In this exercise, we will compare Nordstrom’s website vs Nordstrom Rack’s website. Scoring is based on depth (word count), clear supporting details and conclusion, and spelling / grammar.
Review each site. What are some obvious differences between both sites with respect to: (1) Cost of shipping (2) Return policy (25+ words) (3pts). NOTE – You should see shipping / return policy at the top of each site. If not, go to here
https://shop.nordstrom.com/content/shipping-method…
for Nordstrom and here
https://www.nordstromrack.com/ship-return-policy
for Rack.
Describe the difference in the layout and picture quality of both sites. Is one fancier, more polished, seems more expensive than the other? Briefly explain. (2pts)
Based on (1) and (2), what is Nordstrom’s competitive strategy vs Rack’s in terms of Porter (Ch2PowerPoint slide 8 or Chapter 2 eText). In other words which ONE of the four boxes is each in? Explain. NOTE-For industry take into account where they line up taking into account Walmart, Macy’s, Nordstroms, and Nordstrom Rack (25+ words)(4pts)
Based on (1) and (2), do you think Nordstrom or Rack is more expensive in terms of operating costs? Does this match the competitive strategy and the price per item purchased at each store (ie, cost of shoes at Nordstrom vs Rack. Why is Nordstrom more? Link your response to Q1 and Q2)? Explain.
Chapter 2
Organizational Strategy, Information
Systems, and Competitive Advantage
Prof Rick Cassoni, CISSP, PMP
Study Questions
Q1: How does organizational strategy determine information systems
structure?
Q2: What five forces determine industry structure?
Q3: How does Industry structure determine competitive strategy?
Q4: How does competitive strategy determine value chain structure?
Q5: How do business processes generate value?
Q6: How does competitive strategy determine business processes and
structure of IS
Q7: How do information systems provide competitive advantages?
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Q1: How Does Organizational Strategy Determine
Information Systems Requirements?
Organizational Strategy Determines Information Systems
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Key to
know
order!!
3-3
Q2: What Five Forces Determine Industry Structure?
Competitive Forces – Danger of customers taking biz elsewhere
• Competition from vendors who manufacture substitutes
• Competition from new competitors
• Competition from existing rivals
Bargaining Power Forces
• Bargaining power of suppliers – High if patent or availability of
raw materials is low and supplier has access and others do not
• Bargaining power of customers – High if product is a commodity
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3-4
Not all doom and gloom
• There are a couple of strength factors in a business’ favor
– Switching Costs
– Customer Loyalty
• Both of these create barriers to entry against new entrants
– Do not have any customer loyalty (builds over time)
– Do not have records on customer’s purchase habits (builds)
– Typically not able to lock in suppliers to gain competitive
advantage
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3-5
5-Forces Model is used …
• To identify sources of strong competition.
• Then, use that knowledge to create a competitive strategy to
combat / minimize strong forces.
• Porter originally developed the Five Forces model to
determine potential profitability of an industry
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Assessing
the Five
Forces at
Falcon
Security
You will do
this for
your final
project
UberEats
Example
In context of forces AGAINST
Force
UberEats
Force
UberEats Example
Strength Uber Eats Response
Compet
itive
Forces
Bargain
ing
Power
Forces
Threat of
substitutions (typically
less techie, lower cost)
Delivery with car, motorcycle, or
(e)Bike
Medium
UberEats is faster and more
convenient
Threat of new
entrants
iFlyFood – New company that
focuses on drone delivery only
Weak
Requires capital and has
unproven success
Rivalry
Lyft offers similar service
Medium
Would need to come up with
capital for drones
Bargaining power of
customers
Large customer (McDonalds) wants
discounting
Strong
Lower price for McDonalds or
find new customers
Bargaining power of
suppliers
Supplier increasing the cost of the
drones they sell
Medium
Look for other suppliers
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3-7
Q3: What Is Competitive Strategy?
Porter’s Four
Competitive
Strategies
Where would
Nordstrom,
Nordstrom Rack,
Macys, and
Walmart
show up?
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3-8
Review 1
• The 5 Forces Model is based on which two forces
• The 5 Forces Model determines potential _________ of an
industry
• Competitive Strategy is based on what 4 items
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3-9
Q4: How Does Competitive Strategy Determine Value
Chain Structure?
Margin = Value Cost
Primary Activities
Each stage adds values but also
accumulates cost
•Inbound Logistics: arranging the inbound movement of
materials, parts, and/or finished inventory from suppliers
to manufacturing or assembly plants, warehouses, or
retail stores
•Operations: concerned with managing the process that
converts inputs (in the forms of raw materials, labor, and
energy) into outputs (in the form of goods and/or
services).
•Outbound Logistics: is the process related to the storage
and movement of the final product and the related
information flows from the end of the production line to
the end user
•Marketing and Sales: selling a product or service and
processes for creating, communicating, delivering, and
exchanging offerings that have value for customers,
clients, partners, and society at large.
•Service: includes all the activities required to keep the
product/service working effectively for the buyer after it
is sold and delivered.
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https://en.wikipedia.org/wiki/Value_ch
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Q4: How Does Competitive Strategy Determine Value
Chain Structure? (cont)
Support activities facilitate /
enhance primary activities such as
the negotiation of prices with
suppliers
Each stage
adds values
but also
accumulate
s
cost
Support Activities
• Procurement: the acquisition of goods,
services or works from an outside external
source
• Human Resources Management: consists of
all activities involved in recruiting, hiring,
training, developing, compensating and (if
necessary) dismissing or laying off
personnel.
• Technological Development: pertains to the
equipment, hardware, software, procedures
and technical knowledge brought to bear in
the firm’s transformation of inputs into
outputs.
• Infrastructure: consists of activities such as
accounting, legal, finance, control, public
relations, quality assurance and general
(strategic) management.
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Value Chain Linkages – Example
• Linkages are relationship between value chain activities
• Manufacturer system (possibly ERP) uses sales forecasts to plan
production
• The production plan determines raw material needs
• Need for raw material drives scheduling of purchases – many times
this is via electronic data interchanges (EDIs)
• This reduces inventory
– Therefore saving costs on storage
– Saving costs on scrap inventory
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3-12
Review 2
• The 5 primary activities are?
• The 4 support activities are?
• Margin = _______ – ________
• Relationship between value chain activities is called ______
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3-13
OUTSIDE
INSIDE
Roles
Q2: How Can
Business
Process
Modeling
Help?
Roles are a
subset of
activities in
a Biz
Process
performed
by an actor
Separate
repositories
for vendor
data and
orders
potentially
problematic
(inefficient)
Vendor
Activiti
es
Business Process Modeling Notation (BPMN)
in Swimlane Format
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Business Process
Modeling Notation (BPMN)
Activity – specific tasks to be accomplished
in a process
Data Repository – Collection of business
records / database
Decision – Question to be answered Yes
or No
Role – Subset of activities in a business
process performed by an actor
Actor/Resource – Generic person, group,
department, organization, or information
system
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3-15
Revised AllRoad Process
Using BPMN
OUTSIDE
INSIDE
Process diagrams provide
means to communicate
process structure,
possible changes, and
additional personnel
needs.
Impact of 3D Printing
1. New role for 3D printing added.
2. Vendor Data / Order Repo split
3. Operations will need to decide
whether the part is being
manufactured in-house
using 3D printing
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Review 1
_______ – Collection of business records /
database
_______ – Question to be answered Yes
or No
_____ – Specific tasks to be accomplished in
a process
_______ – Generic person, group,
department, organization, or information
system
_____ – Subset of activities in a business
process performed by an actor
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3-17
Q5: How Do Value Chains Determine Biz Process and IS?
Low-Cost Rental Value Chain
3-18
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Q6: How Do Information Systems Provide Competitive
Advantages?
Principles of
Competitive
Advantage
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3-19
How Does an Actual Company Use IS to Create
Competitive Advantages?
• What makes AMZN so good?
• Maintains customer account data
– IS collects information for ABC (adds value).
– IS saves customers time by automatically filling in part of form (adds value for
customer)
– Customer Loyalty / Switching costs
• Package & information delivery system
– IS helps customer to select delivery address and generate shipping labels.
– What value does shipper get? Reduced material cost, less errors
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3-20
ABC Web Page to Select Recipient from Customer’s
Records
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Review 3
Value
Chains
3
Informatio
n
Systems
5
Industry
Structure
Competitiv
e
Strategy
Business
Processes
1
2
4
• What are some ways an Actual Company Use IS to Create
Competitive Advantages?
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3-22
Ch2 HW2 Discussion Board
• Look at Ch2 HW2 Discussion Board comparing Nordstrom
vs Nordstrom Rack
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3-23
Think about what a VR company would look like
MS Hololens at Build
2015
Minecraft on Hololens
Oculus Rift Elders
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3-24
How Does Knowledge in This Chapter Help You?
•Identify key points Falcon Security must address in deciding
whether to expand its business beyond security services
•Explains relationship between competitive strategy and
information systems requirements.
•Summarizes knowledge that can help you in a job interview.
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Copyright
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