Strategic Advantage Competitive Strategy Concepts Strategic Uses of

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. Competing with Information Technology Real World Cases KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -1

Learning Objectives 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. Real World Cases KEY TERMS BACK NEXT 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. END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -2

Learning Objectives 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. Real World Cases KEY TERMS BACK NEXT END 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -3

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. Real World Cases KEY TERMS BACK NEXT END Fundamentals of Strategic Advantage Strategic IT • Supports Efficient Business Operations • Workgroup or Enterprise Collaboration • Effective Business Decisions Real World Case 1 - GE, Click to go to Dell, Intel, and Others Case 1 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -4

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. Real World Cases KEY TERMS BACK NEXT END Competitive Strategy Concepts Strategic Information Systems • Support Competitive Position • Can Be Any Kind of Information System • Gain Competitive Advantage • Reduce a Competitive Disadvantage Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -5

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. Real World Cases KEY TERMS BACK NEXT END Competitive Strategies Strategic Advantage Cost Leadership Differentiation Innovation Growth Alliance Other Strategies Rivalry of Threat of Bargaining Competitors New Substitutes Power of Entrants Customers Suppliers Competitive Forces Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -6

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. Real World Cases KEY TERMS BACK NEXT Other Competitive Strategies • Lock in Customers • Lock in Suppliers • Switching Costs • Barriers to Entry • Leverage Investment in IT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -7

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. Real World Cases KEY TERMS BACK NEXT END 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -8

Value Chain & Strategic IT 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. Real World Cases Support Processes • Administrative Coordination and Support Services • Human Resources Management • Technology Development • Procurement of Resources KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -9

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. Real World Cases KEY TERMS BACK NEXT Value Chain & Strategic IT Primary Business Processes • Inbound Logistics • Operations • Outbound Logistics • Marketing and Sales • Customer Service END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -10

Value Chain & Strategic IT Inbound Outbound Marketing Operations Logistics & Sales Computer. Automated Aided Just-in-Time Flexible Warehousing Manufacturing Online Point-of-Sale And Order Processing Target Marketing Customer Service Customer Relationship Management ADV SUPPORT PROCESSES PRIMARY BUSINESS PROCESSES E ITIV BACK NEXT Procurement of Resources E-Commerce Web Portals for Suppliers ANT A G E KEY TERMS Administrative Coordination & Support Services Collaborative Workflow Intranet Human Resources Management Employee Benefits Intranet Technology Development Product Development Extranet with Partners PET Real World Cases The Value Chain of a Firm COM 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. END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -11

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. Real World Cases KEY TERMS BACK NEXT END 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -12

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. Real World Cases KEY TERMS BACK NEXT END 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -13

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. Real World Cases KEY TERMS BACK NEXT END 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -14

Building Customer Value 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. Real World Cases KEY TERMS BACK NEXT Customer Place Orders Directly Customer Database by Preferences & Profitability Internet Web Personalization Builds Loyalty Intranets END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. Intranets Extranets Transaction Database Customer Database Employee View of Customer is Complete Customer Orders Through Partners Build a Web Community of Customers, etc. Customers Check Own History Customers Linked With Distribution Intranets Extranets Internet 2 -15

Reengineering Business Processes 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. Real World Cases KEY TERMS BACK NEXT END Business Improvement Level of Change Incremental Business Reengineering Radical Process Change Improved New Version of Process Brand New Process Starting Point Existing Processes Clean Slate Frequency of Change One-time or Continuous Periodic One-time Change Time Required Short Narrow, Within Functions Long Broad, Cross. Functional Horizon Past and Present Future Participation Bottom-up Top-down Path to Execution Cultural Structural Typical Scope Primary Enabler Statistical Control Moderate Risk Copyright 2005, Mc. Graw-Hill/Irwin, Inc. Information Technology High 2 -16

Order Management Process KEY TERMS BACK NEXT Business Processes Real World Cases C O N F I G U R A T I O N P R O P O S A L Business Functions 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. SALES MANUFACTURING FINANCE C O M M I T M E N T END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. C R E D I T C H E C K I N G D E L I V E R Y B I L L I N G C O L L E C T I O N S LOGISTICS 2 -17

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. Real World Cases KEY TERMS BACK NEXT END Order Management Process 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -18

Reengineering Order Management 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. Real World Cases KEY TERMS BACK NEXT END • 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -19

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. Real World Cases KEY TERMS BACK NEXT END Reengineering Order Management 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -20

Becoming an Agile Company 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. Real World Cases KEY TERMS BACK NEXT END 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -21

Becoming an Agile Company 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. Real World Cases KEY TERMS BACK NEXT 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 END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -22

The Virtual Company Interenterprise IS Alliance Major Supplier Boundary of a Firm Customer Response and Order. Fulfillment Teams Extranets 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. Alliance Subcontractors Intranets Alliance Major Customer Manufacturing Teams Real World Cases KEY TERMS BACK NEXT END Alliance Small Suppliers Cross-Functional Teams Copyright 2005, Mc. Graw-Hill/Irwin, Inc. Engineering Teams Alliance Complementary Services 2 -23

Virtual Company Strategies 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. Real World Cases KEY TERMS BACK NEXT END • 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -24

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. Real World Cases KEY TERMS BACK NEXT 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 END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -25

Knowledge Creating Company 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. Learning Organizations Knowledge Management Explicit Knowledge Management Systems (KMS) Real World Cases KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -26

Knowledge Management 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. Real World Cases KEY TERMS BACK NEXT Enterprise Intelligence Information Creation, Sharing, and Management Document Management END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -27

Knowledge Management 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. Real World Cases KEY TERMS BACK NEXT END Siemens AG: Global Knowledge Management System • Stop Employee Problem of Knowledge Hoarding • Created Share. Net Web Site • Profitable Real-time Worldwide Collaboration Real World Case 3 Yellow, Jet. Blue and Gentex: Copyright 2005, Mc. Graw-Hill/Irwin, Inc. Click to go to Case 3 2 -28

Summary 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. Real World Cases KEY TERMS BACK NEXT END 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -29

Summary 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. Real World Cases KEY TERMS BACK NEXT 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 END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -30

Summary 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. Real World Cases KEY TERMS BACK NEXT 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 END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -31

Summary 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. Becoming an Agile Company • Rapid Response to Market • • • Real World Cases KEY TERMS BACK NEXT • Changes Broad Product Ranges Short Model Lifetimes Heavy Dependence Upon IT to Respond to Customer’s Unique Situations Enhance Cost Effectiveness END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -32

Summary 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. Real World Cases KEY TERMS BACK NEXT 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 END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -33

Summary 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. Real World Cases KEY TERMS BACK NEXT END 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -34

KEY TERMS 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. Real World Cases KEY TERMS BACK NEXT END Agile Competitor Business Process Reengineering Competitive Forces Competitive Strategies Creating Switching Costs Customer-Focused e-business Identifying e-business and ecommerce Strategies Knowledge-Creating Company Knowledge Management System Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -35

KEY TERMS 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. Real World Cases KEY TERMS BACK NEXT END 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 Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -36

Optional Case Studies Real World Case 1 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. Real World Cases KEY TERMS BACK NEXT END 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 Real World Case 3 Yellow, Jet. Blue, and Gentex: Using I. T. for Competitive Advantage Click to go to Case 3 Real World Case 4 CDW and Harrah’s Entertainment: Developing Strategic Customer. Loyalty Systems Copyright 2005, Mc. Graw-Hill/Irwin, Inc. Click to go to Case 4 2 -37

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. Module II – Information Technologies Computer Hardware Real World Cases Chapter 3 KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -38

GE - Dell - Intel and Others: 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. Real World Cases KEY TERMS BACK NEXT END The Competitive Advantage of Information Technology 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? Return to Chapter 2 Return to Cases Page Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -39

GE - Dell - Intel and Others: 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. Real World Cases KEY TERMS BACK NEXT END Discussion points would include the following: • 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -40

GE - Dell - Intel and Others: 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. Real World Cases KEY TERMS BACK NEXT END 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? Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -41

GE - Dell - Intel and Others: 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. Real World Cases KEY TERMS BACK NEXT END Discussion points would include the following: • 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -42

GE - Dell - Intel and Others: 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. Real World Cases KEY TERMS BACK NEXT END 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -43

GE - Dell - Intel and Others: 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. Real World Cases Ways to provide a competitive advantage may include: • 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. KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -44

GE - Dell - Intel and Others: 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. Real World Cases KEY TERMS BACK NEXT END Ways to provide a competitive advantage may include: • 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 Return to Chapter 2 highly competitive. • Improve the value chain for the Return to Cases Page company. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -45

Intec Engineering: 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. Real World Cases The Strategic Value of Knowledge Management Systems 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? Return to Chapter 2 KEY TERMS BACK NEXT Return to Cases Page END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -46

Intec Engineering: 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. Real World Cases KEY TERMS BACK NEXT END Discussion points would include the following: • 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -47

Intec Engineering: 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. Real World Cases KEY TERMS BACK NEXT END 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? Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -48

Intec Engineering: 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. Real World Cases KEY TERMS BACK NEXT END Points to consider would include: • 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -49

Intec Engineering: 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. Real World Cases 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. KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -50

Intec Engineering: 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. The Strategic Value of Knowledge Management Systems • The Beijing project with different specifications Real World Cases KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -51

Intec Engineering: 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. The Strategic Value of Knowledge Management Systems • The Beijing project with different specifications • The prospective customer in Australia Real World Cases KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -52

Intec Engineering: 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. Real World Cases KEY TERMS BACK NEXT END The Strategic Value of Knowledge Management Systems • 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 Return to Chapter 2 Return to Cases Page Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -53

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases Using Information Technology 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. KEY TERMS BACK NEXT Return to Cases Page END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -54

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT END Choices would include: Progressive – • Lower Costs • Differentiate • Innovate • Promote Growth • Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -55

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT END Choices would include: Yellow – • Lower Costs • Innovate • Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -56

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT END Choices would include: Jet. Blue – • Lower Costs • Differentiate • Innovate • Develop interenterprise information systems to create switching costs. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -57

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT END Choices would include: Gentex – • Lower Costs • Promote Growth • Leverage investment in IS people, hardware, software, databases, and networks from operational uses into strategic applications. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -58

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT END Using Information Technology 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -59

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT END Choices would include: 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -60

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT Choices would include: 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. END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -61

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT END Choices would include: Jet. Blue – • 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -62

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT END Choices would include: 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -63

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT END Using Information Technology 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -64

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT END Large business perspective – • 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -65

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT END Small business perspective – • 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -66

Progressive - Yellow Jet. Blue and Gentex: 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. Using Information Technology for Competitive Advantage • The use of IT can permit a larger company to develop interenterprise systems. Real World Cases KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -67

Progressive - Yellow Jet. Blue and Gentex: 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. Using Information Technology for Competitive Advantage • The use of IT can permit a larger company to develop interenterprise systems. • IT can create barriers to restrict competition from entering the marketplace. Real World Cases KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -68

Progressive - Yellow Jet. Blue and Gentex: 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. Real World Cases KEY TERMS BACK NEXT Using Information Technology for Competitive Advantage • 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 Return to for strategic applications. Cases Page END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -69

CDW and Harrah’s Entertainment: 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. Developing Strategic Customer. Loyalty Systems 1. Does CDW’s customer loyalty program give them a competitive advantage? Why or why not? Real World Cases KEY TERMS BACK NEXT Return to Cases Page END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -70

CDW and Harrah’s Entertainment: 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. Real World Cases KEY TERMS BACK NEXT END Discussion points to consider: • 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -71

CDW and Harrah’s Entertainment: 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. Real World Cases KEY TERMS BACK NEXT END Developing Strategic Customer. Loyalty Systems 2. What is the strategic value of Harrah’s approach to determining and rewarding customer loyalty? Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -72

CDW and Harrah’s Entertainment: 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. Real World Cases KEY TERMS BACK NEXT END Discussion points to consider: • 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -73

CDW and Harrah’s Entertainment: 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. Real World Cases KEY TERMS BACK NEXT END Developing Strategic Customer. Loyalty Systems 3. What else could CDW and Harrah’s do to truly become customerfocused businesses? Visit their websites to help you suggest several alternatives. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -74

CDW and Harrah’s Entertainment: 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. Real World Cases KEY TERMS BACK NEXT END Suggestions could include: 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. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -75

CDW and Harrah’s Entertainment: 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. Suggestions could include: Harrah’s - • Leverage IT investments by expanding the analytical mining of the data. Real World Cases KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -76

CDW and Harrah’s Entertainment: 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. Suggestions could include: 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. Real World Cases KEY TERMS BACK NEXT END Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -77

CDW and Harrah’s Entertainment: 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. Real World Cases KEY TERMS BACK NEXT END Suggestions could include: 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 Cases Return to Page customers to Harrah’s. Copyright 2005, Mc. Graw-Hill/Irwin, Inc. 2 -78