3/19/2024

College of Business & Economics (CBE) – Spring 2024

MIST 614
IT Strategy in Management
Hassan M. Selim
Professor of Information Systems & Data Analytics,
College of Business & Economics

March 12th , 2024

Subject 2 – The IS Strategy Triangle

MIST 614 – Spring 2024
Hassan M. Selim
Professor of Information Systems & Data Analytics,
College of Business & Economics

March 19th , 2024

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The Information Systems Strategy Triangle

AGENDA
• Introduction

• Business Strategy Frameworks

• Organizational Strategies

• Information Systems Strategy

• Economics of Things

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INTRODUCTION Business
Strategy

• This subject introduces the Information Systems Strategy Triangle, which

relates Business Strategy with IS Strategy and Organizational Strategy.

• It is important that general managers play a role in decisions about Organizational Information
Information Systems. Strategy Strategy

• Successful firms have a Business Strategy that drives both Organizational

Strategy and IS Strategy.

• The following are driven by the firm’s business strategy:

• Decisions related to organizational structure, hiring practices, and other

components of the organizational strategy

• Decisions related to hardware, applications, and other IS components

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INTRODUCTION

• IS Strategy affects and is affected by changes

in the firm’s Business and Organizational
strategies.

• Changes in IS strategy must be accompanied

by changes in both the organizational and
overall business strategy.

• Success can only be achieved by specifically

designing all three components of the
strategy triangle.

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INTRODUCTION

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BUSINESS STRATEGY FRAMEWORKS Michael Porter

• Business Strategy is a well-articulated vision of where a business seeks to

go and how it expects to get there.

• It is the form by which a business communicates its strategic goals.

• Business Strategic plan is constructed in response to:

Richard D’Aveni

• Market forces
• Customer demand
• Organizational capabilities

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BUSINESS STRATEGY FRAMEWORKS Michael Porter

• Market Forces create competitive situation for the business

• Customer Demands represent the wants and needs of the individuals and
companies that satisfy the need by offering products and services in the
marketplace.

Richard D’Aveni
• Organizational Capabilities include the skills and experience that give the
firm the currency that add value in the marketplace.

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BUSINESS STRATEGY FRAMEWORKS – Porter’s Generic Strategies Framework

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BUSINESS STRATEGY FRAMEWORKS – Porter’s Generic Strategies Framework

• Michael Porter identified three primary

strategies for achieving competitive
advantage:

1. Cost Leadership,
2. Differentiation
3. Focus

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BUSINESS STRATEGY FRAMEWORKS – Porter’s Generic Strategies Framework

Cost Leadership :

• The firm aims to be the lowest cost producer in

the marketplace.
• The product/service offered must be comparable
in quality to those offered by others.
• There should be one cost leader in an industry,
otherwise a price war will be triggered causing
high-cost firms to leave the market.
• Wal-Mart optimizes the cost-leadership strategy
using to generate operating efficiencies:

• Mass distribution
• Economies of scale
• Information systems

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BUSINESS STRATEGY FRAMEWORKS – Porter’s Generic Strategies Framework

Differentiation:

• Product/service is introduced as unique

• The firm identifies which qualitative
dimensions are most important to customers
and add them to the product/service.
• Pricing must be reasonable and competitive
• Progressive Insurance differentiates its
services using the following:

• Representatives are available 24/7 to

respond to accident claims
• They arrive to the accident scene shortly
after the accident with laptop, intelligent
SW, and authority to settle claims on spot.

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BUSINESS STRATEGY FRAMEWORKS – Porter’s Generic Strategies Framework
Focus:

• Firm limits its scope to a narrower market

segment and customize the offerings to fit that
group of customers.
• This strategy has two variants:

• Cost Focus – a firm is seeking a cost

advantage in its segment.
• Differentiation Focus – a firm distinguishing
its products or services within a segment.

• Marriott chain targeted business travellers by

introducing check-in-kiosks. A guest swipes a
Marriott Reward card at the Kiosk in the lobby
and receives a room assignment and keycard
from the machine, which is linked to the billing
IS.

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BUSINESS STRATEGY FRAMEWORKS – Hypercompetition and the New 7 Ss Framework

• D'Aveni's 7S framework was created by strategy expert

Richard A. D'Aveni in 1990 .

• The framework is an approach to directing a firm in high

velocity or hypercompetitive markets.

• The framework was designed to enable a business to remain

competitive through a series of initiatives delivering
temporary advantages.

• The hypercompetition models suggest that the speed and

aggressiveness of the moves and countermoves in any
market create an environment in which advantages are
“rapidly created and eroded”

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BUSINESS STRATEGY FRAMEWORKS – Hypercompetition and the New 7 Ss Framework
• D'Aveni's 7S framework works based on the following
assumptions:

o Every competitive advantage is eroded. The advantage

lasts until competitors imitated or counter-maneuvered
them.

o Sustaining an advantage can be deadly distraction. Can

take attention away from developing new advantages.

o The of advantage should be disrupting not sustainability.

A firm should seek to stay ahead using a series of fast and
temporary advantages that erode competitors’ advantages.

o Initiatives are achieved with a series of small steps.

Competitive cycles are shorter now, and new advantages
must be achieved quickly.

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BUSINESS STRATEGY FRAMEWORKS – Hypercompetition and the New 7 Ss Framework
• D'Aveni identified 4 areas firms can seek a competitive
advantage under hypercompetition – Four Arena Analysis:

o Cost/Quality (C-Q). This includes offerings of value

propositions that are cost-effective and reactive to
customer sentiments.

o Timing/know-how. This is the strategic leveraging of

expert knowledge to gain first-mover advantages in new
markets. It considers innovation to be at the heart of
efficiency.

o Strongholds. Firm’s core competencies that are difficult to

copy. A firm's product and geographic position best
protected by barriers to entry and substitutes

o Deep pockets. The financial resources of players in the

industry. When access to financing is easy, it becomes
even easier to mount a challenge in any business space.

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BUSINESS STRATEGY FRAMEWORKS – Hypercompetition and the New 7 Ss Framework
• D'Aveni suggests that the following 7 approaches will help
businesses thrive in hypercompetitive environments – 7Ss:

1) Stakeholders Satisfaction. The model asserts that the

customer is the most critical business stakeholder. So it
encourages businesses to make them the most important
consideration in return for their loyalty. About
maximizing customer satisfaction by adding values.

2) Strategic Soothsaying. Seeking new knowledge that

can predict or create new windows of opportunities.
Managers be strategic in planning for whatever outcomes
they face.

3) Speed. Preparing the firm to react as quickly as possible.

Take advantage of every opportunity to gain further
grounds

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BUSINESS STRATEGY FRAMEWORKS – Hypercompetition and the New 7 Ss Framework
• D'Aveni suggests that the following 7 approaches will help
businesses thrive in hypercompetitive environments – 7Ss:

4) Surprise. Preparing the organization to respond to the

marketplace in a manner that will surprise competitors.

5) Shifting the Rules of Competition. Finding new ways

to serve customers which transform the industry. Must
take bold and unconventional moves that'll cause great
disruption for your rivals.

6) Signals. Communicating the intended actions of a

company, to stall responses by competitors. Signals are
those strong moves that pass a resounding message of
intent across your business space.

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BUSINESS STRATEGY FRAMEWORKS – Hypercompetition and the New 7 Ss Framework
• D'Aveni suggests that the following 7 approaches will help
businesses thrive in hypercompetitive environments – 7Ss:

7) Simultaneous & Sequential Thrusts. Taking a series

of steps designed to stun and confuse competitors in
order to disrupt or block their efforts.

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BUSINESS STRATEGY FRAMEWORKS – Hypercompetition and the New 7 Ss Framework

Examples of Hypercompetitive Industries Ride-Sharing Services

Online Retail
E-commerce is one of the best examples of
hypercompetiton. E-commerce platforms such as
Amazon, Alibaba, and Walmart constantly innovate
to improve their services and gain an edge over
competitors.
Smartphones
The smartphone market is highly competitive, with
companies like Apple, Samsung, Huawei, and
Xiaomi vying for market share.
Companies like Uber, Lyft, and Didi Chuxing
constantly compete for customers with aggressive
pricing and promotions.
Fast Food
The fast-food industry is highly competitive, with
companies like McDonald’s, Burger King, and
Wendy’s constantly trying to innovate and offer new
products to attract customers.
Video Streaming
The streaming services such as Netflix, Amazon
Prime Video, and Disney+ are on the rise, which has
led to a highly competitive market.

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BUSINESS STRATEGY FRAMEWORKS – why are Strategic Advantage Models Essential to Planning for ISs?

• Business strategy should drive IS decision making.

• Changes in business strategy should entail re-assessments of IS. On the other side, changes in IS potential should
trigger re-assessments of business strategy

Understanding business strategy means answering the following questions:

1. What is the business goal or objective?

2. What is the plan for achieving it? What is the role of IS in this plan?

3. Who are the crucial competitors and cooperators, and what is required of a successful player in this value
net?

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BUSINESS STRATEGY FRAMEWORKS –

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