Organizational Strategy, IS and Competitive Advantage.docx

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Computer Science
Computer Science 1032A/B
Diane Goldstein

Organizational Strategy, Information Systems and Competitive Advantage Productivity and Technology  Technology – its impact on economic productivity?  Stephen Roach (Late 1980’s) o Found no evidence of an increase in worker productivity associated with the massive increase in investment in information technology  Robert Solow (Nobel Prize winning economist) o “We see computers everywhere except in the productivity statistics.”  Productivity Paradox o Productivity growth has slowed while investments in information technology have grown dramatically o Some take this as proof that information technology doesn’t affect productivity o Still valid today  IT’s impact o Productivity, value to business o Application of information technology improves productivity Value of an IT Investment  Productivity o Using IT allows companies to produce more/better/faster output from the same inputs  Structure of competition o Using IT can alter the way corporations compete  End customer  Ability to provide cheaper and better goods and services as a results of IT and increased competition IS Improvement to Productivity  Increasing efficiency o Business process accomplished  Quicker/with fewer resources and/or facilities o Doing things right  Increased effectiveness o Company offers new or improved goods or services that is valued by the customer o Doing the right things  Company may choose to focus on one of: o Doing things right o Doing the right things  Companies with long term success tend to focus on both effectiveness and efficiency Business Processes and Value Chain  Value chain is a network of value-creating activities o Primary activities o Support activities  Contains o At least one o Often many business processes  Each business process adds value o Chain of events – value chain Value Chains  Primary Activities o Five activities  Inbound logistics  Receiving, storing and dissemination inputs to the product  Operations  Transforming inputs into the final product  Outbound logistics  Collecting, storing and physically distributing the product to the buyers  Marketing and sales  Inducing buyers to purchase product and providing a means for them to do so  Service  Assisting customers use of the product  Maintaining and enhancing the products value o Each stage  Accumulate costs  Add value to product  Net result is total margin of chain  Support Activities o Four activities  Firm infrastructure  General management, finance, legal  Allow organization to function  Human resources  Recruiting, hiring, compensations, training  Technological development  Research and development, new technologies  Activities to improve product or service  Procurement/purchasing  Purchasing raw materials, negotiating prices, contract arrangements o Contribute indirectly  Production, sales and service o Add value and costs (indirectly)  Difficult to calculate margin  Linkages in the value chain: o Interactions across value activities  Important sources of efficiencies  Readily supported by IS Organizational Strategy and Industry Structure  Organizational Strategy o Determines organizations goals and objectives
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