W3 - The Strategic Framework and BPR for e-Business

Response:

Strategic framework

Each organization need to establish its own strategic framework in order to have significant success. In lecture, strategic framework is to provide a broader context within which the analysis techniques and tools are applied for strategy formulation which includes the external environment, pressure groups and stakeholders and internal business strategizing and planning. To explain it in a easier way, a strategic framework consists of a vision for your future, a mission that defines what you are doing, values that shape your actions, strategies that zero in your key success approaches, and goals and action plans to guide your daily, weekly and monthly actions. There are two analysis PEST and SWOT.

PEST analysis

PEST analysis to describes a framework of macroenvironmental factors and analyze the impact of the overall business environment in the early stage of strategic thinking. PEST respectively represent Political factors, Economic factors, Social factors and Technical factors. It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning.

For Political factors, they usually include government regulations and legal issues and define both formal and informal rules under which the organizations must operate such as tax policy, environmental regulations, employment laws, political stability etc. For these factors, organizations should consider that following issues,

First, How stable is the political environment?

Second, Will government policy influence laws that regulate or tax your business?
Third, What is the government's position on marketing ethics?
Fourth, What is the government's policy on the economy?
Fifth, Does the government have a view on culture and religion?
Sixth, Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others?

For Economic factors, they affect the purchasing power of potential customers and the organizations' cost of capital. The examples are economic growth, interest rates, exchange rates and inflation rate etc. For these factors, organizations should consider that following issues,
First, Interest rates,
Second, The level of inflation Employment level per capita,
Third, Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on.

For Social factors, they include the demographic and cultural aspects of the external macroenvironment. These factors affect customer needs and the size of potential markets. The examples are health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety etc. For these factors, organizations should consider that following issues,

First, What is the dominant religion?
Second, What are attitudes to foreign products and services?
Third, Does language impact upon the diffusion of products onto markets?
Fourth, How much time do consumers have for leisure?
Fifth, What are the roles of men and women within society?
Sixth, How long are the population living? Are the older generations wealthy?
Seventh, Do the population have a strong/weak opinion on green issues?

For Technological factors, they can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. The examples are  R&D activity, Automation, Technology incentives and Rate of technological change etc. For these factors, organizations should consider that following issues,

First, Does technology allow for products and services to be made more cheaply and to a better standard of quality?
Second, Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc?
Third, How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc?
Fourth, Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management, etc?

SWOT analysis

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT respectively represent Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses are internal factors while opportunities and threats are external factors.

For Strengths, an organization's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. The examples include patents, strong brand names, good reputation among customers etc.

For Weaknesses, the absence of the above strengths can be viewed as weaknesses. For example, they may lack of patent protection, have a weak brand name, poor reputation among customers, high cost structure etc.

For Opportunities, the external environmental analysis may reveal new opportunities for profit and growth. The examples are arrival of new technologies, loosening of regulations, removal of international trade barriers etc.

For Threats, changes in the external environmental may also be the threats to an organization. The examples are shifts in consumer tastes away from the organization's products, emergence of substitute products, new regulations, increased trade barriers etc.

Conclusion

To conclude, strategic framework helps to analyze both internal, external, macroenvironmental and microenvironmental issue of the organization. Therefore, a right strategic framework is very important for an organization to have a clear vision for its business. It is one of the keys to lead the organizations to success.

Source / Reference:
1) Suillivan, “Systems planning in the information age,” Sloan Management Review, 1985

2) "PEST: Political, Economic, Social, and Technology Analysis" by The Decision Group 2009

3) “Strategy and Vision Statements"

http://humanresources.about.com/cs/strategicplanning1/a/strategicplan.htm

4) "A knowledge-based SWOT-analysis system as an instrument for strategic planning in small and medium sized enterprises" by G. Houben, K. Lenie, K. Vanhoof 1999

5) “Making the Most of Your Company's Knowledge: A Strategic Framework” by Georg von Krogh, Ikujiro Nonaka, Manfred Aben 2001

http://www.sciencedirect.com/science/article/pii/S0024630101000590

W4 - Strategic Alliance Model

Subject:
In Lect 4 - Which alignment strategy in SAM model is the best? and why?
======================================================================
Response:

First, I should briefly define what is SAM. Strategic Alignment Model (SAM) is a framework which is used for aligning IT with business strategy, conceptualizing and directing strategic role or management of IT, leveraging IT on a continuous basis to achieve sustainable competitive advantage. It is widely used as the base of Business and IT alignment theories. This model brings out a key message that the company should ensure the IT strategy is fully aligned with business strategy in order to become a successful company.

There are four dominant alignment perspectives of SAM which are Strategy execution, Technology transformation, Competitive potential and Service level.

To comment on which is the best SAM model, I personally support the argument that there is no best alignment strategy and it depends on different industries and companies. As mentioned by J C Henderson and N Venkartraman, as researchers and observers of strategic management phenomena, we do not believe that there is one universally superior mode to formulate and implement strategy. If there were, it would not be strategic because all firms would adopt it. They basically support the argument. If there were a best model, all firms would make use of it and the model would no longer strategic.

I will now further describe the four dominant alignment perspectives and show their own advantages and successful examples to show all of the four perspectives are good when they are applied to the appropriate nature.

1.      Strategy execution

Business strategy is the driver of both organizational design choices and the design of IT infrastructure. Identifying the specific role of management is the key point to make this succeed. In this perspective, the role of top management is strategy formulator and should articulate the logic and choices pertaining to business strategy while the role of IT manager is strategy implementer and should designs and implements the infrastructure and processes which support the strategy. One more thing is that performance of the IT function is assessed by the financial parameters.

Since strategy execution is the most common and widely understood perspective as it corresponds to the classic, hierarchical view of strategic management, many companies succeed with applying this model.

2.      Technology transformation

Business strategy is the driver of IT strategy and IT infrastructure. This model use appropriate IT strategy to implement the business strategy. The role of top management is technology visionary that best support the business strategy and the role of IT manager is technology architect that designs and implements the IS infrastructure that is consistent with IT vision. This alignment perspective is not constrained by the current organization design. It uses to identify the best possible IT competencies. The other thing is that performance in term of IT market position is assessed by a benchmarking approach.

A successful example is American Express Travel Related Services Co., Inc. It has two technology-based competencies which are providing quick approval of purchases made by charge card and providing copies of receipts to the cardholders. By this, American Express can catch the response time of the leading competitors so as to avoid the cardholders switching to the alternative with faster transacting card.

3.      Competitive potential

IT strategy is the driver of business strategy and organizational infrastructure. This model is to allow adaptation of business strategy via emerging IT capabilities. It seeks to identify the best set of strategic options for business strategy. The role of top management is business visionary that estimates how IT competencies affect the business strategy while the role of IT manager is catalyst that identifies the IT environment so as to assist the business managers to know more about the opportunities and threats of emerging IT. In this perspective, business performance is assessed by business/product leadership including market share, growth and new product introduction.

A successful example of competitive potential is Baxter Healthcare. It enhances Technology scope, greater systemic competencies and governance with IBM through the Spectrum joint venture that will provide software service to the health care marketplace.

4.      Service level

IT strategy is the driver of IT infrastructure and organizational infrastructure. Applying this model is to ensure the effective use of IT. It focus on how to build a world-class IT service organization. The role of top management is prioritizer that allocate the resources within the organization and IT marketplace while the role of IT managers is executive leadership that ensure the internal service business succeed. The performance is assessed by the level of customer satisfaction.

A successful example of service level is PARKnSHOP. It makes use of the RFID technology to make the customers more convenient and have better buying experience. It supports using Octopus card to pay which fasten the billing procedure and it uses MoneyBack card which allow customers to save the cash dollar. By this, PARKnSHOP can maximize the customers’ satisfaction.

To conclude, all of the four SAM models have their own advantages and they can lead the companies to success if the models are adopted in the right nature and well used. There is no best model and it depends on different industries and companies.

Source / Reference:
1)  "Strategic Alignment: Leverage Information Technology for transforming organization" by J C Henderson and N Venkartraman 1993

http://search.proquest.com/docview/26252741/134A6C8B53F19A4F606/1?accountid=16210

2) “Using and validating the strategic alignment model” by David Avison, Jill Jones, Philip Powell, David Wilson 2004

http://www.sciencedirect.com/science/article/pii/S0963868704000356

3) “The Strategic Alignment Model of Henderson and Venkatraman”

http://businessitalignment.wordpress.com/2010/12/17/the-strategic-alignment-model-of-henderson-and-venkatraman/

4) “Strategic Alignment: Analysis of Perspectives” by Coleman, Preston and Papp, Raymond 2006