies can be applied to basic
business processes using the value chain framework.
STRATEGIC USES
OF IT
There are many ways that organizations may
view and use information technology. For example,
companies may choose to use information system
strategically, or they may be content to use IT to
support efficient everyday operations. But if a
company emphasized strategic business uses of
information technology, its management would view
IT as a major competitive differentiator.
REENGINEERING BUSINESS
PROCESSES
One of the most important implementation of
competitive strategies is business process
reegineering (BPR), most often simply called
reengineering, Reengineering is a fundamental
rethinking and radical redesign of business
processes to achieve dramatic improyements in
cost, quality, speed, and service.
Making radical changes to business processes to
dramatically improve efficiency and effectiveness is
not an easy task. For example, many companies
have used cross - functional enterprise resource
planning (ERP) software to reengineer, automate, and
integrate their manufacturing, distribution, finance, and
human resource business processes. While many companies
have reported impressive gains with such ERP reengineering
projects, many others have experienced dramatic failures or
have failed to achieve the improvements they sought.
THE ROLE OF INFORMATION
TECHNOLOGY
Information technology plays a major role in reengineering
most business processes. The speed, information processing
capabilities, and connectivity of computers and Internet
technologies can substantially increase the efficiency of
business processes, as well as communications and
collaboration among the people responsible for their
operation and management.
BECOMING AN AGILE
COMPANY
Agility in business performance is the ability of
a company to prosper in rapidly changing,
continually fragmenting global markets for high-
quality, high-performance, customer-configured
products and services. An agile company can make
a profit in markets with broad product ranges and
short model lifetimes, and can produce orders
individually and in arbitrary lot sizes.
To be an agile company, a business must implement
four basic strategies.
1.Customers of an agile company perceive products or
services as solutions to their individual problems.
2.Thus, products can be priced based on their value as
solutions, not on their cost to produce. An agile company
cooperates with customers, suppliers and other
companies, and other companies, and even with
competitors.
3.An agile company organizes so that it thrives on
change and uncertainty. It uses flexible organizational
structures keyed to the requrements of different and
constantly changing customer opportunities.
4.In agile company leverage the impact of its people and
the knowledge they possess.
VIRTUAL COMPANY STRATEGIES
A virtual company uses the Internet, intranets, and
extranets of form virtual workgroups and support alliances
with business partners.
The basic business strategies of virtual companies.
STRATEGIES OF VIRTUAL
COMPANIES
BUILDING A KNOWLEDGE
CREATING COMPANY
in an economy where the only certainty is
uncertainty, the one sure source of lasting
competitve advantage is knowledge.
To many companies today, competitive
advantage can only be theirs if they become
knowledge-creating companies or learning
organizaitons. That means consistently creating new
business knowledge, disseminating it widely
throughout the company, and quickly building the
new knowledge into their products and services.
Knowledge creating companies exploit two kinds of
knowledge.
1.One is explicit knwledge data documents, things
written down or stored on computers.
2.Tacit knowledge – the “how-tos” of knowledge,
which reside in workers.
This tacit know ledge is not recorded or
codified any where because it has evolved in the
employee’s mind through years of experience.
Successful knowledge management creates
techniques, technologies, systems, and rewards for
getting employees to share what they know and to
make better use of accumulated workplace and
enterprise knowledge.
KNOWLEDGE MANAGEMENT
SYSTEMS
Making personal knowledge available to others
is the central avtivity of the knowledge-creating
company.
Many companies are building knowledge

management system (KMS) to manage
organizational learning and business know-how.
knowledge management systems facilitate

organizational learning and knowledge creation.
TQM
TOTAL QUALITY MANAGEMENT
QUALITY : Quality includes not only the form,
shape, size, etc of a product but it also inludes its
functionality and customer eatiefaction port the
usage of the Product.
Good qlty. would ultimately lead to higher
profits and increased sales.
TOM : IT can be used strategically to improve
business performance in many ways other then in
supporting reengineering initiatives. One important
existing process strategic roll in ets quality
imporvement proplarly called TQM.
Quality is exphasijed from the customer
viewpoint rather than the Producer’s quality is
defined as meeting or exceeding the requirements
and expectations of customers for a pat or service.
According to quality Guru Richard

Schonberger, companies that use TQM are
committed to be –
1.Even Better
2.Even Quicker
3.Even Greater Flexibility
4.Even Lower Cost

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COMPETITIVE STRATEGY

Many companies are building knowledge

knowledge management systems facilitate

According to quality Guru Richard

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