Copyright 2015 Pearson Education Inc Introduction to Information

Copyright © 2015 Pearson Education, Inc. Introduction to Information Systems Chapt er 2 - 1 Third Edition Chapter 2 Information Systems and Strategy Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Copyright © 2015 Pearson Education, Inc. Chapt er 2 - 2 Learning Objectives • • • Five forces Other factors Value chain Business strategy Nonprofit/government strategy Role of IS Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Copyright © 2015 Pearson Education, Inc. Chapt er 2 - 3 Baidu • Chinese visitors • Chinese language • Competition Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Copyright © 2015 Pearson Education, Inc. Chapt er 2 - 4 Introduction • • Strategies rely on IS IS transform industries Companies gain advantages with IS Nonprofits achieve missions with IS Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Introduction 1. 2. 3. 4. 5. New entrants Buyers Suppliers Substitutes Rivalry Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 - 6 Threat of New Entrants • Incumbents and IS • Network effects • Switching costs Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Power of Buyers • Few buyers • Similar products • IS shift buyer power Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 - 8 Power of Suppliers • Only game in town • IS impose switching costs Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Copyright © 2015 Pearson Education, Inc. Chapt er 2 - 9 Threat of substitutes • Alternative products at attractive savings • IS role in substitutions Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 10 Rivalry Among Competitors • Price cuts • Slow growth Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 11 External Factors 1. 2. 3. 4. Disruptive innovations Government policies Complementary services Environmental events Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 12 Disruptive Innovations • Radical and unexpected breakthroughs • Transform industry and change five forces • Creative destruction Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 13 Government Policies • Affect how industries operate and evolve • Organizations lobby for government action • Judges and courts affect industry structure Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 14 Complementary Services • Industries are interrelated • Companies embedded in ecosystem • Visionaries lead to new beneficial directions Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 15 Environmental Events • Major effects without warning • Energy costs and emissions • Leaders must consider industry and forces Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 16 Value Chain • Primary activities • Support activities Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 17 Extended Value Chain • Includes suppliers and customers • Strategic opportunities for suppliers • Strategic opportunities for customers Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 18 Benchmarking • Reference point used as baseline • For value chain, percent of total budget • Analysis identifies areas that need attention Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 19 IT Benchmarks • IT spending varies by industry and by region • Managers can use benchmarks to assess extended value chain Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 20 Competitive Strategies 1. Low cost leadership 2. Product differentiation 3. Focused strategy Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 21 Low Cost Leadership • Similar product at lower price • Automate and streamline processes • Reduce operating expenses • Achieve efficiencies Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Differentiation and Focus Product Differentiation Focused Strategy • Special features • Differentiate for • Customers willing to market niche pay more • Reduce substitutes and new entrants Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 23 IS in Strategy Low Cost • Automate • Support back office • Streamline Differentiation • Innovations Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 24 Run, Grow, and Transform • 66% of IT spending to run organization • 19% to grow business • 15% to transform business model Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 25 Nonprofit Organizations • Objectives that need strategic planning • Operational requirements • Benefit from IS Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 26 Fund-Raising • IS help manage donations • Reach worldwide audience • Learn about preferences and motivations Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 27 Volunteering • Attract volunteers • Help volunteers identify projects that need their skills Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 28 Government (1: 2) • Needs IS to handle operational requirements • Citizens expect cost effective services • Mission also includes projects with long-term benefits Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Government (2: 2) E-Government • Unclassified info available to citizens via the Internet • Interactive online services Research • Private investors might avoid certain projects because of risk or distant payoff Chapter Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved 2 - 29

Chapt er 2 30 Does IT matter? • Advantage depends on type of IS • Funds to run business are commodity • Funds to grow and transform are more closely tied to strategy and advantage • Human element is critical for success Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Chapt er 2 31 Summary 1. 2. 3. 4. 5. Five forces Other factors Value chain Business strategy Nonprofit/government strategy 6. Role of IS Copyright © 2015 Pearson Education, Inc. Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved

Game. Stop Case Study • • • Game. Stop business model Rivalry among competitors Barriers to entry Power of suppliers Game. Stop’s response to threats Chapter Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved 2 - 32

Open Internet Case Study • • • Net neutrality Position of content providers Position of telecom companies Proposal Criticism of proposal Chapter Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved 2 - 33