Chapter 3: Information Systems for Competitive Advantage

-information systems exist to help organzizations achieve their goals and objectives
-competitive strategy determines the structure, features, and functions of every information system
-Porter’s Five Force Model
    -Bargaining power of customers
    -threat of substitutions
    -bargaining power of suppliers
    -treat of new entrants
    -rivalry
- to be effective, the organization’s goals, objectives, culture, and activities must be consistent with the organization’s strategy
-companies determine what type of competitive strategy depending on if the system’s benefits outweighs the risks
-value chain is a network of value-creating activities
-generic chain consists of five primary activities and four support activities
-Primary Activities: Inbound logistics, operations/manufacturing, outbound logistics, sales and marketing, customer service
-Support Activities: procurement
-linkages are interactions across value activities
-value chain analysis has a direct application to manufacturing businesses like the bicycle manufacturer
-business process is a network of activities that generate value by transforming inputs into outputs
-cost of business is cost of the inputs plus cost of activities
-margin of business is the value of the outputs minus the cost
-activities transform input resources into outputs
-manufacturing process transforms raw materials into finished goods while sales process transforms finished goods into cash
-business process varies in cost and effectiveness. Increasing margin is the key to comparative advantage
-organizations analyze their industry and choose a competitive strategy. Given that strategy they design business processes that will span value-generating activities. Those processes determine the scopes and requirements of each company’s information system. Using that, we will determine each company’s comparative advantage
-competitive advantage by creating new products, enhancing existing products/services, or differentiating their products/services from competititors
-competitive advantage by locking in customers making it hard or expensive for customers to switch to another product (switching costs)
-establish alliances with other organizations (set standards, promote product awareness and needs)
-reducing costs to increase profitability