Business Strategy Concepts & IT/IS Strategy Implications

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Business Strategy Concepts IT/IS Strategy
Implications
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Definition of Strategy

• Strategy is an integrated set of actions aimed at
  increasing the long-term well-being and strength
  of the enterprise relative to competitors
• (Porter, 1980)

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Role of Strategy

• Without a strategy, managers HAVE NO
• Prescriptions for doing business
• Road map to competitive advantage
• Game plan for pleasing customers or achieving
  good performance
• (Thompson Strickland, 2003)

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Three Interrelated ProcessContributed in
Establishing A Strategy(Porter, 1980)

• Strategic thinking creative, entrepreneurial
  insight
• Strategic planning systematic, comprehensive
  analysis to develop plans / actions
• Opportunistic decision making effective reaction
  to unexpected threats or opportunities
• Effective combination of them called as strategic
  management

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Relationship Between of IS/IT Strategy and
Business Strategy

1. IS/IT is a mean implementing chosen strategy, BUT
   ALSO
2. An enabler of new business strategies (strategies
   that are impossible to be implemented without IT)

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Evolution Of Strategic Management(Gluck, 1980)
Annual planning
5-years planning
Competitors Oriented
Innovation Oriented
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Five Task of Strategic Management
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Strategic vision

• A computer on every desk and in every home
  using great software as an empowering tool old
  version of Microsofts vision
• Empower people through great software anytime,
  anyplace, and on any device, The new one

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Strategic objective

• To safely deliver a hot, quality pizza in 30
  minutes or less at fair price and reasonable
  profit (Dominos Pizza)
• To achieve annual growth in earnings per share of
  10 percent or better, on average a return on
  stockholders equity on 20-25 percent (3M
  Corporation)

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Strategic Framework

• Three factors that should be involved in
  strategic management
• External environment
• Pressure of group and stakeholders
• Internal business strategizing and planning

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External Environment

• Done by PEST analysis
• That analysis involves aspects
• Politic (including legal)
• Economic
• Social (including ecological)
• Technological
• Can be used to identify opportunities and threats

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Pressure of Groups and Stakeholders

• Shareholders
• Competitors
• Customers
• Suppliers
• Government
• Employees
• Labor unions
• Public (society) (including NGO)
• Financial institution
• Mass media

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Business Strategy Formulation and Planning
Processes

• External environment
• Threats
• Opportunities

• Strategy

Determine the scope (whole in the organization or
in discrete parts such as SBUs)
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Future Strategies

• Need for identifying future strategies
• Factors that maybe need to be identified
• Risks in financial and managerial
• Degree needed to create new capabilities
• Current organization structure
• Ability organization to implement the strategy
  (competencies, resources, processes, and culture)
• Implications for customers and partners
• Need to create alliances or joint ventures

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Strategy Implementation

• A strategy needs to be implemented
• Unexpected constraints or new option will occur
• New oppurtinities come

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Product Life Cycles
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Strategy Tools and Techniques

• Common tools for formulating strategy
• BCG matrices
• Policy/portfolio matrices
• Five forces
• Industry analysis

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Situational Analysis

• To evaluate Where we are now
• Usually is done by SWOT analysis
• Several factors that should be analyzed
• Resources (excluding the employees)
• Financial health
• Employees (skill, experience, motivation,
  trainings)
• Physical assets
• RD
• Organization culture and structure
• Market segment market share
• Product life cycles
• Potential competitors
• Future competitive actions

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BCG Matrices
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BCG Matrices (continued)

• Need to manage products according to market
  opportunities and pressure (not internal factors)
• Need to reinvest net cash inflows into future
  products to ensure continuing sources of revenue
• Need to have a complete and balanced portfolio if
  the business is thrive in the long term

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Policy/Portfolio Matrices

• There are other factors that make industries more
  or less attractive
• Size
• Market diversity
• Competitive structure
• Price
• Profitability
• Technology development effects
• Legal, social, and environmental factors

Market share
Innovation
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Implications for IS/IT Strategy

• Wildcat products
• focus on product and/or process development
• to identify potential customers, segment customer
  types
• To ensure effective information exchange occur
  about the product/service with the chosen segment
  or customers
• To enable exact specification of service and
  product requirement

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Implications for IS/IT Strategy

• Star products
• focus on customers identifying customer and
  their requirements to achieve better
  understanding of demand than actual or potential
  competitors
• To handle business innovation

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Implications for IS/IT Strategy

• Cash cow products
• Focus on control of business relationships and
  activities rather than innovation
• To maintain low cost

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Implications for IS/IT Strategy

• Dog products
• Very little innovative IS/IT use can be expected

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Competitive Forces and Competitive Forces
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Competitive Forces and Competitive Forces
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Industry Analysis

• Developed by Parsons and McFarlan
• Three essential role of IS/IT in industry
• How can IS/IT affect products/services?
• e-publication
• e-job
• How can IS/IT affect demand for
  products/services, segment markets, extend them
  geographically, or provide new distribution
  channels?
• mail order
• e-auction
• How can IS/IT influence cost base of key
  processes?
• Remote printing (newspapers)
• E-procurement

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Generic Business Strategies

• Low cost strategy
• Differentiation strategy
• Niche/focus strategy

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A Resource-Based View Of Strategy

• Three important keys to market leadeship (Treacy
  and Wiersma, 1995)
• Operational Excellence (reliable, easily, and
  cost-effectively by customers)
• Customer intimacy (targeting markets precisely)
• Product leadership (continuing product innovation
  meeting customers needs)