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Information Strategy and Strategic Management

Block 1

Organizational development requires the use of information available to develop knowledge which can be used to enhance success and attainment of organizational objectives. Waggoner stresses the primacy of information in knowledge development in his assertion that, “One can have information without knowledge, but it is impossible to have knowledge without information.”

The search and use of information can be enhanced using the building blocks of information which include tool literacy which the ability to use sources of information both print and electronic including software in the search for information, and resource literacy which is the understanding of location, form, format, and methods of access of the information resources enabling the understanding of methods of use of the information sought.

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These two building blocks enable the search of information and its use which is applicable to Waggoner’s assertion on information literacy which he describes as, “knowing where and how to find information sources as well as how to locate information within those sources …”

Also applicable is the social-structural literacy which is the knowledge of the social situation and production of knowledge including an understanding of the scholarly publishing process applicable in the determination of whether the information found is accurate, reliable, and valid. Another building block is research literacy which is the understanding and use of information technology tools including discipline-related software to carry out research and to further knowledge.

Six elements of strategy with reference to appropriate information content

The six elements of strategy include; direction, market/scope, advantage, resources, environment, and stakeholders. Direction is the destination the business is trying to get to and it consists of the visions and the goals of the organization, the purpose for which it exists. This is a primary consideration, a broad strategic foundation covering all aspects for the business. It includes mission and vision statements, business plans and performance projections, core and distinctive competencies, competitor and market analyses, and overall business strategy (Mintzberg 1995).

Market/scope is the kind of markets that a business should compete in and the kinds of activities involved in such market. This is also a key strategy which encompasses the need that the business seeks to fill so as to gain commercial value. It includes information focusing on the market aspects or scope for the business including trends, information on competition and their activity, the company’s positioning and penetration capacity, costs, and overall expected success of strategy (Barney 2001).

Advantage refers to the ability of a business to perform better than the competition it the markets and it includes a company’s distinctive competence which enables differentiation. Appropriate information content for this strategy include competitor activity, analysis of capacity and areas of differentiation, analyses of specific market needs, and customer feedback/market response (Pine 1999).

Environment includes the external, environmental factors that affect a businesses’ potential to compete and influence the success of its objectives. Information relevant to this strategy would include analysis of political climate, demographics, analysis of needs and acceptance, and foregoing trends in the markets (Barney 2001).

Resources are the factors that the company employs to build its capacity and ability to compete including skills, assets, finances, relationships, technical competence and facilities that a company requires to perform its activities. Information content appropriate to this strategy would include the capital requirement and availability, skills and technical competence required and availability, availability of strategic partners and relationships with the various players needed for success of objective, as well as the need and acceptance for a company’s product mix in the market.

Stakeholders refer to those who have power in and around the business, their values and expectations. This strategy emphasizes focus on the various needs of the various individuals including customers, employees, investors, service providers, suppliers, government. Relevant information would include customer feedback, market regulations, availability of suppliers and service providers and their capacity, investor expectations and goodwill, and employee relations and their resourcefulness (Mintzberg 1995).

Block 2

Impact of Porter’s five forces model on the development and provision of strategically useful information

To strategically position itself in a market and to develop information that can be strategically useful, it is imperative that a company takes into consideration the Porter five forces which describe the forces that surround any economic venture affecting business success and potential. These include the power exerted by buyers and suppliers, the threats of substitute products and competition, and the barriers within the market that challenge the entry of new firms (competitors) into the market (Barney 2001).

When developing its strategy, information on the existence of products that could be close substitutes to those offered by the firm is essential as they could be a threat to the company’s potential and profitability through the increase in the propensity of customers switching to these alternatives in response to price increases. Factors that need to be considered and monitored when considering this threat are the performance of these substitutes in the market including its strengths and weaknesses, the cost of switching to alternatives which could influence the decision to switch to the alternative, and the willingness of the buyer which can also influence the shift to the alternative (Barney 2001).

Information on the presence and capacity of competition is also essential to the development of strategy as these would present a challenge to the profitability of the company. Factors that need be considered to have relevant information on this threat include the number and diversity of competitors, their differentiation, niche or quality, the industry concentration, and the costs of switching which are essential factors to consider as the company seeks its competitive advantage (Barney 2001).

Also necessary to consider is the barrier to entry into the market of new competitors. Profitable markets that yield high returns will draw new entrant firms and will consequently lead to a decrease in profitability. The profit rate will fall towards a competitive level (a level of perfect competition) unless the entry of new firms can be blocked by incumbents. This threat is influenced by barriers such as time and cost of entry, the knowledge required, economies of scale, cost advantages, and technology among other barriers (Barney 2001).

Upstream information from the customers to the firm, inherent in their bargaining power, is also an essential consideration as customers have the ability to put the firm under pressure, affecting their sensitivity to price changes and overall allegiance. Factors that could influence this bargaining power include the number of customers, their buying volumes, and differentiation in the market, price elasticity, incentives, the brand identity and switching costs to alternatives that could influence shift to substitutes.

Downstream information also has an impact in the development of useful strategy. This is the bargaining power of suppliers which is the power that suppliers of raw materials, components, labour and services/expertise to the firm can field over the firm. With this power, suppliers can refuse to work with the firm or offer their services, or can charge exorbitantly for their unique resources. Factors that can influence this bargaining power include the number of suppliers and their size, the ability to substitute and costs of switching, and the unique service or product provided (Barney 2001).

How consensus management can help provide directed and focused organizational information

Consensus management consists of the agreement between various players in the market place to align their business services, share tasks, as well as pool resources in a market for mutual benefit and for effective and efficient attainment of results (Mintzberg 1995). Taking an example of the Lloyd’s of London which operates primarily in the specialist insurance market, providing insurance to their clients, there has to be consensus between the various parties in its market.

These parties include clients seeking the insurance services; brokers representing the clients in seeking insurance, using their specialist knowledge to arrange insurance with underwriters at the best quality, value and price; underwriters working for syndicates with their responsibility entailing the use of their specialist knowledge to assess and accept or decline risks on behalf of the syndicate; members who provide capital required to cover the risks; and the corporation (the administrative body of the Lloyd’s market) which is the structure that oversees these processes, providing the infrastructure for the underwriters and brokers to do business.

Such undertakings requiring the involvement of several players for the success of a business venture requires all the parties involved to mutually understand the terms of their agreement or reference, and providing their unique specialized input focused and directed to the overall objective of the business venture. Therefore, consensus management in such an endeavour is essential.

Difference between strategic, tactical and operational organization information in Argos

Strategic information includes all applications which are critical to achieving future business strategy. It consists of highly aggregated information with overall business scope and impact affecting the entire organization. It is mainly an exploration of known data from current trading and market activities in developing the organization’s plan or blue-print for the future. Strategic information is subject to market variations and political constraints and is liable to change at any moment (Collins 2008). With regard to Argos, its strategic information includes its awareness of the needs of people in its market for the comfort and convenience of home selection via the catalogue. This it endeavours to combine with the closeness of high street stores and the creation of stronger presence with the opening up of additional stores to reach a greater percentage of the population in its market, its customers, with its long run target to have 600 stores (Argos case study 2004).

Tactical information includes all information used to implement the plan. It consists of comprehensive information regarding overall implementation including progress, and market penetration. This information needs be precise enough to allow the tweaking and amendment of the strategy as well as to control operational decisions (Collins 2008). In the case of Argos, tactical information includes the profound impact of new technologies on the company’s functions as a retailer including the collection of feedback through various communication channels, as well as, its use of technology to integrate its functions using ICT to monitor stock levels, to recognize market trends early and to avoid stock out situations, and to communicate with its customers and suppliers (Argos case study 2004).

Operational information includes application upon which the organization currently depends on for its success. It consists of highly detailed performance information used to monitor the day to day impact of the strategy and tends to be restricted to departments in its requirement and use relevant to a particular area of influence (Collins 1998). Operational information in the case of Argos includes the strategies for the enlargement of its business through innovative use of evolving technologies in information, its multi-channel approach that offers greater presence to the company and a wider reach to customers unlike stores approach reliant on customers that walk in, and the outsourcing of its supply chain management in its “Nominated carrier scheme” and its warehousing in its “Advanced inventory planning scheme”, solutions that enable the company to efficiently manage flow of merchandising from its extensive base of 750 suppliers to its distribution centres throughout the UK (Argos case study 2004).

Block 3

Importance of strategic alignment on Argos

Strategic alignment is the matching up of two or more organizational strategies so as to ensure that the overall objectives of the organization are met. Entities with unique and varied specialty, for example, deliver information one to the other that is necessary in facilitating the realization of the overall organizational objective (Barney 2001). This alignment is useful as it enhances effectiveness and efficiency overall and in the case of Argos, an example of this strategic alignment is the multi-channel approach with the combined use of physical store presence and online presence both offering the capability to browse, reserve, order and make purchases, enhancing the company’s overall presence (Argos case study 2004).

Another example of strategic alignment is the adoption of various solutions (including the delegation of responsibilities to service providers) so as to manage complex functions essential for its success including management of its supply chain and warehousing in its “Nominated carrier scheme” and “Advanced Inventory planning scheme” solutions delegated to UPS and Retek respectively, and its teaming up with Vodafone Live enabling customers to check stock availability and reserve goods, and to view the catalogue on their mobile phones, all linked to a home or store delivery options (Argos case study 2004). These are organizations that are themselves specialized in these particular fields. This alignment enables greater effectiveness and efficiency for Argos as it enables it to enhance its operations focusing on the key areas with these complex functions left to able providers.

Strategic alignment improves the market penetration potential of Argos

This strategic alignment improves market penetration of Argos as its multi-channel approach and especially its online presence enables it reach customers who might have hitherto not visited the physical stores. Another example of strategic alignment at Argos is its teaming up with Vodafone enabling customers to view catalogue and stock and to reserve goods enables its reach to the wider Vodafone’s customer base hence enhancing its market penetration more than it would have if it had focused only on its stores (Argos case study 2004).

Lack of strategic alignment might impede market penetration by Argos

A lack of strategic alignment might impede market penetration by Argos as it will result in uncoordinated approaches that will challenge overall efficiency and therefore success of its objectives. For a retailer such as Argos whose business involves the purchase and resale of a variety of products, differentiation and value addition involves the enhancement of efficiency in its system as its only source of advantage. Without strategic alignment and enhanced focus on overall strategy, this will not obtain limiting the company’s market penetration.

Examples of core and distinctive competence in Argos

Core competence is the specific skill sets or techniques that are critical to the business and which deliver value to the customer. It includes areas of expertise distinctive to the company and critical for its long term growth (Prahalad 1990). It includes areas central to a company’s business where most value is added and in the case of Argos (Argos case study 2004), they are;

Its reliable and efficient delivery infrastructure covering product picking, distribution and customer satisfaction handling.
Its design and delivery of a simplified online customer interface that makes shopping efficient for its customers through its various channels.
Its design and implementation of an efficient supply system with supply chain management, warehousing solutions and home delivery systems that are effectively linked.

Distinctive competence comprises traits unique to an organization enabling the creation of a unique value superior to those of competing organizations forming the basis for its competitive advantage (Collins 1998). In Argos’ case (Argos case study 2004), these comprise elements in its business approach that enhance efficiency in service delivery and the attainment of its overall objective such as;

Its innovative use of technology to enhance its retail trade and efficiency with its use of a multi-channel approach.
Its strategic integration of elements in its business model which are complementary such as warehousing, supply chain management and use of technology into its powerful business solution and to enhance its efficiency.
Its use of enhanced efficiency in its business processes and good relations with its suppliers to drive down costs to the customer.

Main problems relating to competitive advantage as may be apparent in the retail trade

Competitive advantage for a retailer like Argos tends to be from its differentiated service and efficiency, with its major advantage coming through external elements such as innovative employment of technology and price. Its product mix cannot form a basis for its competitive advantage as retail trade entails the purchase and resale of various products which are similar to competitor products.

Such a competitive advantage is not sustainable in the long term as the market evolves and competition intensifies and therefore there is always a need to tweak the company’s competencies to enhance value to the customer and ward off potential switch. The price war in a market as the retailer seeks to differentiate from its competition comes at a cost to overall profitability and therefore needs to be well designed and implemented for it to have meaningful benefit to the overall objective of the company.

Block 4

Is knowledge the ultimate competitive advantage?

Competitive advantage is a condition which enables a company to operate more efficiently or at a higher quality than its competition resulting in benefits accruing to the company (Prahalad 1990). Knowledge is indeed the ultimate competitive advantage as it comprises a sustainable competitive advantage, a capability which is not easily duplicated or surpassed by competitors. Taking an example from the Lloyd’s of London, its underwriters are famous for recognizing new insurance opportunities and requirements, and for meeting them using their specialty knowledge and that of their partner brokers. The Lloyd’s market, for example, covers offshore wind farms of the energy industry, an area that the government is planning to expand.

Knowledge, as in this case, helps in developing differentiation and value creation through the use of information available to a company and apt analysis to reach better decisions which can then be used with enhanced efficiency or unique approaches to acquire competitive advantage. Analysis and efficiency or unique approaches are subject to the availability and use of information and they can be easily duplicated and surpassed by competitors. Knowledge is therefore the ultimate competitive advantage.

The growing importance of contingent work in information industries affects the development of knowledge for competitive advantage

The growing importance of contingent work in information industries affects the development of knowledge for competitive advantage as the contractor often seeks to retain as much knowledge gained from their experience to themselves so as to retain the capacity to offer services they are contracted for which would not be if there were people within the company gained such knowledge and capacity.

Impact of knowledge transfer on competitive advantage

Knowledge transfer has a positive effect on competitive advantage if it is effective and efficient as it enhances overall understanding, consensus, and therefore helps in the realization of the overall objective of the organization. However, a negative effect could result from the unsecured transfer of sensitive information which can be obtained by the competition and used to challenge the organization’s competitive strategy.

What is the impact of internal knowledge development?

Internal knowledge development consists of four approaches including socialization which entails the sharing of tacit information by individuals and especially learning by doing; externalization in which individuals link the tacit knowledge to explicit knowledge; combination which entails individuals combining different explicit ideas to create knowledge; and internalization in which individuals extract knowledge from newly created organizational tacit and explicit knowledge through learning by doing.

Discuss why the disenfranchising of the individual during the change process is a problem for the organization

The disenfranchising of an individual in the change process can be disastrous to the organization’s change objective if the individual, victim of the change process is powerful enough to influence the environment, an undesired outcome if the change is not well planned and carefully controlled. This could result from the perspective of employees of organizational change as a negative process over which they have no control.

Such individuals would act as deterrents to the realization of the overall organizational objective if this objective requires their input and wholesome involvement with their resultant de-motivation, feeling of being left out, and their participation not being appreciated. This would lead to the lowering of overall efficiency and effectiveness and would therefore be a problem to the organization. Empowering the disenfranchised is therefore an important aspect of well managed change.

Suggest ways in which the disenfranchised might be empowered within the change scenario

To empower the disenfranchised individual, the organization should seek to keep these individuals in the loop to create an environment in which there is mutual trust and an appreciation of the overall picture and an understanding of the benefit and necessity for change. The main ways through which this can be achieved include giving them an understanding of the necessity for change and what benefits would accrue, creating a guide for the process for clarity and consistency, developing a clear shared vision and communicating it including explaining to the individual its effect on them, empowering the people to act on the vision (to be the change), splitting the process into realizable milestones and benchmarks to ease the overall process.

Contrast Kotter’s and Satir’s approaches to change

Kotter’s approach, referred to as the organizational approach as it focuses on institutional change, is a structured method through which change can be managed and followed through within an institution. It is a linear approach which comprises eight steps to follow in the management of the process including the initiation of the urgency, the institution of people to guide the process, the development of a shared vision, communication of the vision, the empowerment of the people to act on the vision, the creation of short term wins to enhance motivation, consolidation and building on the gains, and finally the institutionalization of the change, embedding it in the organization’s culture (Mintzberg 1995). This is a clarified linear approach with a destination and discrete steps to follow.

Satir’s approach/model, on the other hand, is referred to as the human approach and is composed of a number of stages and with highlights of key events that disturb and move an individual’s experience from a position referred to as a status quo (all the usual activities of a normal day) through the change process to a new level (status quo). These key events include the foreign element and the transforming idea. It comprises a cyclical iteration of steps stimulated by the key events in the change process through a position referred to as chaos, then to integration which with time eventually develops into the new status quo (Mintzberg 1995). These steps however have several iterations depending on the stimuli of the key events and unlike the Kotter’s approach, it perceives change as a continuous process rather than linear events that are followed through.

Arguments for the Kotter approach

Change is seen as linear and the aim of the change can therefore be reached directly following through the various steps.
Its linearity is useful in the analysis of the change process and benchmarking so as to gauge success.
It provides an excellent process for the management of the change process with clear and discrete steps useful for successful realization of objectives.

Arguments against the Kotter approach

This approach takes an abstract approach to the change process, focusing on the process management but failing to identify the actual internal change among the individuals involved that result in the acceptance of the change.
Kotter’s approach is criticized for it mainly focuses on the concerns of management rather than those of the organization as a whole.
It is criticized for its view that there is the one best way in which change can happen forming the basis for the process. The style or path of change, however, may vary influenced by various factors including receptivity to the change, the change management, performance of the organization, among other factors.

Arguments for the Satir approach

This approach identifies the actual change process within the individual which can then be extrapolated when considering the involvement of a number of other people.
It perceives change as a continuous process rather than a destination which can be reached.
It takes cognizance of the fact that the change process no matter the size of organization is still an individualized process and that overall change depends on the acceptance of the change by individuals.

Arguments against this approach

The Satir approach comprises of several cyclical iterations which are mainly a description of the process which offer no steps towards management of the process.
This approach makes benchmarking and measuring of success of the process difficult.
Difficult to manage in large scale change processes entailing huge organizations.

Preferred approach

My preferred approach in the management of a project associated with the change would be the Kotter approach as it has a clarified and well defined process and steps to take unlike the Satir model which has a lot of cyclic iterations depending on results and influence of the key events. The Kotter approach with its linearity offers greater advantage in the management of the change process enabling analysis and recognition of the various steps, and the gauging of success at every stage, as well as, in its simplicity and forthrightness when dealing with change in large organizations comprising several individuals.

Block 5

Outsourcing is the strategic use of outside resources to perform activities that are traditionally handled internally. It is a management strategy in which an organization delegates major, non-core functions to specialized service providers (Barney 2001).

Advantage

The main advantage of outsourcing is the enhancement of focus on core business that it enables in a company through the transfer of costly, non-core activities to service providers (Luftman 2008). This focus enables enhanced performance on core activities as there is less interruption of the main activities from the non-core activities, and also enhanced performance on the non-core activities as they are delegated to specialized providers specially organized for such activities.

Disadvantage

The main disadvantage of outsourcing is the abdication of control on certain activities and/or sectors of the organization that is necessitated by the delegation of tasks to external service providers (Luftman 2008). This creates a dependence on the external providers which is a potential liability to the company/organization in terms of confidentiality with these delegated functions and tasks often essential to the performance of its core activities.

Aspects of information systems advocated for outsourcing

Some aspects of an organization’s information system that can be advocated for outsourcing include non-critical/non-core functions that application development and maintenance, network management, customer care and helpdesk services, data centre management, among other important but non-core aspects.

Aspects of information systems not advocated for outsourcing

Aspects that hold sensitive information for the organization or are critical components for its competitive advantage should have tight internal control and should not be outsourced as these could become possible points of compromise in terms of leaked information or opening up the system to a variety of threats. Such aspects include; Databases containing a variety of sensitive information including customer information and sensitive data,

Discuss the effectiveness in combating threats to an information system of the following control mechanisms

Redundancy entails the use of more than one path to reach the destination in information transmission through the network. This is effective in combating threats of compromise in the transmission of information by providing resiliency.

Anti-virus software programs form an effective method of preventing attacks on the system by viruses and other suspicious programs that could threaten the composition of the system.

Passwords form an effective barrier at points of access preventing unauthorized entry to sensitive system areas and controlling and managing the use of resources. Encryption provides secrecy which is effective in deterring unauthorized use of information.

Firewalls filter out dangerous transmissions blocking out unwanted and suspicious activities and thereby effectively helps in maintaining the system’s integrity.

Block 6

The limits of computing

The extent to which human and computer attribute overlap and differ exist as the designers of computers have made immense effort at creating a machine that mirrors brain function, or even surpasses it. However, wide differences still exist, especially with the acknowledgement that scientists have not been able to fully map the brain, its functions, capacity and potential. This unmapped potential therefore gives humans a higher capacity than machines in tasks including the capability enabling abstract thinking, a capability that challenges the computer (Chan 1992).

Abstract thinking refers to the derivation of higher concepts in thought from the classification and usage of literal or concrete concepts or methods connecting any relations among various fields, a high level thought process in which the consideration of a concept is broad, general and non-specific. Human intelligence and expertise depends significantly on unconscious instincts which can hardly be measured or captured rather than conscious manipulation of symbols, with mental states such as beliefs and desires being relations between individuals and their mental representations. The variation results from a human’s emotional intelligence combined with the logic and scholastic intelligence which the computer, a machine, can hardly be thought to possess in the near future (Hawkins 2005).

Computers are successful in information processing as they are designed to perform iterations with a lot of effort focused on reliability. It is quite efficient in conducting processes that feature repetitive activity better than humans who have inefficiencies in this particular aspect. The challenge still remains the convergence of consciousness and computation and therefore the computer is challenged with regard to abstract thinking though it can mimic several aspects of thought and decision making (Davis 2000).

References

Barney, B., and A., Arikan, 2001. “The resource-based view: Origins and implications.” In M. A. Hitt, R. F. Freeman & J. S. Harrison (Eds.), Handbook of strategic management (pp. 124-188).

Oxford: Blackwell.

Chan, Y., and S., Huff, 1992. “Strategy: An Information Systems Research Perspective.” In: Journal of Strategic Information Systems (1:4), pp. 191-204.

Collis, D., and C., Montgomery, 1998. Creating corporate advantage. Harvard Business Review, 76(3):71–83

Davis, G., 2000. “Information Systems Conceptual Foundations: Looking Backward and Forward.” In: Baskerville, R., J. Stage, and J., DeGross (eds.), Organizational and Social Perspectives on Information Technology, pp. 61-82. Boston: Springer.

Hawkins, et al., 2005. On Intelligence, New York, NY: Owl Books

Mintzberg, H., B., Quinn, and S., Ghoshal, 1995. The Strategy Process. London: Prentice Hall.

Luftman, J., and R., Kempaiah, 2008. “Key Issues for IT Executives 2007.” In: MIS Quarterly Executive (7:2), pp. 99-112.

Pine, J., and J., Gilmore, 1999. The Experience Economy. Boston: Harvard Business School Press.

Prahalad, C., and G., Hamel, 1990. The core competence of the corporation. Harvard Business Review, 68 (3):79–91.

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