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Lecture 3

BUs 237 Week 3

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Business Administration
BUS 237
Maryam Ali

BUS 237 Week 3 Strategy, Information Systems and Competitive Advantage • Productivity Paradox ○ Productivity Paradox - The increase in investment in information technology combined with small changes in worker productivity is referred to as the • How can IT create Business Value ○ Productivity – IT allows a company to make either more output from the same input, and/or to make better output and/or to make the output faster then before the technology ○ Structure of competition – IT can alter the way corporations compete ○ Benefits to customers – consumers may see cheaper and better goods and services as a result of IT and increased competition. • Can IS Improve Productivity ○ Increasing efficiency means that business processes can be accomplished either more quickly or with fewer resources and facilities (or both)  “doing things right” ○ Increasing effectiveness means that the company offers new and/or improves goods or services that the customers value  “doing the right things” • Business Processes and Value Chains ○ When considering the effectiveness and efficiency of an organization, we are considering the companies’ Business Processes ○ Business processes and linked to the concept of value chain  Value chains describe how organizations create value (and margin) in products and services that the company delivers  A value chain can be made up of many business processes ○ Value Chain - a network of value-creating activities  Primary Activities • Create of direct benefit to customers of product or service • E.g. manufacturing a running shoe creates direct value for a customer ○ Inbound logistics ○ Operations ○ Outbound logistics ○ Markets and Sales ○ Service  Support Activities • Indirectly responsible for benefits to customers • E.g. running a payroll system that helps to pay workers who create the running shoe adds value indirectly to the running shoe ○ Accounting ○ Marketing ○ Payroll/HR ○ Information systems • Strategy Vs. Industry Structure ○ Organizational Strategy  Organizational Strategy maps out how a company intends to meet its goals and objectives ○ Porters 5 competitive forces  Bargaining power of customers  Threat of substitution  Bargaining power of suppliers  Threat of new entrants  Rivalry among existing firms Porters Five Forces ○ Bargaining Power of Customers  Customers can switch easily between brands
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