Chapter 2 - Information Systems and Strategy

What are primary activities on the Value Chain?

Activities directly related to the value chain process by which products and services are created, marketed, sold, and directed.

What are support activities on the Value Chain?

Activities performed as part of the value chain model that are not primary. Support activities include administration and management, human resources, technology support, and procurement.

Explain the Product Differentiation strategy

Adding special features or unique add-ons to products for which customers are willing to pay more

What is an ecosystem in the terms of business?

An ecosystem is an economic community that includes the related industries making complementary products and services, the competitors themselves, the suppliers, and also the consumers.

The value chain offers a way for organizations to compare their performance against industry _______ to see how they stack up and also spot areas that should be targeted for improvement.

Benchmark

How do IS help volunteering?

By helping volunteers find projects to volunteer at, such as VolunteerMatch.org

Explain the Focused Niche strategy

Differentiating a product or service for a particular market niche (Tailoring products and services to a small group of customers preferences)

Define "benchmark"

A reference point used as a baseline measurement, usually it indicates a measurement that would be considered optimal, or best practices within an industry, though it is sometimes simply an industry average

What are Porter's Five Competitive Forces?

1. Threat of new entrants 2. Power of buyers 3. Power of suppliers 4. Threat of substitutes 5. Rivalry among existing competitors

What is the Value Chain Model?

A model developed by Michael Porter that describes the activities a business performs to create value, as it brings in raw resources from suppliers, transforms them in some way, and then markets the product or service to buyers.

What is a disruptive innovation?

A new product, usually created from technological advances, that changes the industry of the original product.

IT is a strategic_____.

enabler

Who created The Internet?

In the 1960s, a U.S. Government agency - Defense Advanced Research Projects Agency (D.A.R.P.A.)

How does rivalry among competitors reduce profitability in the industry?

It results in price cuts which leads to damaging price wars.

What are the 3 strategies that Porter identified companies can adopt for success?

Low cost leadership strategy, product differentiation strategy, and the focused niche strategy.

How do IS help fund-raising for non-profit organizations?

Most non-profits rely on donations and specialized IS help manage that and also to help learn more about potential donors.

Give an example of a disruptive innovation.

Moving from DVDs to online streaming

Explain the Low cost leadership strategy

Offering a similar product at a lower price compared to competitors

What is an example of a substitution threat?

Online newspapers taking the market from paper newspapers

_____ reduce the threat of new entrants while low cost _____ to small business can increase that threat.

Patents, loans

The extended value chain consists of what 3 elements?

Supplier, internal value chain, and the buyer

The Value Chain is made up of _____ activities and _____ activities.

Support, Primary

What are sustaining technologies?

Technologies that offer improvements to streamline existing processes and give companies marginal advances.

What is the kingpin of disruptive innovations that occurred in the last century?

The Internet

Explain the power of buyers competitive force?

The advantage that buyers have when they have leverage over suppliers and can demand discounts and special services.

What is E-government?

The application of ICT to government activities, especially by posting information online and offering interactive services to citizens.

What are switching costs?

The costs that customers face when changing suppliers of goods.

What are network effects?

The increased value of a service or product that comes from more people using it.

Explain what rivalry among existing competitors is.

The intensity of competition within an industry.

What is a strategic enabler?

The role information systems play as tools to grow or transform the business, or facilitate a whole new business model.

Explain the Threat of Substitutes competitive force

The threat posed to a company when buyers can choose alternative businesses that provide the same item or service.

Explain the threat of new entrants competitive force

The threat that new entrants into an industry post to existing businesses. This threat is high when start-up costs are low and newcomers can enter easily.

IS run, ___, and ____ the business.

Transform, grow

True or False? On average, companies spend most (2/3) of their IT money just to keep things running.

True

What is Creative destruction?

What happens in an industry when disruptive innovations threaten the established players

What is the power of suppliers competitive force?

When suppliers have a lack of competition and can charge buyers more for their products and services.

When does power of buyers occur?

When there are few buyers, the government is the main buyer, or many suppliers offer the same product and buyers can switch easily.

No matter which strategic path a company follows it will ____ cost by using information systems to support all back-office functions - payroll, benefits, accounting, procurement, inventory tracking, and asset management.

lower