ISA 405 Midterm Exam Revision Notes

Topics

1. Data, information and knowledge

2. Major concept and features of vision, mission, objectives, and strategy
3. Five forces model, value chain, and three generic strategies
4. From the article of “What is strategy?”, major concept regarding OE, strategy, tradeoff, and strategic fit.
5. Types of information resources
6. Major concept of resource-based view (RBV)
7. Major content and purpose of Architecture Principle, Capability Maturity Model, Architecture Vision, and SAW
(Statement of Architecture Work)
8. From TOGAF, major activities and output of each phase.

Data, Information, and Knowledge

• Data: Raw, unprocessed facts that by themselves hold no meaning. Examples include numbers,
text, or figures.

• Information: When data is processed, organized, or structured to provide context, it becomes

information. For example, sales figures organized by region provide information about
performance in those areas.

• Knowledge: The application of information to make decisions or solve problems, often enhanced
by experience and expertise. It involves understanding patterns, relationships, and making
informed judgments based on information.

Major Concepts and Features of Vision, Mission, Objectives, and Strategy

• Vision: A vision statement outlines the long-term aspirations of an organization, reflecting where it
aims to be in the future. It acts as a guiding star for all strategic decisions, providing
inspiration and motivation. Examples include Microsoft's vision to help people realize their
full potential, or IKEA's vision to create a better everyday life for many people .

• Mission: This is a clear, concise declaration of the organization's core purpose, addressing what it
does, for whom, and how it achieves its goals. Mission statements give clarity to what the
organization stands for and the problems it aims to solve. For example, Google's mission to
organize the world’s information reflects its focus on accessibility.

• Objectives: Specific, measurable goals derived from the mission. Objectives break down broader
aspirations into concrete, actionable steps and often span 2-3 years. They must be specific,
measurable, achievable, relevant, and time-bound (SMART). An example might be a
company aiming to increase market share by 10% over the next two years.

• Strategy: Strategy defines the coordinated actions to achieve objectives and fulfill the mission. It’s
not just about deciding what to do but also involves determining what not to do. A strategy
must align the organization’s resources to maintain competitiveness. It sets the direction for
achieving objectives while acknowledging the trade-offs required.
Five Forces Model, Value Chain, and Three Generic Strategies

• Five Forces Model (Porter):

1. Threat of New Entrants: How easy it is for new competitors to enter the industry.

2. Bargaining Power of Buyers: The ability of customers to affect pricing and quality by
leveraging their influence.

3. Bargaining Power of Suppliers: The control suppliers can exert over businesses by raising
prices or limiting quality.

4. Threat of Substitutes: The risk posed by alternative products or services.

5. Industry Rivalry: The intensity of competition among existing firms

• Value Chain: A tool for analyzing the activities a company undertakes to deliver a product or
service. It identifies primary activities (like inbound logistics, operations, and sales) and
support activities (such as HR management, technology development) that add value to the
company’s product.

• Three Generic Strategies:

1. Cost Leadership: Achieving competitive advantage by being the lowest-cost producer in the
market.

2. Differentiation: Offering unique products or services that are valued by customers, justifying
a premium price.

3. Focus: Targeting a niche market by applying cost leadership or differentiation within a

specific segment

"What is Strategy?" Article: OE, Strategy, Tradeoff, and Strategic Fit

• Operational Effectiveness (OE): Doing similar tasks better than rivals by improving efficiency
and productivity (e.g., lean manufacturing or TQM). However, OE alone leads to diminishing
returns over time because competitors can eventually replicate these efficiencies, which may
result in reduced profitability.

• Strategy: Unlike OE, strategy is about performing different activities or similar activities in a
different way to create a unique and sustainable competitive advantage. For instance,
Southwest Airlines focuses on offering low-cost, no-frills service with quick turnarounds,
while IKEA uses a self-service model with ready-to-assemble furniture.

• Tradeoff: A key aspect of strategy is making trade-offs, which means deciding what not to do.
Companies must make clear choices to avoid diluting their position. For example, IKEA
trades off high-end service to maintain its low-cost model.

• Strategic Fit: This refers to the alignment between a company’s various activities, which
reinforces one another and makes the overall strategy harder to imitate. A well-implemented
strategy relies on a system of interconnected activities, not just individual efforts. Strategic fit
amplifies trade-offs and increases the sustainability of a competitive position (What is
Strategy).
Types of Information Resources

• IT Assets: Tangible or intangible resources that can be leveraged in a firm’s business processes.
Examples include the physical infrastructure (hardware, software, network) and
organizational data.

• IT Capabilities: Skills and expertise developed over time that enable a firm to effectively utilize its
IT assets. These include technical skills (e.g., systems design), IT management skills (e.g.,
managing IT functions), and relationship skills (e.g., collaboration between IT and other
departments).

Resource-Based View (RBV)

• RBV: A management framework used to determine the strategic resources a company can exploit
to achieve sustained competitive advantage. According to RBV, a resource is valuable if it
helps firms operate more effectively or efficiently, rare if competitors don’t have it, and hard
to imitate or substitute. This is what makes certain capabilities sustainable for long-term
advantage.

Architecture Principle, Capability Maturity Model, Architecture Vision, and Statement of

Architecture Work (SAW)

• Architecture Principle: Principles that define the fundamental beliefs guiding the architecture.
These principles ensure the architecture aligns with the organization’s overall goals and
technology strategies. Examples include data security, interoperability, and service
orientation.

• Capability Maturity Model (CMM): A structured framework to assess and improve process
maturity. CMM in architecture helps organizations assess their current capability (from initial
to optimized levels) and identify areas for improvement, such as process efficiency,
governance, and IT security.

• Architecture Vision: A high-level representation of what the enterprise architecture aims to

achieve. It includes a summary of business goals, the value proposition of the architecture,
and the roadmap for moving from the current state to the target state.

• Statement of Architecture Work (SAW): A formal document outlining the scope, focus, and
timeline of an architecture project. It includes details on project objectives, stakeholder roles,
and expected outcomes.
TOGAF: Major Activities and Outputs of Each Phase

• Preliminary Phase: Establishes the architecture capability, defining scope, governance, and
principles.

• Phase A: Architecture Vision: Develop a high-level vision of business capabilities, define goals
and stakeholder needs.

• Phase B: Business Architecture: Develop the target business architecture that aligns with the
strategy.

• Phase C: Information Systems Architecture: Develop the target architecture for data and
applications, focusing on how IT systems will support business processes.

• Phase D: Technology Architecture: Define the technology infrastructure necessary to support the
information systems.

• Phase E: Opportunities and Solutions: Identify solutions and opportunities for technology and
architecture improvement.

• Phase F: Migration Planning: Develop a detailed plan for migrating from the current architecture
to the target architecture.

• Phase G: Implementation Governance: Ensure that the implementation follows the architecture
and governance principles.

• Phase H: Architecture Change Management: Manage and govern changes to the architecture in
response to evolving business needs.