Huang Lihua,Fudan U
Session 2,Winning Competitive
Advantages with IT
1,Case Study,UPS
2,The key applications in business
3,Strategic Information systems
4,Summary of how IT can be used to
implement Competitive Advantages
Huang Lihua,Fudan U
Huang Lihua,Fudan U
UPS Case,Trips
? UPS is a 95-year-old company whose history spans the
bicycle to the Internet,Today the largest express carrier
and largest package carrier in the world,UPS continues to
develop the frontiers of logistics,supply chain
management and e-Commerce,,, combining the flows of
goods,information and funds.
? Today,UPS delivers 13.6 million packages and documents
a day for 7.9 million customers (1.8 million pickups; 6.1
million deliveries) and averages more than 6 million on-
line tracking requests per day on its Web site,UPS invests
more than US$1 billion every year on information
technology,
? For a decade,UPS had been capitalizing on
opportunities created by IT to increase the
efficiency and flexibility of its core business and
to develop new business opportunities.
Huang Lihua,Fudan U
UPS Case,Trips (con’t)
? Jim Kelly,CEO and chairman of the board,UPS:
– The business model is changing,and our focus is
changing.Our customers are demanding broader,deeper
service,whether that’s running telephone centers for
them or doing their billing for them or going out and
repairing their computer parts for them,we;’re doing all
kinds of things we didn’t dream of doing ten years ago.
Huang Lihua,Fudan U
Becoming a Technology-driven
Firm? Developed package tracing systems from1986.
? By 1990,.UPS Net
? A global network with 3 centralized DBs and a centralized data
processing facility which become IT infrastructure to support
deployment of enterprise-wide application
? 1993,DIAD (Delivery Information Acquisition Device)
? To capture a customer signature with every delivery and upload data
in real time to package information DB
? Benefit:
– To save each driver 30 minutes per day and collect information about
each package and customer (60000 drivers)
– To better understand the profitability of individual customers and
packages
– To make routing and pricing decision
– To provide the customers with information on their individual shipping
habits
Huang Lihua,Fudan U
Becoming a Technology-driven
Firm
? mid of 1990,become the one of the first
companies to create its own web.
– Direct to customer
? API,individual companies could integrate into their own
customer service systems
? Web-based tracking system:
– reduce call center traffic
– Established alliance with key vendors,
? integrate tracking API into the vendor such as Oracle,
Peoplesoft,IBM,SAP,Harbinger.
– By late 2000,6 OnLine Tools
? Allow the customers to link their own customers
? Others functions (Exhib t 3)
Huang Lihua,Fudan U
Becoming a Technology-driven
Firm
– A wide range of Web-supported product and service
such as EDE,Return Service(exhibit 4)
? Late of 2000,e-Logistics+……
– e-Logistics,
? To provide a complete menu of ―behind the scene‖service that
would manage the entire back-end logistics process from the
time an order was placed on a customer’s web to the time the
order was delivered,Service included warehousing,inventory
management,order fulfillment (pick,pack and ship),shipping
and delivery,management reporting,returns management,
customers care,and telephone support.
? In the future,UPS expected to be able leverage its
data and systems to further improve service
Huang Lihua,Fudan U
Case Study,UPS
? List the key changes in UPS’s business strategy
and business models since 1986,What were the
key stimuli or causes for these changes?
? What technologies are used in the package
tracking systems? How are these technologies
related to UPS’s business strategy? What would
happen if these technologies were not available?
Huang Lihua,Fudan U
Case Study,UPS
? Technologies used include handheld computers
with devices to automatically capture shipping
information,barcode scanners,
telecommunications for transmitting data,cellular
phone network,and computer.
? The strategy is still the original one:‖best service
and lowest rate‖,Technology allows UPS and its
customers to always know where a package is.
? If the technology were not available,then UPS
would,as it has through most of its history,
attempt to provide that information to its
customers,but at a high price,Note the pressure to
reduce process time and cycle time
Huang Lihua,Fudan U
Learn from the case,The
Information Systems Strategy
Triangle
Business Strategy
Information
Strategy
Organizational
Strategy
Huang Lihua,Fudan U
Session 2,Winning Competitive
Advantages with IT
1,Case Study,UPS
2,The key applications in business
3,Strategic Information systems
4,Summary of how IT can be used to
implement Competitive Advantages
Huang Lihua,Fudan U
TYPES OF INFORMATION SYSTEMS
DATA WORKERS
KIND OF SYSTEM GROUPS SERVED
STRATEGIC LEVEL SENIOR
MANAGERS
MANAGEMENT LEVEL MIDDLE
MANAGERS
OPERATIONAL OPERATIONAL
LEVEL MANAGERS
KNOWLEDGE LEVEL KNOWLEDGE &
SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN
RESOURCESMARKETING
Huang Lihua,Fudan U
MAJOR TYPES OF SYSTEMS
? TRANSACTION PROCESSING SYSTEMS (TPS)
? MANAGEMENT INFORMATION SYSTEMS (MIS)
? DECISION SUPPORT SYSTEMS (DSS)
? KNOWLEDGE WORK SYSTEMS (KWS)
? OFFICE AUTOMATION SYSTEMS (OAS)
? EXECUTIVE SUPPORT SYSTEMS (ESS)
*
Huang Lihua,Fudan U
TYPICAL TPS APPLICATIONS
Sales & Marketing Systems
MAJOR FUNCTIONS OF SYSTEMS:
? Sales management,market research,
promotion,pricing,new products
MAJOR APPLICATION SYSTEMS:
? Sales order info system,market research
system,pricing system
*
Huang Lihua,Fudan U
TYPICAL TPS APPLICATIONS
Manufacturing & Production Systems
MAJOR FUNCTIONS OF SYSTEMS:
? Scheduling,purchasing,shipping,receiving,
engineering,operations
MAJOR APPLICATION SYSTEMS:
? Materials resource planning systems,
purchase order control systems,engineering
systems,quality control systems
*
Huang Lihua,Fudan U
TYPICAL TPS APPLICATIONS
Finance & Accounting Systems
MAJOR FUNCTIONS OF SYSTEMS:
? Budgeting,general ledger,billing,cost
accounting
MAJOR APPLICATION SYSTEMS:
? General ledger,accounts receivable,
accounts payable,budgeting,funds
management systems
*
Huang Lihua,Fudan U
TYPICAL TPS APPLICATIONS
Human Resources Systems
MAJOR FUNCTIONS OF SYSTEMS:
? Personnel records,benefits,compensation,
labor relations,training
MAJOR APPLICATION SYSTEMS:
? Payroll,employee records,benefit systems,
career path systems,personnel training
systems
*
Huang Lihua,Fudan U
TYPICAL TPS APPLICATIONS
Other Types (e.g.,University)
MAJOR FUNCTIONS OF SYSTEMS:
? Admissions,grade records,course records,
alumni
MAJOR APPLICATION SYSTEMS:
? Registration system,student transcript
system,curriculum class control system,
alumni benefactor system
*
Huang Lihua,Fudan U
KNOWLEDGE LEVEL
? INPUTS,DESIGN SPECS
? PROCESSING,MODELLING
? OUTPUTS,DESIGNS,GRAPHICS
? USERS,TECHNICAL STAFF
EXAMPLE,ENGINEERING WORK
STATION
KNOWLEDGE WORK SYSTEMS
(KWS)
Huang Lihua,Fudan U
OFFICE AUTOMATION SYSTEMS
(OAS)
? TOWARD A,PAPERLESS” OFFICE
? REDESIGN OF WORK FLOW
? INTEGRATED SOFTWARE
? ERGONOMIC DESIGN
? BRIGHT,CHEERFUL
WORK SPACE
EXAMPLE,PRESENTATION GRAPHICS
Huang Lihua,Fudan U
MANAGEMENT LEVEL
? INPUTS,HIGH VOLUME DATA
? PROCESSING,SIMPLE MODELS
? OUTPUTS,SUMMARY REPORTS
? USERS,MIDDLE MANAGERS
EXAMPLE,ANNUAL BUDGETING
MANAGEMENT INFORMATION
SYSTEMS (MIS)
Huang Lihua,Fudan U
? STRUCTURED & SEMI-STRUCTURED
DECISIONS
? REPORT CONTROL ORIENTED
? PAST & PRESENT DATA
? INTERNAL ORIENTATION
? LENGTHY DESIGN PROCESS
*
MANAGEMENT INFORMATION
SYSTEMS (MIS)
Huang Lihua,Fudan U
MIS
MIS FILES
SALES
DATA
UNIT
PRODUCT
COST
PRODUCT
CHANGE
DATA
EXPENSE
DATA
MIS REPORTS
MANAGERS
TPS
Order Processing
System
Materials Resource
Planning System
General Ledger
System
ORDER FILE
PRODUCTION MASTER FILE
ACCOUNTING FILES
TPS DATA FOR MIS APPLICATIONS
Huang Lihua,Fudan U
MANAGEMENT LEVEL
? INPUTS,LOW VOLUME DATA
? PROCESSING,INTERACTIVE
? OUTPUTS,DECISION ANALYSIS
? USERS,PROFESSIONALS,STAFF
EXAMPLE,CONTRACT COST ANALYSIS
DECISION SUPPORT SYSTEMS (DSS)
Huang Lihua,Fudan U
? FLEXIBLE,ADAPTABLE,QUICK
? USER CONTROLS INPUTS/OUTPUTS
? NO PROFESSIONAL PROGRAMMING
? SUPPORTS DECISION PROCESS
? SOPHISTICATED MODELING TOOLS
*
DECISION SUPPORT SYSTEMS (DSS)
Huang Lihua,Fudan U
STRATEGIC LEVEL
? INPUTS,AGGREGATE DATA
? PROCESSING,INTERACTIVE
? OUTPUTS,PROJECTIONS
? USERS,SENIOR MANAGERS
EXAMPLE,5 YEAR OPERATING PLAN
EXECUTIVE SUPPORT SYSTEMS
(ESS)
Huang Lihua,Fudan U
? TOP LEVEL MANAGEMENT
? DESIGNED TO THE INDIVIDUAL
? TIES CEO TO ALL LEVELS
? VERY EXPENSIVE TO KEEP UP
? EXTENSIVE SUPPORT STAFF
*
EXECUTIVE SUPPORT SYSTEMS
(ESS)
Huang Lihua,Fudan U
INTERRELATIONSHIPS AMONG SYSTEMS
ESS
TPSKWS
OAS
DSSMIS
Huang Lihua,Fudan U
SYSTEMS FROM A FUNCTIONAL
PERSPECTIVE
? SALES & MARKETING SYSTEMS
? MANUFACTURING & PRODUCTION
SYSTEMS
? FINANCE & ACCOUNTING SYSTEMS
? HUMAN RESOURCES SYSTEMS
*
Huang Lihua,Fudan U
SALES & MARKETING
INFORMATION SYSTEM
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
ORDER PROCESSING ENTER,PROCESS,TRACK ORDERS OPERATIONAL
MARKET ANALYSIS IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE
PRICING ANALYSIS DETERMINE PRICES MANAGEMENT
SALES TRENDS PREPARE 5-YEAR FORECASTS STRATEGIC
Huang Lihua,Fudan U
MANUFACTURING
INFORMATION SYSTEM
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
MACHINE CONTROL CONTROL ACTIONS OF EQUIPMENT OPERATIONAL
COMPUTER-AIDED-DESIGNDESIGN NEW PRODUCTS KNOWLEDGE
PRODUCTION PLANNING DECIDE NUMBER,SCHEDULE OF PRODUCTSMANAGEMENT
FACILITIES LOCATION DECIDE WHERE TO LOCATE FACILITIES STRATEGIC
Huang Lihua,Fudan U
FINANCE & ACCOUNTING
INFORMATION SYSTEM
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
ACCOUNTS RECEIVABLE TRACK MONEY OWED TO FIRM OPERATIONAL
PORTFOLIO ANALYSIS DESIGN FIRM'S INVESTMENTS KNOWLEDGE
BUDGETING PREPARE SHORT TERM BUDGETS MANAGEMENT
PROFIT PLANNING PLAN LONG-TERM PROFITS STRATEGIC
Huang Lihua,Fudan U
HUMAN RESOURCES
INFORMATION SYSTEM
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
TRAINING & DEVELOPMENT TRACK TRAINING,SKILLS,APPRAISALS OPERATIONAL
CAREER PATHING DESIGN EMPLOYEE CAREER PATHS KNOWLEDGE
COMPENSATION ANALYSIS MONITOR WAGES,SALARIES,BENEFITS MANAGEMENT
HUMAN RESOURCES PLANNINGPLAN LONG-TERM LABOR FORCE NEEDS STRATEGIC
Huang Lihua,Fudan U
SHIPPING INVENTORY
PLANNING &
FORECASTING
ORDER
PROCESSING
PRODUCTION
PROCUREMENT
ACCOUNTING
SUPPLIERSCUSTOMERS
LOGISTICS
SERVICES DISTRIBUTORS
INTRANET
SUPPLY-CHAIN MANAGEMENT
Huang Lihua,Fudan U
HOW INFORMATION SYSTEMS
FACILITATES SUPPLY CHAIN
MANAGEMENT
? Decide when,what to produce,store,move…
– Rapidly communicate orders…
– Track order status…
– Check Inventory Availability,monitor levels…
– Track shipments…
– Plan production based on actual demand…
– Rapidly communicate product design changes…
– Provide product specifications…
– Share information about defect rate,returns...
Huang Lihua,Fudan U
TRADITIONAL
VIEW OF SYSTEMS
? WITHIN THE BUSINESS,There are functions,
each having its uses of information systems
? OUTSIDE THE ORGANIZATION’S
BOUNDARIES,There are customers and vendors
FUNCTIONS TEND TO WORK IN ISOLATION
*
Huang Lihua,Fudan U
Sales &
Marketing
Accounting
Finance
Manufacturing
Human
Resources
ENTERPRISE SYSTEM
Business Processes
Enterprise-wide
Business Processes
Vendors Customers
Huang Lihua,Fudan U
INDUSTRIAL NETWORKS
LINK FIRMS INTO INDUSTRY-WIDE
SYSTEM
? HORIZONTAL,Link firms in same
industry,including competitors
? VERTICAL,Link firm with suppliers in
same industry
*
Huang Lihua,Fudan U
Session 2,Winning Competitive
Advantages with IT
1,Case Study,UPS
2,The key applications in business
3,Strategic Information systems
4,Summary of how IT can be used to
implement Competitive Advantages
Huang Lihua,Fudan U
Discussion,
Max D,Hopper,―Rattling SABRE,
New Ways to Compete on
Information‖
1,Do you agree with Max Hopper’s view of the future
impact on organizations & market?
2,What are the major components of the IT infrastructure
required to do business in the 1990s? What are the key
enabling technologies for building the IT infrastructure?
How have these technologies evolved over the past 30
years? What is the difference between IT infrastructure
and IT applications?
3,How can a manager ensure that he or she is capturing the
value from investments in information technology?
Huang Lihua,Fudan U
Can IT provide sustainable
competitive advantage?
? Argument,IT can no longer be considered a
source of sustainable competitive advantage?
? Argument,What is the source of sustainable
competitive advantage?
Huang Lihua,Fudan U
Porter’s Five Forces Model
THE FIRM TRADITIONAL COMPETITION
NEW
MARKET
ENTRANTS
SUPPLIERS CUSTOMERS
SUBSTITUTE
PRODUCTS
& SERVICES
Huang Lihua,Fudan U
? Two key roles for IT
– IT should serve as a platform for building an effective
organization,In this role,IT is a source of knowledge
and information,a platform for communicating and
sharing information; it is a necessary component of the
infrastructure required to creative a flexible,adaptive
org,that embodies both tight control and flexibility.
– IT can serve as a powerful tool for creating value-
added,strategic application,IT application must be
able to be created and deployed quickly and must be
capable of adapting to changes in strategy and its
execution,Firms must create a robust,stable It
infrastructure that serve as a platform for developing
and implementing new value- dded application quickly
and less cost.
Can IT provide sustainable
competitive advantage?
Huang Lihua,Fudan U
SABRE Evolved
? 1960s,Began as inventory-management tool----
technical change.
? By mid-1970s,as control centre----- flight
resource planning,AA management change
? Installed SABRE terminal in travel agencies,As
travel-industry distribution mechanism----
transform the marketing and distribution of airline
services.
? Today,as electronic travel supermarket ----
SABRE Travel Information Network.
p.122
Huang Lihua,Fudan U
Organization design challenge
Huang Lihua,Fudan U
The IT design challenge parallels
the organization design challenge
Huang Lihua,Fudan U
The organization challenge
Huang Lihua,Fudan U
What
activities
we should
keep
inside?
Huang Lihua,Fudan U
IT and External Industry Participant
Transaction Contract Partnership
Basis of
Interaction
Discrete exchange of
goals,services and
payments(simple
buyer/Seller exchange)
Prior agreement governs
exchange(e.g,Service
contract,lease,purchase
agreement)
Shared goals and
processes for achieving
them (eg,Collaborative
product development)
Duration of
interaction
Immediate Usually short term,
defined by contract
Usually long term;
defined by relationship
Level of business
intergration
Low Low?Moderate High
Coordination
and control
Supply and demand
(market)
Terms of contract define
procedures,monitoring,
and reporting
Interorganizational
structure,processes,and
systems,mutual
adjustment
Information flow Primarily on way; limited in scope and
amount; low level of
customization
One or two-way; scope
and amount are usually
defined in the contract
Two
way(interactive);extensi
ve exchange ot rich,
detailed
inf.;dynamically
changing; customizable
Huang Lihua,Fudan U
Huang Lihua,Fudan U
Huang Lihua,Fudan U
? 1950s,TECHNICAL CHANGES
? 60s-70s,MANAGERIAL CONTROL
? 80s-90s,INSTITUTIONAL CORE
ACTIVITIES
*
GROWING IMPORTANCE
Information as Strategic Resource
Huang Lihua,Fudan U
CHANGING CONCEPTS OF
INFORMATION SYSTEMS
TIME
PERIOD
CONCEPTION OF
INFORMATION INFORMATIONSYSTEM PURPOSE
1950-1960 BUREAUCRATIC
REQUIREMENT
ELECTRONIC SPEED ACCOUNTING &
ACCOUNTING
MACHINE
PAPER PROCESSING
1960s-1970s GENERAL
PURPOSE SUPPORT MIS
SPEED GENERAL
REPORTING
REQUIREMENTS
1970s-1980s CUSTOMIZED
MANAGEMENT
SUPPORT
DSS - ESS IMPROVE,CUSTOMIZEDECISION MAKING
1985-2000 STRATEGIC RESOURCE STRATEGIC
SYSTEM
PROMOTE SURVIVAL
ANDCOMPETITIVE ADVANTAGE PROSPERITY OF
ORGANIZATIONBUSINESS FOUNDATION
Huang Lihua,Fudan U
STRATEGIC ROLE OF INFORMATION SYSTEMS
STRATEGIC INFO SYSTEM:
CAN CHANGE GOALS,OPERATIONS
PRODUCTS,SERVICES
ENVIRONMENT
TO GAIN COMPETITIVE ADVANTAGE
Huang Lihua,Fudan U
Session 2,Winning Competitive
Advantages with IT
1,Case Study,UPS
2,The key applications in business
3,Strategic Information systems
4,Summary of how IT can be used to
implement Competitive Advantages
Huang Lihua,Fudan U
BUSINESS LEVELS STRATEGY AND INFORMATION
TECHNOLOGY
STRATEGIES MODELS IT TECHNOLOGIES
INDUSTRY COOPERATION vs
COMPETITION
COMPETITIVE FORCES
MODEL
ELECTRONIC TRANSACTIONS
LICENSING NETWORK ECONOMIES
COMMUNICATIONS NETWORKS
STANDARDS
INTERORGANIZATIONAL SYSTEMS
INFORMATION PARTNERSHIPS
FIRM SYNERGY CORE COMPETENCY KNOWLEDGE SYSTEMS
CORE COMPETENCIES ORGANIZATIONAL SYSTEMS
BUSINESS LOW COST VALUE CHAIN ANALYSIS DATAMINING
DIFFERENTIATION IT-BASED PRODUCTS / SERVICES
SCOPE INTERORGANIZATIONAL SYSTEMS
SUPPLY CHAIN MANAGEMENT
EFFICIENT CUSTOMER RESPONSE
Huang Lihua,Fudan U
BUSINESS LEVELS STRATEGY AND
INFORMATION TECHNOLOGY
? VALUE CHAIN ANALYSIS,Highlights
Activities that add Margin of Value to
Product or Service
? DATAMINING,Analysis of Data to Find
Patterns & Rules to Guide Decision Making
*
Huang Lihua,Fudan U
Value Chain Model
Administration and Management
Human Resource
Technology
Procurement
Support
Activities
Inbound
Logistic
Operations OutboundLogistic Sales and
Marketing Service Primary Activities
Materials
Handling
Delivery
Manufacturing
Parts assembly
Order processing
Shipping
Advertising
Promotion
Service
Repair
Huang Lihua,Fudan U
How Technology Support Value
Activities
Value Activity Use of Technology
Inbound logistics Just-in-Time Inventory
Operations Process Control Systems
Outbound logistics On-lines to the order-entry
systems of suppliers
Marketing and Sales Laptops for direct Sales
After-sale service Electronic dispatch of
technical support
Huang Lihua,Fudan U
How Technology Support
Secondary Activities
Secondary Activity Use of Technology
Management
Communication
Electronic mail
Human resource Online access to personnel
files with a skill database
Technology Computer-aided design and
manufacturing
Procurement Online access to suppliers’
Inventory files
Huang Lihua,Fudan U
Firm-level Strategy and Information Technology
(1) Optimum Operations
?Synergies,When outputs of some unites can be
used as inputs to other unites,then unique
nonmarket relationships can lower costs and
generate profits.
?How Can IT be used strategically here?----To tie
together the operations of disparate business
units so that they can act as a whole.
Huang Lihua,Fudan U
订单
发运
应收款 总帐
物料单
计划
制造
库存管理
应付款
采购
成本
MRPMCUSM
MOMM
INVM
GLSM
PURM
APSM
PRCM
ARSM
SHPM
MRPII(Manufacturing Resource Planning)
BILM
价格手册
定制产品
材料分析 批号跟踪
管理报告
合格供应商
车间管理
Huang Lihua,Fudan U
? Core Competencies,An activity at which a firm is a
world-class leader,may include being the world’s
best fiber-optic manufacturer,the best miniature
parts designer,the best package delivery service,or
the best thin film manufacturer,----rely on
knowledge.
? How can IT be used to advance or create core
competencies? Knowledge Management Systems
encourage the sharing of knowledge across business.
(2) Enhancing Core Competencies
Huang Lihua,Fudan U
? By altering the product development
cycle or by increasing the speed of
distribution.
? By development new business by use of
new IT,eg,Videoconferencing vs,hotel
business.
Industry-level Strategy and Information Technology
(1) Change the nature of products and services
Huang Lihua,Fudan U
? In a network,the marginal cost of adding
another participant are about
zero,whereas the marginal gain is much
larger,The larger the number of
subscribers in a telephone system,or the
Internet,the greater the value to all
participants.
? Change the market,eg.ATMs,Point-of-
Sale system.
(2) Network Economics
Huang Lihua,Fudan U
Competition Force Model
THE FIRM TRADITIONAL
COMPETITION
NEW MARKET
ENTRANTS
SUPPLIERS CUSTOMERS
SUBSTITUTE
PRODUCTS &
SERVICES
Huang Lihua,Fudan U
Porter’s Five Forces Model of
Competitive Advantage
? Porter’s Five Forces Model divides entities in the competitive
landscape into five groups as follows,
– Threat of New Entrants,new firms that may enter a
companies market.
– Bargaining Power of Buyers,the ability of buyers to use
their market power to decrease a firm’s competitive
position
– Bargaining Power of Suppliers,the ability suppliers of
the inputs of a product or service to lower a firm’s
competitive position
– Threat of Substitutes,providers of equivalent or superior
alternative products
– Industry Competitors,current competitors for the same
product.
Huang Lihua,Fudan U
Method to Gain Competitive Advantage
? Barriers to entry keep out potential competitors and
substitutes
? Ties to suppliers can cut costs,improve quality,and
lock out competitors
? Control over distribution provides stronger markets and
keeps out competitors
? Building ties to customers builds loyalty,improves
products and increases margins
? Creating switching costs keeps customers loyal
Huang Lihua,Fudan U
Potential threat
of new entrants
Bargaining
power of buyers
Bargaining
power of
suppliers
Industry
competitors
Threat of substitutes
Strategic use
?Cost effectiveness
?Market access
?Differentiation of
product or service
Strategic use
?Selection of supplier
?Threat of backward
integration
Strategic use
?Switching costs
?Access to distribution
channels
?Economics of scale
Strategic use
?Redefine products and services
?Improve price/performance
Strategic use
?Buyer selection
?Switching costs
?Differentiation
Porter’s competitive forces with potential
strategic use of information
Huang Lihua,Fudan U
Summary of how information technology can
be used to implement competitive strategies
Approach 1,Lower costs
1,Use IT TO substantially
reduce the cost of business
processes
2,Use IT to lower the costs of
customers or suppliers.
4.15
THE
FIRM
TRADITIONAL
COMPETITION
NEW
MARKET
ENTRANTS
SUPPLIERS CUSTOMERS
SUBSTITUTE
PRODUCTS &
SERVICES
Huang Lihua,Fudan U
通讯支持
(COMMUNICATIONS
SUPPORT)
配销中心
供应商
供应商支付
WAL-MAT总部
财务
(FINANCING)
卫星通讯
零售商店
POS数据
(Point-of-sale data)
组织学习
(Organizational
Learning)
视讯联接
（ VIDEO LINK）
POS数据
(Point-of-sale data)
WAL-MAT供应链 Partner
Huang Lihua,Fudan U
Wall-Mart沃尔 -马特
? 是近 20年来美国发展最快的零售商。 70
年代公司年销售额只有 4000万美元。
1995年销售额已达 936亿美元，列美国最
大企业排名第四位,2000年市值 2567亿
美元，列世界第 7位,2002年世界 500强
名列第一。至尽，公司已拥有 2133商店、
469家山姆会员商店和 248家购物广场，
遍布美国、墨西哥、加拿大、巴西、阿
根廷、南非、印尼、中国等地。
Huang Lihua,Fudan U
Wall-Mart沃尔 -马特：成功之道：
在于理念和手段
? 理念：创始人沃尔顿先生倡导的尽量降低经营
成本，实行低价销售。
– 宗旨：帮顾客节省每一分钱。
– 口号：天天平价，始终如一。
– 1995年经营成本占销售额的 15.8%（世界上大多数
零售商的经营成本在 40%以上）
? 手段：拥有世界上最大的私有卫星系统，与
3800家供货商实现计算机联网。总部的计算机
系统与 16个发货中心以及 1000多家商店连接，
做到即时销售，大大压缩产品时间成本，减少
库存风险，加速资金周转。
Huang Lihua,Fudan U
Approach 2,
Differentiate
1,Develop new IT features
to differentiate products
and services
2,Use IT features to focus
products and services at
selected market niches.
Approach 3,Innovate
1,Create new products and
service that include IT
components
2,Make radical changes to
business processes with
IT
3,Develop unique new
markets or market niches
with the help of IT
应用案例 ——戴尔计算机公司,
直销与个性化服务的典范
? 向企业销售,5,000家美国公司服务的“首页”计划。
当戴尔公司赢得一家有 400百人以上的企业客户时，它
就为那家客户建立首页。首页只不过是一套比较小的
网页，常常同客户的内联网联接 (销售和租赁），让获
准的雇员在线配置个人计算机、付款、跟踪交付的情
况 ——每天约有 500万元的戴尔个人计算机以这种方式
定货。首页让客户能即刻得到技术支持（再也不用在
电话里等待！），与销售人员联系。
? 向个人销售,网上订购、网上跟踪、网上支付
Huang Lihua,Fudan U
Approach 4,
Promote Growth
1,Use IT to manage
regional and global
business expansion
2,Use IT to diversify
and integrated into
other products and
service
Approach 5,Develop
Alliance
1,Use IT to create virtual
organizations of business
partners (information
partner)
2,Develop interorganizational
information systems that
create strategic business
relationships with customers,
suppliers,subcontractors,
and others
? 如 Amazon的网站上，购书客户在填写订单的最后，选
择几种运输方式。 Amazon通过网络直接将运输业务转
移给不同的运输的公司，同时为客户返回一个运输号。
客户能够在任何时间登录到指定的运输公司网站，根
据运输号，查询自己的书的运输状态。最终取得低成
本的优势。
? 客户在 Cisco公司的网上下订单以后,Cisco同时在后
台连接到 Fedex公司的信息系统，把运输的指令发给
Fedex,Fedex则根据这些指令及时将客户的订购产品
送货上门。 Cisco公司在 Fedex那里获得每个运输物品
的编号，将其返回给客户。客户可以随时登录到 Cisco
的网站，在查询订单信息的同时，能看到自己订购的
物品的当前运输状态。而这些运输状态信息则是 Fedex
通过网络直接及时地更新 Cisco网站的数据库来实现的。
案例
Huang Lihua,Fudan U
Approach 6,Improve Quality and Efficiency
1,Use IT of to dramatically improve the quality of
products and service
2,Use IT to make continuous improvements to the
efficiency of business process
3,Use IT to substantially shorten the time needed
to develop,produce,and deliver products and
service
Huang Lihua,Fudan U
Approach 7,Build an IT
Platform
1,Leverage investment in
IS people,hardware,
software,and networks
from operational uses
into strategy applications.
2,Build a strategic
information base of
internal and external data
collected and analyzed by
IT
Approach 8,Other
Strategy
1,Use interorganizational
information systems to
create switching costs that
lock in customers and
suppliers
2,Use investment in IT to
build barriers to entry
against industry outsiders
3,Use IT components to
make substitution of
competing products
unattractive
Session 2,Winning Competitive
Advantages with IT
1,Case Study,UPS
2,The key applications in business
3,Strategic Information systems
4,Summary of how IT can be used to
implement Competitive Advantages
Huang Lihua,Fudan U
Huang Lihua,Fudan U
UPS Case,Trips
? UPS is a 95-year-old company whose history spans the
bicycle to the Internet,Today the largest express carrier
and largest package carrier in the world,UPS continues to
develop the frontiers of logistics,supply chain
management and e-Commerce,,, combining the flows of
goods,information and funds.
? Today,UPS delivers 13.6 million packages and documents
a day for 7.9 million customers (1.8 million pickups; 6.1
million deliveries) and averages more than 6 million on-
line tracking requests per day on its Web site,UPS invests
more than US$1 billion every year on information
technology,
? For a decade,UPS had been capitalizing on
opportunities created by IT to increase the
efficiency and flexibility of its core business and
to develop new business opportunities.
Huang Lihua,Fudan U
UPS Case,Trips (con’t)
? Jim Kelly,CEO and chairman of the board,UPS:
– The business model is changing,and our focus is
changing.Our customers are demanding broader,deeper
service,whether that’s running telephone centers for
them or doing their billing for them or going out and
repairing their computer parts for them,we;’re doing all
kinds of things we didn’t dream of doing ten years ago.
Huang Lihua,Fudan U
Becoming a Technology-driven
Firm? Developed package tracing systems from1986.
? By 1990,.UPS Net
? A global network with 3 centralized DBs and a centralized data
processing facility which become IT infrastructure to support
deployment of enterprise-wide application
? 1993,DIAD (Delivery Information Acquisition Device)
? To capture a customer signature with every delivery and upload data
in real time to package information DB
? Benefit:
– To save each driver 30 minutes per day and collect information about
each package and customer (60000 drivers)
– To better understand the profitability of individual customers and
packages
– To make routing and pricing decision
– To provide the customers with information on their individual shipping
habits
Huang Lihua,Fudan U
Becoming a Technology-driven
Firm
? mid of 1990,become the one of the first
companies to create its own web.
– Direct to customer
? API,individual companies could integrate into their own
customer service systems
? Web-based tracking system:
– reduce call center traffic
– Established alliance with key vendors,
? integrate tracking API into the vendor such as Oracle,
Peoplesoft,IBM,SAP,Harbinger.
– By late 2000,6 OnLine Tools
? Allow the customers to link their own customers
? Others functions (Exhib t 3)
Huang Lihua,Fudan U
Becoming a Technology-driven
Firm
– A wide range of Web-supported product and service
such as EDE,Return Service(exhibit 4)
? Late of 2000,e-Logistics+……
– e-Logistics,
? To provide a complete menu of ―behind the scene‖service that
would manage the entire back-end logistics process from the
time an order was placed on a customer’s web to the time the
order was delivered,Service included warehousing,inventory
management,order fulfillment (pick,pack and ship),shipping
and delivery,management reporting,returns management,
customers care,and telephone support.
? In the future,UPS expected to be able leverage its
data and systems to further improve service
Huang Lihua,Fudan U
Case Study,UPS
? List the key changes in UPS’s business strategy
and business models since 1986,What were the
key stimuli or causes for these changes?
? What technologies are used in the package
tracking systems? How are these technologies
related to UPS’s business strategy? What would
happen if these technologies were not available?
Huang Lihua,Fudan U
Case Study,UPS
? Technologies used include handheld computers
with devices to automatically capture shipping
information,barcode scanners,
telecommunications for transmitting data,cellular
phone network,and computer.
? The strategy is still the original one:‖best service
and lowest rate‖,Technology allows UPS and its
customers to always know where a package is.
? If the technology were not available,then UPS
would,as it has through most of its history,
attempt to provide that information to its
customers,but at a high price,Note the pressure to
reduce process time and cycle time
Huang Lihua,Fudan U
Learn from the case,The
Information Systems Strategy
Triangle
Business Strategy
Information
Strategy
Organizational
Strategy
Huang Lihua,Fudan U
Session 2,Winning Competitive
Advantages with IT
1,Case Study,UPS
2,The key applications in business
3,Strategic Information systems
4,Summary of how IT can be used to
implement Competitive Advantages
Huang Lihua,Fudan U
TYPES OF INFORMATION SYSTEMS
DATA WORKERS
KIND OF SYSTEM GROUPS SERVED
STRATEGIC LEVEL SENIOR
MANAGERS
MANAGEMENT LEVEL MIDDLE
MANAGERS
OPERATIONAL OPERATIONAL
LEVEL MANAGERS
KNOWLEDGE LEVEL KNOWLEDGE &
SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN
RESOURCESMARKETING
Huang Lihua,Fudan U
MAJOR TYPES OF SYSTEMS
? TRANSACTION PROCESSING SYSTEMS (TPS)
? MANAGEMENT INFORMATION SYSTEMS (MIS)
? DECISION SUPPORT SYSTEMS (DSS)
? KNOWLEDGE WORK SYSTEMS (KWS)
? OFFICE AUTOMATION SYSTEMS (OAS)
? EXECUTIVE SUPPORT SYSTEMS (ESS)
*
Huang Lihua,Fudan U
TYPICAL TPS APPLICATIONS
Sales & Marketing Systems
MAJOR FUNCTIONS OF SYSTEMS:
? Sales management,market research,
promotion,pricing,new products
MAJOR APPLICATION SYSTEMS:
? Sales order info system,market research
system,pricing system
*
Huang Lihua,Fudan U
TYPICAL TPS APPLICATIONS
Manufacturing & Production Systems
MAJOR FUNCTIONS OF SYSTEMS:
? Scheduling,purchasing,shipping,receiving,
engineering,operations
MAJOR APPLICATION SYSTEMS:
? Materials resource planning systems,
purchase order control systems,engineering
systems,quality control systems
*
Huang Lihua,Fudan U
TYPICAL TPS APPLICATIONS
Finance & Accounting Systems
MAJOR FUNCTIONS OF SYSTEMS:
? Budgeting,general ledger,billing,cost
accounting
MAJOR APPLICATION SYSTEMS:
? General ledger,accounts receivable,
accounts payable,budgeting,funds
management systems
*
Huang Lihua,Fudan U
TYPICAL TPS APPLICATIONS
Human Resources Systems
MAJOR FUNCTIONS OF SYSTEMS:
? Personnel records,benefits,compensation,
labor relations,training
MAJOR APPLICATION SYSTEMS:
? Payroll,employee records,benefit systems,
career path systems,personnel training
systems
*
Huang Lihua,Fudan U
TYPICAL TPS APPLICATIONS
Other Types (e.g.,University)
MAJOR FUNCTIONS OF SYSTEMS:
? Admissions,grade records,course records,
alumni
MAJOR APPLICATION SYSTEMS:
? Registration system,student transcript
system,curriculum class control system,
alumni benefactor system
*
Huang Lihua,Fudan U
KNOWLEDGE LEVEL
? INPUTS,DESIGN SPECS
? PROCESSING,MODELLING
? OUTPUTS,DESIGNS,GRAPHICS
? USERS,TECHNICAL STAFF
EXAMPLE,ENGINEERING WORK
STATION
KNOWLEDGE WORK SYSTEMS
(KWS)
Huang Lihua,Fudan U
OFFICE AUTOMATION SYSTEMS
(OAS)
? TOWARD A,PAPERLESS” OFFICE
? REDESIGN OF WORK FLOW
? INTEGRATED SOFTWARE
? ERGONOMIC DESIGN
? BRIGHT,CHEERFUL
WORK SPACE
EXAMPLE,PRESENTATION GRAPHICS
Huang Lihua,Fudan U
MANAGEMENT LEVEL
? INPUTS,HIGH VOLUME DATA
? PROCESSING,SIMPLE MODELS
? OUTPUTS,SUMMARY REPORTS
? USERS,MIDDLE MANAGERS
EXAMPLE,ANNUAL BUDGETING
MANAGEMENT INFORMATION
SYSTEMS (MIS)
Huang Lihua,Fudan U
? STRUCTURED & SEMI-STRUCTURED
DECISIONS
? REPORT CONTROL ORIENTED
? PAST & PRESENT DATA
? INTERNAL ORIENTATION
? LENGTHY DESIGN PROCESS
*
MANAGEMENT INFORMATION
SYSTEMS (MIS)
Huang Lihua,Fudan U
MIS
MIS FILES
SALES
DATA
UNIT
PRODUCT
COST
PRODUCT
CHANGE
DATA
EXPENSE
DATA
MIS REPORTS
MANAGERS
TPS
Order Processing
System
Materials Resource
Planning System
General Ledger
System
ORDER FILE
PRODUCTION MASTER FILE
ACCOUNTING FILES
TPS DATA FOR MIS APPLICATIONS
Huang Lihua,Fudan U
MANAGEMENT LEVEL
? INPUTS,LOW VOLUME DATA
? PROCESSING,INTERACTIVE
? OUTPUTS,DECISION ANALYSIS
? USERS,PROFESSIONALS,STAFF
EXAMPLE,CONTRACT COST ANALYSIS
DECISION SUPPORT SYSTEMS (DSS)
Huang Lihua,Fudan U
? FLEXIBLE,ADAPTABLE,QUICK
? USER CONTROLS INPUTS/OUTPUTS
? NO PROFESSIONAL PROGRAMMING
? SUPPORTS DECISION PROCESS
? SOPHISTICATED MODELING TOOLS
*
DECISION SUPPORT SYSTEMS (DSS)
Huang Lihua,Fudan U
STRATEGIC LEVEL
? INPUTS,AGGREGATE DATA
? PROCESSING,INTERACTIVE
? OUTPUTS,PROJECTIONS
? USERS,SENIOR MANAGERS
EXAMPLE,5 YEAR OPERATING PLAN
EXECUTIVE SUPPORT SYSTEMS
(ESS)
Huang Lihua,Fudan U
? TOP LEVEL MANAGEMENT
? DESIGNED TO THE INDIVIDUAL
? TIES CEO TO ALL LEVELS
? VERY EXPENSIVE TO KEEP UP
? EXTENSIVE SUPPORT STAFF
*
EXECUTIVE SUPPORT SYSTEMS
(ESS)
Huang Lihua,Fudan U
INTERRELATIONSHIPS AMONG SYSTEMS
ESS
TPSKWS
OAS
DSSMIS
Huang Lihua,Fudan U
SYSTEMS FROM A FUNCTIONAL
PERSPECTIVE
? SALES & MARKETING SYSTEMS
? MANUFACTURING & PRODUCTION
SYSTEMS
? FINANCE & ACCOUNTING SYSTEMS
? HUMAN RESOURCES SYSTEMS
*
Huang Lihua,Fudan U
SALES & MARKETING
INFORMATION SYSTEM
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
ORDER PROCESSING ENTER,PROCESS,TRACK ORDERS OPERATIONAL
MARKET ANALYSIS IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE
PRICING ANALYSIS DETERMINE PRICES MANAGEMENT
SALES TRENDS PREPARE 5-YEAR FORECASTS STRATEGIC
Huang Lihua,Fudan U
MANUFACTURING
INFORMATION SYSTEM
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
MACHINE CONTROL CONTROL ACTIONS OF EQUIPMENT OPERATIONAL
COMPUTER-AIDED-DESIGNDESIGN NEW PRODUCTS KNOWLEDGE
PRODUCTION PLANNING DECIDE NUMBER,SCHEDULE OF PRODUCTSMANAGEMENT
FACILITIES LOCATION DECIDE WHERE TO LOCATE FACILITIES STRATEGIC
Huang Lihua,Fudan U
FINANCE & ACCOUNTING
INFORMATION SYSTEM
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
ACCOUNTS RECEIVABLE TRACK MONEY OWED TO FIRM OPERATIONAL
PORTFOLIO ANALYSIS DESIGN FIRM'S INVESTMENTS KNOWLEDGE
BUDGETING PREPARE SHORT TERM BUDGETS MANAGEMENT
PROFIT PLANNING PLAN LONG-TERM PROFITS STRATEGIC
Huang Lihua,Fudan U
HUMAN RESOURCES
INFORMATION SYSTEM
SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL
TRAINING & DEVELOPMENT TRACK TRAINING,SKILLS,APPRAISALS OPERATIONAL
CAREER PATHING DESIGN EMPLOYEE CAREER PATHS KNOWLEDGE
COMPENSATION ANALYSIS MONITOR WAGES,SALARIES,BENEFITS MANAGEMENT
HUMAN RESOURCES PLANNINGPLAN LONG-TERM LABOR FORCE NEEDS STRATEGIC
Huang Lihua,Fudan U
SHIPPING INVENTORY
PLANNING &
FORECASTING
ORDER
PROCESSING
PRODUCTION
PROCUREMENT
ACCOUNTING
SUPPLIERSCUSTOMERS
LOGISTICS
SERVICES DISTRIBUTORS
INTRANET
SUPPLY-CHAIN MANAGEMENT
Huang Lihua,Fudan U
HOW INFORMATION SYSTEMS
FACILITATES SUPPLY CHAIN
MANAGEMENT
? Decide when,what to produce,store,move…
– Rapidly communicate orders…
– Track order status…
– Check Inventory Availability,monitor levels…
– Track shipments…
– Plan production based on actual demand…
– Rapidly communicate product design changes…
– Provide product specifications…
– Share information about defect rate,returns...
Huang Lihua,Fudan U
TRADITIONAL
VIEW OF SYSTEMS
? WITHIN THE BUSINESS,There are functions,
each having its uses of information systems
? OUTSIDE THE ORGANIZATION’S
BOUNDARIES,There are customers and vendors
FUNCTIONS TEND TO WORK IN ISOLATION
*
Huang Lihua,Fudan U
Sales &
Marketing
Accounting
Finance
Manufacturing
Human
Resources
ENTERPRISE SYSTEM
Business Processes
Enterprise-wide
Business Processes
Vendors Customers
Huang Lihua,Fudan U
INDUSTRIAL NETWORKS
LINK FIRMS INTO INDUSTRY-WIDE
SYSTEM
? HORIZONTAL,Link firms in same
industry,including competitors
? VERTICAL,Link firm with suppliers in
same industry
*
Huang Lihua,Fudan U
Session 2,Winning Competitive
Advantages with IT
1,Case Study,UPS
2,The key applications in business
3,Strategic Information systems
4,Summary of how IT can be used to
implement Competitive Advantages
Huang Lihua,Fudan U
Discussion,
Max D,Hopper,―Rattling SABRE,
New Ways to Compete on
Information‖
1,Do you agree with Max Hopper’s view of the future
impact on organizations & market?
2,What are the major components of the IT infrastructure
required to do business in the 1990s? What are the key
enabling technologies for building the IT infrastructure?
How have these technologies evolved over the past 30
years? What is the difference between IT infrastructure
and IT applications?
3,How can a manager ensure that he or she is capturing the
value from investments in information technology?
Huang Lihua,Fudan U
Can IT provide sustainable
competitive advantage?
? Argument,IT can no longer be considered a
source of sustainable competitive advantage?
? Argument,What is the source of sustainable
competitive advantage?
Huang Lihua,Fudan U
Porter’s Five Forces Model
THE FIRM TRADITIONAL COMPETITION
NEW
MARKET
ENTRANTS
SUPPLIERS CUSTOMERS
SUBSTITUTE
PRODUCTS
& SERVICES
Huang Lihua,Fudan U
? Two key roles for IT
– IT should serve as a platform for building an effective
organization,In this role,IT is a source of knowledge
and information,a platform for communicating and
sharing information; it is a necessary component of the
infrastructure required to creative a flexible,adaptive
org,that embodies both tight control and flexibility.
– IT can serve as a powerful tool for creating value-
added,strategic application,IT application must be
able to be created and deployed quickly and must be
capable of adapting to changes in strategy and its
execution,Firms must create a robust,stable It
infrastructure that serve as a platform for developing
and implementing new value- dded application quickly
and less cost.
Can IT provide sustainable
competitive advantage?
Huang Lihua,Fudan U
SABRE Evolved
? 1960s,Began as inventory-management tool----
technical change.
? By mid-1970s,as control centre----- flight
resource planning,AA management change
? Installed SABRE terminal in travel agencies,As
travel-industry distribution mechanism----
transform the marketing and distribution of airline
services.
? Today,as electronic travel supermarket ----
SABRE Travel Information Network.
p.122
Huang Lihua,Fudan U
Organization design challenge
Huang Lihua,Fudan U
The IT design challenge parallels
the organization design challenge
Huang Lihua,Fudan U
The organization challenge
Huang Lihua,Fudan U
What
activities
we should
keep
inside?
Huang Lihua,Fudan U
IT and External Industry Participant
Transaction Contract Partnership
Basis of
Interaction
Discrete exchange of
goals,services and
payments(simple
buyer/Seller exchange)
Prior agreement governs
exchange(e.g,Service
contract,lease,purchase
agreement)
Shared goals and
processes for achieving
them (eg,Collaborative
product development)
Duration of
interaction
Immediate Usually short term,
defined by contract
Usually long term;
defined by relationship
Level of business
intergration
Low Low?Moderate High
Coordination
and control
Supply and demand
(market)
Terms of contract define
procedures,monitoring,
and reporting
Interorganizational
structure,processes,and
systems,mutual
adjustment
Information flow Primarily on way; limited in scope and
amount; low level of
customization
One or two-way; scope
and amount are usually
defined in the contract
Two
way(interactive);extensi
ve exchange ot rich,
detailed
inf.;dynamically
changing; customizable
Huang Lihua,Fudan U
Huang Lihua,Fudan U
Huang Lihua,Fudan U
? 1950s,TECHNICAL CHANGES
? 60s-70s,MANAGERIAL CONTROL
? 80s-90s,INSTITUTIONAL CORE
ACTIVITIES
*
GROWING IMPORTANCE
Information as Strategic Resource
Huang Lihua,Fudan U
CHANGING CONCEPTS OF
INFORMATION SYSTEMS
TIME
PERIOD
CONCEPTION OF
INFORMATION INFORMATIONSYSTEM PURPOSE
1950-1960 BUREAUCRATIC
REQUIREMENT
ELECTRONIC SPEED ACCOUNTING &
ACCOUNTING
MACHINE
PAPER PROCESSING
1960s-1970s GENERAL
PURPOSE SUPPORT MIS
SPEED GENERAL
REPORTING
REQUIREMENTS
1970s-1980s CUSTOMIZED
MANAGEMENT
SUPPORT
DSS - ESS IMPROVE,CUSTOMIZEDECISION MAKING
1985-2000 STRATEGIC RESOURCE STRATEGIC
SYSTEM
PROMOTE SURVIVAL
ANDCOMPETITIVE ADVANTAGE PROSPERITY OF
ORGANIZATIONBUSINESS FOUNDATION
Huang Lihua,Fudan U
STRATEGIC ROLE OF INFORMATION SYSTEMS
STRATEGIC INFO SYSTEM:
CAN CHANGE GOALS,OPERATIONS
PRODUCTS,SERVICES
ENVIRONMENT
TO GAIN COMPETITIVE ADVANTAGE
Huang Lihua,Fudan U
Session 2,Winning Competitive
Advantages with IT
1,Case Study,UPS
2,The key applications in business
3,Strategic Information systems
4,Summary of how IT can be used to
implement Competitive Advantages
Huang Lihua,Fudan U
BUSINESS LEVELS STRATEGY AND INFORMATION
TECHNOLOGY
STRATEGIES MODELS IT TECHNOLOGIES
INDUSTRY COOPERATION vs
COMPETITION
COMPETITIVE FORCES
MODEL
ELECTRONIC TRANSACTIONS
LICENSING NETWORK ECONOMIES
COMMUNICATIONS NETWORKS
STANDARDS
INTERORGANIZATIONAL SYSTEMS
INFORMATION PARTNERSHIPS
FIRM SYNERGY CORE COMPETENCY KNOWLEDGE SYSTEMS
CORE COMPETENCIES ORGANIZATIONAL SYSTEMS
BUSINESS LOW COST VALUE CHAIN ANALYSIS DATAMINING
DIFFERENTIATION IT-BASED PRODUCTS / SERVICES
SCOPE INTERORGANIZATIONAL SYSTEMS
SUPPLY CHAIN MANAGEMENT
EFFICIENT CUSTOMER RESPONSE
Huang Lihua,Fudan U
BUSINESS LEVELS STRATEGY AND
INFORMATION TECHNOLOGY
? VALUE CHAIN ANALYSIS,Highlights
Activities that add Margin of Value to
Product or Service
? DATAMINING,Analysis of Data to Find
Patterns & Rules to Guide Decision Making
*
Huang Lihua,Fudan U
Value Chain Model
Administration and Management
Human Resource
Technology
Procurement
Support
Activities
Inbound
Logistic
Operations OutboundLogistic Sales and
Marketing Service Primary Activities
Materials
Handling
Delivery
Manufacturing
Parts assembly
Order processing
Shipping
Advertising
Promotion
Service
Repair
Huang Lihua,Fudan U
How Technology Support Value
Activities
Value Activity Use of Technology
Inbound logistics Just-in-Time Inventory
Operations Process Control Systems
Outbound logistics On-lines to the order-entry
systems of suppliers
Marketing and Sales Laptops for direct Sales
After-sale service Electronic dispatch of
technical support
Huang Lihua,Fudan U
How Technology Support
Secondary Activities
Secondary Activity Use of Technology
Management
Communication
Electronic mail
Human resource Online access to personnel
files with a skill database
Technology Computer-aided design and
manufacturing
Procurement Online access to suppliers’
Inventory files
Huang Lihua,Fudan U
Firm-level Strategy and Information Technology
(1) Optimum Operations
?Synergies,When outputs of some unites can be
used as inputs to other unites,then unique
nonmarket relationships can lower costs and
generate profits.
?How Can IT be used strategically here?----To tie
together the operations of disparate business
units so that they can act as a whole.
Huang Lihua,Fudan U
订单
发运
应收款 总帐
物料单
计划
制造
库存管理
应付款
采购
成本
MRPMCUSM
MOMM
INVM
GLSM
PURM
APSM
PRCM
ARSM
SHPM
MRPII(Manufacturing Resource Planning)
BILM
价格手册
定制产品
材料分析 批号跟踪
管理报告
合格供应商
车间管理
Huang Lihua,Fudan U
? Core Competencies,An activity at which a firm is a
world-class leader,may include being the world’s
best fiber-optic manufacturer,the best miniature
parts designer,the best package delivery service,or
the best thin film manufacturer,----rely on
knowledge.
? How can IT be used to advance or create core
competencies? Knowledge Management Systems
encourage the sharing of knowledge across business.
(2) Enhancing Core Competencies
Huang Lihua,Fudan U
? By altering the product development
cycle or by increasing the speed of
distribution.
? By development new business by use of
new IT,eg,Videoconferencing vs,hotel
business.
Industry-level Strategy and Information Technology
(1) Change the nature of products and services
Huang Lihua,Fudan U
? In a network,the marginal cost of adding
another participant are about
zero,whereas the marginal gain is much
larger,The larger the number of
subscribers in a telephone system,or the
Internet,the greater the value to all
participants.
? Change the market,eg.ATMs,Point-of-
Sale system.
(2) Network Economics
Huang Lihua,Fudan U
Competition Force Model
THE FIRM TRADITIONAL
COMPETITION
NEW MARKET
ENTRANTS
SUPPLIERS CUSTOMERS
SUBSTITUTE
PRODUCTS &
SERVICES
Huang Lihua,Fudan U
Porter’s Five Forces Model of
Competitive Advantage
? Porter’s Five Forces Model divides entities in the competitive
landscape into five groups as follows,
– Threat of New Entrants,new firms that may enter a
companies market.
– Bargaining Power of Buyers,the ability of buyers to use
their market power to decrease a firm’s competitive
position
– Bargaining Power of Suppliers,the ability suppliers of
the inputs of a product or service to lower a firm’s
competitive position
– Threat of Substitutes,providers of equivalent or superior
alternative products
– Industry Competitors,current competitors for the same
product.
Huang Lihua,Fudan U
Method to Gain Competitive Advantage
? Barriers to entry keep out potential competitors and
substitutes
? Ties to suppliers can cut costs,improve quality,and
lock out competitors
? Control over distribution provides stronger markets and
keeps out competitors
? Building ties to customers builds loyalty,improves
products and increases margins
? Creating switching costs keeps customers loyal
Huang Lihua,Fudan U
Potential threat
of new entrants
Bargaining
power of buyers
Bargaining
power of
suppliers
Industry
competitors
Threat of substitutes
Strategic use
?Cost effectiveness
?Market access
?Differentiation of
product or service
Strategic use
?Selection of supplier
?Threat of backward
integration
Strategic use
?Switching costs
?Access to distribution
channels
?Economics of scale
Strategic use
?Redefine products and services
?Improve price/performance
Strategic use
?Buyer selection
?Switching costs
?Differentiation
Porter’s competitive forces with potential
strategic use of information
Huang Lihua,Fudan U
Summary of how information technology can
be used to implement competitive strategies
Approach 1,Lower costs
1,Use IT TO substantially
reduce the cost of business
processes
2,Use IT to lower the costs of
customers or suppliers.
4.15
THE
FIRM
TRADITIONAL
COMPETITION
NEW
MARKET
ENTRANTS
SUPPLIERS CUSTOMERS
SUBSTITUTE
PRODUCTS &
SERVICES
Huang Lihua,Fudan U
通讯支持
(COMMUNICATIONS
SUPPORT)
配销中心
供应商
供应商支付
WAL-MAT总部
财务
(FINANCING)
卫星通讯
零售商店
POS数据
(Point-of-sale data)
组织学习
(Organizational
Learning)
视讯联接
（ VIDEO LINK）
POS数据
(Point-of-sale data)
WAL-MAT供应链 Partner
Huang Lihua,Fudan U
Wall-Mart沃尔 -马特
? 是近 20年来美国发展最快的零售商。 70
年代公司年销售额只有 4000万美元。
1995年销售额已达 936亿美元，列美国最
大企业排名第四位,2000年市值 2567亿
美元，列世界第 7位,2002年世界 500强
名列第一。至尽，公司已拥有 2133商店、
469家山姆会员商店和 248家购物广场，
遍布美国、墨西哥、加拿大、巴西、阿
根廷、南非、印尼、中国等地。
Huang Lihua,Fudan U
Wall-Mart沃尔 -马特：成功之道：
在于理念和手段
? 理念：创始人沃尔顿先生倡导的尽量降低经营
成本，实行低价销售。
– 宗旨：帮顾客节省每一分钱。
– 口号：天天平价，始终如一。
– 1995年经营成本占销售额的 15.8%（世界上大多数
零售商的经营成本在 40%以上）
? 手段：拥有世界上最大的私有卫星系统，与
3800家供货商实现计算机联网。总部的计算机
系统与 16个发货中心以及 1000多家商店连接，
做到即时销售，大大压缩产品时间成本，减少
库存风险，加速资金周转。
Huang Lihua,Fudan U
Approach 2,
Differentiate
1,Develop new IT features
to differentiate products
and services
2,Use IT features to focus
products and services at
selected market niches.
Approach 3,Innovate
1,Create new products and
service that include IT
components
2,Make radical changes to
business processes with
IT
3,Develop unique new
markets or market niches
with the help of IT
应用案例 ——戴尔计算机公司,
直销与个性化服务的典范
? 向企业销售,5,000家美国公司服务的“首页”计划。
当戴尔公司赢得一家有 400百人以上的企业客户时，它
就为那家客户建立首页。首页只不过是一套比较小的
网页，常常同客户的内联网联接 (销售和租赁），让获
准的雇员在线配置个人计算机、付款、跟踪交付的情
况 ——每天约有 500万元的戴尔个人计算机以这种方式
定货。首页让客户能即刻得到技术支持（再也不用在
电话里等待！），与销售人员联系。
? 向个人销售,网上订购、网上跟踪、网上支付
Huang Lihua,Fudan U
Approach 4,
Promote Growth
1,Use IT to manage
regional and global
business expansion
2,Use IT to diversify
and integrated into
other products and
service
Approach 5,Develop
Alliance
1,Use IT to create virtual
organizations of business
partners (information
partner)
2,Develop interorganizational
information systems that
create strategic business
relationships with customers,
suppliers,subcontractors,
and others
? 如 Amazon的网站上，购书客户在填写订单的最后，选
择几种运输方式。 Amazon通过网络直接将运输业务转
移给不同的运输的公司，同时为客户返回一个运输号。
客户能够在任何时间登录到指定的运输公司网站，根
据运输号，查询自己的书的运输状态。最终取得低成
本的优势。
? 客户在 Cisco公司的网上下订单以后,Cisco同时在后
台连接到 Fedex公司的信息系统，把运输的指令发给
Fedex,Fedex则根据这些指令及时将客户的订购产品
送货上门。 Cisco公司在 Fedex那里获得每个运输物品
的编号，将其返回给客户。客户可以随时登录到 Cisco
的网站，在查询订单信息的同时，能看到自己订购的
物品的当前运输状态。而这些运输状态信息则是 Fedex
通过网络直接及时地更新 Cisco网站的数据库来实现的。
案例
Huang Lihua,Fudan U
Approach 6,Improve Quality and Efficiency
1,Use IT of to dramatically improve the quality of
products and service
2,Use IT to make continuous improvements to the
efficiency of business process
3,Use IT to substantially shorten the time needed
to develop,produce,and deliver products and
service
Huang Lihua,Fudan U
Approach 7,Build an IT
Platform
1,Leverage investment in
IS people,hardware,
software,and networks
from operational uses
into strategy applications.
2,Build a strategic
information base of
internal and external data
collected and analyzed by
IT
Approach 8,Other
Strategy
1,Use interorganizational
information systems to
create switching costs that
lock in customers and
suppliers
2,Use investment in IT to
build barriers to entry
against industry outsiders
3,Use IT components to
make substitution of
competing products
unattractive
