Mis: Chapter 2: Competing with Information Technology

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Chapter 2: Competing with Information Technology
Contributors: John Richardson, Kim Wandersee, Les Pang, Marlene Wilcox

Chapter 2 introduces fundamental concepts of competitive advantage through information technology and illustrates major strategic applications of information systems. Information Technology (IT) professionals must understand how to use IT systems and technology to deliver a competitive advantage to the organization. Information systems and technology should provide more than a cost savings benefit to organizations. Today, IT solutions are expected to provide the means to surpass a competitor’s performance. As discussed in Chapter 1, the role of IT professionals is changing. Currently, there is an evolving term, business technology, which is used to describe the emerging role in IT.  IT professionals are becoming more and more integrated with the business operations of an organizations. The Real World Case Study 4,  "IT Leaders: Reinventing IT as a Strategic Business Partner,"  describes how one organization is reorganizing to better utilize IT to increase business benefits and contribute to a competitive advantage. It is important for an IT organization to utilize IT to reduce the cost of running the business, grow the business, or develop new services to change the business.   To position an organization to better provide its products and services,  an understanding of the competitive forces is needed.  Michael Porter identifies five threats that require business strategies ensure that an organization can out-perform other competitors. They are: 1. Rivalry of competitors within its industry

2. Threat of new entrants
3. Threat posed by substitute products that might capture its market share 4. The bargaining power of customers
5. The bargaining power of suppliers 
To counteract these threats, competitive strategies must be developed to address the potential risks an organization may encounter as it strives to maintain its position on the market place. The competitive strategies are: 1. Cost Leadership Strategy

2. Differentiation Strategy
3. Innovation Strategy
4. Growth Strategies
5. Alliance Strategies
6. Other Strategies
These strategies can be used either individually or in a combination to position an organization to better compete for the future.   An example of an organization that is utilizing IT to change how it does business and remain economically viable in the future is the online magazine Cross Talk. In the 1990’s, Cross Talk was printing and mailing the magazine to subscribers. With a decrease in funding, this organization had to develop ways to reduce costs, deliver its services to its subscribers, grow its subscriber base, demonstrate its value above other on-line content providers, and justify why it should not be eliminated. Cross Talk is now available at its new website in either an online digital flipbook format or PDF version—CrossTalk is now completely electronic. This change reduces their carbon footprint and allows them to bring the journal to their readers in their preferred and most convenient format. This is also CrossTalk's first step towards reaching new reader devices and enhancing the suitability of the journal for our increasing electronic readership. Customer Value

 Customer value has become a driving force in the world economy. A key success factor for many organizations is developing customer value by increasing customer loyalty, anticipate their future needs, respond to customer concerns, and provide top-quality customer service. One example is Southwest Airlines. Not only have they automated ticket sales via the Internet, Southwest also sends special offers regarding discounts available at my destination, emails to remind customers that the trip is "around the corner," text alerts if a flight is delayed, and offers incentives to fly with them. It seems that Southwest Airlines provides a personal assistant to...
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