Chapter 9

Achieving Competitive
Advantage with
Information Systems

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 Chapter 9

Learning objectives
 Using Information Systems to Achieve Competitive Advantage.
 Competing on Quality and Design.
 Business Process management (BPM).
 Competing on Business Processes.

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 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Using Information Systems to Achieve Competitive Advantage

There are four ways companies can create or keep the competitive
advantage:

1. create confidences.
2. Demand control
• create and control the costs of replacing customers if they move to
another supplier.

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 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Using Information Systems to Achieve Competitive Advantage

3. Economies of scale
• keep operating costs low while expanding sales by increasing the amount of
product or service you provide with the same equipment.
4. Process efficiency
• improve business processes to make them more efficient and cheaper.
Some companies use just one of these to maintain a competitive advantage but most
companies will use a combination of them.

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 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Old Traditional Competitive Forces Model

• Traditional competitors
o always nipping at your heals with new products and services trying to
steal your customers.
• New market entrants
o Can lure customers away with cheaper or better products and services.

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 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Old Traditional Competitive Forces Model

• Less Quality
o If your price is too high or the quality of your products and services is
too low.
• Customers
o It empowers customers with new information resources that make it
easier for them to jump to your competitors, new market entrants, or
substitute products.

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 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Old Traditional Competitive Forces Model

• Suppliers
o the number of suppliers used can make the easiest or difficulty for
your business to control the package.
o Too few suppliers and you lose a lot of control.

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 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Porter’s Competitive Forces Model

In Porter’s competitive forces model, the

strategic position of the firm and its strategies
are determined not only by competition with its
traditional direct competitors but also by four
forces in the industry’s environment: new
market entrants, substitute products,
customers, and suppliers.
Figure 3-1
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 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Information System Strategies for Dealing with

Competitive Forces

• Many companies have found that effective and efficient information systems
allow them to deal with external forces in one of four ways:
1. Low-cost leadership
2. Product differentiation
3. Focus on market niche
4. Strengthen customer and supplier intimacy

© 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Information System Strategies for Dealing with

Competitive Forces

1. Low-cost leadership
– It can help lower operational costs and lower prices.
– Makes it difficult for traditional competitors and new market entrants to match your
prices.
– strategy works best with commodities such as computers or with household products
retailers such as Wal-Mart.
– Efficient customer response systems provide a company and its suppliers with an
integrated view of customers.

© 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Information System Strategies for Dealing with

Competitive Forces

2. Product differentiation
– It helps to create products or services that are so different that
they create barriers for the competition.
– HP Computer Corporation vs. its competitors success.

© 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Information System Strategies for Dealing with

Competitive Forces
3. Focus on market niche
 market niche is the subset of the market on which a specific product is focused. 
 The market niche defines as the product features aimed at satisfying specific market needs, as well as
the price range, production quality and the demographics that is intended to impact. It is also a
small market segment. For example, sports channels like STAR Sports, Super sports, ESPN, STAR
Cricket, and Fox Sports target a niche of sports enthusiasts.
 Apple Computer uses focused differentiation to help sell its computers to a narrow target market of
graphic designers and educators rather than the general population of computer users.

© 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Information System Strategies for Dealing with

Competitive Forces
4. Strengthen customer and supplier intimacy
– Supply chain management (SCM) systems increase supplier intimacy while
customer relationship management systems increase customer intimacy.
– Customer relationship management systems allow companies to learn details
about customers that give them the competitive advantage over traditional
competitors and new market entrants.

© 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Assessment of Business Value

• It explains the specific business activities of the best strategies and

power in the information systems that are likely to have a strategic
effect.

1. Primary activities
 movements that lead to the purchase of goods, raw materials to
produce goods and services.

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 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Assessment of Business Value

2. Support activities
o support the primary functions of production, shipping, and sales
and marketing.
o E.g., human resources, accounting, and finance, etc.
3. Testing
o provides a way for businesses to determine how they stand up against their
competitors within the same industry.

© 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Using Information Systems to Achieve Competitive Advantage

Extending the Value Chain: The Value Web

• More companies will add online business strategies through the use of
valuable websites.
• The price range is dependent on the value chain of suppliers, distributors,
and customers.
• The cost-effective network is an independent organization that uses
information technology to coordinate the value chain they collect from the
product together.
• Cost networks are flexible and adapt to changes in demand.

© 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Competing on Quality and Design

What Is Quality?

Quality is the value of the material's purpose. Productivity, service,

experience or property can be explained in terms of quality.

The quality includes both practical and implicit aspects such as tastes
and side effects. The following are some types of quality.

© 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Competing on Quality and Design

Types of Quality?
• Data Quality

Means the accurate quality of data.

• Information Quality

The quality of data as it relates to people.

• Quality of Life

The health, happiness, security, prosperity and fulfillment of individuals and communities.

© 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Competing on Quality and Design

Types of Quality?
• Service Quality

Services involve intangible elements of quality such as environments,customer

service and customer experience.

• Experience Quality

The quality of experiences in areas such as medicine, education, entertainment, events and
services.

• IT Quality
The quality aspects of information technology.

© 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Competing on Quality and Design

How Information Systems Improve Quality

• Describe the product and the process of production

• Testing
• Use customer application to improve products and services
• Limit the cycle time
• Improvement of quality and accuracy
• Improve productivity estimates and strengthen productivity tolerance

© 2007 by Prentice Hall

 BUSINESS PROCESS MANAGEMENT
(BPM)

WHAT IS BUSINESS PROCESS MANAGEMENT?

•Business process management (BPM) is an approach to business that
aims to improve business processes continuously.
• BPM uses a variety of tools and methodologies to understand existing
processes, design new processes, and optimize those processes.

© 2007 by Prentice Hall

 Business process management need to go
through the following steps.

• Identify processes for change.

• Analyze existing processes.
• Design the new process.
• Implement the new process.
• Continuous measurement.

© 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 9 Achieving Competitive Advantage with Information Systems

Competing on Business Processes

Steps in Effective Reengineering

• Understanding what business processes need improvement

• Understanding how the improvements will help the firm execute its strategy

• Understanding and measuring the performance of existing processes

• Managing change

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END

© 2007 by Prentice Hall