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ntry (cost of setting up a website) 32 ISMT 510 Impact of Inter on 5C’s ? Coordination (inefficiencies removed –worth $200 billion) ? Commerce (enables B2B, C2C) ? Community (user groups – ratings and feedback) ? Content (news, stock quotes, games) ? Communication (, webphones, real time video) 33 ISMT 510 Business Model Environment Performance 5 C’s Coordination Commerce Community Content Communication Change Impact of Inter on 5C’s Inter Properties ? Mediating technology ? Universality ? Network externality ? Distribution Channel ? Transaction cost reducer ….. 34 ISMT 510 Where we are… ? Strategy ? Determinants of performance ? Sustainable advantage how to achieve it ? Porters five forces model ? Value Configuration Strategic vs. operational effectiveness Key issues in strategic positioning Mistakes made by dots Value chain Value shop Value work Business models and types Impact of Inter 35 ISMT 510 A Brief History of IT for Competitive Advantage ? The potential of IT for creating strategic advantage was recognized in early 1980s ? Early work led by Harvard Business School strategy professor Michael Porter: – Competitive Strategy, 1980 – Competitive Advantage, 1985 ? W. McFarlan, “IT Changes the Way You Compete,” Harvard Bus. Review, 1984 ? Early case studies of innovative use of IT: American Airlines SABRE, Otis Elevators, etc. 36 ISMT 510 How do we define and achieve petitive advantage? Competitive advantage means: ? “Being able to earn a ROI (return on investment) that is persistently above the average for a given industry.” ? (not just a temporary advantage or high ROI) – Crowston Treacy, “Assessing the Impact of IT on Enterprise Level Performance” 1986. How do firms achieve petitive advantage? 37 ISMT 510 Sustainable Advantage ? The strategic “positioning” school of strategy (Porter) Select the right “position” in an “attractive” industry Perform different activities or similar activities differently ? Means of achieving: Benefits of size in targeted markets Access advantage Exercising options Economies of scale Economies of scope Experience Inputs Markets Patents Antitrust 38 ISMT 510 How Can You Deploy IT to Create a Competitive Advantage Identify novel uses of IT that are consistent with and support your strategy ? These novel uses of IT may: – Reinforce your cost leadership position – Allow you to provide product/service differentiation to your customers (or suppliers) ? Strive to “l(fā)ockin” your customers (or buyers) through innovative uses of IT – Use the “createcapturekeep” strategy (Clemons) – What factors can enhance customer “l(fā)ockin” or “switching costs?? 39 ISMT 510 Why is Michael Porter important? ? First strategy writer to analyze why information and IT can be critical to petitive advantage – Competitive Strategy 1980。 Competitive Advantage, 19