ORGANIZATIONAL STRATEGY, COMPETITVE ADVANTAGE, AND INFORMATION

SYSTEMS

2
ORGANIZATIONAL STRATEGY, COMPETITVE ADVANTAGE, AND INFORMATION
SYSTEMS

This lesson aims to address IT professionals to respond to the

challenges of the information revolution. How will advances in
information technology affect competition and the sources of
competitive advantage? What strategies should a company pursue to
exploit the technology? What are the implications of actions that
competitors may already have taken? Of the many opportunities for
investment in information technology, which are the most urgent?

Learning Outcomes:

1. Understand the concept of business processes, and

provide examples of business processes in the functional
areas of an organization;
2. Differentiate between the terms business process
reengineering and business process management;
3. List and provide examples of the three types of business
pressures and describe IT responses to each;
4. Identify the five competitive forces and explain how the
Internet impacts each one;
5. Describe the strategies that organizations typically adopt
to counter the five competitive forces and achieve
competitive advantage;
6. Define business - information technology alignment,
and describe the characteristics of effective alignment.

WHAT IS A BUSINESS PROCESS?

An ongoing collection of related activities that create a product or a

service of value to the organization, its business partners, and /or its
customers.

3 Fundamental Elements of a process:

1. Inputs- Materials, services and information that flow

through and are transformed as a result of process activities.

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2. Resources – people and equipment that perform process

activities
3. Outputs – the product or a service created by the process.

Methods of measuring the activities of a business process could

include:

• Customer Satisfaction
• Cost Reduction
• Cycle and Fulfillment Time (think manufacturing)
• Quality
• Differentiation
• Productivity

A cross-functional business process is one in which no single

functional area is responsible for its execution.

Below is a sample business process for an airline online ticket booking

system.

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Business Processes, BPR & BPM

Business Process Reengineering (BPR)

A radical redesign of a business process that improves it's efficiency
and effectiveness - often begins with a "clean sheet".

Business Process Management (BPM)

A management technique that includes methods and tools to support
the design, analysis, implementation, management, and optimization
of business processes.

http://csbapp.uncw.edu/mis213/02/2-1.html

BUSINESS PRESSURES, ORGANIZATIONAL RESPONSES, AND INFORMATION

TECHNOLOGY SUPPORT

Modern organizations compete in a challenging environment. To

remain competitive they must react rapidly to problems and
opportunities that arise from extremely dynamic conditions. In this
section you examine some of the major pressures confronting modern
organizations and the strategies that organizations employ to respond
to these pressures.

BUSINESS PRESSURES

The business environment is the combination of social, legal

economic, physical, and political factors in which businesses conduct
their operations. Significant changes in any of these are likely to create
business pressures on organizations.

Pressures on organizations are generated by the:

1. Global economy and strong competition facilitated by

the global, web-based platform
2. Changing nature of the workforce which is becoming
more diversified
3. Ability for workers to work from home
4. Powerful customers whose expectations increase as
they become more knowledgeable about products and
services
5. Technology innovations, and in some cases,
information overload
6. Societal issues or government regulations

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The figure shows several examples of business pressures,

organizational performance and responses, and IT support

Business Pressures can be categorized into three main categories:

1. Market pressures
2. Technology pressures
3. Societal pressures (also includes political and legal)

Organizational responses to these pressures may include:

1. Strategic systems
2. Customer focus
3. Make-to-order and mass customization
4. E-business

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http://csbapp.uncw.edu/mis213/02/2-3.html

http://csbapp.uncw.edu/mis213/02/2-3-2.html

COMPETITIVE ADVANTAGE

IT assists a firm to be more competitive (Competitive Advantage)

Competitive Advantage = a significant and (ideally) long-term benefit

to a company over its competition

Factors that lead firms to seek competitive advantage:

• Rivalry among existing competitors

• Threat of new entrants
• Threat of substitute products and services
• Bargaining power of customers
• Bargaining power of suppliers

http://csbapp.uncw.edu/mis213/02/2-4.html

STRATEGIES FOR COMPETITIVE ADVANTAGE

1. Cost Leadership Strategy – produce products and/or services at

the lowest cost in the industry.
2. Differentiation Strategy – Offer different products, services, or
product features than your competitors.
3. Innovation Strategy- introduce new products and services, add
new features to existing product and services, or develop new
ways to produce them.
4. Operational effectiveness strategy- improve the manner in
which a firm executes its internal business processes so that it
performs theses activities more effectively than its rivals.
5. Customer – orientation strategy- concentrate on making
customers happy.

BUSINESS - IT ALIGNMENT

Business-IT alignment is the tight integration of the IT function with

the organization’s strategy, mission, and goals. That is, the IT function

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directly supports the business objectives of the organization. There are

six characteristics of excellent alignment.

1. Organizations view IT as an engine of innovation that

continually transforms the business often creating new revenue
streams.
2. Organizations view their internal and external customers and
their customer service function as supremely important.
3. Organizations rotate business and IT professionals across
departments and job functions.
4. Organizations provide overarching goals that are completely
clear to each IT and business employee.
5. Organizations ensure that IT employees understand how the
company makes or loses money.
6. Organizations create a vibrant and inclusive company culture.

Business-IT alignment involves optimizing communication between

executives who make the business decisions and IT managers who
oversee the technical operations. The implementation of flexible
business plans and IT architectures, as well as effective cost allocation,
are critical components of any business-IT alignment effort. Technical
department managers can formulate and submit proposals that can be
tailored to ensure the optimum return on investment (ROI).

http://whatis.techtarget.com/definition/business-IT-alignment

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GLOSSARY
Cross-functional business process is one in which no single
functional area is responsible for its execution.

Business process is an ongoing collection of related activities that

create a product or a service of value to the organization, its business
partners, and /or its customers.

Business Process Reengineering (BPR)

A radical redesign of a business process that improves it's efficiency
and effectiveness - often begins with a "clean sheet".

Business Process Management (BPM)

A management technique that includes methods and tools to support
the design, analysis, implementation, management, and optimization
of business processes.

Competitive Advantage is a significant and (ideally) long-term

benefit to a company over its competition

Business-IT alignment is the correspondence between the business

objectives and the Information Technology (IT) requirements of an
enterprise.

REFERENCES

Rainer, Prince (2015), Introduction to Information Systems, fifth

Edition

Joseph Valacich and Christoph Schneider. Information Systems

Today, 5th edition. Prentice Hall, 2010.

http://csbapp.uncw.edu/mis213/02/2-1.html

http://csbapp.uncw.edu/mis213/02/2-3.html

http://csbapp.uncw.edu/mis213/02/2-3-2.html

http://csbapp.uncw.edu/mis213/02/2-4.html

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http://whatis.techtarget.com/definition/business-IT-alignment

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