Customers are one of the competitive forces that affect an organizations ability to compete.

Strategic Information Systems

Yehia Mortagy, in Encyclopedia of Information Systems, 2003

II.A. Competitive Forces

The competitive forces model looks at an organization as a member of an industry and studies its interaction with the other members (see Fig. 1). It defines five major forces that have a relation with the organization and that determine the structure of the industry and its profitability. The forces are competitors, suppliers, buyers, new entrants, and substitute products. By studying the relationship between each of these entities, an organization may identify opportunities for developing an SIS that will present the organization with strategic advantage.

Customers are one of the competitive forces that affect an organizations ability to compete.

Figure 1. Determinants of industry attractiveness.

The model identifies the determinants that influence the relationship between an organization and the five forces. An organization can then develop policies that will result in convincing others to behave in a manner that will benefit the organization from these relations or reduce the potential of threats from these forces. These determinants include buyers switching costs and bargaining powers. An organization may adopt policies that change the switching cost to its advantage or increase the switching cost of buyers. Thus it increases the bargaining power of the organization with its buyers. Information technology may be used to achieve this objective. Take the case of American Hospital Supply Corporation (AHSC). Through the use of their order entry system, Analytic Systems Automatic Purchasing (ASAP), the ordering process was simplified and the ordering accuracy increased. This led to an increase in customers' dependency on AHSC, increased order size, and increased switching costs.

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Virtual Organizations

Magid Igbaria, Pruthikrai Mahatanankoon, in Encyclopedia of Information Systems, 2003

VII. Conclusions

Globalization and competitive forces in the business world are gradually driving organizations to adapt quickly to social and economic changes. To remain competitive in the global market, the establishment of virtual organizations allows companies to be flexible and to do business regardless of time and location. This article discussed the driving forces—economy, information technology, political, and social—that influence the establishment of virtual organizations.

We presented definitions of some of the fundamental components of virtual organizations such as virtual factories, virtual products, virtual teams, and virtual offices. These components are the underlying operating engine and the essential building blocks that constitute virtual organizations. We further suggested that structure, task, technology, and people are interrelated and influence the operation of virtual organizations. Finally we identified the benefits and risks that virtual organizations may bear. The conclusion is that as technology becomes more sophisticated and permits better collaboration among organizations, the creation of virtual organizations becomes inevitable.

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Strategic Planning

J.M. Bryson, in International Encyclopedia of the Social & Behavioral Sciences, 2001

3.8 Competitive Analysis

Another important content approach that assists strategy selection has been developed by Michael Porter (1998a) and his associates. Porter (1998a) hypothesizes that five key competitive forces shape an industry: relative power of customers, relative power of suppliers, threat of substitute products, threat of new entrants, and the amount of rivalry activity among the players in the industry. For many public and nonprofit organizations, there are equivalents to the forces that affect private industry. An effective organization in the public and nonprofit sector, therefore, must understand the forces at work in its ‘industry’ in order to compete effectively, and must offer value to its customers that exceeds the cost of producing it. On another level, planning for a specific public function (health care, transportation, or recreation) can benefit from competitive analysis if the function can be considered an industry.

In addition, Porter (1998b) points out that for the foreseeable future self-reinforcing agglomerations of firms and networks are crucial aspects of successful international economic competition. In effect, not just firms or nations, but metropolitan regions (Shanghai, the Silicon Valley, New York, London, and Paris) are key economic actors. Regions interested in competing on the world stage should therefore try to develop the infrastructure necessary for virtuous (rather than vicious) cycles of economic growth to unfold. In other words, wise investments in education, transportation and transit systems, water and sewer systems, parks and recreation, housing, and so on, can help firms reduce their costs—particularly the costs of acquiring an educated labor force—and thus improve the firms' ability to compete internationally.

The strength of competitive analysis is that public and nonprofit organizations can use competitive analysis to discover ways to help the private firms in their regions. When applied directly to public and nonprofit organizations, however, competitive analysis has two weaknesses: it is often difficult to know what the ‘industry’ is and what forces affect it, and the key to organizational success in the public and nonprofit world is often collaboration instead of competition. Competitive analysis for the public organizations, therefore, must be coupled with a consideration of social and political forces and the possibilities for collaboration (Huxham 1993, Osborne and Plastrik 1997).

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Managing IS: the future

Margi Levy, Philip Powell, in Strategies for Growth in SMEs, 2005

▪ Lessons for SMEs and researchers

There are several lessons in this book for SMEs in the pursuit of management IS. First, the owner is central to all decision-making. Second, customer pressure, over and above any other competitive force, is a driver for change. Hence, SMEs need to be aware of customers’ future requirements for knowledge and information sharing. Third, the greatest benefits from management IS are found when it is adopted as part of a value-adding strategy, rather than viewed as a cost. A cost-focused strategy tends to limit opportunity and means that SMEs are more likely to develop operational systems rather than those that support the business strategy. Fourth, ISS should be undertaken as part of business strategy development, particularly in growing firms to measure success and to ensure strategic alignment. Fifth, there is potential for leverage for the firm if it uses knowledge from partners and collaborators more effectively. Finally, SMEs can usefully review the business value to them of investing in e-business as part of their overall business and IS strategies.

For researchers, this book has drawn together the developing research in IS use in SMEs. It has demonstrated where “large firm” theory works in the SME context and where it fails. The book also demonstrates how rich the SME context is as a research domain and how rewarding it is to work in. SMEs need to use IS better. Hopefully, the theoretical and practical insights this text offers will assist managers and researchers to enable this to happen.

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Globalization and Information Management Strategy

Jatinder N.D. Gupta, Sushil K. Sharma, in Encyclopedia of Information Systems, 2003

III.B.16. Knowledge Management (KM)

Knowledge management seems an obvious imperative in the knowledge economy. Facing competitive pressures and a bleak economic climate, organizations need access not only to technology resources but also to the vast intellectual capital residing within employees and data stores, knowledge that can be capitalized on to bolster decision-making abilities. Early adoptions sharing data via groupware systems and intranets have helped facilitate knowledge sharing but have not gone far enough. Knowledge management is seen to be central to product and process innovation and improvement, to executive decision making, and to organizational adaptation and renewal.

Today, intellectual capital, rather than physical capital, is the driving competitive force for companies in virtually all industries. Businesses are investing in a wide range of KM “solutions” to exploit the power of their intellectual assets and translate them into real value. Knowledge management is all about finding and translating experience, instinct, and values into documented knowledge that can be delivered throughout the supply chain. While the first wave of information technology focused on the creation of the IT infrastructure in the form of networks, the next wave will focus on enabling people to use knowledge to add value to a company's products and services. Globalization and intensifying competition have placed a premium on highly specialized expertise. The challenge lies in using knowledge to create new value. The market for KM products and technologies is increasingly driven by companies seeking to improve their efficiency to save costs, increase revenues, and ensure competitiveness. Many are already implementing successful KM strategies and reaping benefits in terms of greater return on investments, improved productivity, and increased customer and employee satisfaction.

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Gender, Economics of

F.D. Blau, in International Encyclopedia of the Social & Behavioral Sciences, 2001

4.2 Models of Labor Market Discrimination

Theoretical work in this area was initiated by Becker's (1957) model of racial discrimination. Becker conceptualized discrimination as a taste and analyzed three cases, those in which the discriminatory tastes were held by employers, co-workers, and customers or clients. Under certain circumstances, such discrimination will cause a wage differential between men and women. So discriminatory employers will only hire women at a sufficient wage discount that compensates them for the disutility of employing women. Discriminatory male workers will demand a wage premium to work with women thus raising men's relative wages, and the reluctance of discriminatory customers or clients to buy goods or services provided by women will make women less productive in terms of revenue brought in, thus depressing women's relative wages.

Models based on tastes for discrimination are also consistent with employment segregation, but do not necessarily predict it will occur. If wages are flexible, it is altogether possible that discrimination will result in lower pay for women, but produce little or no segregation. However, if discriminatory tastes against women in traditionally male pursuits are both strong and prevalent, women may tend to be excluded from these areas. If such segregation does occur, it may or may not be associated with gender pay differentials. In the presence of sufficient employment opportunities in the female sector, equally qualified women may earn no less than men.

The relationship between occupational segregation and earnings differentials is clarified in Bergmann's (1974) overcrowding model. If, for whatever reason (i.e., labor market discrimination or their own choices), potentially equally qualified men and women are segregated by occupation, the wages in male and female jobs will be determined separately by the supply and demand for labor in each sector. Workers in male jobs will enjoy a relative wage advantage if the supply of labor is more abundant relative to demand for female than for male occupations. Such ‘crowding’ of female occupations can also widen differentials between male and female jobs that would otherwise exist due to women's smaller human capital investments or employers' reluctance to invest in women's human capital.

One question that has been raised about the Becker model is how employer discrimination can persist in the long run in the face of competitive forces. The least discriminatory firms, which hire more lower-priced female labor, would have lower costs of production. In the long run, they should expand and drive the more discriminatory firms out of business. One answer, suggested initially by Becker himself, is that discrimination will be located in sectors of the economy that are not competitive (see Market Structure and Performance). While Becker emphasized monopolistic elements in the product market, a related approach targets monopsonistic power on the part of the employer in the labor market (e.g., Madden 1973).

In addition, models of statistical discrimination were later developed, in part to explain the persistence of discrimination in the long run in the face of competitive forces. Such models assume a world of uncertainty and imperfect information; thus differences between groups in the expected value of productivity or in the reliability with which productivity may be predicted are expected to result in differences in the treatment of members of each group. So, for example, employers may believe that women are more likely to quit their jobs than men with similar observed characteristics (education, experience, etc.) or they may believe that women's turnover can be less reliably predicted by their measured characteristics than men's. As a consequence, they may pay women less, exclude them from jobs requiring substantial firm-specific training, or deny them promotions.

It has been argued that such statistical discrimination, making decisions on the basis of the average characteristics of the group, is consistent with profit maximization and can thus persist in the face of competitive forces. However, Aigner and Cain (1977) contend that such models are no more convincing in explaining the persistence of discrimination than models based on tastes for discrimination. To the extent that employers' views are accurate, the lower expected productivity of women will reduce their wages but women as a group will be paid their expected productivity. This does not constitute labor market discrimination as economists define it, that is, pay differences that are not accounted for by productivity differences. Presumably they would make a similar argument regarding hiring and promotion decisions. Moreover, they note that when employer beliefs regarding average differences are erroneous, discrimination clearly exists but in their view discrimination based on such misperceptions is even less likely to persist in the long run than discrimination based on tastes. Finally, though they acknowledge that less reliable predictions of a group's productivity combined with risk aversion by employers could produce a discriminatory differential, a perfectly elastic supply of risk neutral entrepreneurs could be expected to erode discriminatory differentials based on this factor.

However, such models may have greater usefulness in explaining the persistence of gender differentials in pay than Aigner and Cain's analysis suggest. Consider first the situation where employer perceptions are correct. In this case, the concept of statistical discrimination provides a plausible reason for the existence and persistence of pay and occupational differences between men and women with similar measured characteristics; this is in itself a useful contribution even if it does not shed light on the persistence of economic discrimination in the long run. But if the employer views are correct, is it appropriate to consider this a form of ‘discrimination’ in any sense? From a normative perspective, the answer may be yes, to the extent that basing employment decisions on a characteristic like sex—a characteristic that the individual cannot change—could be viewed as inequitable. Indeed, the practice of judging an individual on the basis of group characteristics rather than upon his or her own merits seems the very essence of stereotyping or discrimination. Such behavior is certainly not legal, for example, under the antidiscrimination laws and regulations.

Now consider the situation where employer perceptions are incorrect. If statistical discrimination is accompanied by feedback effects, this may be a more credible source of persistent discriminatory pay differences between men and women than Aigner and Cain suggest. For example, if employers incorrectly expect that women are more likely to quit their jobs, they may respond by giving women less firm-specific training or assigning them to dead end jobs. Faced with few incentives to remain on the job, women may respond by exhibiting exactly the higher turnover that employers expect.

This criticism of the Becker model—its inability to explain the persistence of discrimination against women in the long run—has proved to be a double-edged sword in that it has led some economists to doubt that labor market discrimination is responsible, in whole or part, for observed gender differences in labor market outcomes. Yet it is important to recognize that discrimination is an intrinsically complex process. From this perspective, it is not surprising that no easy solution has been found to the question of why discrimination may persist in the face of competitive forces. Similarly, the various models of discrimination, each emphasizing different motivations and different sources of this behavior, need not be viewed as alternatives. Rather, each may serve to illuminate different aspects of this complex reality. When it is further recognized that, as our discussion above suggests, discrimination can adversely affect women's human capital investments and labor force attachment by lowering the market rewards to this behavior (e.g., Weiss and Gronau 1981), it is clear that the potential impact of discrimination on women's labor market outcomes may be large indeed.

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IS role in co-opetition and knowledge sharing

Margi Levy, Philip Powell, in Strategies for Growth in SMEs, 2005

▪ Exploring knowledge transfers

This chapter attempts to operationalize two constructs: co-opetition and knowledge sharing. Neither of these has well-developed definitions or dimensions in the literature. Therefore, the approach taken to understand the role of knowledge sharing in SMEs is to revisit the case study SMEs presented in Chapter 7 and analysed using the focus-dominance model discussed in Chapter 9. Figure 13.5 shows the positions of the firms in the focus-dominance model.

Customers are one of the competitive forces that affect an organizations ability to compete.

Figure 13.5. Focus-dominance case analysis.

The case analysis is a useful means of discussing the role of synergy and leverage and the role of explicit knowledge. The models identify what the firms exchange and the systems they use to exchange them. It also identifies the competitive forces at work in the SMEs’ sectors. Soft systems analysis (Chapter 8) reveals if the exchanges are easy or problematic and the form that the exchanges take. The notion of co-opetition is taken here to refer to SMEs’ interactions with their major customers. For some SMEs they will compete with their own customers – “classic co-opetition” – while other SMEs face the prospect of their dominant customers grabbing value from the exchange for themselves. Further, large firms often encourage their suppliers through information exchanges and the dissemination of “best practice”. If the knowledge SMEs exchange with their customers is explicit (as is focused on here), then this knowledge is less sticky and can leak to competitors. Thus, even when competition is not dyadic, explicit, component or public knowledge may escape to other SME competitors. For Dyer and Singh (1998) explicit knowledge may just be information. For Cohen (1998) knowledge is information in context. It is not the intention here to enter the knowledge versus information debate. Rather, to accept that the boundaries between information and knowledge are blurred and porous and that knowledge typically derives from information. While some of the material exchanges by case SMEs is information, some other, designs and formulations for example, is clearly knowledge. As discussed, explicit information is valuable to SMEs.

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Local Economic Development

N. Ettlinger, in International Encyclopedia of the Social & Behavioral Sciences, 2001

3.3 Connecting Exogenous and Endogenous Processes

Researchers interested in endogenous development who are attuned to globalization focus on the connections between particular places and global agents. Unlike the model of capital flight (Sect. 3.1), in which global agents are necessarily ‘dominant’ and capital is mobile, at issue is how local and global competitive forces may be connected to develop entrepreneurial economies (Storper 1997).

Most MNCs, which produce in one country and market products elsewhere, have evolved into TNCs that functionally integrate marketing and production of different components in a wide variety of countries and localities therein. Global production in this context has become more complex than a strategy of establishing branch plants in diverse locations.

Many TNCs withdraw wholly or partially from production itself and focus energies on coordinating a global system of subcontracting via tiers of networks of firms across nations and world regions (Gereffi and Korzeniewicz 1994). This type of production system can result in positive local change, if the state is developmentally oriented and invests in upgrading of production processes and upskilling of workers regarding the local component of a global commodity and knowledge chain. Alternatively, such networks entail uneven power relations across regional divisions of labor, and some regions remain trapped in a Taylorist-oriented low-skilled, low-cost production component (Hart-Landsberg and Burkett 1998).

Other TNCs remain production-oriented and sink costs into localities by establishing plants that become locally embedded (Amin and Thrift 1994). This is a possibilist perspective in which the long-run investment of foreign capital (capital fixity as opposed to capital mobility) is contingent on: the synergy of preexisting local structures (revisiting Massey's geomorphological metaphor), strategies of TNCs specific to facilities in each place of production, and agency (social interactions, leadership). Questionable, however, in this rosy, albeit possibilist picture, is the partiality of so-called ‘development.’ Embeddedness itself is partial and usually confined to elite circles; workers, if empowered, are only partially empowered and are disempowered in other respects; and workplaces often remain homogeneous and exclusionary (Ettlinger 1999).

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E-business influencers

Margi Levy, Philip Powell, in Strategies for Growth in SMEs, 2005

Competitive environment

The influence of the competitive environment should not be underestimated. The relationships identified by Porter in his five forces model are as apt for the Internet age as they were for the machine age. The Internet is a tool to enhance strategy rather than define it. Firms need to build effective business strategies that enable the strengths of the Internet to work for them in establishing competitive advantage. Indeed, the successful firms will be those in traditional markets that identify innovative ways to deploy Internet technologies. “Pureplays” will be successful if they focus on business strategies that make them distinctive (Porter, 2001). Figure 18.1 identifies the changes in the competitive environment due to Internet technologies.

Customers are one of the competitive forces that affect an organizations ability to compete.

Figure 18.1. Internet influences on competitiveness.

(Source: adapted from Porter, 2001.)Copyright © 2001

The five competitive forces still provide a useful structural model by which to understand how the economic value of a product or service is distributed between the different players in the market. The model is still valid even if channels, competitors, suppliers or substitutes change (Porter, 2001).

The use of Internet technologies impacts on industries in a variety of ways. It provides access to new customers through new delivery channels. For example, many high street stores have online shops. Industry efficiency can also be improved by increasing market accessibility relative to traditional substitutes.

However, the ubiquity of Internet technologies means that competitiveness is heightened for many firms. Competitor intelligence is more easily available, which increases the bargaining power of suppliers. New substitutes are created through the different delivery mechanisms generated by the Internet. Customer power is likely to rise as switching costs are low using Internet technologies. As with other technologies, Internet-based systems cannot provide sustainable competitive advantage. Indeed, the openness of such technologies means that systems are more accessible. While increasing geographic reach opens up new markets it also puts more firms in competition with each other. Cost structures are changed by the Internet towards increasing fixed costs rather than variable costs (Porter, 2001). Firms are likely to gain the greatest benefits from use of the Internet, if they recognize its potential as a complementor to traditional activities. For example, in the US, customers can order on-line and collect from a local store outlet, which many prefer to waiting for a postal delivery. Benefits can only be achieved through strategic positioning. Before moving to the use of Internet technologies firms need to focus on the economic value to be gained. They need to consider how they will be differentiated from competitors. Firms need to ensure strategic fit between business activities in the supply chain (Porter, 2001). Chapters 7 and 8 demonstrated the value of the five forces model in the SMEs context. The lessons presented here on its value when considering the strategic value of Internet technologies may be as valid. Thus, it is reasonable to suppose that customers, suppliers and competitors are likely to influence adoption.

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An organizational approach to IS strategy

Margi Levy, Philip Powell, in Strategies for Growth in SMEs, 2005

▪ A multi-paradigm model for ISS in SMEs

The ISS framework (Figure 7.3) adapts Walsham's (1993) themes for IS strategy. There are three perspectives. First, the business context provides the understanding of the business environment within which the SME operates. This focuses particularly on the market and relationships with customers and suppliers. The owner's strategy for the business is elicited to aid identification of critical success factors (CSF). These provide the basis for strategic information requirements. The second perspective is business process. This focuses on understanding the work processes in the SME to appreciate whether information flows inhibit business activities, and also to identify changes that might be made as a result of the introduction of IS. Additionally, information available to the SME is identified. Finally, the strategic content embodies the vision for change from the owner and the practicality of its introduction given organizational circumstances.

Customers are one of the competitive forces that affect an organizations ability to compete.

Figure 7.3. The ISS approach for SMEs.

Business context

There are three main aspects to the first part of the ISS development. First, the business strategy and objectives are identified. Second, the business environment of the SME is reviewed. Finally, the competitive environment is assessed.

A key issue for SMEs is their lack of an explicit business strategy but the owners’ objectives are critical to the process of ISS (Blili and Raymond, 1993). Yet, many owners do have an implicit strategy and this can often be elicited. Critical success factors are a useful approach to determine whether strategic objectives have been met. Critical successs factors are derived from the business objectives and represent the things that the business must get right in order to be successful (Boynton and Zmud, 1984). Performance measures are defined for each CSF as a means of determining whether they have been achieved. Performance measures always have a value associated with them, for example sales revenue will increase by 10% in the next year. Once performance measures are identified it is possible to determine the information that is required in order to know whether it has been met. This helps define systems requirements.

The balanced business scorecard (Figure 7.4) is a useful means of assessing whether a business has considered strategic objectives from customer, financial, organizational and growth perspectives (Kaplan and Norton, 1996).

Customers are one of the competitive forces that affect an organizations ability to compete.

Figure 7.4. Balanced scorecard.

(Source: adapted from Kaplan and Norton, 1996.)Copyright © 1996

The strength of the balanced business scorecard is that firms look at measures other than finance. The financial perspective is important as it addresses the question of how the firm appears to shareholders. The internal business perspective considers what has to be done well within the current operation to satisfy employees and others with whom the business interacts. Innovation and learning addresses the strategies required to grow and develop the business in the future. Finally, the customer perspective considers how the firm is perceived by customers in term of quality and service.

The business environment is assessed using standard analytical tools such as PESTEL (Table 7.1) and SWOT (Figure 7.5) for the overall context, while, as shown in Chapter 6, Porter and Millar's (1985) information intensity matrix provides a guide to the importance of information.

Table 7.1. PESTEL analysis issues

Political The political environment within which firms work may influence decisions that are taken. For example there may be tariff barriers in place. There may be particular issues relating to the global region within which a firm is situated. There may be restrictions on trade with particular countries
Economic Costs are driving many firms, both large and small to relocate production to Eastern Europe, China and South America. As these areas are moving more towards free market economies, they are encouraging inward investment. This has many ramifications for firms as they have to consider the overall benefits of moving production. These include issues of managing quality, delivery and currency fluctuations
Social The main focus here is customer values. There is a need to understand the demography of the customer base. In many Western European countries people are living longer, are fitter and have more disposable income. The “greying factor” is more important and older people are likely to wield more buying power in the future. Retirement is beginning to be seen as a voluntary activity. In contrast there are other countries, particularly in Africa where the population is much younger and has less disposable income. The gap between those who are information rich and information poor is widening
Technological Technology has changed dramatically in the last 25 years since the introduction of the PC in the late 1970s. Microchip technology has revolutionized the development of computers. The Internet has dramatically changed communication. While the dot.com bubble burst rather quickly, many hi-tech SMEs are being started. New products and services using new technologies are being developed rapidly. It is important to understand whether the market is ready for the technology
Environmental The discovery of the hole in the ozone layer, acid rain, nuclear waste in the sea, the extinction of many species have all led to a rise in concern among many people about the future of the world. Firms are expected to consider the impact upon the environment of the use of resources associated with their products or services. Technology-based companies in particular telephony companies are under scrutiny with regard to health issues associated with radio waves
Legal Technology has made it possible to collect data on people to a much greater degree. Store loyalty cards enable purchasing patterns to be monitored. Internet shopping enables personal details including credit card details to be stored. The use of this information has been prohibited in many countries except for use by the firm collecting it and for the purpose for which it has been collected. There are also legal issues for product distribution as the music and video industries are finding as it is possible to digitally download these products without paying for them

Customers are one of the competitive forces that affect an organizations ability to compete.

Figure 7.5. SWOT analysis.

Strategic opportunities from IS, including emerging technologies, available to the industry in terms of production support (e.g. MRP) management support (e.g. financial analysis) and customer support (e.g. EDI) are useful to clarify this. Competitive forces analysis provides the basis for understanding the pressures on SMEs.

The business environment part of the framework encompasses industry awareness and an understanding of the firm's competitive position together with the vision of the owner.

Business processes

There are three activities in the business process element of the framework. First, understand the value-adding processes that contribute to the business. Second, identify whether the SME has the relevant systems to support both the business objectives and the value-adding processes. Finally, the extant IT is assessed.

The main issue here is to identify value-adding activities. To enrich understanding of these activities the organizational environment and the roles of the players involved need to be understood. The value chain identifies the key value-adding activities and the information flows between them. However, as discussed, ISS benefits from organizational fit. Soft systems methodology provides a means of analyzing organizational information flows and a comparison with the value chain. This comparison gives the means of appreciating how much of what the organization does adds value. The SSM analysis identifies issues in the organization that may need to be resolved for the value-adding activities to be effective.

The purpose of SSM is to enable the study of unstructured problem situations from a variety of viewpoints. Checkland's argument is that different people have different perspectives on a problem. The classic example he quotes is a prison; the prison officers seeing it as a place of restraint, the education officers, a place for re-education and the public as a place of punishment. The various perspectives lead to different views on the activities that should take place inside the prison.

There are several stages to SSM (Table 7.2). The most important aspect to the analysis is the constant iteration of the models developed. They are constantly compared with the real world so that the best fit is obtained to move towards changes in business activities or processes and information flows that support organizational objectives.

Table 7.2. Description of SSM stages

SSM stagesPhasesDescription
Finding out This task is one that involves interviewing as wide a range of people as possible to identify the key issues. It may not be clear at this stage what the problem really is. This stage is the precursor to being able to express the problem situation clearly in both words and pictures
Expressing the problem situation This stage is an opportunity to clarify with the problem owners the analysts understanding of the problem situation. The key technique that Checkland uses is the drawing of rich pictures (see Chapter 7). These are drawings that represent in an unstructured form the problem situation. They often take the form of elementary cartoon drawings (e.g. stick people, computers) that show the relationships between different aspects of the problem situation. They are useful for indicating contradictory information and highlighting communication problems
Deriving the root definition

A root definition expresses the central purpose of the system that is being modelled. There will be an over-arching root definition that encompasses the essence of the whole system under review. There will be a number of lower level root definitions that embrace the lower level activities that are the components of the total system

There are a number of phases in this part of the analysis that enable the root definition to be developed. This is where SSM starts to put some structure into the analysis

The transformation process This process is about defining a set of transformations that will achieve the aims of the organization. Different people in the organization will have different objectives and therefore different transformation. While it is important not to disregard any transformations, there needs to be some reflection back onto the issues highlighted in the rich picture
The root definition

Checkland argues that it is only when you have put a name to a system that its function or purpose becomes clear. The root definition does this in a structured way from the perspective of the main player in the problem. In the analysis it is important to consider the sponsor's objectives. The root definition takes account not only of the transformations itself, but also the people involved in different ways in achieving the transformation. The following aspects all need to be considered in defining the system:

Customer: for whom is the system operated?

Actors: which single group of people will perform the activities?

Transformation: which single process will transform the input into the output?

Worldview: what is the view that makes the transformation worthwhile?

Owner: who has the power to say whether the system will be implemented or not?

Environment: what are the constraints that may prevent the system from being successful?

Deriving conceptual models This stage provides an ideal view of the various activities or business processes that have to be undertaken models to achieve the transformation. Checkland suggests that monitor and review is a useful activity to be included in all models. It is also possible at this stage to consider the information requirements that link the different activities
Comparison between the ideal and real word models The next stage is to decide what actions need to be taken to address the differences between the ideal the ideal and real model and the real world. It is important to note that actions resulting form this analysis may not require word models technological solutions but may primarily require organizational change to exploit the use of current technologies more effectively

Organizational culture may determine the most appropriate IS (Checkland and Holwell, 1998). The analysis is undertaken through semi-structured interviews with the senior managers and the staff responsible for operations. The main outcome is a model of the key business activities essential to achieving the business objectives. Organizational inhibitors and enablers are identified. The information requirements for the business are also derived from this analysis.

Existing IS need to be assessed. This may be of more importance than for large organizations as SMEs’ propensity to invest in IS is much lower. If current systems provide the organization with useful information there may be no need to change them and manual systems may be all that is required. The McFarlan-McKenney (1983) strategic grid (see Chapter 6) assesses the business value of the SMEs’ IS. As Earl (1989) argues, organizations should regularly review their IS to see whether they continue to support the business objectives.

Information technology is also a critical part of an ISS (Earl, 1989). However, is shown in Chapter 4, IT in many SMEs inhibit precisely the flexibility for which SMEs are renowned. Most SMEs expect their IT to have a longer life than in larger firms, which means that many are locked into systems developed using third generation tools that may be unsupported or, at the very least, incompatible with current industry standards.

Strategic content

The strategic content stage compares the business strategy requirements with the organizational analysis to generate an understanding of the capacity of the organization to grow and develop from the use of IS. At this stage strategic alignment can usefully be considered (see Chapter 3). The MIT'90s strategic alignment framework reminds the analyst of the individual issues that affect performance in the firm. However, the real benefit of the framework is in recognizing and addressing how the impact of a decision in one aspect may affect the all the others.

There is a need to balance the ability of the organization to cope with change with the need to make strategic decisions on the use of IS. The owner's vision is revisited at this stage to ensure that recommendations fit. The 3D model of IS success provides a means for considering the ability of the SME to manage the relationships between technical development, deployment within the organization and delivery of business objectives (Figure 7.6).

Customers are one of the competitive forces that affect an organizations ability to compete.

Figure 7.6. The 3D model of IS success for SMEs.

(Source: adapted from Ballantine et al., 1998.)Copyright © 1998

Success in IS can be identified at three levels (the “Ds”). First is the development level that addresses the technical development of a computer system for an SME. Second is the deployment level: where the system is used within the firm. The final level is delivery at which the contribution of the system to the firm's objectives as a whole are realized. Success at one level does not imply success at the next. Exogenous factors are those issues that can impede movement to the next level. For example, existing IS may be more comfortable for staff to use than new systems; this reluctance is demonstrated by the implementation filter. The integration filter is about the fit between the business strategy and use of the IS. Over and above the levels of achievement of success discussed, there is an issue of learning through time and experience, leading to better planning and knowledge of systems to grow the firm.

The ISS analysis identifies opportunities for best practice through the use of IS. However, as resources are tight SMEs will have to prioritise which systems they require. Systems may be organizational or computer-based. The analysis considers the contribution of systems to the business, the likely financial return from the systems, and the difficulty of implementation. For each system firms should consider the relative importance of market position, competitive advantage, financial return and the ease of implementation. They are unlikely to be of equal value to a firm and different firms will ascribe different weightings. It is useful to determine the contribution of each category to the business strategy (Ormerod, 1998). Ormerod offers a number of criteria that are shown in Table 7.3. These are examples; other criteria may be more relevant to the firm under study.

Table 7.3. Implementation decisions for proposed systems.

1 point3 points5 points
Market position Nice to have Build Critical
Competitive advantage Support Primary value chain Leverage (industry value chain)
Financial return 1–2 years 3–5 years Unclear
Ease to implement Enhancements New system old technology New system new technology

(Adapted from Ormerod, 1998.)

Copyright © 1998

Systems are evaluated to ensure that they support achievement of the business strategy or that proposals are integrated into changes in the business strategy. The objective is to develop a set of recommendations that are practical, feasible and realistic in the SME context.

Figure 7.7 presents all the tools and techniques discussed above and in Chapter 6 within the context of the organization ISS framework. The next section considers the use of the ISS framework and the value of the models to the development of an ISS.

Customers are one of the competitive forces that affect an organizations ability to compete.

Figure 7.7. Tools and processes for ISS approach for SMEs.

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URL: https://www.sciencedirect.com/science/article/pii/B9780750663519500097

Which of the following is not one of the competitive forces of Porter's model?

Political factor is not one of the Porter's five force factor. The Porter's five forces tool is a simple but powerful tool to evaluate the power of business. Porter's Forces Analysis assumes that there are important forces that determine competitive power in a business situation.

Which of the following are the four major competitive strategies?

4 Types of Competitive Strategies.
Cost leadership strategy. It suits large businesses that can produce a big volume of products at a low cost, and that is why Walmart implemented this strategy. ... .
Differentiation leadership strategy. ... .
Cost focus strategy. ... .
Differentiation focus strategy..

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Porter's competitive forces model helps companies determine what they should do to be more productive by comparing what their competitors are doing. It also brings the companies costs down and makes them more efficient as a business by using Information Systems.

Is strategies for dealing with competitive forces?

There are four generic strategies for dealing with competitive force enable by using IT: low-cost leadership, product differentiation, focus on market niche and strengthen customer and supplier intimacy.