Essentials of Management Information Systems

Fourteenth Edition

Chapter 3

Achieving Competitive Advantage with Information Systems

Copyright © 2021, 2019, 2017 Pearson Education, Inc. All Rights Reserved

Copyright © 2021, 2019, 2017 Pearson Education, Inc. All Rights Reserved

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Learning Objectives

3.1 How do Porter’s competitive forces model, the value chain model, synergies, core competencies, and network-based strategies help companies use information systems for competitive advantage?

3.2 How do information systems help businesses compete globally?

3.3 How do information systems help businesses compete using quality and design?

3.4 What is the role of business process management (B P M) in enhancing competitiveness?

3.5 How will M I S help my career?

Copyright © 2021, 2019, 2017 Pearson Education, Inc. All Rights Reserved

“Strategy” can be an abstract concept to undergraduates. It’s helpful to start this conversation by asking students for some examples of “business strategy.” Or ask them what they think the strategy of well-known firms might be. How about Apple, Microsoft, Ford, AT&T Wireless, Coca Cola, Google, or any well-known public company? Ultimately strategy is about performing better than the other firms in your industry. How can firms do that?

 

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Video Cases

Case 1: G E Becomes a Digital Firm: The Emerging Industrial Internet

Case 2: National Basketball Association: Competing on Global Delivery with Akamai O S Streaming

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Technology Helps Starbucks Find Better Ways to Compete

Problem

Competitive opportunities from new technology

Improve customer experience

Solutions

Wi-Fi wireless network

Smartphones

Mobile app

Illustrates use of IT to differentiate products and improve customer experience

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You can ask students which company has the “better” strategy, and why. Will these firms attract them to switch their wireless provider, or to purchase some of their services?

 

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Porter’s Competitive Forces Model

Five competitive forces shape fate of firm

Traditional competitors

New market entrants

Substitute products and services

Customers

Suppliers

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Porter’s model is the best-known model of competitive advantage. The model provides a nice summary of the strategic situation of firms in a larger business environment. The model focuses on industry structure (or the environment of the firm) as the main determinant of management decisions about corporate strategies. Managers don’t just make up strategies out of thin air. They look at the competitive situation in their industry, and then consider ways of coping and succeeding in that environment.

 

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Figure 3.1 Porter’s Competitive Forces Model

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Figure 3.1, Page 81.

 

In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not only by competition with its traditional direct competitors but also by four forces in the industry’s environment: new market entrants, substitute products, customers, and suppliers.

 

A good way to teach this model is to take a specific industry and ask students to fill in the boxes in the model (starting with the environmental boxes). Any industry can be analyzed: automobiles, PC computers, smartphones, and so on.

 

Long Description:

 

The diagram illustrates “The Firm” and “Competitors” as the major elements of Porter’s competitive forces model. It shows the firm and competitors sharing a direct relationship, denoted by a double-headed arrow. The other competitive forces of the model are “New market entrants,” “Substitute products,” “Customers,” and “Suppliers.”

 

 

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Information System Strategies for Dealing with Competitive Forces (1 of 5)

Basic strategy: Align I T with business objectives

Identify business goals and strategies

Break strategic goals into concrete activities and processes

Identify metrics for measuring progress

Determine how I T can help achieve business goals

Measure actual performance

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Information systems often play a critical role in defining and achieving strategic objectives of the firm. Sometimes, IS is tangential: Coca Cola for instance is not an intense technology user and maintains its differentiated product through marketing and branding efforts. Other firms are intensely using IS to achieve competitive advantages, from Walmart to Facebook, Amazon, and Google.

 

The first step in using information systems to serve your firm is to make sure the IS objectives are lined up with the business objectives.

 

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Information System Strategies for Dealing with Competitive Forces (2 of 5)

Low-cost leadership

Use information systems to achieve the lowest operational costs and the lowest prices

E.g. Walmart

Inventory replenishment system sends orders to suppliers when purchase recorded at cash register

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