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Define the value web and show how it is related to the value chain.
A value web is a collection of independent firms that use information technology to
coordinate their value chains to collectively produce a product or service. It is more
Explain how the value web helps businesses identify opportunities for strategic
information systems.
Information systems enable value webs that are flexible and adaptive to changes in
supply and demand. Relationships can be bundled or unbundled in response to
webs.
Describe how the Internet has changed competitive forces and competitive
advantage.
The Internet has nearly destroyed some industries and severely threatened others. The
Internet has also created entirely new markets and formed the basis of thousands of
4. How do information systems help businesses use synergies, core competencies,
and network-based strategies to achieve competitive advantage?
Explain how information systems promote synergies and core competencies.
A large corporation is typically a collection of businesses that are organized as a
Describe how promoting synergies and core competencies enhances competitive
advantages.
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Explain how businesses benefit by using network economics.
In a network, the marginal costs of adding another participant are almost zero,
whereas the marginal gain is much larger. The larger the number of participants in a
Define and describe a virtual company and the benefits of pursuing a virtual
company strategy.
A virtual company uses networks to link people, assets, and ideas, enabling it to ally
with other companies to create and distribute products and services without being
5. What are the challenges posed by strategic information systems and how should
they be addressed?
List and describe the management challenges posed by strategic information
systems.
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Explain how to perform a strategic systems analysis.
Managers should ask the following questions to help them identify the types of
systems that may provide them with a strategic advantage.
1. What is the structure of the industry in which the firm is located? Analyze the
2. What are the business, firm, and industry value chains for this particular
firm? Decide how the company creates value for its customers; determine how
the firm uses best practices to manage its business processes; analyze how the
3. Have we aligned IT with our business strategy and goals? Articulate the
Discussion Questions
1. It has been said that there is no such thing as a sustainable competitive
advantage. Do you agree? Why or why not?
Students will argue both sides, and there is no definite answer to the question. There
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2. It has been said that the advantage that leading-edge retailers such as Dell and
Walmart have over their competition isn’t technology; it’s their management.
Do you agree? Why or why not?
Student answers will vary but here are some points their answers should include:
• How well has each company, Dell and Walmart, used information systems
to reduce transaction costs and agency costs?
• How well has each company used information systems to take advantage
of Porter’s Competitive Forces model:
o Keeping new market entrants out
3. What are some of the issues to consider in determining whether the Internet
would provide your business with a competitive advantage?
The Internet increases accessibility and distribution of information and knowledge
while decreasing storage and transmission costs. Transaction and agency costs are
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Hands-On MIS Projects
Management Decision Problems
1. Macy’s Inc.: Wants to tailor merchandise more to local tastes based on sales patterns
in each individual store. How could information systems help management
implement this new strategy? What pieces of data should these systems collect to help
management make merchandising decisions that support this strategy?
By collecting small pieces of sales data such as size, style, price, and even the time of
purchases, each individual store can analyze local sales. Demographic information
2. T-Mobile: Despite aggressive campaigns to attract customers with lower mobile
phone prices, the company has been losing large numbers of its most lucrative two-
Using the Strategic Systems Analysis in Section 3.4, management should consider
these organizational features:
• What are the competitive forces at work in the industry, specifically the
relative power of suppliers, customers, and substitute services over prices?
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• What are the organization’s core competencies?
Management should make these decisions to ensure the strategy works:
• Has senior management correctly articulated an appropriate business strategy
Improving Decision Making: Using a Database to Clarify Business Strategy
Software skills: Database querying and reporting; database design.
Business skills: Reservation systems; customer analysis
The existing database can be easily queried to find out the average length of stay per
room type, the average number of visitors per room type, and the base income per room
during a specified period of time. One can see from these queries and reports that ocean-
front rooms are the most popular and rooms overlooking side streets are the least popular.
Improving Decision Making: Using Web Tools to Configure and Price an
Automobile
Software skills: Internet-based software
Business skills: Researching product information and pricing
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Video Case Questions
Collaboration and Teamwork: Identifying Opportunities for Strategic
Information Systems
With your team of three or four students, select a company described in the Wall
Street Journal, Fortune, Forbes, or another business publication. Visit the
company’s Web site to find additional information about that company and to see
how the firm is using the Web. On the basis of this information, analyze the
business. Include a description of the organization’s features, such as important
business processes, culture, structure, and environment, as well as its business
strategy. Suggest strategic information systems appropriate for that particular
business, including those based on Internet technology, if appropriate. If possible,
use Google Sites to post links to Web pages, team communication announcements,
and work assignments; to brainstorm; and to work collaboratively on project
documents. Try to use Google Docs to develop a presentation of your findings for
the class.
Because students will select different companies, group answers will vary. General
comments for facilitating the project preparation are provided below.
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Case Study: Can This Bookstore Be Saved?
1. Use the value chain and competitive forces models to evaluate the impact of the
Internet on book publishers and book retail stores such as Barnes & Noble.
Under Porter’s Competitive Forces Model, B&N no longer has to worry about
traditional competitors like B. Dalton, Borders, and small independent book stores.
However, it must now contend with many new competitors in the e-book
2. How are Barnes & Noble and the book publishers changing their business
models to deal with the Internet and e-book technology?
Publishers are doing anything they can to support B&N’s efforts to stay afloat,
because the survival of physical book retailers is important to effectively market and
sell books. Bookstores spur publisher sales with the “browsing effect.” Surveys have
3. Will Barnes & Noble’s new strategy be successful? Explain your answer.
It’s going to be a tough uphill climb for B&N to make its new strategy successful. It’s
helpful to partner with Microsoft and include an e-reading app in the new Windows 8
operating system. That will increase its exposure to computer users and make it easier
4. Is there anything else Barnes & Noble and the book publishers should be doing
to stimulate more business?
Partnering with Microsoft was a good first step toward widening B&N’s reach toward
customers. It needs to expand its richness and perhaps partner with publishers to
continually offer more features and services to readers that other competitors don’t or
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5. What competitive forces have challenged the television industry? What
problems have these forces created?
The competitive forces that challenge the television industry include:
a. Traditional competitors: Television networks and content producers are
continuously devising new, more efficient ways to increase the number of
6. Describe the impact of disruptive technology on the companies discussed in this
case.
Downloading video content from movies and television shows is faster and easier
than ever thanks to high-speed Internet access, powerful PCs with high-resolution
display screens, iPhones and other mobile handheld computing devices, and Web-
enabled televisions just coming into the market. Free and often illegal downloads of
7. How have the cable programming and delivery companies responded to the
Internet?
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The cable companies are being forced to go where the customers are and not wait for
the customers to come to them. By making more television shows available online,
but only for cable subscribers, the cable networks hope to preserve and possibly
8. What management, organization, and technology issues must be addressed to
solve the cable industry’s problems?
Management: Customers accustomed to YouTube and Hulu may rebel if too many
ads are shown online. If people can’t access content delivered by the cable industry
9. Have the cable companies found a successful new business model to compete
with the Internet? Why or why not?
Student answers will vary depending on their personal experiences and exposure to
new avenues of accessing television content. Students may want to include how well
10. If more television programs were available online, would you cancel your cable
subscription? Why or why not?
Highly individualized answers will abound from this question. Many students may
relate their opinion to the issue of resistance to change. Changes in personal,