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By: Monica M
Syllabus
IT Capabilities and their organizational impact Fundamentals of strategic advantage Using IT for strategic advantages Refer: Kenneth C Laudon & Jane P Laudon Chapter No. 3
Organization
Organization
A formal collection of people and other resources established to accomplish a set of goals An organization is a stable, formal social structure that takes resources from the environment & processes them to produce output
Capital and labor (the primary production factors provided by the environment) are transformed by the firm through the production process into products and services (outputs to the environment). The products and services are consumed by the environment, which supplies additional capital and labor as inputs in the feedback loop.
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Organization & IT
Organization & IT
The Interaction between IT and Organization is very complex & Influenced by the mediating factors
Environment Culture Structure Business process Politics Management Decision
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Organizational Culture:
The set of assumption the organization and people will follow in an organization The major understandings and assumptions for a business, a corporation, or an organization The organizational culture is a powerful restraint on change especially technological changes ( Resistant to change) Organization avoids to do changes in the basic assumption
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Business process:
The business process will become very effective over time as individuals develops routine for producing goods and services Firm is able to reduce the cost and increases the effectiveness by use of IT in an organization
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Management Decision:
As Managers, need to decide which system will be built, how it is beneficial to the organization, how to implement
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Organization, IT & IS
Strategy
Strategy is a long term plan formulated and executed over a period of time by firms such that their resources are best utilized and output of the firm is optimized (a) Where are we right now? (b) Where do we want to go? (c) How do we get there?
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Fundamentals of Strategic Advantage Information technology can change the way businesses compete. For this reason, you should view information systems strategically, that is, as vital competitive networks, as a means of organizational renewal, and as a necessary investment in technologies that help an enterprise achieve its strategic objectives.
Strategic advantage refers to obtaining a sustainable competitive edge over competitors. The ability to obtain a greater than normal return on investment. A strategic necessity is a system that must be installed to remain competitive and stay in business.
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IT Capabilities
Capabilities: routine processes that reflect a firms ability to perform repeatedly a productive task which relates either directly or indirectly to a firms capacity for creating value (Grant 1996). IT Capabilities: The ability of firms to develop, use, and manage IT effectively to achieve firm objectives The focus in this study: business-oriented IT capabilities
Knowledge Management
Tracking Disintermediation
IT allows the capture and dissemination of knowledge and expertise to improve the process
IT allows the detailed tracking of task status, inputs, and outputs IT can be used to connect two parties who would otherwise communicate through an intermediary
Customers / Buyers
Can customers easily switch to competitors products? Can they force businesses to compete on price alone in transparent marketplace?
Suppliers
Market power of suppliers when firm cannot raise prices as fast as suppliers
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Business/IT Challenges *Speed and flexibility requirements of product development, manufacturing, and delivery cycles, *Integration of e business and e commerce into the organizations strategies, process, structure, and culture
Business/IT Developments
Business/IT Goals
*Give customers what they want, when and how they want it, at the lowest cost *Coordination of manufacturing and business process with suppliers and customers
Capabilities of IT
Overcome/Breaking Time Barriers Information technology is used to shorten the intervals between the various critical steps in a business process. Telecommunications is a lot faster than most other forms of communications, thus, it provides information to remote locations immediately after it is requested. Overcome/Breaking Geographic Barriers Telecommunications networks enable you to communicate with people almost anywhere in the world. Telecommunications and computing technologies make it possible to distribute key business activities to where they are needed, where they are best performed, or where they best support the competitive advantage of a business. 32
Capabilities of IT
Overcome/Breaking Cost Barriers Computers and telecommunications can often significantly reduce the cost of business operations when compared with other means of information processing and communications. For example, Information technologies have also helped companies cut labor costs, minimize inventory levels, reduce the number of distribution centers, and lower communications costs. Overcome/Breaking Structural Barriers Computers and telecommunications networks can help a business develop strategic relationships by establishing new electronic linkages with customers, suppliers, and other business entities.
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Thank You..
By: Monica M
Important Questions
Explain organization and IT Explain IT Capabilities and their impact on organization Explain how company can achieve strategic advantages What are the strategic capabilities of IT Using Information Systems to Achieve Competitive Advantage
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