Porter's competitive forces model the most widely Four major enterprise applications -Enterprise How information systems

How information systems impact organizations

used model for understanding competitive advantage Systems (ERP)A large organization typically has and business firms -economic impacts from the
is Michael Porter's competitive forces model. This many different kinds of information systems built point of view of economics, IT changes both the
model provides a general view of the firm, its around different functions, organizational levels, and relative costs of capital and the costs of information.
competitors, and the firm's environment. -Traditional business processes that cannot automatically Information systems technology can be viewed as a
Competitors-New Market Entrants -Substitute exchange information. Enterprise systems speed factor of production that can be substituted for
Products and Services -Customers -Suppliers communication of information throughout the traditional capital and labor. (Transaction Cost
Information system strategies for dealing with company, making it easier for business to coordinate Theory, Agency Theory) -Organizational and
competitive forces There are four generic strategies, their daily operations. Enterprise systems give behavioral impacts Behavioral researchers have
each of which often is enabled by using information companies the flexibility to respond rapidly to theorized that information technology facilitates
technology and systems: low-cost leadership, customer requests while producing and stocking flattening of hierarchies by broadening the
product differentiation, focus on market niche, inventory only with what is needed to fulfill existing distribution of information to empower lower-level
strengthening customer and supplier intimacy. orders. Their ability to increase accurate and on- employees and increase management efficiency
Impact of the Internet on Competitive Forces and time shipments, minimize costs, and increase -Postindustrial organizations and virtual firms
Industry Structure -Substitute products or services customer satisfaction adds to firm profitability. In postindustrial societies, authority increasingly
-Customers bargaining power -Suppliers bargaining Enterprise systems provide valuable information for relies on knowledge and competence, and not merely
power -Threat of new entrants-Positioning and improving management decision making. on formal positions. -Increasing flexibility of
rivalry among existing competitors. Challenges of ERP-Difficulty to build-Technology- organizations Information technology helps
Decentralized organizational coordination and companies organize in more flexible ways,
Business value chain model The value chain model
decision making -Supply Chain Management increasing their ability to sense and respond to
identifies specific, critical leverage points where a
Systems SCM systems help businesses manage changes in the marketplace and to take advantage of
firm can use information technology most effectively
relationships with their suppliers. These systems new opportunities.-understanding organizational
to enhance its competitive position. This model
provide information to help suppliers, purchasing
views the firm as a series or chain of basic activities resistance to change
firms, distributors, and logistics companies share
that add a margin of value to a firms products or
information about orders, production, inventory
services. Value web is a collection of independent
levels, and delivery of products and services so that
firms that use information technology to coordinate
they can source, produce, and deliver goods and
their value chains to produce a product or service for
services efficiently. How Information System
a market collectively. It is more customers driven and
Facilitates Supply Chain Management -Decide
operates in a less linear fashion than the traditional
when and what to produce, store and move -Rapidly
value chain. Synergies The idea driving synergies is
communicate orders -Track the status of orders
that when the output of some units can be used as
-Track shipments -Reduce inventory, transportation,
inputs to other units, or two organizations can pool
and warehouse costs -Check inventory availability
markets and expertise, these relationships can lower
and monitor inventory levels. Customer Relationship
costs and generate profits. Enhancing Core
Management Systems -Customer relationship
Competencies A core competency is an activity for
management CRM systems help firms manage their
which a firm is a world-class leader. Core
relationships with customers. CRM systems provide
competencies may involve being the worlds best
information to coordinate all of the business
miniature parts designer, the best package delivery
processes that deal with customers in sales,
service, or the best thin-film manufacturer. Network-
marketing, and service to optimize revenue, customer
Based Strategies The availability of Internet and
satisfaction, and customer retention. -Knowledge
networking technologies has inspired strategies that
Management Systems KMS enable organizations to
take advantage of firms' abilities to create networks or
better manage processes for capturing and applying
network with each other network-based strategies
knowledge and expertise. These systems collect all
include the use of network economics, a virtual
relevant knowledge and experience in the firm, and
company model, and business eco system. Network
make it available wherever and whenever it is needed
Economics Business models based on a network may
to improve business processes and management
help firms strategically by taking advantages of
decisions.
network economics. In traditional economics-the
economics of factories and agriculture-production
experiences diminishing returns. After a certain point,
the more any given resource is applied to production,
the lower the marginal gain in output, until a point is
reached where the additional inputs produce no
additional outputs.