Indian Institute of Management Bodh Gaya 10/11/2022

STRATEGIC
ADVANTAGE WITH IT

PRESENTED BY: DR. PRAGATI PRIYADARSHINEE

 Indian Institute of Management Bodh Gaya 10/11/2022

2 ISSUES FOR IMPLEMENTING STRATEGIC

INFORMATION SYSTEMS
❑How important it is to align business strategies with IT?
❑Has IT become a common utility for everyone?
❑How will advances in information technology affect competition and the sources
of competitive advantage?
❑What strategies should a company pursue to exploit the technology?
❑What are the implications of actions that competing organizations may have
already taken?
❑Of many technologies, which is the most important?
 Indian Institute of Management Bodh Gaya 10/11/2022

Internetworked
3 USE OF

End User Commerce

Electronic
E-Business &
INFORMATION M-Commerce

1990-
2020
SYSTEM
End User

Strategic
Computing
EIS

1980-
1990

&
Decision
Support

Management Decis
1970-

Supp
Systems (DSS)

1980

ion

ort
And Ad hoc
Reports

Reporting
Management
1960-
1970

Information
Systems
Process
1950-1

EDP (Electronic Data

Data
960

ing

Processing) and
TPS
 Indian Institute of Management Bodh Gaya 10/11/2022

4 INFORMATION REVOLUTION AFFECTING

COMPETITION
❑It changes industry structure and, in doing so alters the rules of competition. For example, the
newspaper industry, book retailer moving to online space.
❑It creates competitive advantage by giving companies new ways to outperform their rivals. For
example, traditional match-making service providers when went online outperformed all their
rivals.
❑It spawns whole new businesses, often from within a organization's existing operations. For
examples, when newspaper industry went online, they created multiple number of new business
models.
❑ IT makes new business technologically feasible
❑ IT can also spawn new business by creating derived demand for new products or services
❑ IT can also help in creating new business within old ones.
 Indian Institute of Management Bodh Gaya 10/11/2022

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STRATEGIC INFORMATION SYSTEMS (SIS)

❑Strategic Information System (SIS) is any system that offers an

organization a competitive advantage over its competitors.
❑Strategic Information Systems (SIS) is concerned with systems which
contribute significantly to the achievement of an organization's overall
objectives.
❑Strategic Information Systems (SIS) is those technology-based systems
that helps in implementing business strategies of an organization.
 Indian Institute of Management Bodh Gaya 10/11/2022

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METHODS OF COMPETITIVENESS

❑Cost Leadership
❑Differentiation
❑Focused or Niche Differentiation
❑Innovation
❑Alliance
 Indian Institute of Management Bodh Gaya 10/11/2022

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PORTER’S VALUE CHAIN MODEL

❑Primary Activities
❑Inbound Logistics: this deal with receipt, storage and management of raw
material.
❑Operations: Deals with manufacturing or service steps.
❑Outbound Logistics: this deals with collection, storage and distributions of
finished product.
❑Marketing and Sales: this includes order entry, price management, and customer
relationship
❑After Sales: this deals with the support of the products after the sale has been
done. This may also include installation and customer training.
ORDER AAYA-GAYA ENTRY, PRICE SET KRNA H YA
MANAGE KRNA H, CUSTOMER S ACCHE RELATION
BNANE HNN SALES M
 Indian Institute of Management Bodh Gaya 10/11/2022

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PORTER’S VALUE CHAIN MODEL

❑Support Activities
❑Procurement: this includes the procurement of raw material required for the
final product, or any other item required by the organization. Procurement
process is generally spread across the organization.
❑Technology: this deals with selection and utilization of appropriate technology
for product development and other activities.
❑Human Resource Management: this deals with managing human resource in an
organization from recruitment to training to development of employees.
❑Firm Infrastructure: this is a major support function which includes accounting,
legal, planning, labor relations, and other departments in an organization.
 Indian Institute of Management Bodh Gaya 10/11/2022

PORTER’S VALUE CHAIN MODEL

 Indian Institute of Management Bodh Gaya 10/11/2022

10 INTEGRATION OF IT INTO VALUE CHAIN

ACTIVITIES
 Indian Institute of Management Bodh Gaya 10/11/2022

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PORTER’S VALUE SYSTEM

Value chain is a set of activities

that an organization performs to
deliver its product or services to
the market.
 Indian Institute of Management Bodh Gaya 10/11/2022

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INFORMATION VALUE CHAIN
 Indian Institute of Management Bodh Gaya 10/11/2022

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PORTER’S
COMPETITI
VE FORCES
MODEL
 Indian Institute of Management Bodh Gaya 10/11/2022

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STEPS TO ACHIEVE COSTS LEADERSHIP

❑Identify the appropriate value chain and assign cost to each activity
❑Identify the cost drivers for each value activity and see how they
interact
❑Determine the relative costs of competitors and the sources of cost
differentiators
❑Develop a strategy to lower relative cost position through controlling
cost drivers or by redefining the value chain
❑Test the cost reduction strategy for sustainability
 Indian Institute of Management Bodh Gaya 10/11/2022

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STEPS TO ACHIEVE DIFFERENTIATION

❑Identify the real customer

❑Understand the customer’s value chain and impact of seller’s product on it
❑Identify the customer’s buying criteria
❑Identify the possible sources of uniqueness
❑Identify the cost associated with these sources of uniqueness
❑Select the value activities that create the most important differentiation for the customer
relative to costs incurred
❑Test the selected differentiation strategy for sustainability
 Indian Institute of Management Bodh Gaya 10/11/2022

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ROLE OF INTERNET & COMPETITIVE FORCES
❑For most organizations, the Internet increases the threat that new competitors will enter a market.
❑Internet impact is mixed. Buyers can find alternative suppliers and compare prices more easily, reducing
power of suppliers.
❑On the other hand, as companies use the Internet to integrate their supply chains, suppliers can lock in
customers.
❑Internet increases buyers’ access to information, increasing buyer power.
❑Internet reduces switching costs, which are the costs, in money and time, to buy elsewhere. This also
increases buyer power.
❑Information-based industries are in the greatest danger from this threat (e.g., music, books, software). The
Internet can convey digital information quickly and efficiently.
 THANK YOU !
Questions
?
10/11/2022 Indian Institute of Management Bodh Gaya
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