etourism chapter 2 - implications of the ict revolution for busin
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Tourism chapter 2TRANSCRIPT
SESSION OBJECTIVES ●This session aims to : ●Introduce how information communication technologies
revolutionise modern society & how they affect business strategy
●Demonstrate how ICTs revolutionise societies and businesses
●Improve your understanding of the basic structure & tools for strategic analysis for organisations
●Introduce the issue of eCommerce and demonstrate how it grows
●Demonstrate how organisations can achieve competitive advantage and strengthen their competitiveness
●Explore how ICTs can support organisations to enhance their strategic position
Information Communication Technologies
at macro-economic level
●A new global information society is gradually emerging
●ICTs are instrumental in regional development & long-term
prosperity of regions
●All enterprises become global as they can be present in the
international marketplace at an affordable cost
●Frontier controls and limitations are gradually eased as a result of
ICTs
●The location of buyers & sellers becomes less important for
transactions.
●Management, quality & speed of information are key factors for
competitiveness
Information Communication Technologies
at micro-economic level
●ICTs change the operation, structure and strategy of
organisations
●They drive a shift from product-oriented organisations, to a
flexible & responsive marketplace
●Gradually they reengineer the entire business process of
organisations
●ICTs become one of the most important strategic
considerations at the corporate level
●Successful ICT strategies based on innovative and dynamic
management can provide organisations with competitive
advantage
●Failure to adopt suitable technologies may generate
competitive disadvantages
Corisande Hotel in Cornwall www.cornwall-
calling.co.uk
●The Corisande Manor Hotel in Cornwall is an example of best
practice in ICT usage.
●It receives 90% of its bookings through the Internet
●David Grant taught himself how to use the internet and gradually
learned how to develop a web page promoting his property
●Instead of David doing a usual page about his own hotel he
registered the domain name www.cornwall-calling.co.uk and
provided information on Cornwall and its attractions.
●Each page invited people to stay in his property by providing a
link to his hotel (www.corisande.co.uk).
●David managed to gain a respectable return on his investment,
which cost the equivalent amount of one regular advertisement in
a Sunday newspaper.
The impact of the ICT revolution and the information
society●Technology enables the personalisation of information, products
and services to individual needs and desires
●ICTs enable people to socialise and interact with their local
community
●Virtual communities are being established
●Digital-living places less emphasis upon people being in a specific
place at a specific time
●The Internet introduces new services such as home-shopping, tele-
entertainment, tele-working, tele-banking
●The Internet provides niche markets with access to specialised
information & services
●The Internet can also introduce a wide range of political, economic
& social threats
●The Internet encourages transparency & interactivity in the society
●It also empowers individuals to research on major issues and
decide their standing for themselves
The information marketplace
The development of eCommerce & cybermarkets
The information marketplace is:
“the collection of people, computers, communications,
software and services that will be engaged in the
intra-organisational and inter-personal informational
transaction of the future”
eBusiness
●Represents the entire range of business processes that
are enhanced by the emerging ICT tools
- provides electronic tools and resources for business
- may replace some of the off-line business transactions
- can enhance the total transaction volume
- the Internet provide eBusiness tools internally
(intranets),
with partners (extranets) and with the entire world
(Internet)
- eBusiness bridges the gap between consumers &
partners
- provides opportunities for disintermediation and
reintermediation
eCommerce
●Electronic Commerce (eCommerce) can be defined as the
secure trading of information, products and services via
computer networks and the exchange of value on-line, as
well as the support for any kind of business transactions
over a digital infrastructure ●Electronic Commerce (eCommerce)
- can include all ICT-supported transactions
- secures trading of information, products and services via computer
networks
- enables the exchange of value on-line
- supports any kind of business transactions over a digital
infrastructure
The development of eCommerce & Cybermarkets
●eCommerce facilitates a wide range of business opportunities,
mainly:
●Business to consumers (B2C)
- trading and delivery of commodities & services to consumers
- entire support information and mechanisms required for these
transactions
●Businesses to Business (B2B)
- trading between producers and intermediaries
- transactions between producers towards the final product
●Grow Customer base & market share
Share of customer’s disposable income
Global presence all day every day
Efficiency in business processes
Profit by increasing turnover & reducing cost
●Protect Customer base & market share
Brand name and property
Markets, investments and ultimately business
●Differentiate Specialise and 1-2-1 marketing
Improve customer service/information/knowledge
Time to market
Price/value proposition
Potential benefits from enterprise-wide
Internet & eCommerce
●Manage & create change Enhance environment
Organisational structure and culture
Business process
Enhance competitiveness
●Trust Leverage the trust and values of brand
Implement a secure and reliable system
Develop trust in all your eCommerce
applications
Potential benefits from enterprise-wide
Internet & eCommerce (continued)
●Information & communication technologies have critical impacts
on the industry structure and on organisations as they :
●Create new industries
●Restructure existing industries
●Radically change the way organisations compete
●The Internet provides a comprehensive way for interacting
●Business model of organisations need to be redesigned
●Reshape the nature of competition and value chain
●Entire economic system changed
Strategic management & competitive advantage
●Top management’s plans to attain outcomes
consistent with the organisation’s mission and goals
●A coherent, unifying and integrative pattern of
decisions
●A means of establishing the organisational purpose in
terms of its long-term objectives, actions programs
and resource allocation priorities
●A definition of the competitive domain of the firm
Defining
strategy & strategic management
●A response to:
- Industry structures and challenges
- External opportunities & threats
- Internal strengths & weaknesses to achieve competitive advantage
●A mechanism to:
- Define managerial tasks at the corporate, business &
functional levels
●A statement of the economic & non-economic contribution the firm
intends to make to its stakeholders
Defining
strategy & strategic management (continued)
●Where are we now? Situation analysis
SBU analysis
Future analysis
Demand & Supply
External (PEST)
Internal analysis
Competition analysis & industry
Stakeholder mapping
Competitive SWOT analysis
●Where do we Mission statement
want to go? Strategic options
Strategic choice
Portfolio management & SBU reviewSource: Based on Hax and Majluf (1991); Finlay (2000); Lynch (1997); Johnson and Scholes (1999)
Strategic management : processes & tools
●How do we Strategic direction
get there? Portfolio analysis & adjustment
Implementation
Strategic alliances
Tactical planning
Budgeting
●How do we know Control & feedback
we get there? Setting of indicators, warnings
Incorporate feedback & reaction
mechanisms Source: Based on Hax and Majluf (1991); Finlay (2000); Lynch (1997); Johnson and Scholes (1999)
Strategic management : processes & tools
(continued)
●Generic strategies
●Cost leadership
- based on mass production & to cost minimisation, e.g. EasyJet
or Go offer limited service & charge for all catering offered
●Differentiation
- Creating different products & services that are unique & valuable,
e.g.
Mauritius as a destination or the Orient Express
●Focus
- A strategy with a narrow competitive scope targeting specific
market
segments
- Business class on airlines focuses on business passengers
Competitive strategy & advantage
●provide executive management with information to
support the development and implementation of
strategy
●link the organisation via technology-based systems to
its customer/consumers and/or suppliers
●produce more effective integration of the use of
information in the organisation's value adding process
●enable the organisation to develop, produce, market
and deliver new or enhanced products or services
based on information
4 categories of strategic ICT systems
Strategic opportunities emerging
through ICTs
●Gain a competitive advantage
●Improve productivity and performance
●Facilitate new ways of managing &
organising
●Develop new businesses or expand
horizontally and vertically
Management & business opportunities of ICTs
●Organisations need to use ICTs to be proactive &
reactive
●Innovative and ongoing market research is the driving
force
●New niche markets can be developed to create and add
value to products and services
●Communicating effectively with consumers & partners
is critical
●Support the growth of the organisation, geographical &
operational
Using ICT
to support strategic initiatives
●Info-structure brings partners & their core competencies
together
●Enhance efficiency through redesigning & re-engineering
business process
●Encourage staff to share knowledge
●Collection of information in dynamic data warehouses
enables organisations to constantly update their consumer
research
●Use to avoid substitution by developing barriers to entry
●Integrate internal & external processes
Using ICT
to support strategic initiatives (continued)
●long term planning and strategy
●innovative processes
●top management commitment
●training throughout the hierarchy
●Enterprise Resource Planning (ERP)
Prerequisites for achieving competitive
advantage through ICTs
●Refocusing:
raising executive management awareness and understanding
how important ICTs are for business
●Retooling:
developing management or application skills and knowledge to
follow up any new initiatives identified in refocusing
●Reskilling:
educating and training the Information Systems community on
technology, management and business skills for the new ICT era
●Reinforcing:
building top management understanding, confidence and
commitment to support the effects of the other programmes.Source: Based on Earl (1988)
4Rs framework for ICT training
Paradigm shifts influencing business
Paradigm shifts influencing business
Source: Based on Tapscott and Caston
(1993)
●co-destiny with partner throughout the value chain
●products are produced instantaneously
●products are customised in response to customer
demand
●develop best of everything
●demonstrate focused strategic direction & purpose
●develop dynamic communications with partners
●create cultures that support continual organisational
adaptation
●can compete on a global scale
●overcomes geographical constraints
●undertake an extensive outsourcing policy
●use less of everything - compared with mass production
●synergies in communications & technologies used
The virtual corporation
●virtuality: process and direction, journey not a destination
● focus on consumer gratification
● responsiveness and promptness: just in time
●cost effectiveness
● trust partners/consumers/suppliers/employees
●continuous organisational adaptation to market needs
●continuous learning and training towards innovation
●networking and partnerships
●synergies in communication and technologies utilised
● lean production through outsourcing
●dynamic involvement of suppliers/consumers/employees
●co-destiny throughout the value chain
● teamwork and empowerment
● innovative use of Information Technology
● flexible and intelligent location
●proximity to the needs of the marketplace Source: Based on Tapscott (1996); Davidow and Malone (1992); Handy (1995); Hollister (1995);
Loebbecke and Jelassi (1997)
Characteristics of virtual corporations
A multidimensional framework for strategic
management & marketing Organizational info-
space for strategic
management
●maximises the efficiency and effectiveness of each organisation
●capitalises on the market opportunities
●positions the organisation effectively for taking advantage of the
partnership opportunities
●formulates successful value chains
●maximises consumer benefits
A multidimensional framework
for strategic management & marketing