The Strategic
Management of
Information
Technology
Chapter 11
Strategic Analysis
Transaction Processing
System
Input Output Process
Information
Communication
Systems Development
Six Key Messages For
Managers And Analysts
? Process innovation is a new and desirable approach to
transforming organizations and improving their
performance
? An explicit approach to process innovation is important
? Information and information technology are powerful tools
for enabling and implementing process innovation
? How a firm approaches organization and human resources
is critical to enable and implement innovative processes
? Process innovation must occur within a strategic context
and be guided by a vision of the future process state
? Innovation initiatives can benefit all manner of processes
Strategic Business
Planning
Strategic
IS Planning
IS
Investment
Plan
VISION Strategy
External
Strategic
Models
Strategic
Goals
Competitive
Social Political
Critical
Success
Factors
CDS
VBP
CAS
IS
Products
and
Services
S
D
M
Strategic and IS Planning Process
REQUESTS
COMPLETED
AGREEMENTS
REACHED
AGREEMENTS
REACHED
WORK
COMPLETIONS
Traditional organizations Customer-driven organizations
Product and service planning ?Short-term focus
?Reactionary management
?Management by objectives
?Long-term focus
?Prevention-based management
?Customer-driven strategic planning process
Measure of performance ?Bottom-line financial results
?Quick returns on investment
?Customer satisfaction
?Market share
?Long-term profitability
?Quality orientation
?Total productivity Attitudes toward
customers
?Customers are irrational and a pain,
?Customers are a bottleneck to
profitability,
V ice of the customer is important
?Professional treatment and attention to
customers are required,
Quality of products and
services
?Provided according to organizational
requirements
?Provided according to customer
requirements and needs
Marketing focus ?Seller’s market
?Careless about lost customers
?Increased market share and financial
growth achieved through customer
satisfaction,Process management
approach
?Focus on error and defect
detection
?Focus on error and defect prevention
Product and service delivery
attitude
?It is OK for customers to wait for
products and services,
?It is best to provide fast-time-to-market
products and services
People orientation ?People are the source of problems
and are burdens on the organization,
?People are an organization’s greatest
resource,
Basis for decision
making
?Product-driven
?Management by opinion
?Customer-driven
?Management by data
Attitudes toward
customers
?Hostile and careless
?“Take it or leave it” attitude
?Courteous and responsive
?Empathic and respectful attitude Improvement strategy ?Crisis management
?Management by fear and intimidation
?Continuous process improvement
?Total process management
Mode of
operation
?Career-driven and independent work
?Customers,supppliers,and process owners have
nothing in common
?Management-supported improvement
?Teamwork between suppliers,process owners,and
customers practiced,
What Drives the
Competitor
What the Competitor Is Doing
and Can Do
FUTURE GOALS
At all levels of management and in
multiple dimensions
CURRENT STRATEGY
How the business is currently
competing
COMPETITORS RESPONSE PROFILE
Is the competitor satisfied with its current position?
What likely moves or strategy shifts will the competitor
make?
Where is the competitor vulnerable?
What will provoke the greatest and most effective
retaliation by the competitor?
ASSUMPTIONS
Held about itself and the
industry
CAPABILITIES
Both strenghts and
weaknesses
The Components of a Competitor Analysis
Scope of electronic
integration
Business
governance
Tightly
coupled
Loosely
coupled
Common role Unique role
IT governance
Transactions
Inventory triggers
Process
linkages
Expertise
Electronic
infrastructure
Competitive
advantage
Collaborative
advantage
Business network
redesign
“EDI”
“Standard business
contracts”
“Strategic alliances”
“Knowledge
networks”
Conventional and IT Design Variables
Class of variable Conventional and design
variables Source IT design variables
Structual
Work process
Communications
Interorganizational
relations
Definition of organizational
subunits
Determining purpose,output
of subunits
Reporting mechanisms
Linking mechanisms
Control mechnisms
Staffing
Tasks
Workflows
Dependencies
Output of processes
Buffers
Formal channels
Informal communications/
collaboration
Make versus buy decision
Exchange of materials
Communications
mechanisms
Nadler and Tushman;
Galbraith; Thompson
Nadler and Tushman;
Galbraith; Thompson
Nadler and Tushman;
Mintzberg
Galbraith; Nadler and
Tushman
Nadler and Tushman
Mintzberg
Nadler & Tushman
Nadler & Tushman
Thompson
Galbraith
Mintzberg
Mintzberg
Virtual components
Electronic linking
Technological leveling
Production automation
Virtual components
Electronic communications
Technological metrixing
Electronic customer/ supplier
relationships
Electronic customer/supplier
relationships
Electronic linking
Virtual Negotiated organizations Traditional
Vertically
integrated
conglomerates
IT Design Variables and Four
Prototypical Organizations
Virtual components
Electronic linking and
communications
Technological
matrixing
Technological
leveling
Electronic workflows
Production
automation
Electronic customer/
supplier links
Substitute electronic
for physical
componenets
Essential part
Participate in
matrixed group
Use to supervise
remote workers and
groups
Crucial part of
strategy
NA
Used extensively
Substitute electronic
for physical
componenets
Essential part
Use for
coordination
NA
Crucial part of
strategy
Communicate
designs
Used extensively
Use to replace
isolated components
Optional
Use for various
groups
Use to reduce layers
of management
Use where applicable
to restructure work
Use where applicable
Potentially important
Force components into
electronic subsidiary
Essential part
Use for coordination and
task forces
Use to reduce layers of
management
Key to coordinating work
units
Coordinate production
among work units
Key to operations
THREE GENERIC STRATEGIES
Uniqueness Perceived
by the Customer Low Cost Position
Industrywide
Particular
Segment Only
DIFFERENTIATION OVERALL COST LEADERSHIP
FOCUS
STRATEGIC ADVANTAGE
Commitment
to customer
satisfaction
Human
resource
development
Total
quality
care
Error
prevention
philosophy
Total
quality
solution
Design
and
product
quality
Competitive
market-
driven
enterprise
Quality
services
Quality
management
and
supervision
Personal
quality
Productivity
efficiency and
effectiveness
Market-driven
quality and
productivity
technologies for
continuous
improvement
Focus Elements of a Customer- and Market-Driven Enterprise
Success factors
Top management
leadership and
commitment
Continuous improvement
focus
Continuous education and
training
Continuous recognition
and reward
Participative management
and employee
empowerment
Convince top management
of benefits of becoming
market driven,
Communicate and
demonstrate management’s
commitment,
Establish focal point
and recruit other
qualified individuals,
1 2
3
Increase amount of customer-
oriented interdepartmental
teamwork,
4
Introduce market-driven
strategic planning
process,
5
Apply tools of market
research,auditing,marketing
training,and consulting,
Create and use market-
based performance
measures,
6 7
Develop new improvement
programs with customer-
oriented professionals,
Develop customer
commitment throughout
enterprise,
Monitor progress toward
objectives,
8
9
10
Steps to Becoming a Customer- and Market-Driven Enterprise
Product
Line
Target
Markets
Marketing
Sales
Distribution
Manufacturing Labor
Purchasing
Research &
Development
Finance and
Control
GOALS
Definition of how the
business is going to
compete
Objectives for
profitability growth,
market share,social
responsiveness,etc,
THE WHEEL OF COMPETITIVE STRATEGY
Internal
Factors
Company
Strengths/
Weaknesses
Industry
Opportunities/
Threats
Personal
Values
Societal
Expectations
External
Factors
Competitive
Strategy
Context for Competitive Strategy
Value Chain Framework
Value Chain
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Inbound
Logistics Operations
Outbound
Logistics Marketing & Sales Service
Value Chain Framework Extension
Value Chain
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Inbound
Logistics Operations
Outbound
Logistics
Marketing
& Sales
Marketing
Management Advertising
Sales
Force Admin,Sales Force
Oper,
Promotion
Service
Technical
Literature
Low High
Low
High
Entry Barriers
Exit Barriers
Barriers and Profitability
Competitive Strategy
Competitive Advantage
Competitive
Scope
Broad
Target
Narrow
Target
Lower Cost Differentiation
Low High
Low
High
Entry Barriers
Exit Barriers
Barriers and Profitability
Low,stable
returns
Low,risky
returns
High,stable
returns
High,risky
returns
Competitive Strategy
Competitive Advantage
Competitive
Scope
Broad
Target
Narrow
Target
Lower Cost Differentiation
1,Cost Leadership 2,Differentiation
3A,Cost Focus 3B,Differentiation
Focus
Potential
Entrants
Suppliers
Industry Competitors
Rivalry Among
Existing Firms
Buyers
Substitutes
Bargaining power
of suppliers
Threat of new
entrants
Bargaining power of
buyers
Threat of substitute
products or services
FIVE FORCES MODEL
Potential
Entrants
Suppliers
Industry Competitors
Buyers
Substitutes
FIVE FORCES MODEL LINKAGES
Business
Unit Value
Chain
Business
Unit Value
Chain
Business
Unit Value
Chain
Supplier
Value
Chains
Channel
Value
Chains
Buyer Value
Chains
Value Chain
C
L
I
E
N
T
Customer Value Chain Framework
C
L
I
E
N
T
Customer Value Chain
What is
Produced/
Provided To
Me (inputs)
What I Do
(process)
What I
Produce
(Outputs)
Who I
Produce It For
(Customers)
Computer
Hardware and
Software
Local Area
Network
Installations
Implement
Technology to
Accomplish
Strategic
Goals
Working
Models
Practice Area Information
Value Chain Applied
Response Center Technology
Leveraged Staffing of Telephones with Series -7 Licensed Associates
OS/2 Dell 486 Platform
Morningstar/IPR/Style Advisor
Staffing
Coverage Technical
Infrastructure
and Installation
Response Time
Measurements
Marketing
Service
Response
Requirements
/Standards
Services Value Chain
Service Value
Chain (Business
Unit)
Services Value
Chain Dell,IBM,Lotus Value
Chain (Suppliers)
Distribution
Channel Value
Chain
(Eliminated)
Fortune 500
Companies
(Buyers)
Information
Systems Value
Chain
Potential Entrants
Morningstar
Wyatt
Fidelity
Suppliers
Dell 486 PC’s
IBM OS/2
Lotus Notes
Industry Competitors/
Fidelity
Rivalry Among
Existing Firms
Buyers
Fortune 500
Firms
Substitutes
1,Less Expensive,
Paper-Based Approach
2,In Sourcing
Bargaining power
of suppliers
Threat of new
entrants
Bargaining power of
buyers
Threat of substitute
products or services
FIVE FORCE MODEL
TWO CONCEPTS OF THE CORPORATION,
SBU OR CORE COMPETENCE
S BU Co re Co m p e ten c e
Ba sis fo r c o m p e ti ti o n Co m p e ti ti v e n e ss o f
to d a y 抯 p ro d u c ts
In terfirm c o m p e ti ti o n to
b u il d c o m p e ten c ies
Co rp o ra te stru c tu re P o rtfo li o o f b u sin e ss e s
re late d in p ro d u c t-ma rk e t
term s
P o rtfo li o o f c o m p e ten c ies,
c o re p ro d u c ts,a n d
b u sin e ss e s
S tatu s o f th e b u sin e ss u n it Au to n o m y is sa c ro sa n c t;
th e S BU, o wn s, a ll
re so u rc e s o th e r th a n c a sh
S BU i s a p o ten ti a l
re se rv o ir o f c o u r
c o m p e ten c ies
Re so u rc e a ll o c a ti o n Disc re te b u sin e ss e s a re
th e u n it o f a n a ly sis,
c a p it a l is allo c a ted
b u sin e ss b y b u sin e ss
Bu sin e ss e s a n d
c o m p e ten c ies a re th e u n it
o f a n a ly sis ; to p
m a n a g e m e n t a ll o c a tes
c a p it a l a n d tale n t
Va lu e a d d e d o f to p
m a n a g e m e n t
Op ti m izin g c o rp o ra te
tretu rn s th ro u g h c a p it a l
a ll o c a ti o n trad e -o ffs
a m o n g b u sin e ss e s
En u n c iatin g stra teg ic
a rc h it e c tu re a n d b u il d in g
c o m p e ten c ies to se c u re
th e fu tu re
Developing Strategies,Market measures and firm performance are used to highlight problems
and opportunities,Corporate straightedges are developed from process improvements and
innovations,Potential strategies are evaluated and prioritized,Processes are re-engineered
and new systems are designed and implemented,
?expectations
?goals
?rivalry
Business Strategies
and Priorities
Process Changes
Data Needs
IS Changes
System
Development
& Implementation
Business Operations & Rules
Existing Data and IS
Corporate Strategy Development
?strengths
?weaknesses
?opportunities
?critical success factors
monitor
rivals
Market Measures
?Market share
?Concentration
?Growth
?Profitability
Performance Measures
?ROA
?EPS
?Subjective
?ROI
?Growth
?Cost leadership
?Differentiation
?Innovation
?Linkage
?Re-engineeering
?Organization
?Decentralization
Strategy analysis,Strategy determines the identity of a firm,Formulating strategies
is only the first step,As an effective manager,you must also be able to implement
strategies,
Formulation
(Deciding what to do.)
Implementation
(Achieving results.)
Corporate Strategy
Pattern of
purposes and
policies
defining the
company and
its business
1,Organization structure and
relationships,
Division of work,
Coordination of divided responsibility,
Information systems,
2,Organizational processes and
behavior,
Standards and management,
Motivation and incentive systems,
Control systems,
Recruitment and development of
managers,
3,Top leadership,
Strategic,
Organizational,
Personal,
1,Identification of
opportunity and risk,
2,Determining the
company’s material,
technical,financial,and
human resources,
3,Personal values and
aspirations,
4,Acknowledgment of
noneconomic
responsibility to society,
Management of
Information
Technology
Chapter 11
Strategic Analysis
Transaction Processing
System
Input Output Process
Information
Communication
Systems Development
Six Key Messages For
Managers And Analysts
? Process innovation is a new and desirable approach to
transforming organizations and improving their
performance
? An explicit approach to process innovation is important
? Information and information technology are powerful tools
for enabling and implementing process innovation
? How a firm approaches organization and human resources
is critical to enable and implement innovative processes
? Process innovation must occur within a strategic context
and be guided by a vision of the future process state
? Innovation initiatives can benefit all manner of processes
Strategic Business
Planning
Strategic
IS Planning
IS
Investment
Plan
VISION Strategy
External
Strategic
Models
Strategic
Goals
Competitive
Social Political
Critical
Success
Factors
CDS
VBP
CAS
IS
Products
and
Services
S
D
M
Strategic and IS Planning Process
REQUESTS
COMPLETED
AGREEMENTS
REACHED
AGREEMENTS
REACHED
WORK
COMPLETIONS
Traditional organizations Customer-driven organizations
Product and service planning ?Short-term focus
?Reactionary management
?Management by objectives
?Long-term focus
?Prevention-based management
?Customer-driven strategic planning process
Measure of performance ?Bottom-line financial results
?Quick returns on investment
?Customer satisfaction
?Market share
?Long-term profitability
?Quality orientation
?Total productivity Attitudes toward
customers
?Customers are irrational and a pain,
?Customers are a bottleneck to
profitability,
V ice of the customer is important
?Professional treatment and attention to
customers are required,
Quality of products and
services
?Provided according to organizational
requirements
?Provided according to customer
requirements and needs
Marketing focus ?Seller’s market
?Careless about lost customers
?Increased market share and financial
growth achieved through customer
satisfaction,Process management
approach
?Focus on error and defect
detection
?Focus on error and defect prevention
Product and service delivery
attitude
?It is OK for customers to wait for
products and services,
?It is best to provide fast-time-to-market
products and services
People orientation ?People are the source of problems
and are burdens on the organization,
?People are an organization’s greatest
resource,
Basis for decision
making
?Product-driven
?Management by opinion
?Customer-driven
?Management by data
Attitudes toward
customers
?Hostile and careless
?“Take it or leave it” attitude
?Courteous and responsive
?Empathic and respectful attitude Improvement strategy ?Crisis management
?Management by fear and intimidation
?Continuous process improvement
?Total process management
Mode of
operation
?Career-driven and independent work
?Customers,supppliers,and process owners have
nothing in common
?Management-supported improvement
?Teamwork between suppliers,process owners,and
customers practiced,
What Drives the
Competitor
What the Competitor Is Doing
and Can Do
FUTURE GOALS
At all levels of management and in
multiple dimensions
CURRENT STRATEGY
How the business is currently
competing
COMPETITORS RESPONSE PROFILE
Is the competitor satisfied with its current position?
What likely moves or strategy shifts will the competitor
make?
Where is the competitor vulnerable?
What will provoke the greatest and most effective
retaliation by the competitor?
ASSUMPTIONS
Held about itself and the
industry
CAPABILITIES
Both strenghts and
weaknesses
The Components of a Competitor Analysis
Scope of electronic
integration
Business
governance
Tightly
coupled
Loosely
coupled
Common role Unique role
IT governance
Transactions
Inventory triggers
Process
linkages
Expertise
Electronic
infrastructure
Competitive
advantage
Collaborative
advantage
Business network
redesign
“EDI”
“Standard business
contracts”
“Strategic alliances”
“Knowledge
networks”
Conventional and IT Design Variables
Class of variable Conventional and design
variables Source IT design variables
Structual
Work process
Communications
Interorganizational
relations
Definition of organizational
subunits
Determining purpose,output
of subunits
Reporting mechanisms
Linking mechanisms
Control mechnisms
Staffing
Tasks
Workflows
Dependencies
Output of processes
Buffers
Formal channels
Informal communications/
collaboration
Make versus buy decision
Exchange of materials
Communications
mechanisms
Nadler and Tushman;
Galbraith; Thompson
Nadler and Tushman;
Galbraith; Thompson
Nadler and Tushman;
Mintzberg
Galbraith; Nadler and
Tushman
Nadler and Tushman
Mintzberg
Nadler & Tushman
Nadler & Tushman
Thompson
Galbraith
Mintzberg
Mintzberg
Virtual components
Electronic linking
Technological leveling
Production automation
Virtual components
Electronic communications
Technological metrixing
Electronic customer/ supplier
relationships
Electronic customer/supplier
relationships
Electronic linking
Virtual Negotiated organizations Traditional
Vertically
integrated
conglomerates
IT Design Variables and Four
Prototypical Organizations
Virtual components
Electronic linking and
communications
Technological
matrixing
Technological
leveling
Electronic workflows
Production
automation
Electronic customer/
supplier links
Substitute electronic
for physical
componenets
Essential part
Participate in
matrixed group
Use to supervise
remote workers and
groups
Crucial part of
strategy
NA
Used extensively
Substitute electronic
for physical
componenets
Essential part
Use for
coordination
NA
Crucial part of
strategy
Communicate
designs
Used extensively
Use to replace
isolated components
Optional
Use for various
groups
Use to reduce layers
of management
Use where applicable
to restructure work
Use where applicable
Potentially important
Force components into
electronic subsidiary
Essential part
Use for coordination and
task forces
Use to reduce layers of
management
Key to coordinating work
units
Coordinate production
among work units
Key to operations
THREE GENERIC STRATEGIES
Uniqueness Perceived
by the Customer Low Cost Position
Industrywide
Particular
Segment Only
DIFFERENTIATION OVERALL COST LEADERSHIP
FOCUS
STRATEGIC ADVANTAGE
Commitment
to customer
satisfaction
Human
resource
development
Total
quality
care
Error
prevention
philosophy
Total
quality
solution
Design
and
product
quality
Competitive
market-
driven
enterprise
Quality
services
Quality
management
and
supervision
Personal
quality
Productivity
efficiency and
effectiveness
Market-driven
quality and
productivity
technologies for
continuous
improvement
Focus Elements of a Customer- and Market-Driven Enterprise
Success factors
Top management
leadership and
commitment
Continuous improvement
focus
Continuous education and
training
Continuous recognition
and reward
Participative management
and employee
empowerment
Convince top management
of benefits of becoming
market driven,
Communicate and
demonstrate management’s
commitment,
Establish focal point
and recruit other
qualified individuals,
1 2
3
Increase amount of customer-
oriented interdepartmental
teamwork,
4
Introduce market-driven
strategic planning
process,
5
Apply tools of market
research,auditing,marketing
training,and consulting,
Create and use market-
based performance
measures,
6 7
Develop new improvement
programs with customer-
oriented professionals,
Develop customer
commitment throughout
enterprise,
Monitor progress toward
objectives,
8
9
10
Steps to Becoming a Customer- and Market-Driven Enterprise
Product
Line
Target
Markets
Marketing
Sales
Distribution
Manufacturing Labor
Purchasing
Research &
Development
Finance and
Control
GOALS
Definition of how the
business is going to
compete
Objectives for
profitability growth,
market share,social
responsiveness,etc,
THE WHEEL OF COMPETITIVE STRATEGY
Internal
Factors
Company
Strengths/
Weaknesses
Industry
Opportunities/
Threats
Personal
Values
Societal
Expectations
External
Factors
Competitive
Strategy
Context for Competitive Strategy
Value Chain Framework
Value Chain
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Inbound
Logistics Operations
Outbound
Logistics Marketing & Sales Service
Value Chain Framework Extension
Value Chain
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Inbound
Logistics Operations
Outbound
Logistics
Marketing
& Sales
Marketing
Management Advertising
Sales
Force Admin,Sales Force
Oper,
Promotion
Service
Technical
Literature
Low High
Low
High
Entry Barriers
Exit Barriers
Barriers and Profitability
Competitive Strategy
Competitive Advantage
Competitive
Scope
Broad
Target
Narrow
Target
Lower Cost Differentiation
Low High
Low
High
Entry Barriers
Exit Barriers
Barriers and Profitability
Low,stable
returns
Low,risky
returns
High,stable
returns
High,risky
returns
Competitive Strategy
Competitive Advantage
Competitive
Scope
Broad
Target
Narrow
Target
Lower Cost Differentiation
1,Cost Leadership 2,Differentiation
3A,Cost Focus 3B,Differentiation
Focus
Potential
Entrants
Suppliers
Industry Competitors
Rivalry Among
Existing Firms
Buyers
Substitutes
Bargaining power
of suppliers
Threat of new
entrants
Bargaining power of
buyers
Threat of substitute
products or services
FIVE FORCES MODEL
Potential
Entrants
Suppliers
Industry Competitors
Buyers
Substitutes
FIVE FORCES MODEL LINKAGES
Business
Unit Value
Chain
Business
Unit Value
Chain
Business
Unit Value
Chain
Supplier
Value
Chains
Channel
Value
Chains
Buyer Value
Chains
Value Chain
C
L
I
E
N
T
Customer Value Chain Framework
C
L
I
E
N
T
Customer Value Chain
What is
Produced/
Provided To
Me (inputs)
What I Do
(process)
What I
Produce
(Outputs)
Who I
Produce It For
(Customers)
Computer
Hardware and
Software
Local Area
Network
Installations
Implement
Technology to
Accomplish
Strategic
Goals
Working
Models
Practice Area Information
Value Chain Applied
Response Center Technology
Leveraged Staffing of Telephones with Series -7 Licensed Associates
OS/2 Dell 486 Platform
Morningstar/IPR/Style Advisor
Staffing
Coverage Technical
Infrastructure
and Installation
Response Time
Measurements
Marketing
Service
Response
Requirements
/Standards
Services Value Chain
Service Value
Chain (Business
Unit)
Services Value
Chain Dell,IBM,Lotus Value
Chain (Suppliers)
Distribution
Channel Value
Chain
(Eliminated)
Fortune 500
Companies
(Buyers)
Information
Systems Value
Chain
Potential Entrants
Morningstar
Wyatt
Fidelity
Suppliers
Dell 486 PC’s
IBM OS/2
Lotus Notes
Industry Competitors/
Fidelity
Rivalry Among
Existing Firms
Buyers
Fortune 500
Firms
Substitutes
1,Less Expensive,
Paper-Based Approach
2,In Sourcing
Bargaining power
of suppliers
Threat of new
entrants
Bargaining power of
buyers
Threat of substitute
products or services
FIVE FORCE MODEL
TWO CONCEPTS OF THE CORPORATION,
SBU OR CORE COMPETENCE
S BU Co re Co m p e ten c e
Ba sis fo r c o m p e ti ti o n Co m p e ti ti v e n e ss o f
to d a y 抯 p ro d u c ts
In terfirm c o m p e ti ti o n to
b u il d c o m p e ten c ies
Co rp o ra te stru c tu re P o rtfo li o o f b u sin e ss e s
re late d in p ro d u c t-ma rk e t
term s
P o rtfo li o o f c o m p e ten c ies,
c o re p ro d u c ts,a n d
b u sin e ss e s
S tatu s o f th e b u sin e ss u n it Au to n o m y is sa c ro sa n c t;
th e S BU, o wn s, a ll
re so u rc e s o th e r th a n c a sh
S BU i s a p o ten ti a l
re se rv o ir o f c o u r
c o m p e ten c ies
Re so u rc e a ll o c a ti o n Disc re te b u sin e ss e s a re
th e u n it o f a n a ly sis,
c a p it a l is allo c a ted
b u sin e ss b y b u sin e ss
Bu sin e ss e s a n d
c o m p e ten c ies a re th e u n it
o f a n a ly sis ; to p
m a n a g e m e n t a ll o c a tes
c a p it a l a n d tale n t
Va lu e a d d e d o f to p
m a n a g e m e n t
Op ti m izin g c o rp o ra te
tretu rn s th ro u g h c a p it a l
a ll o c a ti o n trad e -o ffs
a m o n g b u sin e ss e s
En u n c iatin g stra teg ic
a rc h it e c tu re a n d b u il d in g
c o m p e ten c ies to se c u re
th e fu tu re
Developing Strategies,Market measures and firm performance are used to highlight problems
and opportunities,Corporate straightedges are developed from process improvements and
innovations,Potential strategies are evaluated and prioritized,Processes are re-engineered
and new systems are designed and implemented,
?expectations
?goals
?rivalry
Business Strategies
and Priorities
Process Changes
Data Needs
IS Changes
System
Development
& Implementation
Business Operations & Rules
Existing Data and IS
Corporate Strategy Development
?strengths
?weaknesses
?opportunities
?critical success factors
monitor
rivals
Market Measures
?Market share
?Concentration
?Growth
?Profitability
Performance Measures
?ROA
?EPS
?Subjective
?ROI
?Growth
?Cost leadership
?Differentiation
?Innovation
?Linkage
?Re-engineeering
?Organization
?Decentralization
Strategy analysis,Strategy determines the identity of a firm,Formulating strategies
is only the first step,As an effective manager,you must also be able to implement
strategies,
Formulation
(Deciding what to do.)
Implementation
(Achieving results.)
Corporate Strategy
Pattern of
purposes and
policies
defining the
company and
its business
1,Organization structure and
relationships,
Division of work,
Coordination of divided responsibility,
Information systems,
2,Organizational processes and
behavior,
Standards and management,
Motivation and incentive systems,
Control systems,
Recruitment and development of
managers,
3,Top leadership,
Strategic,
Organizational,
Personal,
1,Identification of
opportunity and risk,
2,Determining the
company’s material,
technical,financial,and
human resources,
3,Personal values and
aspirations,
4,Acknowledgment of
noneconomic
responsibility to society,
