CHAPTER 2

Organizational Strategy, Competitive

Advantage, and Information Systems
(Strategi Organisasi, Keungglan
Kompetitif, dan Sistem Informasi)
CHAPTER OUTLINE

2.1 Business Pressures, Organizational

Responses, and IT Support
2.2 Competitive Advantage and Strategic
Information Systems
2.3 Business IT Alignment
LEARNING OBJECTIVES
1. List and provide examples of the three types
of business pressures, and describe one IT
response to each.
2. Identify the five competitive forces described
by Porter, and explain how the Web impacts
each one.
3. Describe the strategies that organizations
typically adopt to counter the five competitive
forces and achieve competitive advantage.
Learning Objectives (continued)
4. Define business IT alignment, and describe
the characteristics of effective alignment.
Opening Case: Before the Stores

pocorex/iStockphoto
Competitive Advantage

Photodisc/Getty Images, Inc.

 2.1 Business Pressures, Organizational
Responses, and IT Support
Business Pressures (tekanan bisnsis) -
The business environment is the combination of
social, legal, economic, physical, and political
factors that affect business activities.
Three types of business pressures:
Market Pressures (tekanan pasar)
Technology Pressures (tekanan teknogi)
Societal Pressures (tekanan sosial)
Business Pressures, Organizational
Responses, and IT Support
 Market Pressures (tekanan pasar)
The Global Economy and
WAVEBREAKMEDIA LTD/Age
Fotostock America, Inc.

Strong Competition

The Changing Nature of the Workforce

Powerful Customers

(Source: Studio Frank/Image Source L

Mike Flippo/Shutterstock
imited)
The Stages of Globalization
(From Thomas Friedman in The World is Flat)

Globalization 1.0 (from 1492 to 1800)

Globalization 2.0 (from 1800 to 2000)
Globalization 3.0 (from 2000 to the present)

Stockbroker xtra/Age Fotostock

America, Inc.
The Stages of Globalization
(From Thomas Friedman in The World is Flat)

Globalization 1.0
* 1492 to 1800
* World went from large to medium-size
* All about countries and muscles
* Key agents of change: brawn (tenaga)
and horsepower

Stockbroker xtra/Age Fotostock

America, Inc.
Globalization 1.0

Christopher Columbus
 Globalization 2.0 (first half)

Steam engine

Railroads

Global integration during the first half

of Globalization 2.0 was driven by
falling transportation costs (for
example, steam engine and the
railroads).
Globalization 2.0 (second half)

Global integration during the second half of

Globalization 2.0 was driven by falling
communications costs (e.g., satellites, fiber
optics, the personal computer, and wireless
smart phones).
Globalization 2.0 (second half)

Tablet computers

Oleksiy Makymenko/Alamy
PhotoEdit/Alamy

Philip Hatson/Photo Researchers, Inc ecco/Shutterstock

Fiber optics Smart phones

 Globalization 3.0

3.0

WAVEBREAKMEDIA/Age Fotostock America, Inc.

2.0
1.0
 Globalization 3.0

Key agent of change: software, in

conjunction with the global fiber-
optic network enabling people to
collaborate and compete globally
 Thomas Friedmans Ten Flatteners

Fall of the Berlin Wall

Netscape goes public

Hongjiong Shi/Age Fotostock America, Inc.

Development of work-flow software

Friedmans Ten Flatteners (continued)

Uploading

Call center in India

Stockbroker xtra/Age Fotostock America, Inc.

Outsourcing

Offshoring
Dinodia/Age Fotostock America, Inc.
Friedmans Ten Flatteners (continued)

Supply chaining

Insourcing

Informing
 Friedmans Ten Flatteners (continued)
The Steroids
Computing

zu difeng/Shutterstock
Charles Babbages Difference
Engine (1822) Modern data center
The Steroids (continued)
Instant messaging and file sharing

Voice over Internet Protocol

The Steroids (continued)
Videoconferencing

Computer Graphics

Wireless Technologies
Source: PRNews Foto/Polycom, Inc./NewsCom

(Source: Marianna Day Massey/Zuma Press.)

 Technology Pressures
Technological Innovation and Obsolescence

Information Overload
 Technological Innovation and Obsolescence
(continued)

Innovation: Telegraph

Obsolescence: Pony Express

Technological Innovation and Obsolescence
(continued)

Obsolescence:
Horse and Buggy

Innovation: Ford Model T

Information Overload

(Source: Maria R.T. Deseo/PhotoEdit)

Societal/Political/Legal Pressures

Social Responsibility
Government Regulation and Deregulation
Protection Against Terrorist Attacks
Ethical Issues
 Social Responsibility

Green IT See CBS video on disposal of e-waste

Web sites that One Laptop per Chil

enable generosity d initiative

Source: Frederic Lucano/Stone/GettyImages, Inc.

 Organizational Responses
Strategic Systems
Customer Focus
Make-to-Order and mass customization
See Reebok
See Bodymetrics video
E-business and E-commerce
 Organizational Responses
Strategic Systems provide advantages that
enable organizations to increase market
share and/or profits, to better negotiate with
suppliers, or prevent competitors from
entering their markets.
Customer Focus is the difference between
attracting and keeping customers by
providing superb customer service to losing
them to competitors.
 Organizational Responses
Make-to-Order is a strategy of producing
customized products and services.
Mass Customization is producing a large
quantity of items, but customizing them to fit
the desire of each customer. Reebok and
Bodymetrics provide excellent examples of
mass customization.
E-business and E-commerce: Buying and
selling products and services electronically.
E-business is a broader concept than e-
commerce.
 2.2 Competitive Advantage and
Strategic Information Systems
Competitive Advantage (keunggulan kompetitif)

Photodisc/Getty Images, Inc.

Strategic Information Systems

(Sistem-sistem informasi strategis)

zu difeng/Shutterstock
 2.2 Competitive Advantage and
Strategic Information Systems
Competitive Advantage: An advantage over
competitors in some measure such as cost,
quality, or speed, leads to control of a market and
to larger- than average profits.
Strategic Information Systems (SIS) provide a
competitive advantage by helping an organization
to implement its strategic goals and to increase its
performance and productivity.

zu difeng/Shutterstock
Porters Competitive Forces Model

The best-known framework for analyzing

competitiveness is Michael Porters
competitive forces model (Porter, 1985).
Porters Competitive Forces Model
Porters Competitive Forces Model
Threat of entry of new competitors is high
when it is easy to enter a market and low
when significant barriers to entry exist.
A barrier to entry is a product or service
feature that customers expect from
organizations in a certain industry.
For most organizations, the Internet
increases the threat that new competitors will
enter a market.
Porters Competitive Forces Model
The bargaining power of suppliers is high
when buyers have few choices and low when
buyers have many choices.
Internet impact is mixed. Buyers can find
alternative suppliers and compare prices
more easily, reducing power of suppliers.
On the other hand, as companies use the
Internet to integrate their supply chains,
suppliers can lock in customers.
Porters Competitive Forces Model
The bargaining power of buyers is high
when buyers have many choices and low
when buyers have few choices.
Internet increases buyers access to
information, increasing buyer power.
Internet reduces switching costs, which are
the costs, in money and time, to buy
elsewhere. This also increases buyer power.
Porters Competitive Forces Model
The threat of substitute products or
services is high when there are many
substitutes for an organizations products or
services and low where there are few
substitutes.
Information-based industries are in the
greatest danger from this threat (e.g., music,
books, software). The Internet can convey
digital information quickly and efficiently.
Porters Competitive Forces Model
The rivalry among firms in an industry is
high when there is fierce (keras) competition
and low when there is not.
Porters Value Chain Model

This model identifies specific activities where

organizations can use competitive strategies
for greatest impact.
Primary activities
Support activities
 Porters Value Chain Model

Primary activities are those business

activities that relate to the production and
distribution of the firms products and
services, thus creating value for which
customers are willing to pay. Primary
activities include inbound logistics,
operations, outbound logistics, marketing and
sales, and customer service.
 Porters Value Chain Model

Support activities do not add value directly

to a firms products and services, but support
the primary activities. Support activities
include accounting, finance, management,
human resources management, product and
technology development (R&D), and
procurement.
Porters Value Chain Model
Porters Value Chain Model
Strategies for Competitive Advantage
Cost Leadership

Differentiation

Innovation

Operational Effectiveness

Customer-orientation
Strategies for Competitive Advantage

Figure 2.5
2.3 Business Information
Technology Alignment

Toh Kheng Ho/Age Fotostock America,Inc

Chapter Closing Case 1

The Problem

The Solution

The Results
Chapter Closing Case 2

The Problem

The Solution

The Results