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Achieving Competitive Advantage with
Information Systems
Lecture Note 003
TIM50, 2012 Autumn

Announcements
1. HW # 1 due Next Thursday paper or electronic submission(Web page) 2. Business Paper Preferences , Due 10-11-2012(Web Page)
3. Computer Lab Hour(if you know Microsoft Access, You may not attend) Date Time : Oct 10 and 11 : 08:00 -09:30 PM
Location: Baskin Engineering Building Room 109
Instructor: TAs.
* Due to space limit: you should arrange Date and time(All class are same)

Class Objectives
• What is Competitive Advantages
• Porter’s competitive forces model
• Companies develop competitive strategies
using information systems
• The value chain and value web models,
strategic information system applications
• synergies, core competencies, and networkbased strategies to achieve competitive advantage?

• Competing on a global scale
• Quality enhance competitive advantage
• Evaluate the role of business process
management (BPM),
• Enhancing competitiveness.

Functions on Competitive Advantages(CA)
Competitive Advantages
Porter’s C A
Model

Competitive Advantages
Strategies with I S
IT

Quality Control

Value Chains

BPM

New
Enhanced Business

Global Business

Achieving Competitive Advantage; Case Study
Verizon or AT&T: Which Company Has the Best Digital
Strategy?

Cutting-edge technologies like the iPhone
and fiber-optic networks offer Verizon and
AT&T opportunities to gain an edge.
Illustrates digital technology’s role in
gaining and maintaining a competitive
advantage
And what about substitute providers like
cable companies and Wi-Max (wide area
Wi-Fi)?

Verizon or AT&T: Which Company Has the
Best Digital Strategy?

Verizon(FIOS) or AT&T(I Phone)

Apple’s iTunes: Music’s New Gatekeeper

Problem: Taking advantage of opportunities
from new and disruptive technology, staying
ahead of traditional competitors.
Solutions: Launched iPod and set up iTunes
Music Store to create a marketplace for
portable, downloadable music.

Partnerships with artists and recording labels
allow iTunes to supply exclusive content in
return for driving sales and increasing
groups’ popularity.
Illustrates digital technology’s role in gaining
and maintaining a competitive advantage.

Apple’s iTunes: Music’s New Gatekeeper

Porter’s Competitive Forces Model
• One way to understand competitive advantage
• Five competitive forces shape fate of firm
1. Traditional competitors
• Competitors in market space continuously
devise new products, new efficiencies, switching
costs.
2. New market entrants
• Some industries have low barriers to entry:
• E.g., food industry versus microchip industry
• Newer companies may have advantages:
• Newer equipment, younger workforce, and
so on.

3. Substitute products and services


Substitutes customers can purchase if
your prices too high.



E.g., Internet music service versus CDs.

4. Customers


Can customers easily switch to
competitor’s products?



Can customers force firm and
competitors to compete on price alone
(transparent marketplace).

5. Suppliers


The more suppliers a firm has, the
greater control it can exercise over
suppliers.

Porter’s competitive forces model

In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not only by competition with its traditional direct competitors but also by four forces in the industry’s environment: new market entrants, substitute products, customers, and suppliers.

Basic strategy: Align IT with business objectives
 75 percent of businesses fail to align their IT with
their business objectives, leading to lower profitability.
 To align I T:
Identify business goals and strategies.
Break strategic goals into concrete activities and
processes.
Identify metrics for measuring progress.
Determine how IT can help achieve business goals.
Measure actual performance....
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