Chapter 4 ITSS

Primary Chain/Activities: Support Activities:

(start) Inbound Logistics Manufacturing Assembly Outbound Logistics Marketing and Sales (end) Service 1. HR 2. Info Technology 3. Admin Suport 4. Procurement

Know Porter's 5 forces.

*1. Potential Threat of New Entrants* - How easy is it for new companies to enter the market in which the organization operates? *2. Bargaining Power of the Suppliers* - What is the ability (or market power) of the organization's suppliers to reduce its competitive position (e.g. by bringing prices up)? *3. Potential Threat of Substitutes* - What is the likelihood that other products of equal of superior value will be available? *4. Bargaining Power of Buyers* - What is the ability (or market power) of the organization's buyers (customers) to reduce its competitive position (e.g. by bringing prices down)? *5. (all point to) Industry Competitive Rivalry* - What is the current level of competition in the industry?

Threat of new entrants:

- Controlled access of distribution, channels, innovations and product differentiation - Constant innovation in order to be different

Bargaining power of suppliers:

- Lack of coffee bean producer - An over crowed market, riding process of coffee beans - New challenge is to choose suppliers based on quality environmental and economic issue

Bargaining power of suppliers:

- Low buying power - Low switching cost - medium level of price sensitivity - More options due to competitors, large variety of products - Customers have the ability to brew their own coffee at home (technological and cheaper home coffee machines)

Competitive rivalry within the coffeeshop industry:

- Mature market - Many competitors - But similar product, special coffee and high quality food - High competitively in this sector (Diedrich coffee, Seattle's best coffee in USA + Dunkin Donuts, Costa Coffee, McCafe..)

Threats of substitutes:

- Tea, soft drinks, chocolate

( how could you use a value chain analysis to identify strategic information systems initiatives? )

Porter identified two major ways to create competitive advantages in the value chain: - Lowering cost to perform an activity - Adding value to the final products and services in an activity

Know what a SWOT analysis is and what it stands for.

SWOT analyses can be used for strategic information systems planning. The use of SWOT for the purpose of identifying potential strategic information systems initiatives. *Strengths* - What gives the organization advantages over others in their industry? - Amazon: Leadership position in online retailing *Weaknesses* -What creates disadvantages for the organization relative to others in their industry? - Amazon: Increased size of the company requires more investments *Opportunities* - What activities or factors could help the organization get new advantages over others in their industry? - Amazon: Expand to services instead of just retailing *Threats* - What activities or factors could create disadvantages or troubles for the organization relative to others in their industry? - Amazon: Increasing global competition from online retailers

Know the 5 steps of the strategic planning process and be able to explain each.

Step 1: Strategic Business Planning Step 2: Information Systems Assessment Step 3: Information Systems Vision Step 4: Information System Architecture Step 5: Strategic Initiatives Identification

Step 1:

Step 1: Strategic Business Planning: Know who you are Identify the organization's: - mission - strategies - goals and objectives

Step 2:

Step 2: Information Systems Assessment: Know where you start The outcome of the info system assessment is a picture of the current state of information systems resources in the organization and how well they fulfill the needs of the organization But IS resources no do not equal IT resources - 3 categories of resources: - technical resources - data and info resources - Human Resources

Step 3:

Step 3: Information Systems Vision: Know where you want to go Broad statement of how the organization should use and manage its information systems for strategic purposes - Info systems vision has to be aligned with the organization's mission, vision, and strategies.

Step 4:

Step 4: Information System Architecture: Know how you are going to get there How IS resources should be used and how they should work together Architectural guidelines can include statements about all information resources - hardware, software, networks - the way data is stored, protected, and managed - how information systems HR are managed, such as whether info systems work can be outsourced.

Step 5:

Step 5: Strategic Initiatives Identification: Know what you need Proposals - long-term (two to five year) - identify new systems, new projects, or new directions for the organization Frameworks - IS SWOT Analysis - Porter Five Competitive Forces Model - Porter's Value Chain - Virtual Value Chain

Know Porter's Value Chain

Value Chain analysis: managers identify all the activities that the organization must perform to conduct its business. - as each activity is performed, the organization adds value to the product or service it delivers. Two types of activities in the value chain: primary and support. Primary: activities are directly related to the creation, processing, or delivery of the product or service. Support: activities are those overall task that make it possible for the organization to function but that are not directly involved in the product or service. Competition can come from two sources: - Lowering cost to perform an activity - Adding value to product or service