Understanding a Company's Strategy - What to Look For.

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Understanding a Company's Strategy What to Look For

Why Organisational Behaviour Matters

• Individual members of organisations tend to conform to the organisation's formal and informal rules and the 'company culture' - or else leave;

• The behaviour of an organisation is determined by the relationships within it and by its purpose and by the environment in which it operates.

What is an' Organisation'?

Defining 'Organisation'

The definition selected from Huczynski and Buchanan, for example, brings out three important aspects of organisations:

* The fact that they are social organisations and hence must cater for the individual needs of people within

* The fact that organisations require controls and direction in order to succeed

* The fact that measurement is required in order to assess organisational performance

Determining Features of an Organisation

What is Organisational Culture?

How Organisational Culture Develops

Impact of Organisational Culture 1

• An organisation's culture is either an important contributor or an obstacle to successful strategy execution.

• A deeply rooted culture well matched to strategy is a powerful lever for successful strategy execution.

• A strong culture is a valuable asset when it matches strategy and a serious liability when it doesn't.

• A 'weak' culture may prove to be an organisational opportunity since it can more easily be encouraged to be adaptive.

Traditional Organisational Structure

Alternative 'Flat' Structure

Alternative - Matrix Organisation

IT & Organizational Structures 1

Traditional organization is hierarchical, flat or matrixed.

2 In hierarchical orgs. Middle managers tell subordinates what to do and tell superiors the outcomes. IS supports this hierarchy.

3 In flat structured orgs. Work is more flexible and employee do whatever is needed. IS allows offloading extra work and supports intrafirm communications.

IT & Organizational Structures

4 In matrixed organizations, work is organized in small work groups and integrated regionally and nationally/globally.

5 IS reduce operating expenses by allowing information to be easily shared among different managerial functions.

IT & Organizational Structures 3

6 The "networked organization" is a new form, made possible by IS. Instead of rigid hierarchies, all parts of the company are connected by formal and informal communications.

The Information Systems Strategy Triangle

The Information Systems Strategy Triangle

Traditional Management

MIS Organization

Operations, Tactics, Strategy

Decision Levels

BIS3000 Lecture Two

E-Business

Strategic Relationships and Knowledge Management

E-Commerce and E-Business

* E-commerce, the process of selling a product or service to the customer (whether a retail customer or another business) over the Internet

* E-business, the integration, through the Internet, of all an organisation's processes from its suppliers through to its customers

Stages in the Commercial Use of the Internet

Boddy distinguishes between four levels of Internet use by a business, with increasing integration into core business processes at each level. These levels are:

* Information provision;

* Interaction with customers;

* Transactions; and

* Integration with internal information systems.

Basic Internet Business Models

(B-to-B: targets other businesses

( B-to-C: targets consumers

( B-to-E (employee): companies provide service to employees of other companies.

( B-to-G: companies provide services to local, state and national governments

( C-to-C: Consumers interact with other consumers.

Web-based business mechanisms

( Auctions: Web-based auction site (e-bay).

( Reverse auctions: sellers offer items to meet buyer's requests (priceline.com).

( Net markets: provides a place for buyers and sellers to meet (igetsmart.com).

( Portals: combined offering of information, services and links to other sites (Yahoo!).

( Bricks & clicks: storefront plus Web site (www.next.com).

( ASPs: offer business process functionality over the web to customers that use the site for internal business processes (igetsmart.com).

Reconfiguring Value Chain Systems to Lower Costs -- Software Industry

Reconfiguring Value Chain Systems to Lower Costs -- Software Industry

How Internet Technology Can Revamp Company Value Chains

? Internet technologies allow some value chain activities to be bypassed entirely.

And also

? Simplify supply chain activities and use 'e-procurement' tools.

? Integrate with internal operations - just-in-time inventory, production schedules closely matched to buyer orders, more accurate monitoring of buyer preferences and shifts in demand

? Automate collaborative data sharing with distribution channel partners -online systems reduce transactions costs.

Logical Design for Simple Web Site

Difficulties relying on Internet technology to gain competitive advantage

( All companies are rapidly gaining experience in use and application of Internet technology

- Mostly with use of generic, off-the-shelf software packages readily available to rivals

- Most industry participants gravitate to

use of many of the same Internet

technology applications

(and achieving comparable

operating benefits)

( Achieving sustainable competitive advantage generally requires use of proprietary Internet technology not readily available to rivals

Strategic Mistakes Made by Early Internet Entrepreneurs

( The mistake of ignoring low barriers to entry

- Eager capital providers paved the way

for market overcrowding and fierce rivalry

( The mistake of competing solely on the basis of low price

- Price became the predominant attention-getting competitive variable-price war atmosphere turned into a battle for market share and profits later (when volume built to levels high enough to support fixed costs)

- Low price is not a competitive advantage unless it is accompanied by truly lower costs

Business Models and Strategies for "Pure" Dot-Com Enterprises

Successful dot-com strategies tend to incorporate the following features:

- A distinctive strategy that delivers

unique value to buyers and

makes buying online very appealing

- Deliberate efforts to engineer a value

chain that enables differentiation or

lower costs or better value for the money

- Focusing on a limited number of competencies and performing a specialized number of value chain activities where proprietary Internet applications and capabilities can be developed.

Internet Strategies for Traditional Businesses

( Few, if any, businesses can/should avoid making use of Internet technology for internal cost savings and improve operational effectiveness

( Key issue is how to use the Internet to position the company in the marketplace, i.e. whether:

• Solely as a vehicle for disseminating product information (with traditional distribution channel partners making all sales to end-users)

• Secondary or minor distribution channel

• One of several important channels

• Primary channel

• Company's exclusive distribution

channel

Reasons for Using Internet

as Information or Minor Distribution Channel

( Avoids channel conflict and angering longtime wholesale/retail dealers

- Important where strong support

and goodwill of dealer networks

is essential

( Helps a company gain online experience, achieve incremental sales, and do marketing research to respond more precisely to buyer preferences
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Advantages of Using Internet as Primary or Exclusive Channel

( Advantage of bypassing traditional distribution channels entirely: Allows capture of full retail price by the manufacturer (e.g. downloads of music)

( Can assist re-design of entire value chain - i.e. on supply side as well as sell side

Reasons for Knowledge Management

Information and knowledge have become the fields in which businesses compete. Several important factors include:

? Rapid Change

? Globalization

? Difficulty in gaining sustainable Competitive Advantage

( Value of knowledge embedded in products and services

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