Strategic Management and Information Systems

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Chapter 3

Information Systems, Organizations, and Strategy
LEARNING OBJECTIVES
After reading this chapter, you will be able to:
1. Identify and describe important features of organizations that managers need to know about in order to build and use information systems successfully. 2. Evaluate the impact of information systems on organizations. 3. Demonstrate how Porter’s competitive forces model and the value chain model help businesses use information systems for competitive advantage. 4. Demonstrate how information systems help businesses use synergies, core competencies, and network-based strategies to achieve competitive advantage. 5. Assess the challenges posed by strategic information systems and management solutions. 3.4

CHAPTER OUTLINE
3.1 ORGANIZATIONS AND INFORMATION SYSTEMS What Is an Organization? Features of Organizations HOW INFORMATION SYSTEMS IMPACT ORGANIZATIONS AND BUSINESS FIRMS Economic Impacts Organizational and Behavioral Impacts The Internet and Organizations Implications for the Design and Understanding of Information Systems USING INFORMATION SYSTEMS TO ACHIEVE COMPETITIVE ADVANTAGE Porter’s Competitive Forces Model Information System Strategies for Dealing with Competitive Forces The Internet’s Impact on Competitive Advantage The Business Value Chain Model Synergies, Core Competencies, and Network-Based Strategies USING SYSTEMS FOR COMPETITIVE ADVANTAGE: MANAGEMENT ISSUES Sustaining Competitive Advantage Performing a Strategic Systems Analysis Managing Strategic Transitions HANDS-ON MIS Analyzing Competitive Strategy: Dirt Bikes USA Improving Decision Making: Using a Database to Clarify Business Strategy Improving Decision Making: Using Web Tools to Configure and Price an Automobile

3.2

3.3

3.5

Interactive Sessions:
7-Eleven Stores Ask the Customer by Asking the Data Amazon.com: An Internet Giant Fine-Tunes Its Strategy

LEARNING TRACK MODULE The Changing Business Environment for Information Technology

WILL THE NEW US AIRWAYS BE ABLE TO FLY?
n September 2005, US Airways and America West Airlines merged to create something that may shake up the airline industry: a low-cost full-service airline. The new company, which retains the US Airways name, combines a fully developed national route network, first class seating, and customer loyalty program comparable to those offered by traditional airlines such as American and Continental with low prices competitive with budget carriers such as JetBlue, AirTran, and Southwest Airlines. The merging companies couldn’t have been more different in terms of their business strategies, organizational culture, and information systems: US Airways, which originated with the formation of All American Aviation in 1939, was a traditional hub-and-spoke carrier with an older workforce, lumbering bureaucracy, and a rigid information systems function that had been outsourced to Electronic Data Systems (EDS). America West was very different. Formed in 1981, it had a younger workforce, a more freewheeling entrepreneurial culture, and a penchant for managing its own information systems. But by the late 1990s, both had something in common: They were considered airlines of last resort, that people flew only when there were no other alternatives. US Airways was forced to file for bankruptcy first in 2002 and again in 2004, laying off thousands of employees. America West was struggling with surging fuel costs and competition from Southwest Airlines, another low-cost carrier. The US Airways merger was designed to create synergies between a traditional full-service airline and a newer low-cost carrier. The resulting company combines US Airways’ experience and strong network on the east coast of the United States and America West’s low-cost structure, information systems, and routes in the western United States. Management believes the merger will produce $600 million in annual cost savings. To achieve these cost savings, the new US Airways will reduce the...
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