CORPORATE STRATEGIC

INFORMATION SYSTEMS
PLANNING (ITS 582)
3.0 STRATEGIC PERSPECTIVES
 Information Systems (IS) and Information Technology (IT)
 Information Technology (IT) Strategy
 Information System (IS) Strategy
 Corporate Strategy
 Business Strategy
 Strategic alignment

© Sy. Ruzaini S. A., UiTM

Strategic Perspectives
 In business, your strategic perspective determines how
your company views and solves important issues.
Putting the word "strategic" before the word
"perspective" indicates a tactical, carefully formulated
approach. Say your business discusses withdrawing
from a certain market. Your staff discusses the
possibilities. But, if you discuss a market withdrawal
from a strategic perspective, you will consider the
possibilities in light of your predetermined business
objectives. You exercise an enlightened process,
exploring how the withdrawal affects your business's
priorities.
 Why a Stronger Strategic
Perspective Is Needed
 Understanding the significance of a business's strategic
perspective invariably encourages business leaders to create
a stronger strategic perspective in hopes of making better
decisions. Carefully consider the past, present and future of
your business objectives. Once senior management clearly
envisions its goals and objectives, it makes better decisions in
all areas. This can be applied to many aspects of decision
making. But, staying with the marketing example for now,
establishing clear goals allows effective, profitable marketing
decisions -- for developing a branding strategy, generating
growth and other key issues. All decisions are viewed within
the perspective of your most important goals.
Perspectives
 Visualize a square drawn on a piece of paper. If an artist
added a few more strokes to the page, the square
becomes a cube. Suddenly, it has depth, height and
width as viewed from a certain vantage point.
 As a business makes decisions, it has to do more than
crunch numbers. Strategic perspectives view a challenge
in such a way that succeeds in reaching business goals.
Viewing business challenges from multiple perspectives
allows the decision maker choices in light of the way
each optional solution relates to the next when viewed
side-by-side -- like two-dimensional cubes.
Information system (IS) and Information
technology (IT)

© Sy. Ruzaini S. A., UiTM

Information system (IS) and Information
technology (IT)
Information system (IS) and Information
technology (IT)

Information systems is the multi-disciplinary study of the collection, processing

and storage of data; of the use of information by individuals and groups, especially
within an organizational context; and of the impact, implications and management
of artifacts and technologies applied to those activities (Roger Clark 1995)

Information systems is a collection of interrelated components (hardware,

software, procedures, people, databases) that work together to “collect” (or
retrieve), process, store and distribute information to support decision making and
control an organization (Laudon & Laudon 1994)

© Sy. Ruzaini S. A., UiTM

Information system (IS) and Information
technology (IT)

Information technology (IT) is "the study, design, development,

implementation, support or management of information systems".

Information technology is a general term that describes any technology that

helps to produce, manipulate, store, communicate, and/or disseminate
information.

© Sy. Ruzaini S. A., UiTM

 Management Information system (MIS)

MIS are the instrumentation of an organization. Their interfaces to the human

controllers of business serve as the ‘dials and gauges’ that allow these controllers to
‘read off’ the current state of their organization. They may record and model all or
part of the organization's activities and provide indicators of any actual or predicted
change in state.

MIS is the development and the use of effective information systems in

organizations.
(Awad, 1988)

MIS … is now defined to include everything which deals with computer-

assested flow and presentation of information …
(Wolstenholme, Henderson & Gavin, 1993)
Management Information System (MIS)

 The instrumentation view of MIS provides a simple and yet

powerful perspective from which to approach management of,
and with, these systems. Implied in this view is the need for
human value judgments to support effective actions being
taken, judgments are needed on:
 Which activities to record

 Which of the enterprise’s variables require monitoring

 What extent to monitor them

 What format to have the ‘dials and gauges’ display their

message
 Levels of Management Information
System (MIS) Planning

 i.e: Making business

sector comparison

 i.e: Developing budgetary

forecast

 i.e: Reporting daily sales

 Levels of Management Information
System (MIS) Planning (cont.)
12

• Strategic Planning
– Long-range goals and policies for resource allocation
– E.g... What new products should be offered

• Management Control and Tactical Planning

– Focus on effective utilization of resources
– more longer range planning horizon
Scope of
– E.g... What is next years production level
decision

• Operational Planning and Control:

– Focus on efficient and effective execution of specific tasks.
– They affect activities taking place right now
– E.g... What should be today's production level
Nature of decision making : Management
Information System (MIS)
 Decision Making
 Decision: a reasoned choice among alternatives
 Examples:
 Where to advertise a new product
 What stock to buy
 What movie to see
 Where to go for dinner

 Decision Making: a process of choosing among alternative

courses of action for the purpose of attaining a goal or goals
Nature of Decision
 Structured
 Routine and repetitive with standard solution

 Well defined decision making procedure

 Given a well-defined set of input, a well defined set of output is

defined
 Semi-structured
 Has some structured aspect

 Some of the inputs or outputs or procedures are not well defined

 Unstructured
 All phases of decision making process are unstructured

 Not well defined input, output set and procedures

 Strategy role of categories of systems players:
Management Information System (MIS)

 By definition, MIS are for people and IS as the organisational

function responsible for them, will also be made up of people.
 Because of the often extensive impact of an MIS upon an
organisation, it is important to be a strategic direction that co-
ordinates the role and interests of the different groups of
players in MIS.
 These will include senior management, user management
and IS management
Strategy role of categories of systems players:
Management Information System (MIS)

The two-way arrows along each

side show the necessary flow of
information.

The role of the IS Strategy is to

ensure the effective development
and implementation of IS within
the strategic direction and to do
this, each node must play the role
indicated in the circle to avoid the
dangers noted.
 STRATEGY USES OF IS/IT

 In the late 1970’s – a number of organization had began to use

IS/IT in ways that fundamentally change how their business was
conducted.

 IS/IT was directly influencing their competitive position and had

become a new weapon to improve their competitiveness, implying
a new relationship between IS/IT investment and strategic
development.
 STRATEGY USES OF IS/IT
 Example : (an earliest)
 American Airlines – SABRE reservation system
 American Hospital Supplies – direct terminal-
based ordering system
 Both involved putting technology directly into the

customers’ sites, in the process, precluded similar

competitive responses and caused fundamental
changes in the ‘systems’ operating in their
industries, to their advantage.
Example Case Study
Example Case Study
Example Case Study
Example Case Study
Example Case Study
Example Case Study
 STRATIGIC USES OF IS/IT: IMPLICATION

The implication of strategic IS/IT use in four main type of strategic

system :

1. Those that share information technology–based systems with

customers/consumer and/or supplier and change the nature of
the relationship
2. Those that produce more effective integration of the use of
information in the organization’s value-adding processes
3. Those that enable the organization to develop, produce,
market and deliver new or enhanced products or services
based on information.
4. Those that provide executive management with information
to support development and implementation of strategy (with
external and internal information are integrated in analysis)
 STRATIGIC USES OF IS/IT: IMPLICATION
(cont)

 IS/IT can be used to improve traditional ways of doing business or to

cause ‘significant structural changes’ in the way the company does
business.

 Notowidigdo (1984) divided strategic information systems to :

 Internal system that have direct benefit to the company
 External systems that have direct for the company’s customers.

 Venkatraman (1991) assessing how the strategic benefits from IT

resulted from the increasing degrees of business change (and risk!).
 STRATEGY USES OF IS/IT :
REVOLUTIONARY
 Three types of revolutionary uses of IT in organization
transformation :

a) Business process redesign – using IS/IT to realign business

activities and their relationship to achieve performance
breakthroughs

b) Business network redesign - changing the way information is

used by the organization and its trading partners, thereby
changing how the industry overall carries out the value-adding
processes.

c) Business scope redefinition – extending the market or product

set, based on information or changing the role of the organization
in the industry.
 Information Technology Strategies

What is IT Strategy?

The IT strategy identifies and defines the application and

information architecture, the technical infrastructures and IT
organisation required to support the business strategy and
objectives. In formulating an IT strategy, one must bear in mind
that a strategy is only useful in that it guides and directs specific
actions that provide value.
 Information Technology Strategies

 IT Strategy is a planning document that explains how IT should be utilized as part

of an organization's overall business strategy
 Concerned with outlining the vision of how technology can support
organization’s demand for information and systems;
 Refers to as IT Supply

 IT Strategy
 sets direction for IT function in an organization
 provides the infrastructure, services and is activity based and is more focused
on the technology.
 addresses provision of IT capabilities and resources (HW, SW, Telco) and
services (operations, systems development, and support).
 helps create shareholder value - it helps maximize the return on IT investments.
 Information Technology Strategies

 IT strategy should covers current planned and future plan to ensure both the
existing investment in technology is maintained and fully exploited, and new
beneficial capabilities are provided

IT strategy should be reviewed frequently to take in to account of changing

business priorities and new technology opportunities

IT strategy should provide a set of “Guiding Principles”.

 A set of architectures and standards with which all projects must comply
 Directing the nature and shape of all technology activities
 Ensure the IT strategy is and remains coherent, consistent and relevant.

© Sy. Ruzaini S. A., UiTM

 Information Technology Strategies

 Example of Guiding Principle:

 Simple technology and Human/Technology Interface

 Simple to use
 Ergonomic
 Training
 Provide training to increase acceptance
 E-learning technology
 Security
 Level of access
 Business continuity
 Used resilience product
 Maintenance
 Establish suitable support and maintenance arrangement

© Sy. Ruzaini S. A., UiTM

 Information System Strategies

 IS strategy can be defined as a strategy to implement information systems

that recognizes organizational requirements
 IS strategy is business based and application oriented.

 It provides support for the business directions and helps achieve the

business goals and objectives.

 Defines and prioritizes requirement investments to achieve ideal

portfolio, expected benefits, requirement changes, within constraints of

resources and systems interdependencies;
 Defines the organization’s requirement or demand for information and
systems to support the overall strategy of the business
 An IS strategy should include the business needs for the future aligned
Information System Strategies

Business Strategy

Organizational IS Strategy
Strategy

The Information System Strategy Triangle

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 Information System Strategies :
Business Strategy
 Business strategy drives organizational strategy and IS strategy. The
organization and its IS should clearly support defined business goals and
objectives.

 Definition : Business Strategy is a well-articulated vision of where a

business seeks to go and how it expects to get there.

 Models: Porter’s Generic Strategies Model; D’Aveni’s

hypercompetition model

 Management constructs this plan in response to market forces,

customer demands, and organizational capabilities.
 Information System Strategies :
Business Strategy (cont.)
 Market forces create the competitive situation for the business. Some markets,
such as those faced by airlines, makers of personal computers, and issuers of
credit cards, are characterized by many competitors and a high level of
competition such that product differentiation becomes increasingly difficult.
Other markets, such as those for package delivery, automobiles, and petroleum
products, are similarly characterized by high competition, but product
differentiation is better established.

 Customer demands comprise the wants and needs of the individuals and
companies who purchase the products and services available in the marketplace.

 Organizational capabilities include the skills and experience that give the
corporation a currency that can add value in the marketplace.
 Information System Strategies :
Business Strategy (cont.)

Porter’s Generic Strategies Model

 Information System Strategies :
Business Strategy (cont.)
Porter’s Generic Strategies Model

Cost Leadership :
 The organization aims to be the lowest-cost producer in the
marketplace.
 The organization enjoys above-average performance by
minimizing costs.
 Only one cost leader exists within an industry.
 Example : Through mass distribution, economies of scale,
and IS to generate operating efficiencies, Wal-Mart
epitomizes the cost-leadership strategy.
 Information System Strategies :
Business Strategy (cont.)
Porter’s Generic Strategies Model

Differentiation :
 The organization qualifies its product or service to appear unique in the
marketplace and identifies which qualitative dimensions are most important to its
customers, and then finds ways to add value along one or more of those
dimensions.
 In order for this strategy to work, the price charged customers by the differentiator
must seem fair relative to the price charged by competitors.
 E.g. : Progressive Insurance is able to differentiate itself from other automobile
insurance companies by breaking out of the industry mold. Its representatives are
available 24/7 (i.e., 24 hours a day, 7 days a week) to respond to accident claims.
They arrive at an accident scene shortly after the accident with powerful laptops,
intelligent software, and the authority to settle claims on the spot. This strategy
spurred Progressive’s growth and widened its profit margins
 Information System Strategies :
Business Strategy (cont.)
Porter’s Generic Strategies Model

Focus :
 Allows an organization to limit its scope to a narrower segment of the market and
tailor its offerings to that group of customers.
 This strategy has two variants:
cost focus, in which the organization seeks a cost advantage within its segment,
differentiation focus, in which it seeks to distinguish its products or services within
the segment.
 This strategy allows the organization to achieve a local competitive advantage,
even if it does not achieve competitive advantage in the marketplace overall.
 Example :
 Marriott International – The check-in kiosks
 Ritz-Carlton – use CRM known as CLASS
Information System Strategies :
Business Strategy (cont.)
 Information System Strategies :
Organizational Strategy

 Organizational strategy must complement business strategy.

 Definition : The way a business is organized either supports the
implementation of its business strategy or it gets in the way.
Includes the organization’s design as well as the choices it
makes to define, set up, coordinate, and control its work
processes.
 The organizational strategy is a plan that answers the question:
“How will the company organize in order to achieve its goals
and implement its business strategy?”

 Models: Business diamond; The Seven managerial levers

© Sy. Ruzaini S. A., UiTM

 Information System Strategies :
Organizational Strategy
 Business diamond
 identifies the crucial components of an organization’s plan as its
business processes, its values and beliefs, its management control
systems, and its tasks and structures.
 This simple framework is useful for designing new organizations and for
diagnosing organizational troubles.
 For example, organizations that try to change their cultures but fail to
change the way they manage and control cannot be effective.

The Business Diamond

Information System Strategies :
Organizational Strategy
 Information System Strategies :
IS Strategy

 IS strategy must complement business strategy. When IS support business

goals, the business appears to be working well. IS strategy can itself affect
and is affected by changes in a firm’s business and organizational strategies.
Moreover, information systems strategy always has consequences—
intended or not—on business and organizational strategies.

 Definition : The plan the organization uses in providing information

systems and services

 Models: A basic framework for understanding IS decisions relating

architecture (the “what”) and the other resource considerations (“who” and
“where”) that represent important planning constraints

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Information System Strategies :
IS Strategy

Information Systems Strategy Matrix

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 Strategies Relationships

 Organizational strategy and information strategy must complement

each other.
 They must be designed so that they support, rather than hinder
each other.
 If a decision is made to change one corner of the triangle, it is
necessary to evaluate the other two corners to ensure that balance
is preserved.
 Changing business strategy without thinking through the effects on
the organizational and IS strategies will cause the business
to struggle until balance is restored.
 Likewise, changing IS or the organization alone will cause an
imbalance. Business
Strategy

Organizational IS Strategy
Strategy
END OF TOPIC 3 - PART I
TO BE CONTINUED ..
Organizational Strategy

Corporate Strategy

Business Strategy

Functional
Strategy

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Corporate Strategy
Corporate strategy is concerned with what types of business the
organisation is in.
It denotes the most general level of strategy in an organisation.
Affects scope of firms activities i.e. types of products, services
and markets
Seeks to match activities of the firm with its environment.
correct products for market (competitive environment)
sufficient returns for shareholders (financial environment)
ecologically friendly activities (social environment)

Only the global objectives and the general orientation in order to

achieve them are defines

Provides the framework for the business style that reflects the business
strategy and, in turn, does so much to influence the business strategy,
particularly the extent of outsourcing, diversification, scale and scope
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Corporate Strategy

•Concern with:
Reach: These are the problems that are corporate responsibilities; they may
include identifying the overall goals of the corporation, the types of businesses
in which the corporations should be involved and the way in which the business
will be integrated and managed.
Competitive Contact: This shows where in the corporation competition is to
be localized.
Managing business activities and business interrelationships: In this
stage, the corporate strategy seeks to develop synergies by dividing and
coordinating employees and other resources from corner to corner business
units, finding financial resources across business units, and using business
units to balance other corporate business activities.
Management Practice: In this stage, the corporations make a decision how
business units are to be governed - through straight corporate interventions
(centralization) or through more or less autonomous governance
(decentralization) that relies on persuasion and rewards.

© Sy. Ruzaini S. A., UiTM

Corporate Strategy
A firm might adopt any of three forms of corporate strategy:

1. Single-business.
2. Related diversification.
3. Unrelated diversification.

The Single-Business Strategy:

This calls for a organization to rely on only one single business, product, or
service for all its revenue.

Advantage : The firm can concentrate all its resources and expertise on that
one product or service.

Disadvantage : This strategy increases the organization's weakness to its

competition and to changes in the external environment.
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Corporate Strategy

Related Diversification :

The most common corporate strategy calls for the firm to operate in several different
businesses, industries, or markets at the same time. However, the operations are
related to each other in some fundamental way. Most of the time, this type of strategy
permits the organization to leverage a distinctive competence in one market in order
to strengthen its competitiveness in others. The goal of related diversification and the
basic connection linking different operations often are defined in the firm’s mission
statement.

Unrelated Diversification :

A firm operates in several unrelated industries and markets.

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 Corporate Strategy
Related Diversification

Example : Hewlett-Packard and Texas Instruments are two firms that compete in various segments of
the electronics industry, that employ generic strategies in many of their product lines.

Hewlett-Packard Texas Instruments

Marketing Industrial and some consumer markets Consumer and industrial markets
Strategy High-tech, custom products    High-volume, low-cost standard products
Premium price, lag experience curve Low price,push experience curve
Promote quality/ realiability/ service    Promote availability/ price
Production Small plants Large plants for large volume
Strategy Small batch / job-shop technology Mass production technology with
Build capacity with demand automation and robotics
Build capacity ahead od demand

Financial Self-funding within division Allocate cash among divisions according to

Strategy Make profits early on through high need
margins Fund ahead of experience curve

R&D First to market with new products Improve existing products in proven
Strategy Primarily product R&D markets
Features and quality driven Both product and process R&D
Design or product performance Cost driven
Design for cost reduction
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Business Strategy

A strategic business unit may be a division, product line, or other profit

center that can be planned independently from the other business units of
the firm.

At the business unit level, the strategic issues are less about the
coordination of operating units and more about developing and sustaining a
competitive advantage for the goods and services that are produced. At the
business level, the strategy formulation phase deals with:

Positioning the business against rivals

Anticipating changes in demand and technologies and adjusting the
strategy to accommodate them
Influencing the nature of competition through strategic actions such
as vertical integration and through political actions such as lobbying.

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Business Strategy

Deals with the single SBU and how, by coping with its industry environment,
it can successfully contribute to the corporate strategy
It should have an identifiable and definable product range, market segment
and competitor set.
A useful way of classifying business strategies (Porter, 1985):
 Cost leadership or differentiation of products
 May encompass an entire market or be focused upon a particular
segment of it
Each SBU will have its own coherent business strategy.

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Functional Strategy

The functional level of the organization is the level of the operating divisions
and department.
The strategic issues at the functional level are related to business
processes and the value chain.
Functional level strategies in marketing, finance, operations, human
resources and R&D involve the development and coordination of resources
through which business unit level strategies can be executed efficiently and
effectively.

© Sy. Ruzaini S. A., UiTM

SUMMARY
SUMMARY
 Corporate Strategy - is concerned with the overall purpose and scope of
the business to meet stakeholder expectations. This is a crucial level since
it is heavily influenced by investors in the business and acts to guide
strategic decision-making throughout the business. Corporate strategy is
often stated explicitly in a "mission statement".
 Business Unit Strategy - is concerned more with how a business competes
successfully in a particular market. It concerns strategic decisions about
choice of products, meeting needs of customers, gaining advantage over
competitors, exploiting or creating new opportunities etc.
 Functional Strategy - is concerned with how each part of the business is
organised to deliver the corporate and business-unit level strategic
direction. Functional strategy therefore focuses on issues of resources,
processes, people etc.