Chapter 2
Information Systems and Strategy

Learning Objectives

Describe Porter’s five competitive forces that shape industry competition. *
Explain how disruptive innovations, government policies, complementary products and services, and other factors affect how the competitive forces operate. *
Identify the components of the value chain and explain its extended version. *
Describe how information systems apply to competitive strategies for business. *
Explain how information systems apply to strategy for nonprofit organizations and governments. *
Explain why the role of information systems in organizations shifts depending on whether the systems are deployed to run, grow, or transform the business. *
Solutions to Chapter Review Questions

1. What are the five competitive forces that shape industry competition? How are these forces interrelated?

The five forces that influence industry competition are (1) threat of new entrants, (2) power of buyers, (3) power of suppliers, (4) threat of substitutes, and (5) rivalry among existing competitors. The five forces determine industry structure and how profitable companies in the industry will be. The five interrelated forces are “internal” to the industry.

2. How do disruptive innovations, government policies, complementary products and services, and environmental events affect how the competitive forces operate?

Disruptive innovations, government policies, complimentary products and services, and environmental are “external” forces that affect how the five forces operate. For example, certain innovations can flood through an industry, changing everything in their path, forcing every company to change its strategy.

3.
What are the components of the value chain? Which components comprise the primary activities? Which components comprise the support activities? What is the extended