BISM1201 Chap.2 Business Value and Competitive Strategy
Business Value and Competitive Strategy
Information systems create business value through a mechanism, not through their presence. A capability may increase benefit, decrease cost or decrease risk, but those gains can conflict and must be measured without double-counting. Competitive analysis locates pressure through rivalry, entrants, substitutes, buyer power or supplier power.
Strategy then chooses how to respond through cost leadership, differentiation, niche focus or stronger customer or supplier intimacy. The recommendation is coherent only when the information-system capability enables the selected response and repairs the diagnosed business or information gap.
Strong analysis considers an alternative, attributes conflicting evidence and states what additional information would change the conclusion.
What this chapter covers
- 01
Benefit, cost and risk as value lenses
- 02
Measure and mechanism in a value claim
- 03
Competitive forces and evidence
- 04
Strategic responses to pressure
- 05
System capability, control and outcome alignment
Differentiating a repair network
- +1Identify buyer power and rivalry from rapid comparison and low switching friction.
- +1Choose differentiation through transparent status, evidence and reliable estimates.
- +1Specify booking, repair-status and customer-history capabilities.
- +1Explain the trust mechanism rather than calling the interface value by itself.
- +1Add technician update ownership and an exception queue.
- +1Measure estimate accuracy, complaints and repeat booking while monitoring adoption.
Key terms
- Business value
- A beneficial organisational outcome created through a capability and process change, assessed against cost, risk and trade-offs.
- Buyer power
- The leverage customers hold over price or terms because they can compare, switch or concentrate demand.
- Supplier power
- The leverage suppliers hold when alternatives are limited, switching is costly or critical information is asymmetric.
- Cost leadership
- A strategic position built through a lower sustainable cost structure, not simply a one-time budget cut.
- Differentiation strategy
- A strategic position based on valued distinctiveness that customers recognise and the organisation can deliver consistently.
- Customer intimacy
- A strategic capability that uses relationship knowledge and coordinated service to improve fit, trust and retention.
Business Value and Competitive Strategy FAQ
How do I prove that a system creates value?
Explain the mechanism from capability to changed process and measurable outcome. Include implementation and operating costs, name a relevant risk, and avoid counting the same improvement twice through several labels.
How are competitive forces used in a case?
Use evidence to identify which pressure best explains the organisation’s challenge, then show how that pressure constrains a strategic response. The force is diagnostic; it is not the recommendation itself.
Why must strategy and system align?
A system capability should make the chosen strategic response operational. If the case identifies supplier dependence but the recommendation only improves customer communication, the argument leaves the diagnosed pressure untreated.
What should I do when the evidence conflicts?
Attribute each reading, assess its reliability and explain which fact would resolve the disagreement. A bounded recommendation that identifies uncertainty is stronger than silently selecting the evidence that supports a preferred answer.
Exam move
Practise one six-link chain for each competitive pressure: evidence, force, strategic response, capability, control and measure. Force yourself to write one plausible alternative and why it fits less well. Review value claims by marking benefit, cost and risk separately, then draw arrows showing whether two claimed benefits are actually the same causal effect.
Create a force-evidence deck.
On the front of each card, write a short symptom such as easy price comparison, dependence on one platform, rapid imitation or customers solving the need another way. On the back, name the most plausible force, one competing interpretation and the evidence that would distinguish them. This trains diagnosis from facts rather than memorised definitions.
Shuffle the cards and add an unfamiliar industry so the force is not cued by a familiar example.
Next build a strategy-capability matrix. Put cost leadership, differentiation, niche focus and customer or supplier intimacy down one side. Across the top, list process standardisation, personalisation, shared visibility, analytics and partner coordination. For each cell, explain a plausible mechanism and a failure condition.
Delete any claim that merely says technology makes the organisation efficient. Replace it with a process change and a measurable outcome. Check whether implementation cost, service quality or risk could offset the intended value.
For a longer case, keep three evidence columns: uncontested facts, interpretations and missing information. Write the recommendation only after the table.
Include a counter-case paragraph that explains when another strategy would be superior. Finish with a baseline, review period and balancing measure. This routine makes uncertainty visible and prevents using a force or system label as a substitute for reasoning.
Add a value-realisation review to each recommendation.
State the present baseline, the process behaviour expected to change, the leading indicator and the later business outcome. Identify who bears implementation cost and who receives the benefit, because those groups may differ. Finally, describe a result that would falsify the proposed mechanism. A recommendation becomes stronger when it specifies evidence that could prove it wrong.
