This model, introduced by Wiseman (1985, 1988) and intended to reduce the multiplicity of strategic actions undertaken by organizations, reduces them to only five generic thrusts · differentiation, cost, innovation, growth and alliance.
You can view strategic perspective in terms of strategic thrust, this is a major move which an enterprise undertakes in its search for advantage. By supporting or shaping a strategic thrust, an SIS supports or shapes the organizationÊs effort to obtain a competitive advantage. Thus, a strategic thrust is a critical interface joining competitive strategy with IT.
These generic strategic thrusts manifest strategic polarities, i.e. they are capable of assuming opposing sets of attributes depending upon their strategic use (Remenyi 1990). For instance, some organizations use differentiation offensively while others use it defensively. Using differentiation offensively an enterprise attempts to gain a competitive edge and thus increase its market share. On the other hand, using differentiation defensively means the firm will simply be attempting to protect its share from a competitorÊs attack. The same argument applies to the other four strategic thrusts.
Generic strategic thrusts frequently occur in combination. For instance, a growth thrust may be combined with a cost-reduction thrust, or an innovation thrust may be part of a differentiation thrust, or some other combination of thrusts may take place.
3.17
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The strategic thrusts serve as the engine that powers the strategic options generator, an instrument designed to help identify SIS opportunities. The option generator brings focus on three strategic targets, and then the thrust can be used to hit them.
There are three basic classes of strategic targets, suppliers, customers, and competitors. Thus, there are a total of 5 × 3 (15) different ways of searching for an SIS opportunity (see Figure 3.4).
What is the strategy target?
Supplier Customer Competitor
Offensive? Defensive? Offensive? Defensive? Offensive? Defensive?
Differentiation To use it? To use it? To use it?
To provide it? To provide it? To provide it?
Offensive? Defensive? Offensive? Defensive? Offensive? Defensive?
Cost To use it? To use it? To use it?
To provide it? To provide it? To provide it?
Offensive? Defensive? Offensive? Defensive? Offensive? Defensive?
Innovation To use it? To use it? To use it?
To provide it? To provide it? To provide it?
Offensive? Defensive? Offensive? Defensive? Offensive? Defensive?
Growth To use it? To use it? To use it?
To provide it? To provide it? To provide it?
Offensive? Defensive? Offensive? Defensive? Offensive? Defensive?
Alliance To use it? To use it? To use it?
To provide it? To provide it? To provide it?
Figure 3.4: WisemanÊs strategy optioin generator
The strategic options generator is a very useful tool because it offers a complete framework with which to search for and also evaluate SIS opportunities.
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In this topic you studied the strategic use of information technology through various concepts and frameworks. You studied concepts of information systems (IS), information technology (IT) and the notion of IS and IT strategies. You looked at the impact of IT on organizations. The development of IT can be divided into three eras: data processing era, management information systems era and the strategic information systems era. IT can be used as a strategic resource rather than as a utility and it can play a role in providing competitive advantage. You looked at inter-organizational systems, their characteristics and function, reasons for their growth, and their strategic role. Finally, you were introduced to five well-known frameworks for determining potential for strategic use of IT.
No industry provides so dramatic, so clear, and so public an example of the strategic use of IT as the US domestic airline industry. Until 1978, the Civil Aeronautics Board regulated fares, which eliminated strong price competition. Competition between carriers was based on service, food, seat size and availability of favourable routes. Information on price and routes was fairly stable and simple. Travel agents accounted for less than 20% of ticket sales, and were primarily used for vacation planning or complex trips.
In 1978, pricing was deregulated but safety and routing were still regulated. As a consequence, more cost-effective Âhub-and-spokeÊ route structures were sought. Many new competitors entered the industry, primarily as low cost carriers, who attracted riders from trains and buses.
Airline travel increased dramatically. Managing costs of equipment, fuel, and labour became crucial. Fares changed as quickly as airlines could determine profitability. Yield management, the ability to charge a different fare for any seat on an airline, became a key success factor. Fare wars were common and many fares had complex restrictions on their use.
Information complexity and the time frame for decision-making increased dramatically. By the mid-1980s, travel agents accounted for over 80% of ticket sales.
Use the value chain analysis to identify opportunities for strategic uses of IT in the US domestic airline industry.
Activity 3.5
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