Assignment: Porter’s Generic Strategies

Assignment: Porter’s Generic Strategies

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Assignment: Porter’s Generic Strategies

Porter’s generic strategies framework and the dynamic frameworks (summarized in Figure 1.4) are revisited in the next few chapters. They are especially helpful in discussing the role of IS in building and sustaining competitive advantages (Chapter 2) and for incorporating IS into business strategy. The next section of this chapter establishes a foundation for understanding organizational strategies.

Brief Overview of Organizational Strategies Organizational strategy includes the organization’s design as well as the choices it makes to define, set up, coor- dinate, and control its work processes. How a manager designs the organization impacts every aspect of opera- tions from dealing with innovation to relationships with customers, suppliers, and employees. The organizational strategy is a plan that answers the question: “How will the company organize to achieve its goals and implement its business strategy?”

A useful framework for organizational design can be found in the book Building the Information Age Orga- nization by Cash, Eccles, Nohria, and Nolan.16 This framework (Figure 1.5) suggests that the successful execu- tion of a company’s organizational strategy comprises the best combination of organizational, control, and cultural variables. Organizational variables include decision rights, business processes, formal reporting relationships, and informal networks. Control variables include the availability of data, nature and quality of planning, effectiveness of performance measurement and evaluation systems, and incentives to do good work. Cultural variables comprise the values of the organization. These organizational, control, and cultural variables are managerial levers used by decision makers to effect changes in their organizations. These managerial levers are discussed in detail in Chapter 3.

FIGURE 1.4 Summary of strategic approaches and IT applications.

Strategic Approach Key Idea Application to Information Systems

Porter’s generic strategies Firms achieve competitive advantage through cost leadership, differentiation, or focus.

Understanding which strategy is chosen by a firm is critical to choosing IS to complement the strategy.

Dynamic environment strategies Speed, agility, and aggressive moves and countermoves by a firm create competitive advantage.

The speed of change is too fast for manual response, making IS critical to achieving business goals.

16 James I. Cash, Robert G. Eccles, Nitin Nohria, and Richard L. Nolan, Building the Information Age Organization (Homewood, IL: Richard D. Irwin, 1994).

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26 The Information Systems Strategy Triangle

Our objective is to give the manager a framecanization and assess which components may be missing and what future options are available. Understanding organizational design means answering the following questions:

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