Business Models and Information Systems
“A business strategy is a well articulated vision of where a business seeks to go and how it expects to get there” (Pearlson & Saunders, 2004). An organization’s decisions regarding both organizational and information systems strategies must be governed by this overarching business strategy. The information technology strategy must fit into the business strategy and be reevaluated constantly to ensure the company is meeting its strategic goals. The information systems strategy will both affect, and be affected, by the business strategy. Pearlson and Saunders (2004) discuss two important business models: the Porter generic strategies framework and D’Aveni’s hyper-competition model.
The Porter generic strategies framework can be a useful tool to help managers identify and understand the strategy options available in the search for competitive advantage. Porter (1985) identified three primary strategies that allow a business to obtain this advantage: cost leadership, differentiation, and focus. I feel that this competitive advantage is just as dependent on the competition’s strategy and execution as it is on the organization’s position in the market relative to those competitors.
Porter (1985) contends that the goal of a cost leadership strategy is to be the lowest-cost producer in a particular marketplace. By minimizing the costs associated with doing business the organization is able to obtain above average performance. “To be successful, this strategy usually requires a considerable market share advantage or preferential access to raw materials, components, labor, or some other important input. Without one or more of these advantages, the strategy can easily be mimicked by competitors” (Wikipedia.org, n.d.). The organ ...