Obrien 13e Chapter 2

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CHAPTER 2

Management Challenges Business Applications

Module I

Information Technologies

Development Processes

Foundation Concepts

COMPETING WITH INFORMATION TECHNOLOGY
Chapter Highlights
Section I Fundamentals of Strategic Advantage
Strategic IT Competitive Strategy Concepts Real World Case: GE, Dell, Intel, GM, and Others: The Competitive Advantage of Information Technology Strategic Uses of Information Technology Building a Customer-Focused Business The Value Chain and Strategic IS

Learning Objectives
After reading and studying this chapter, you should be able to: 1. Identify several basic competitive strategies and explain how they can use information technologies to confront the competitive forces faced by a business. 2. Identify several strategic uses of Internet technologies and give examples of how they give competitive advantages to a business. 3. Give examples of how business process reengineering frequently involves the strategic use of Internet technologies. 4. Identify the business value of using Internet technologies to become an agile competitor or to form a virtual company. 5. Explain how knowledge management systems can help a business gain strategic advantages.

Section II Using Information Technology for Strategic Advantage Real World Case: The U.S. Department of Commerce: Using IT to Tap Experts’ Know-How through Knowledge Management Strategic Uses of IT Reengineering Business Processes Becoming an Agile Company Creating a Virtual Company Building a Knowledge-Creating Company Real World Case: CDW, Harrah’s Entertainment, and Others: Developing Strategic Customer-Loyalty Systems

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42 ● Module I / Foundation Concepts

SECTION I

Fundamentals of Strategic Advantage
Technology is no longer an afterthought in forming business strategy, but the actual cause and driver [17]. This chapter will show you that it is important for you to view information systems as more than a set of technologies that support efficient business operations, workgroup and enterprise collaboration, or effective business decision making. Information technology can change the way businesses compete. You should also view information systems strategically, that is, as vital competitive networks, as a means of organizational renewal, and as a necessary investment in technologies that help a company adopt strategies and business processes that enable it to reengineer or reinvent itself to survive and succeed in today’s dynamic business environment. Section I of this chapter introduces fundamental competitive strategy concepts that underlie the strategic use of information systems. Section II then discusses several major strategic applications of information technology used by many companies today. Read the Real World Case regarding the competitive advantage of IT. We can learn a lot about the strategic business uses of information technologies from this case. See Figure 2.1.

Strategic IT

Competitive Strategy Concepts

In Chapter 1, we emphasized that a major role of information systems applications in business is to provide effective support of a company’s strategies for gaining competitive advantage. This strategic role of information systems involves using information technology to develop products, services, and capabilities that give a company major advantages over the competitive forces it faces in the global marketplace. This is accomplished through a strategic information architecture—the collection of strategic information systems that support or shape the competitive position and strategies of a business enterprise. So a strategic information system can be any kind of information system (TPS, MIS, DSS, etc.) that uses information technology to help an organization gain a competitive advantage, reduce a competitive disadvantage, or meet other strategic enterprise objectives. Let’s look at several basic concepts that define the role of such strategic information systems. How should a...
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