Page 54 - DMGT505_MANAGEMENT_INFORMATION_SYSTEM

Unit 3: IT Impacts

 Indicators of competitive position are as follows: Notes
 Increased market share (fixed size or not)
 Increased sales
 New customers

 Increased customer loyalty
 Decrease in production costs
 Decrease in operations (service) costs

 Improved reputation in the market.

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Caution A firm is said to have a competitive advantage when the firm produces greater
return on investment (ROI) than its industry’s average return.

3.5.1 Observing Strategic Behaviour

It is difficult to observe how a firm competes because:
 Boasting of greater ROI can encourage other firms in the industry to claim unfair
competitive practises, to bring up litigation charges.

 Providing information on the SIS can make it easier to imitate the SIS.
 Failures are not discussed.
 Customers of the IT have different uses for the IT, and also different values which can not
be compared to each other. A small store or a big firm can make use of the IT.
 The IT technology is diverse. It can be a simple database or a complex expert system. The
IT should not be confused with the data itself or with the information value customers
gain from the data. The IT provides access to the data or information. It also allows
customers to manipulate the data.

 Identifying the costs and benefits attributed to the new strategic element of an existing IT
system can be difficult.

3.5.2 Characteristics of SIS

Some characteristics of successful SIS are:

 They are innovative, unique, original in some way.
 They are not easily copied (combine IT leverage with organizational resources).
 They are developed through some pre-existing resources of the organization.
For example, special skills of the employees, or protected market segment (patents), brand
name (reputation), product scope, etc.
 The SIS system is supported by top management.
 Strategic partnerships. (R and D is expensive, standardization requires cooperation, reduce
technical risks and training, allow global access, etc.)
 Can be analyzed by strategic frameworks.

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