Rivalry within industry

How has the Internet,

vastly increased connectivity,
and improved communication channels
impacted on
competitive rivalry?

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 Rivalry within industry
Intense competition
from rivals leads to
 aggressive competition
on price
 competition regarding
product development
 distribution and service
being critical factors in
customer choice
 the need for customer
loyalty
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IS/IT can reduce the effects
by
 helping to improve price
performance
 helping to differentiate
products and services
 helping the firm ‘get closer
to the end consumer’
 understand the
requirements or needs of
the ‘end consumer’
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 Using competitive forces
 identify / analyse significant players in each
force
 determine nature / strength of impact of
each player
 devise strategy to exploit / defend /
neutralise impacts
 identify opportunities for IS/IT to support /
implement / manage strategy

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Value chain analysis (internal)
 Value chain analysis enables
consideration of internal activities
and processes, thus understanding
where costs are incurred, and
where value is added
 Examines organisation in terms of
primary activities (core business
processes) and support activities

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Internal value chain analysis

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External value chain analysis

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 Critical success factor analysis
 Important device for ensuring that managers
receive information they need to monitor
achievement of corporate goals and
objectives
 CSFs require information to monitor
achievement in key result areas
 CSFs may require systems enhancements
or new systems

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Critical success factor analysis

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CSFs and the value chain

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Business-technology audit
 Provides managers with an assessment of
business value of IS, against an
assessment of their technical quality
 Business value: value judgement about
contribution an IS makes to achievement of
business goals and objectives
 Technical quality: assessment of age,
amount spent on maintenance, ease of
maintenance, required infrastructure, risk

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Business-technology audit

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 Gap analysis
 Aims to identify and then help remedy gaps
that exist between skills, knowledge,
competencies, capabilities that an
organisation requires to be successful, and
resources an organisation currently has

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Combining the tools

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 Portfolio of systems

 At end of strategy formulation process,

organisation should be clear on
– business goals and objectives
– e-business goals and objectives
– how IT used to support achievement of goals
and objectives
– State of existing portfolio of systems
– Where strengths and weaknesses lie
– Prioritised set of new systems, required
refurbishments

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Portfolio of systems (cont.)

 Application portfolio analysis helps to

‘map’ balance required of new
investments and maintenance of existing
investments
 Portfolio of systems needs to be aligned
with business strategy

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Application portfolio analysis

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Matching portfolio against
strategy

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Circumstances dictate
change in portfolio

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