Study Guide for It Strategy

Chapter 7:

1. Transformation process: input resources are transformed into outputs for which customers are willing to pay

Amount of new value added

Input resources: any factor of production

Output resources: the product being sold

Supplier Opp Cost: the minimum amount of money suppliers are willing to accept

Firm Cost: the actual amount of money the firm disbursed to acquire resources

Customer Willingness to Pay: the max amount of money customer are willing to spend

Total Value Created: the difference between customer willingness to pay and supplier opp cost

2. Amazon and WalMart

3. Personal

4. Creation: the process by which new economic value is generated through a transformation process

Appropriation: the process by which the total value created in the transaction is split among all the entities who contributed to creating it

Difference: creation is about how suppliers, the firm, and the customer partake. Total value tells if there is an opportunity to make a profit. Appropriation tells the split cost among suppliers, the firm and the customer.

5. Amazon

6. Information systems that are designed to support or shape the competitive strategy of an organization. Those information systems that enable the creation and appropriation of value.

7. Systems that do not position the firm to create added value. In other words, they do not enable distinctive initiatives that allow the firm to create unique economic value

8. Identifiable competitive moves and projects that enable the creation of added value, and that rely heavily on the use of information technology to be successfully implemented

Chapter 8

1. A framework that identifies the five forces shaping the profitability potential of an industry. Industry differences can be analyzed by this. The threat of new entrants, the threat of substitute products or services, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry among existing competitors. Different industries offer different potential for profitability. Affect one or more of the industry forces. Competitive advantage.

2. A framework that maps a firms transformation process as a set of sequential value adding activities. Deploy systems to neutralize or minimize unattractive features. Identify, understand, and analyze activities to be enhanced.

3. Create value by offering superior customer service with Internet.