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BUS 237 (192)
Chapter 3

Bus 237 - Chapter 3.docx

4 Pages
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Department
Business Administration
Course Code
BUS 237
Professor
Kamal Masri

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Chapter 3: Productivity, Innovation and Strategy What is the Productivity Paradox? “We see computers everywhere but in productivity statistics” • Interested in how IT investments can create business value o Tangible benefits through more efficient use of resources or more effective delivery of services to customers • Measurement errors may be critical to observed lack of productivity from IT investments o Due to invisible and intangible benefits from IT o 3 ways to benefit: 1) Productivity; greater outputs for the same input 2) Structure of competition; new ways for organizations to compete 3) Benefits to end customer; more efficient, change in the nature of competition Can IS improve Productivity?  Org can increase productivity by: (required to balance for long term success) o Increasing efficiency  Increasing efficiency means business processes can be accomplished either more quickly or with fewer resources and facilities  Easier to measure; “doing things right” using just the right amount of resources, facilities and information to do a satisfactory job o Increasing effectiveness  “doing the right things”  By offering either new or improved goods or services that the customer values  Often requires changing BP to offer something new and improved Business Process and Value Chains  Value chain: network of activities that improve the effectiveness (or value) of a good or service o Each step adds value; more value added, greater selling price o Two types of activities that support the value chain  Primary Activities; directly add value • In-bound/ out-bound logistics, operations, marketing and sales, and service  Support Activities; do not add value directly, and support primary • Firm infrastructure, Human resources, Technology development, and procurements o IS can increase productivity by enabling the development of more efficient and effective supporting activates o IS can also increase productivity by offering new and improved services, primary activities couldn’t do without IT  Margin: the difference between the price the customer is willing to pay and the cost the company incurs in moving the goods or services through the value chain How Are Organizational Strategy and Industry Structure Related?  Organization strategy reflects its goals and objectives  Company’s strategy is influenced by the competitive structure of the industry  Five Forces Model:  5 competitive forces determine industry profitability: (how profitable and how sustainable the profitability will be) 1. bargaining power of customers 2. threat o
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