Cases in the digital economy

1
Cases in the digital economy

• What drives it?
• How does the digital economy put pressures on the
  firm?
• How the firm responds?

2
Pressures on the Organization

• Market pressures
• Technology pressures
• Societal pressures
• Time pressures

3
Market pressures

• The Global Economy and Strong Competition
• Regional agreements i.e. NAFTA, CAFTA, ASEAN
• The Changing Nature of the Workforce
• Education of US labor force
• Diverse US work force
• Lower cost of foreign labor
• Powerful Customers
• Sophistication of consumers
• Ease of price comparison
• Forcing firms to lower prices by cutting costs
  (WallMart effect)

4
Technology pressures

• Technological Innovation and Obsolescence
• Creation of substitute products (land-line phone
  vs. cell)
• Rapid pace of production (cut to order jeans)
• Higher precision quality (HDTV radio)
• Merging of technologies (camera phones)
• Information Overload
• Access to information via the Internet
• Management and analysis of information problematic

5
Social Pressures

• Social Responsibility
• 60 of US has Internet access divide?
• 10 of world population has Internet access
  divide?
• Government Regulation and Deregulation
• Health and safety regulation
• Tax filing regulation
• Ethical Issues
• Monitoring workforce activity
• Monitoring e-mail
• Accessing private data

6
Social Pressures (contd)

• Protection Against Terrorist Attacks.
• Cyber attacks
• Fire walls
• Virus checks
• ID methodologies (Facial recognition case)
• Other computer security measures

7
Time pressures

• Concept-to-market
• Rapid response to customer service

8
How Do Firms Respond?

• Strategic Systems
• Increase market share
• Increase profits
• Leverage in negotiations with suppliers
• Prevent competitors from entering their markets.
• Customer Focus
• attracting and keeping customers by providing
  superb customer service

9
How Do Firms Respond? (Contd)

• Make-to-Order
• produce customized products/services for
  individual customers (specially cut jeans).
• Mass Customizat ion
• produce a large numbers of items, but customizing
  them for each buyer (luxury cars).
• E-business and E-commerce
• doing business electronically.

10
Toronto International Airport

• Implications of Hub and Spoke system
• Determines flight paths and routes
• Dominant airlines hold gates
• Passengers on non-dominant airlines
• Flights of non-dominant airlines
• Proprietary telephone, communications, and
  computer systems
• costly
• hard to manage
• Coordination and interface problems among
  proprietary systems

11
Common-use solution

• Implications of Common-use system
• Standardized
• HW
• SW
• Telecommunications
• Networks
• Video feeds
• Check-in counters
• Gates
• Security
• Baggage handling

12
Common-use solution (contd)

• Use of Internet Protocol (IP, see Lab 2) for,
• Telephones
• Ticketing terminals
• Self service kiosks
• Flight information is available on monitors in,
• Waiting areas
• Bars
• Lunch counters/restaurants

13
Lessons of the Toronto Airport Case

• Competitive advantage achieved by,
• Airport
• Airlines
• Competitive advantage achieved
• Using IT
• Changing business model
• By installing network computing Infrastructure
• By using Internet based system
• By using same info. As before just better

14
Also see

• Implications of Facial Recognition SW
• Demon Customers Case

15
End Cases in the Digital Economy