Assignment: Strategic Advantage Models

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Assignment: Strategic Advantage Models

Assignment: Strategic Advantage Models

Most discussions of strategy focus on gaining competitive advantage in currently existing industries and mar- ketplaces, which are referred to by Kim and Mauborgne as red ocean strategy. Using a red ocean strategy, firms fiercely compete to earn a larger share of existing demand. Kim and Mauborgne recommend a better approach: Firms adopt a blue ocean strategy in which they create new demand in untapped marketspaces where they have the “water” to themselves. When applying the blue ocean strategy, the goal is not to beat the competition but to make it irrelevant. This is what Dell did when it challenged current industry logic by changing the computer purchasing and delivery experiences of its customers. “With its direct sales to customers, Dell was able to sell its PCs for 40 percent less than IBM dealers while still making money.”15 Dell also introduced into unchartered seas an unprec- edented delivery process that allowed buyers to receive their new computers within four days of ordering them as compared to the red ocean process, which typically required 10 weeks.

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10 For more information, please see Don Goeltz, “Hypercompetition,” vol. 1 of The Encyclopedia of Management Theory, ed. Eric Kessler (Los Angeles: Sage, 2013), 359–60. 11 D. J. Teece, G. Pisano, and A. Shuen, “Dynamic Capabilities and Strategic Management,” Strategic Management Journal 18 (1997), 509–33; David Teece, “Dynamic Capabilities,” vol. 1 of The Encyclopedia of Management Theory, ed. Eric Kessler (Los Angeles: Sage, 2013), 221–24. 12 Andrew McAfee and Erik Brynjolfsson, “Investing in the IT That Makes a Competitive Difference,” Harvard Business Review (July–August 2008), 98–107. 13 M. Levinson, “GE Uses the Internet to Grow Business,” CIO (October 15, 2001), GE_Uses_the_Internet_to_Grow_Business_ (accessed May 5, 2012). 14 Walter Isaacson, Steve Jobs (New York: Simon and Shuster, 2011). 15 W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy (Cambridge, MA: Harvard Business School, 2005), 202.

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25Brief Overview of Organizational Strategies

Why Are Strategic Advantage Models Essential to Planning for Information Systems? A general manager who relies solely on IS personnel to make IS decisions may not only give up any authority over IS strategy but also hamper crucial future business decisions. In fact, business strategy should drive IS decision making, and changes in business strategy should entail reassessments of IS. Moreover, changes in IS potential should trigger reassessments of business strategy—as in the case of the Internet when companies that understood or even considered its implications for the marketplace quickly outpaced their competitors who failed to do so. For the purposes of our model, the Information Systems Strategy Triangle, understanding business strategy means answering the following questions:

1. What is the business goal or objective?

2. What is the plan for achieving it? What is the role of IS in this plan?

3. Who are the crucial competitors and partners, and what is required of a successful player in this marketplace?

4. What are the industry forces in this marketplace?

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