The Role of Information Systems in Strategic Management - Report Example

Strategic Management and Information Systems Research and Development of the Pairs Report and Viva s of Learning: s Name; Course Name: Date of Submission Research and Development of the Pairs Report and Viva Produce and Evidence Provide: Conscience is the central focus of change management Purpose The purpose of this report is to research and develop the pairs Report and Viva. The report provides evidence and supports the course that conscience is the central focus of change management. Overview The pairs report treats the lectures on the dependent variable as ordinal. The report starts by analysing the various related topics in Strategic Management and Information Systems. A close analysis of the topics is done to establish their relationship with change management. A critical look establishes that conscience is the central focus of change management. Lectures Lecture 3: Strategic Managers and Strategic Management Introduction Strategic management is an art and science that formulates, implements, and evaluates cross-functional decisions so that an organization effectively achieves its objectives. Strategic managers combine analysis, formulate and complement the need for competitive advantage. The strategic position of an organization must be clearly understood to ensure that strategic choices for future and strategy management issues are put into action. As a result, the internal and external environment of the organization are analysed to develop strategies necessary for resource allocation. Successful allocation of resources enables the organization attain a competitive advantage towards goal achievement (Paul, 2006). The Adizes Model The Adizes PAEI Model of management is a four faced model with short-term orientation, long-term orientation, internal and external orientation. The key players in this model are; the Producer, Administrator, Entrepreneur, and Integrator (PAEI). Their roles in the four orientations produce results, procedure systems, creativity continuity, and motivation co-operation. The elements of Adizes Model Producer The producer is concerned about the external and short-term orientation programs for the organization. The focus is result oriented in relation to the plans and management roles of the organization. The implementation of the strategic plan must comply with the market perspective of the organization. Administrator This element in strategic management focuses on internal and short-term orientations with an emphasis on procedures and systems of the organization. Entrepreneur The entrepreneur element integrates external and long-term orientation with a focus on creativity and continuity in the market. Through this element, strategic management enables exploration of new market opportunities to enable the organization attain competitive edge advantages. Integrator The integrator element incorporates internal and long-term orientation strategies for the organization. The areas of concern are motivation and co-operation aspects within the organization. Analysis of roles of Strategic Managers The roles of strategic manager are not very different from those of other managers but are obliged to operate within the tight confined market. The thinking of strategic managers is abstract, affecting their roles within the organisation confined to three decision levels; strategic, tactical and operational roles. These roles affect and are influenced by external and internal environmental factors. Characteristics of Decision Level for strategic managers Strategic level This level offers an organization a competitive riding advantage over others. This could mean that an organization would engage in producing a new product that will change the industry. To successively and efficiently engage in right decisions, the following factors are worth consideration; The external events around the organization Rivals available producing similar or better products that will create competition for the product to be launched The targeted sales once the product is rolled into the market The costs to be incurred for implementation and production of the product The quality of the product launched and the market expectations Marketing trends of the targeted market. Tactical Level The purpose of this level for strategic managers is to enable the organization improve its operations. For example; an innovative decision on new tools will improve efficiency and reduce costs. The following information is required by strategic managers for efficient decision-making; The expenses that the organisation is likely to incur to implement the innovative program The schedules of the program and the existing schedule so that a harmonious scheme is developed The sales to be gathered from the new inventions The business model to be implemented for successful operations Probable forecast upon implementation of the new business model and the innovated products. Operational Level Decision making at operational level entails the daily functions of the organization. Some of the daily activities include; scheduling of employees and ordering for supplies. The relevant information required for this operation is; Daily transactions to be performed Accounting activities to be carried out Human resource management that evaluates the available resources in the organization. Through the evaluation, the organization is able to assess the available human resource, its capability, inability, and explore viable options for the same. The organizations inventory. Lecture 4: The Strategic Environment Decision making process by strategic managers solely depends on the strategic environment mechanism of the organization. Critical analyses of the organization’s environment leads to supportive decisions that enable the organization attain a competitive advantage. Crucial issues to strategic environment is the value of information gathered from which decision are made. The Porter’s five forces and upstream and downstream flow of information in the organization offer strategic mangers an analysis point towards better decisions. Critical issues in strategic environment Right decisions are derived from a brain storming exercise concerning the strategic environment of the organization. Critical issue of concern are; An analysis of the main competitors in the market sector An analysis of the organization’s competitive ability Factors that will positively and negatively affect the long-term competitiveness of the organization The ability of the organization understanding its long-term resource problems A critical analysis of the organizations capacity to deal with its long-term obstacles and The threats to long-term survival of the organization The value of information to strategic environment The information gathered affects the current strategy as well as the future strategy of the organization. The value of information is essential for; Future strategy in strategy planning Potential value evaluation Supporting the business regardless of little value Facilitate core processes and value achieved through horizontal integration Value information can be achieved through various models. One of the models worth discussion from the lecture is Porter’s five forces. Porters Five Forces Porter’s five forces are used to assess the balance of power in an organization’s situation and for competitive position analysis. The theory relies on the five forces that determine the intensity and attractiveness of a market. Through the analysis, strategy managers adapt viable decisions that the organization engage in towards competitive advantage. Through the model, a strategy manager identifies the power house of the business. The organization’s current competitive position and the viable options for the organization in future that can be explored are also identified. Through the model, a strategic manager establishes the potential profitability of a certain product or service. Once an organization identifies its powerhouse source, identification of an organization’s strength, areas of improvement, weaknesses and areas to avoid are easily identified. The five forces are; Supplier Power (Downstream information) The forces of supply play an important role in controlling prices of commodities or services in the market. Supplies drive up or down market prices and is driven by; the number of suppliers per essential input, the uniqueness of the product or service offered, size and strength of the supplier, and the cost of switching from one supplier to the other. Buyer Power (Upstream information) The purchasing power of buyers determines the downward movement of prices. This is determined by the number of buyers in a particular market, the relative value of each individual buyer to the business, and the cost incurred when the buyer switches from one supplier to the other. Organizations with few buyers often dictate terms. Competitive Rivalry The number of competitors and their capability in the market is the driving force behind competitive rivalry. Market attractiveness is reduced when most competitors offer undifferentiated products and services. Threat of Substitution Customers are likely to switch to alternatives when there is a close substitute of product in the market. This switching is dictated by price increases and as result reduces the power of suppliers and market attractiveness. Threat of New Entry Markets that fetch maximum profits attract many entrants which in the long run erode profitability. This requires the incumbents to possess strong and durable barriers to entry through patenting, economies of scale, capital needs, and government policies to make profitability decline to a competitive rate. Porter’s five forces enables an organisation understand factors affecting profitability in a particular industry. This helps strategic managers make informed decisions relating to; entry in the industry, increase capacity in a specific industry, and develop competitive strategies. Upstream and Downstream Information This information is important for strategy development, monitoring, and evaluation of an organization’s performance. Upstream Information covers; Personal information about the customer Aggregate information about the customer Buyer trend information and Population movements. The Downstream Information focuses on; Information about the supplier company Alternative information about the supplier Value information concerning the supplier and Growth information about the supplier. Lecture 6: Strategic Planning Strategic planning is pegged on the following assumptions; i. Environment forecasting that is sufficiently accurate to determine the future ii. Strategy formulation; a rational process through which objectives are formulated and alternatives are identified and utilised and iii. Ignoring behavioural dimensions. Environment forecasting is an inaccurate procedure due to several dynamic factors. Some of these factors are; unpredicted nature of product life cycles and behavioural and cultural aspects that are significant during the formulation and implementation levels of a strategy. Under such scenario, the process of making vital decisions for the organization may degrade. Therefore, strategic management depends on acknowledging the general principles that govern competition. This makes the process an ongoing activity of assessment, selection, and implementation. Strategic Planning Process Model This model has three planning elements; strategic analysis, strategic choice, and strategic implementation. Strategic analysis focuses on the mission and goal of an organisation as its plan component with a key question of the organization’s objectives. Strategic choice focuses on strategies and the routes to achieve them while strategic implementation looks at the policies, decisions, and actions in the component plan. From the component plan, strategic implementation derives a guide to collective decision, available choices, and probable courses of action. Through the model, the organization adapts two strategic positions. The first position looks at the environment, and capability of the plan. Business environment is made up a complicated mixture of political, economical, social, technical, environmental, and legal surrounding. Strategic managers must examine all these aspects of environment during the decision-making process. The ability of an organization meeting the market demand is referred to as capability. Issues of importance are the available resources at the organization’s disposal and competencies which could be core and distinctive. Competency provides real proficiency for an organization when performing internal activities. It is defined as the product of an organization’s learning and experience, divided into two; core competence and distinctive competence. Core competence is a well-informed internal activity central to the organization’s competitiveness and profitability. The activities are not peripheral or incidental but well castigated and planned. Distinctive competence entails valuable activities that the organization performs better than its rivals (Ward & Peppard, 2006). Analytical Tools in Strategic Planning Strategic Analysis This part of management process focuses on understanding strategic position of the organization. Its aim is to formulate an image of the influences playing upon the organization so that strategic managers are informed about the elements of strategic choices in the overall strategic management process. Three factors are of importance in strategic analysis; the organization’s Environment essential for exploiting environmental opportunities facing and blocking the organization’s threats in a consistent manner with internal capabilities Value and objectives Resources established through strengths and weaknesses examination. Strategic Choice Strategic choice has three factors; Strategic managers enjoy the opportunity of identifying as many viable options as possible to posses many courses of action Evaluating process for the choices made and aligning them in accordance with the framework created by strategic analysis The selecting process from which the managers select an option that results into a single strategy to be used as a target for strategic implementation element. Strategic Implementation The purpose of this element is to engage the selected strategy into action and needs the organization to capture the following; Resources needed- this identifies the tasks to be carried out and assess how and the responsible departments the task is resourced The changes requited in the organizational structure The purpose of information systems strategy is to ascertain that effective development and implementation of the IS in alignment with the strategic direction. To achieve this, each node must participate effectively to avoid any danger. The nodes are; The Board: Its low involvement at the policy development level ;leads to low success The User: Failure of the project is a s result of low involvement or participation The IS: The IS must be aware of the new tools and technological changes so that the right cost effective models are implemented in the organization. IS Strategic Plan In the planning phase, IS has no fixed sequence but acts as a catalyst for generating and documenting business strategies. The IS plan aims at achieving the following issues; Identify the course to be taken by IS so that the danger of getting lost is avoided and Offer a set of benchmarks to measure progress of the journey. Another issue of concern is the ability of identifying the core elements of the IS strategy plan. It is mandatory that a clear statement of IS objectives be stated so that a clear direction that the organization should be driven is arrived at. An inventory and assessment of the capabilities and problems currently faced by the organization should be done. This is an evaluation of the current state of the organization and its practices. An implementation plan that delivers a sense of direction and knowledge of start point into a navigable route is identified. The plan should highlight long and short-term action and resource allocations. The plan must acknowledge that organizational change is inevitable and important in the planning process. Wards model of planning process emphasizes that IS strategy plan should entail three elements; a. The Business Information Strategy: This strategy shows how information is used to enhance the business. b. IS functionality Strategy: highlights the features and performance codes the organization will need from the systems. In other words, it shows how resources will be allocated c. IS/IT strategy: this strategy defines the policies for software and hardware as well as the organization’s attitude towards IS organization. In most cases, the long-term plan coincides with the business plan time but project specific that the business plan. On the other hand, the short-term IS plan is similar to the short-term business plan. In other words, it defines the particular stages of projects run over several years, giving specific dates, goals, and budgets for software and hardware acquisitions. Lecture 7: Competitive Advantage, the Strategic Imperative Competitive advantage refers to superior performance of an organization in relation to other competitors within the same industry. Preferably, anything that an organization does better than its competitors puts it on the competitive advantage edge. It is an aspect that cannot be measured and valued for the right reason. Everything that an organization engages in such as higher profit margin, greater return on assets, valuable resource like brand reputation or unique competence are termed as competitive advantage, relative to what organizations in the similar industry are doing. A company’s survival depends on its capacity to have at least one competitive advantage to compete in the market. Failure to do so will lead to its exit. There are several ways through which an organization can achieve the advantage but there are two basic types; cost or differentiation advantage. Any company that can implement the two is capable of offering consumers products at lower or affordable prices or with a higher degree of differentiation. As a result, it will outdo its rivals successfully. Once the organization outperforms its competitors for a long period of time, it develops sustainable competitive advantage. How can an organization achieve competitive advantage? The following two ways can be used by an organization to achieve competitive advantage; Use of external changes PEST Analysis is a simple but effective tool that an organization uses to analyse situations and identify the external or macro environment level forces. The forces create opportunities and threats for the organization. The purpose of PEST is to; a. Analyse current external factors that affect the company b. Identify any external factors likely to change in future c. Explore any opportunities or defend any threats to a better level than competitors. The result of PEST analysis is that strategic mangers grasp the overall image of the environment of the company. PEST analysis is essential for business planning towards strategic management. The macro environment of the organization includes the following aspects; Political, Legal, Demographic, Technological, Environmental, Socio-Cultural, Ethical, and Economic factors. Political factors such as government policies, its term and change, trading policies, funding and grants, political trends of a country among others poses treats or advantages to an organization. The factors must be critically organized by strategic managers during the decision-making process. Economic factors refer to economic policies, the social structures and the degree to which economy will influence the business. Some of these factors are; local economy, taxation, inflation, economy trends, the growth of the industry, international trade and international exchange rates. The social factors concentrate on cultural aspects, attitudes, and beliefs that affect the demand for an organization’s products and services and the daily operations of the business. Issues of concern are the demographics, the view of media in the industry, work ethic, lifestyle trends, technological image of the organization, brand name, cultural taboos, and consumers’ attitudes and opinions. Technological factors refer to the aspects of technology, innovations, barriers and incentives within the business life cycle. Issues of concern are new technologies, the nature of the technology, legislation processes involved, research and innovation, competitor technological advancement, and intellectual property issues. Legal factors focus on laws, regulation, and legislation that affect business operations. These are current legislation, future legislation, internal legislation, tax regulations, consumer protection, and competitive regulations among others. Environmental factors develop a relationship between ecological and environmental aspects that affect the demand and supply of an organization’s products and services. These factors include environmental regulations, ecological regulations, sustainability and adverse weather. Changes in these factors offer many opportunities that can be exploited by the organization to attain superiority over its competitors. For example, introduction of a new superior machine manufactured and sold only in China would lead to lower costs of production for Chinese companies. As a result, the companies will enjoy cost advantage against competitors in the global arena. On the other hand, changes in demand by consumers such as preference for consumption of healthy food will enable a company gain temporary differentiation if it opts to venture on healthy food products if its competitors do not. Opportunities from changes in external environment likely trigger all companies to profit. This is so because the companies have different resources, competence and capability. This implies that the companies are differently affected by macro environment changes. When a company is fast to respond to environmental changes, it can exploit the external change before its competitors and attain competitive advantage. However, if it is slow to respond to environmental changes, it will never benefit from the rising opportunities. Developing internal Environment within the organization VIRIO Resources A company with VRIO (valuable, rare, hard to imitate, and organized) resources has a competitive edge over its competitors because of superiority of the resources. Once a company acquires VRIO, no other company can acquire it temporarily. Resources that possess VRIO attributes are; intellectual property (patents, copyrights, and trademarks), brand equity, culture, know-how, and reputation. Unique competences This type of competence refers to the ability of a company to perform tasks successfully in relation to skills, knowledge, capabilities, and processes it has. An organization that has developed a competence in manufacturing particular electronics is likely to enjoy temporary advantage over other companies and find it difficult to replicate the processes, skills, knowledge, and capacity for that competence. Innovative capacity An organization can gain superiority through innovation. New business models, innovative processes or products offer companies strong competitive advantage due to first mover advantage. For example, when Apple’s introduced tablets or its business model that combined mp3 device and iTunes in online music stores, it enjoyed a competitive advantage over its rivals. Basic types of competitive advantage According to Porter, there are two basic types of competitive advantage; cost advantage and differentiation advantage. Cost Advantage Porter’s argument states that an organization can attain superior performance by producing similar products but at lower subsidized costs. This implies that a company will sell its products at the same price offered by other competing companies but reap high profit margins due to lower production costs. Cost leaders therefore maintain that quality close to or equal to that in the competition market should be produced. In order to achieve cost leadership, the organization must trade-off with differentiation since the two types of competitive advantage are not compatible. This type of competitive advantage makes the company pursue cost leadership strategy. The high profit margins lead to further reduction in prices, more investments due to innovation prices and greater value for customers. Porter gives a number of cost driving factors that an organization must understand so that it enjoys a sustainable cost advantage. This is so because sustainability of cost advantage in a particular course depends on cost drivers of that course. The cost drivers worth analysis are; a. Scale: The organization must determine the appropriate type of scale. The policies of the business must reinforce economies of scale in sensitive matters b. Learning: The learning curve of the organization must be understood. As it learns from competitors, it must develop its own learning propriety. c. Capacity utilization d. Linkages should be exploited within value chain. Working with suppliers and channels is likely to lead to reduced costs. e. Interrelationships f. Integration g. Timing h. Policies i. Location of the business and j. Institutional factors. In order to achieve cost leadership, Porter issues five steps; The organization needs to identify an appropriate value chain, assign costs and assets to it. Outline the cost drivers of each activity and realize how they relate Establish relative costs of competitors and the sources of cost difference Ensure that it has a relatively low cost position to control cost drivers and Test the cost strategy for cost reduction for sustainability. Differentiation Advantage On the other hand, differentiation advantage is attained through production of unique products and services while charging premium prices. This implies that the company has to position its resources in brand modelling, advertisement, design, quality, and new product development rather than efficiency, outsourcing or innovation processes. However, cost leadership and differentiation strategies are not the only options that organizations can use to attain competitive advantage. Internal knowledge development by an organization is attained through; socialization, externalization, combination, and internalization. Lecture 9: Understanding Consensus Consensus ad idem is a meeting of the minds. It happens when parties in an agreement have same understanding of the agreement terms. This means that the parties must have mutual comprehension. The terms of reference in the agreement are acknowledged by all parties i.e. the parties talk on the same thing and agree on the same issue. Importance of consensus a. Facilitate delivery of the targeted product to customers b. Acknowledge the market environment c. Satisfy the needs of the customers d. Understand the perception and understanding of other professionals e. Develop an integrated mode of information strategy. How to achieve consensus The process of achieving consensus is an ongoing cycle with controls until the objectives of the organization are achieved. The first step is a discussion by relevant strategic managers on the issues at hand. During the discussion, proposals are raised from which a test of consensus is exercised. During this stage, yes proposals lead to achieved consensus and finally action points. Issues that do not attain consensus facilitate rising of concern which can be taken to the drawing board (discussion stage) or may be blocked or modified or set aside (Ward & Peppard, 2002). The consensus process must ensure a structured form of information flow. This could be achieved through contributions from experts. The information is gathered through questionnaires, in the form of answers, and comments to the answers given. This method of gathering information avoids face-to-face engagements. Regular feedback is essential to informational flow. The participants comment on their own forecasts, responses, and progress of the panel. Since the participants maintain anonymity, any domination by other participants through their authority is ruled out. A useful consensus should achieve the following; a. A vivid understanding of the objectives of the organization in order of priority b. A shared vision or agreed reality where all participants understand everyone’s viewpoint c. A focal point for development where all parties agree on what they want and how it will be achieved. Lecture 10: Causing Consensus Alignment of information systems to strategy goals of an organization is a concern for managers. It is defined as the capacity to show positive relationship between information systems and financial measures of performance accepted by an organization. Strategic Alignment model is the most commonly used model of alignment. It is a multidimensional model that identifies internal and external dimensions. Furthermore, it states how the dimensions can be integrated successfully with the strategy of the organization (Melissa, 2008). Most alignment models rely on organization structure and their objectives. Strategic alignment model places alignment at the heart of the needs of the organization. The models show the influence of the objectives of an organization on alignment since it focuses on a link between technology and strategy. An achievable level of alignment in an organization is attained when the purpose of IT/IS is within the structure of the organization. One of the advantages of strategic alignment is the higher perception business value of IT/IS. The stature of IS/IT within the organization is developed and the organization is in a position to leverage IT/IS resources continuously to support competitive advantage in the market environment. Hence there is need to change IT/IS orientations from an internal focusing to one that strategically fits the external IT/IS domain environment. According to the model, internal and external technological as well as socio-economic environments influence the connection. This implies that dynamism of the organization is high and frequent examination, monitoring and adjustment of the alignment is necessary. Organizational structure and alignment It is the responsibility of the managers to ensure that a good alignment exists between information systems and the business. This ensures a smooth work within the business since it centralises decision-making and increase the capacity of processing information. As the changes in strategy, rules, and procedures within the organization occur, hardware, software, databases, and telecommunications will need to be changed too. Information systems and organization has a relationship that results from the scope of system projects and application. Technology is an important aspect in alignment of information systems with the business strategy. This form of information systems structure is relevant to assist granting business goals. As the business strategy changes, aligning the infrastructure of information systems becomes difficult. It is therefore necessary to define the goals of the business as well as those of IT/IS. A review of the formulation of the goals stated is also important. The IT/IS professionals should be involved during business planning phase as the business professionals get involved during the IT/IS planning phases. The early stages of information systems alignment must show a link between the objectives of the business. Performance measures, targets, and performance evaluators are necessary before and after implementation of the strategy alignment. In the long run, the organization will need to modify some of its features in business operations, structures, and cultures. The success of the alignment will depend on the capacity of the organization in managing change. The situation of the organization and the level of alignment will determine the level at which the improvement and alignment of the business strategy and IT/IS will make. As the IS plan and business plan is aligned, information resources supporting business objectives are outlined. The organization will therefore undergo six stages of IS/IT growth with each stage integrating four active processes (application portfolio, user’s role and awareness, IT resources, and management planning. The pace of growth is compared with expenditure. Interpretation Change management is a process and tools and techniques used to manage peoples’ side of change but not a process improvement method. As a method, it reduces and manages resistance when an organization implements processes, technology or organizational change. This implies that it is not a stand-alone technique that improves the performance of an organization to attain competitive advantage but an application of a structured process. Effective implementation of change requires strategic planning by the organization managers. The role of information systems in strategic management and change management can be compared to the role of the heart in the body. Flow of information within an organization structure is important to the organization’s success. The information is the blood while Information Systems is the heart. Just as the heart plays the role of supplying blood to the body, so is the role of information systems in the business structure. Information Systems is responsible for collecting appropriate data from the relevant sources, processing, and relaying the data to the respective departments. Management Information Systems controls diverse programs within the organization structure such as the query systems, analysis systems, modelling systems, and decision support systems. MIS assists in Strategic Planning, management control, operational control, and transaction processing. Strategic managers play an important role in establishing business plans and information systems infrastructure that are aligned. The success of an organization to attain a competitive advantage depends on a system approach to information systems and implementation of the Porter’s Five Forces. According to the lectures provided, change management is modelled through strategic planning, competitive advantage, building consensus among employees, and aligning information systems with strategic management. This implies that the success of the organization in change management depends on strategic managers’ roles. References Melissa, A. S. (2008) Strategic Management of Technological Innovation, McGraw-Hill Education Pvt, India. Paul, G. (2006) Managers Guide to Making Decisions about Information Systems, John Wiley & Sons, New York, NY; U.S.A. Ward, J. & Peppard, J. (2006). Strategic Planning for Information Systems, 3rd Edtn, Academic Internet Publishers Publication, New York; U.S.A. Ward, J., & Peppard, J. (2002). Strategic Planning for Information Systems, 3rd Edtn, John Wiley & Sons, New York, NY; U.S.A. 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