Managing and Using Information

Systems: A Strategic Approach

Pearlson and Saunders – 5th Ed. – Chapter 2

Keri Pearlson & Carol Saunders

 How Can
Evolution Of Information Information Sustaining
Strategic
Information Resources as Resources Be Competitive
Alliances
Resources Strategic Tools Used Advantage
Pearlson and Saunders – 5th Ed. – Chapter 2

Strategically?
Using
Information
Resources to
IT assets Influence
Competitive
Forces Resource-
The Eras Based Co-
model View operation
(RBV)
IT Porter’s Value
Capabilities Chain Model

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The value How do

Customer they
proposition
deliver it?

• young • Fashionable, • In-house production

• women (60%), affordable clothes • Demand based
• men (25%) • Large choice of styles production
• fast growing children • Scarcity
(15%) • Prime locations

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Era I Era III Era V

1960s 1980s 2000s

Era II Era IV Era VI

1970s 1990s 2010+

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 Figure 2.1 – Mission statements of computer companies
Era I Era II Era III Era IV Era V Era VI
1960s 1970s 1980s 1990s 2000+ 2100+

Primary Efficiency Effectiveness Strategic Strategic Value Value

role of IT creation creation
Automate Solve Increase Transform
Pearlson and Saunders – 5th Ed. – Chapter 2

existing problems individual industry/ Create Community

and create organization collaborative and social
paper-based and group
partnerships business
processes opportunities effectiveness
Justify IT ROI Increasing Competitive Competitive Adding value Creating
expenditures productivity position position relationships
and better
decision
quality
Target of Organization Organization/ Individual Business Customer/ Customer/
systems group manager/ processes supplier employee
group ecosystem ecosystem supplier
ecosystem
Information Application Data driven User driven Business Knowledge People
models specific driven driven driven
(or
relationship
driven)

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 Figure 2.1 – Mission statements of computer companies (Cont.)

Era I Era II Era III Era IV Era V Era VI

1960s 1970s 1980s 1990s 2000+ 2100+
Dominate
Pearlson and Saunders – 5th Ed. – Chapter 2

Mainframe, Minicomputer, Microcomputer, Client Internet, Social

technology “decentralized Server,
“centralized mostly global platforms,
intelligence” “centralized intelligence” “distributed “ubiquitous social
intelligence”
intelligence” intelligence” networks,
mobile,
cloud
Basis of Scarcity Scarcity Scarcity Plentitude Plentitude Plentitude
value
Underlying Economics Economics Economics Economics of Economics of Economics of
economics of of of information information relationships
information information information separated separated bundled with
bundled with bundled with bundled with from from economics of
economics of economics of economics of economics of economics of information
things things things things things

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 Information Resources
IT Infrastructure
IT assets
Pearlson and Saunders – 5th Ed. – Chapter 2

Information
Repository

Technical Skills

IT Management
IT Capabilities
Skills

Relationship Skills

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Type of Information Resource
IT Asset
IS infrastructure
Pearlson and Saunders – 5th Ed. – Chapter 2
Information repository
IT Capability
Technical skill
IT management skills
Relationship skills
Figure 2.2 Information resources
Definition Example
Anything that can be used by a firm in its processes for creating, producing and/or offering
its products (goods or services)
Base foundation of the IT portfolio Hardware, software, network, data components,
shared through the firm proprietary technology, web-based services
Data that is logically related and Critical information about customers that can be
organized in a structured form used to gain strategic advantage. Much of this
accessible and able for decision making information is increasingly available on the web.
purposes.
Something that is learned or developed over time in order for the firm to create, produce or
offer it products in IT assets
Ability applied to designing, developing Proficiency in systems analysis and design;
and implementing information systems programming skills
Ability to managing IT function and IT Being knowledgeable about business processes
projects and managing systems to support them; evaluating
technology options; envisioning creative IS
solutions to business problems
Ability of IS specialists to work with Spanning: having a good relationship between IT
parties outside the IS department. and business managers
Externally-forced: have a good relationship with an
outsourcing vendor
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 Figure 2.3 Five competitive forces with potential strategic use of
information resources.
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 Figure 2.4 Application of five competitive forces model for Zara.

Competitive Force IT Influence on Competitive Force

Threat of New Zara’s IT supports its tightly-knit group of designers, market specialists, production managers and
production planners. New entrants are unlikely to provide IT to support relationships that have been
Entrants built over time. Further it has a rich information repository about customers that would be hard to
replicate.
Pearlson and Saunders – 5th Ed. – Chapter 2

Bargaining Power of With its constant infusion of new products, buyers are drawn to Zara stores. Zara boasts more than
11,000 new designs a year, whereas competitors typically offer only 2,000 – 4,000. Further, because
Buyers of the low inventory that the Zara stores stock, the regulars buy products they like when they see
them because they are likely to be gone the next time they visit the store. More recently Zara has
employed laser technology to measure 10,000 women volunteers so that it can add the
measurements of ‘real’ customers into its information repositories. This means that the new
products will be more likely to fit Zara customers.
Bargaining Power of Its computer-controlled cutting machine cuts up to 1000 layers at a time. It then sends the cut
materials to suppliers who sew the pieces together. The suppliers’ work is relatively simple and many
Suppliers suppliers can do the sewing. Thus, the pool of suppliers is expanded and Zara has greater flexibility in
choosing the sewing companies. Further, because Zara dyes 50% of the fabric in its plant, it is less
dependent on suppliers and can respond more quickly to mid-season changes in customer color
preferences.
Threat of Substitute Industry competitors long marketed the desire of durable, classic lines. Zara forces on meeting
customer preferences for trendy, low-cost fashion. It has the highest sales per square foot of any of
Products its competitors. It does so with virtually no advertising and only 10% of stock is unsold. It keeps its
inventory levels very low and offers new products at an amazing pace for the industry (i.e., 15 days
from idea to shelves). Zara has extremely efficient manufacturing and distribution operations.

Industrial Zara offers extremely fashionable lines that are only expected to last for approximately 10 wears. It
offers trendy, appealing apparel at a hard-to-beat price.
Competitors
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Figure 2.5 Value chain of the firm.

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 Figure 2.8 - Information resources at Zara, by attribute

VALUE CREATION VALUE SUSTAINABILITY

Value Rarity Imitation Substitution Transfer

Information Asset
Pearlson and Saunders – 5th Ed. – Chapter 2

IT Infrastructure M M H M H

Information Repository H M M L M

Information Capability

Technical Skills M L M M M

IT Management Skills H H L L M

Relationship Skills

Externally-focused H M L M L-M

Spanning H H L L L

Note: L = low; M = medium; H = high

Adapted from Wade, M and Hulland, J. “The Resource-Based View and Information Systems Research: Review, Extension and
Suggestions for Future Research,,” MIS Quarterly, 28(1), pp. 107-142.
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 Chapter 2 - Key Terms
Customer relationship management

Co-opetition
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Enterprise resource planning

Information resources

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 Chapter 2 - Key Terms

IT asset
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IT capability

Network effects

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 Chapter 2 - Key Terms

Resource-based view

Strategic alliance
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Supply chain management

Web 2.0

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