02 Midterm MIS001 Lecture 2.2

CHAPTER 2
STRATEGIC USES
OF INFORMATION
SYSTEMS
I N F O R M AT I O N T E C H N O L O G Y A S A
S T R AT E G I C R U L E
STRATEGY AND STRATEGIC MOVES
• A SURVEY OF 2,335 CIO BY GARTNER RESEARCH HIGHLIGHTED THE EVER-
CHANGING ROLE OF IT AS AN INTEGRAL PLAYER IN CORPORATIONS.
• THE GARTNER 2012 CIO AGENDA REPORT NOTED THAT 61% OF THE CIOs
CONVEYED THAT THEIR ORGANIZATION’S MOBILITY STRATEGY WILL BE A TOP
PRIORITY.
• THE MAJORITY OF THE RESPONDENTS SET A GOAL OF BEING A “MARKET LEADER” IN
THEIR INDUSTRY SPECIFIC TO THEIR USE OF MOBILE COMPUTING.
• CIO’S BUSINESS PRIORITIES WILL FOCUS ON ENTERPRISE GROWTH AND
ATTRACTING AND RETAINING CUSTOMERS.
• ONE THIRD ALSO BELIEVED THAT IT INNOVATION COULD ENHANCE THE
CUSTOMER EXPERIENCE. CLEARLY IT IS EXPECTED TO CONTRIBUTE TO BUSINESS
STRATEGY.
STRATEGY
• THE WORD “STRATEGY”ORIGINATES FROM THE GREEK WORD “STRATEGOS”
MEANING “GENERAL”
• IN A WAR STRATEGY IS A FRAMEWORK, OR AN APPROACH,TO OBTAINING AN
ADVANTAGEOUS POSITION.
• BUSINESSPEOPLE MUST DEVISE DECISIVE COURSES OF ACTION TO WIN– just as generals do
• In business a strategy is an approach designed to help an organization outperform its competitors.
• Creating New Opportunities rather than beating rivals.
• Many information systems are built to solve problems, many others are built to seize opportunities.
Identifying a problem is easier than creating an opportunity.
• An opportunity is less tangible. It takes a lot of imagination, creativity, and vision to identify an
opportunity, or to create one and aft on it.
STRATEGIC INFORMATION SYSTEMS
( SISS )
• Information systems that help seize opportunities.
• They can be developed from scratch, or they can evolve from an organization’s existing ISs.
• In a free-market economy, it is difficult for a business to do well without some strategic
planning.
BASIC CATEGORIES
1.Developing a new product
2. Identifying an unmet consumer’s need
3. Changing a service to entire more customers or retain existing clients.
4. Increases Organization’s value through improved performance.
IT AS A STRATEGIC TOOL
E-BUSINESS
• ONE OF THE FASTEST GROWING INDUSTRIES IN THE UNITED STATES
• ACCORDING TO E-MARKETING INC., SALES FROM ELECTRONIC COMMERCE
SOURCES ARE PROJECTED TO GROW TO $434 BILLION BY 2017
• SMALL-TO-MEDIUM SIZE FIRMS FEEL PRESSURED TO DEVELOP AN E-BUSINESS
STRATEGY BY USING THE INTERNET TO EFFECTIVELY FULFILL CUSTOMER
ORDERS AND COMMUNICATE WITH MEMBERS IN THEIR SUPPLY CHAIN.
• THEY CAN CREATE NEW MARKETS FOR THEIR PRODUCTS AND SERVICES AND
CREATE COMPETITIVE ADVANTAGES.
• EFFECTIVE INTEGRATION OF E-BUSINESS INFORMATION TECHNOLOGY CAN
ALSO CREATE OPERATIONAL EFFICIENCIES AND LOWER THE COST OF
PROCESSING A SALE.
“COMPETTIVE ADVANTAGE” AND
“STRATEGIC ADVANTAGE”
• MANY STRATEGIES DO NOT AND CANNOT, INVOLVE INFORMATION SYSTEMS.
• CORPORATIONS ARE ABLE TO IMPLEMENT CERTAIN STRATEGIES SUCH AS,
MAXIMIZING SALES AND LOWERING COSTS
– A COMPANY ACHIEVES STRATEGIC ADVANTAGE BY USING STRATEGY TO MIXIMIZE ITS
STRENGTHS, RESULTING IN A COMPETITIVE ADVANTAGE.
– WHEN A BUSINESS USES A STRATEGY WITH THE INTENT TO CREATE A MARKET FOR NEW
PRODUCTS OR SERVICES, IT DOES NOT AIM TO COMPETE WITH OTHER ORGANIZATIONS
THAT MAKE THE SAME PRODUCT, BECAUSE THAT MARKET DOES NOT YET EXIST.
– THEREFORE A STRATEGIC MOVE IS NOT ALWAYS A COMPETITIVE MOVE IN TERMS OF
COMPETING WITH SIMILAR PRODUCTS OR SERVICES.
HOWEVER IN A FREE-ENTERPRISE SOCIETY,A MARKET RARELY REMAINS THE DOMAIN OF
ONE ORGANIZATION FOR LONG, THS, COMPETITION ENSUES ALMOST IMMEDIATELY.
INNOVATIVE COMPANIES
“GOT-TO-HAVE-IT” TECHNOLOGY
• MOBILE PAYMENT TECHNOLOGY
Mobile payments involve the transfer of money using a phone or tablet. This practice was initially
adopted in Asia and Europe before becoming more popular in North America. In 2014, PayPal and
Apple Pay introduced mobile payments by incorporating a barcode that could be scanned using a
store's barcode reader.
Mobile payments use NFC, or near field communication technology. This is a contactless
technology that uses radio waves to send small bursts of data quickly and easily. When the mobile
phone is tapped near the reader terminal, it initiates a conversation between the two.
– MOBILE PAYMENT TECHNOLOGY IS TAKING RETAIL CONSUMERISM TO THE NEXT LEVEL.
– ANY MOBILE-BASED SYSTEM THAT GIVES A COMPANY COMPETETIVE ADVANTAGE IS A
STRATEGIC INFORMATION SYSTEM.
– THE ESSENCES OF STRATEGY IS INNOVATION, SO COMPETETIVE ADVANTAGE IS OFTEN GAINS
WHEN AN ORGANIZATION TRIES A STRATEGY THAT NO ONE HAS TRIED BEFORE.
EIGHT(8) BASIC WAYS TO GAIN
COMPETITIVE ADVANTAGE
1. REDUCE COSTS
A COMPANY CAN GAIN ADVANTAGE IF IT CAN SELL MORE UNITS AT A LOWER
PRICE WHILE PROVIDING QUALITY AND MAINTAINING OR INCREASING ITS PROFIT
MARGIN.
2. RAISE BARRIERS TO MARKET ENTRANTS
A COMPANY CAN GAIN ADVANTAGE IF IT DETERS POTENCIAL ENTRANTS
INTO THE MARKET, ENJOYING LESS COMPETITION AND MORE MARKET POTENTIAL.
3. ESTABLISH HIGH SWITCHING COSTS
A COMPANY CAN GAIN ADVANTAGE IF IT CREATES HIGH SWITCHING COSTS,
MAKING IT ECONOMICALLY INFEASIBLE FOR CUSTOMERS TO BUY FROM
COMPETITORS.
4. CREATE NEW PRODUCTS OR SERVICES
A COMPANY CAN GAIN ADVANTAGE IF IT OFFERS A UNIQUE PRODUCT OR
SERVICE.
5. DIFFERENTIATE PRODUCTS OR SERVICES
A COMPANY CAN GAIN ADVANTAGE IF IT CAN ATTRACT CUSTOMERS BY
CONVINCING THEM ITS PRODUCT DIFFERS FROM THE COMPETITION’S.
6. ENHANCE PRODUCTS OR SERVICES
A COMPANY CAN GAIN ADVANTAGE IF ITS PRODUCT OR SERVICE IS BETTER
THAN ANYONE’S ELSE’S.
7. ESTABLISH ALLIANCES
COMPANIES FROM DIFFERENT INDUSTRIES CAN HELP EACH OTHER GAIN
ADVANTAGE BY OFFERING COMBINES PACKAGES OF GOODS OR SERVICES AT SPECIAL
PRICES.
8. LOCK IN SUPPLIERS OR BUYERS
A COMPANY CAN GAIN ADVANTAGE IF IT CAN LOCK IN EITHER SUPPLIERS
OR BUYERS, MAKING IT ECONOMICALLY IMPRACTICAL FOR SUPPLIERS OR BUYERS TO
DEAL WITH COMPETITORS.
ILLUSTRATION
REDUCE COSTS RAISE BARRIERS TO MARKET ENTRANTS
CREATE NEW PRODUCTS OR SERVICES
DIFFERENTIATE PRODUCTS OR
SERVICES
ENHANCE PRODUCTS OR SERVICES
ESTABLISH ALLIANCES
LOCK IN SUPPLIERS OR BUYERS
Vendor lock-in (also known as customer and proprietary lock-in or simply lock-in effect) is a
mechanism which makes customers dependent on a specific product or service
provider.
REPORTED BY: JUDITH SABINORIO BS-REM

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CHAPTER 2

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