Unit 2.6
Organizational Responses & IT Support
Responding to Pressures
How do organizations survive market, technology, and societal pressures?
They must respond strategically to turn these pressures into opportunities.
- Strategic Systems
- Customer Focus
- Make-to-Order
- E-Business
- Business Alliances
IT is the enabler for all of these responses.
1. Strategic Systems
Strategic Information Systems (SIS) provide a competitive advantage by helping an organization to:
- Implement Goals: Directly support the business strategy (e.g., low cost leader vs. premium service).
- Increase Productivity: Doing more with less.
- Combat Forces: Help deal with competitive threats (Porter's 5 Forces).
Example: Walmart's inventory management system minimizes stock and reduces waste, allowing for lower prices that competitors cannot match.
2. Customer Focus
Goal: Provide superb customer service to retain customers.
Organizations must shift from being product-centric to customer-centric.
- Why? Powerful customers create high pressure. If you don't treat them well, they leave.
- IT Enabler: CRM (Customer Relationship Management) systems.
- Capture and analyze customer data.
- Provide a 360-degree view of the customer.
- Enable personalized marketing and service.
3. Make-to-Order & Mass Customization
Make-to-Order
Manufacturing begins only after the order is received.
- Reduces inventory costs.
- Reduces waste.
Mass Customization
Producing a large quantity of items, but customizing them to fit each customer.
- Example: NikeID, Dell.
- IT Requirement: Flexible manufacturing systems & integrated ordering.
4. E-Business & E-Commerce
Doing business electronically is now a requirement, not an option.
- Global Reach: Sell to anyone, anywhere (expands market).
- Cost Reduction: Less physical infrastructure needed.
- 24/7 Operation: Always open.
- Data Collection: Tracking user behavior for better insights.
5. Business Alliances 🤝
Companies work together to compete more effectively.
- Joint Ventures: Creating a new entity together.
- Strategic Partnerships: Collaborating on specific projects.
- Affiliate Marketing: Partnering for sales.
IT enables these alliances through inter-organizational information systems.
Summary & Key Takeaways
- 🎯 Proactive Response: Organizations use IT to actively respond to pressures, not just passively accept them.
- 🎯 Customer Centricity: CRM and Mass Customization focus on keeping the powerful customer happy.
- 🎯 Efficiency: Make-to-Order and Strategic Systems drive down costs and improve speed.
- 🎯 Collaboration: E-Business and Alliances expand reach and capabilities.
Discussion
- How does mass customization help a company respond to market pressures?
- Is it possible for a company to be successful today without some form of e-commerce?