Реферат: Strategic Information Systems Essay Research Paper The

capabilities * High service

level distribution system

Sales * Sales control systems * * Differential pricing

Advertising monitoring systems * Office-field

systems * Systems to communication * Custom-sales

consolidate sales function support * Dealer support

* Strict systems * Systems to customers

incentive-monitoring

systems

Administration * Cost control systems * * Office automation for

Quantitative planning and integration of functions *

budgeting systems * Office Environment scanning and

automation for staff nonquantitative planning

reduction systems * Teleconferencing

By performing these activities, enterprises create value for their customers. The ultimate value an enterprise creates is measured by the amount customers are willing to pay for its product or services. A firm is profitable if this value exceeds the collective cost of performing all of the required activities. To gain competitive advantage over its rivals, a firm must either provide comparable value to the customer, but perform activities more efficiently than its competitors (lower cost), or perform activities in a unique way that creates greater buyer value and commands a premium price (differentiation).

Exhibit 3: Porter’s Four Generic Strategies

(Porter 1980)

Many differentiation bases exist, classified into four major groups (Borden 1964, quoted in Wiseman 1988):

? product (quality, features, options, style, brand name, packaging, sizes, services, warranties, returns);

? price (list, discounts, allowances, payment period, credit terms);

? place (channels, coverage, locations, inventory, transport); and

? promotion (advertising, personal selling, sales promotion, publicity).

IT can be used to support or sharpen the firm’s product through these various attributes.

Of especial importance is ‘product differentiation’. This is the degree to which buyers perceive products from alternative suppliers to be different, or as it is expressed by economic theory, the degree to which buyers perceive imperfections in product substitutability. The buyers of differentiated products may have to pay a price when satisfying their preference for something special, in return for greater added-value. The connection between the producer and buyers may be reinforced, at least to the level of customer loyalty, and perhaps to the point of establishing a partnership between them. Such a relationship imposes ’switching costs’ on the buyer, because its internal processes become adapted to the beneficial peculiarities of the particular factor of production, and use of an alternative would force internal changes. Hence product differentiation also serves as an entry barrier. In addition, a continuous process of product differentiation may produce an additional cost advantage over competitors and potential entrants, through intellectual property protections, such as patents, and the cost of imitation.

The activities performed by a particular enterprise can be analysed into primary activities, which directly add value to the enterprise’s factors of production, which are together referred to as the ‘value chain’, and supporting activities. Exhibit 4 reproduces Porter’s diagram.

Exhibit 4: Porter’s Enterprise Value-Chain

(Porter 1980)

The primary, value-adding activities include those involved in the production, marketing delivery, and servicing of the product. They are linked, generally in a chain. Support activities include those providing purchased inputs, technology, human resources, or overall infrastructure functions to support the primary activities.

By co-ordinating linked activities, an enterprise should be able to reduce transaction costs, gather better information for control purposes, and substitute less costly operations in one activity for more costly ones elsewhere. Co-ordinating linked activities is also an important way to reduce the combined time required to perform them. Hence co-ordination is increasingly important to competitive advantage. Gaining competitive advantage requires that an enterprise’s value chain be managed as a system rather than as a collection of separate parts. Reconfiguring the value chain, by re-locating, re-ordering, re-grouping, or even eliminating activities is often at the root of a major improvement in competitive position.