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Chapter 3

COMM 226 Chapter Notes - Chapter 3: Vulcanization, Business Process, Bell Canada

Course Code
COMM 226
Marc- Andre Leger

of 5
Chapter 3: Productivity, Innovation, and strategy
Q1: why should I care about productivity and innovation?
Increases the amount of machinery and equipment (M&E) (particularly in
the information and communication technology (ICT) sector) in the
economy raising the ICT capital intensity means increasing the amount of
technology that supports people working
Robert Solow to make the now famous statement, “we see computers
everywhere except in the productivity statistics” thus the productivity
paradox was born. Although this issue is more than 25 years old the
question of how IT adds to productivity that is how IT can be used to
create business value
Researchers have suggested three different ways through which the value
of IT can be realized. The first is through productivity. IT allows a company
to create more and/ or better output from the same inputs and create them
faster than before the technology was in place
The second way in which the investment value of IT is realised is through
the structure of competition. IT can alter the way corporations compete
The final way that IT investment value is realized is through benefits to the
end customer. IT helps make processes more efficient and changes the
nature of competition
Q2: what is business technology management (BTM), and how is it related
to productivity and innovation?
The ICT industry for productivity and innovation because it includes
technologies that can enhance individual and organization productivity
across many industries
The Canadian coalition for tomorrow’s ICT skills (CCICT) was founded
by bell Canada in 2007 for this purpose. The CCICT created an industry
led group of Canadian employer’s educational institutions and industries
that could ensure the ability of Canadian organizations to hire ICT
professionals for twenty first century workforce.
This is named Business technology management (BTM). These
learning outcomes drew on skills frameworks such as the skills frame work
for the information age program.
Q3: how do information systems improve productivity?
Increasing efficiency means that business process can be
accomplished either more quickly or with fewer resources and facilities.
Efficiency is usually relatively easy to measure once you have decided
what measures are important
Increasing effectiveness rather than efficiency, they are interested in
doing the right things. Increased effectiveness means that the
company considers offering either new or improved goods or service
that the customer values
Sometimes. “Doing the right thing” and “doing things right” can be in
conflict in a company. For example company A could be so focused on
increasing efficiency that it misses the fact that customers have
changed and no longer Value Company’s A product. Company A might
be doing things right, but it is not doing the right things!
Business processes and value chain
A value chain is a network of activities that improve effectiveness (or
value) of a good or service
In general, the more value a company adds to a good or service in its
value chain, the higher the price the company can charge for the final
product. The difference between the price the customer is willing to pay
and the cost of the company incurs In moving the goods or services
through the value chain is defined as the margin
Michael porter identified two types of activities that support value chains
primary activities and secondary activities
Primary activities: are activities in which value is added directly to the
product, these activities and many more referred to as support activities
because they support the primary activities. However support activities
add value only indirectly
oSupport activates
Firm infrastructure
Human resources
Technology development
Q4: how are organization strategy and industry structure related
One model used to assess an industry structure is Porter’s five forces
model, according to this model, five competitive forces determine industry
Bargaining power of customers
Threat of substitution
Bargaining power of suppliers
Threat of new entrants
Rivalry among existing firms
An organization responds to the structure of its industry by choosing a
competitive strategy. Porter followed his five force model with a model of
four competitive strategies (FIDC)
An organization can focus on being the cost leader, or it can focus on
differentiating its products from those of the competition. Further, the
organization can employ the cost or differentiation strategy across an
industry, or it can focus its strategy on a particular industry segment
Q5: what is the relationship between innovation and information
Professors Bower and Christensen described two general types of
technological innovations. Sustaining technologies are changes in
technology that maintain the rate of improvement in customer value. For
example the vulcanization of rubber allowed tire manufacturers to produce
tires that facilitated faster and more comfortable rides
In contrast disruptive technologies introduce a very new package of
attributes to the accepted mainstream products. For example in the music
industry, the advent of MP3 was a disruptive technology because it offered
the ability to store and play music through digital devices
The theory of the diffusion of innovation was defined by Everett Rogers
as “the process by which an innovation is communicated through certain
channels over time among the members of a social system. Rogers
identified five stages through which the diffusion of an innovation occurs.
The stages or steps in the process