ISDS 351 Chapter 2 Notes
ISDS 351 Chapter 2 Notes ISDS 351
Cal State Fullerton
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This 5 page Bundle was uploaded by Melinda Chou on Thursday September 15, 2016. The Bundle belongs to ISDS 351 at California State University - Fullerton taught by Malini in Fall 2016. Since its upload, it has received 9 views. For similar materials see ISDS in Business at California State University - Fullerton.
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Date Created: 09/15/16
Chapter 2: STATEGIC PLANNING UNDERSTAND THE RELATIONSHIP OF STRATEGIC PLANNING AND IT Shared vision between IT and managers will guide the IT organization in hiring the right people with the correct skills and competencies, choosing the right technologies and vendors to explore and develop, installing the right systems, and focusing o those projects that are needed to move the organization closer to its vision and mission IT organization not aligned with key business objectives will fail to hit the mark STRATEGIC PLANNING Strategic Planning – Process that helps managers identify desired outcomes and formulate feasible plans to achieve their objectives by using available resources and capabilities Must take into account of the organization and everything changing around it o Consumer likes and dislikes o Old and new competitors in marketplace o Cost and availability of raw materials and labor o Economic situation (interest rates, growth rates, inflation rates) o Government regulation changes Benefits of strategic planning o Provides a framework and direction to guide decision making at all levels o Ensures effective use of resources is made by focusing on key priorities o Enables organization to be proactive and take advantage of opportunities o Enables organizational units to participate and work together to accomplish a common goal o Provides measures of judging organizational and personnel performance o Improves communication among management and board of directors, shareholders and other parties Organizations more advanced in their planning processes develop multiple- year plans based on situational analysis, competitive assessment, external factors, and evaluation of strategic options CEO must make long term decisions about where and how the organization will operate Issues-based strategic planning o Begins by identifying and analyzing key issues that face the organization, setting strategies to address those issues, and identifying projects and initiatives that are consistent with those strategies Organic strategic planning o Defines the organizations vision and values and then identifies the projects and initiatives to achieve the vision while adhering to the value Goals-based strategic planning o Multiphase strategic planning process that begins by performing a situation analysis to identify an organization’s strengths, weaknesses, opportunities, and threats o Sets direction for organization by defining its mission, vision, values, objectives, and goals o 1. Analyze the situation o 2. Set direction o 3. Define strategies o 4. Deploy plan Analyze the situation o What is the size of the market? How fast is it growing or shrinking? What are the significant industry trends? o Capture a clear picture of the strategically important issues that the organization must address in the future and reveal the firm’s competitive position against its rivals Must get input from customers, suppliers, and industry experts o Michael Porter’s Five Forces Model Threat of new competitors (can raise level of competition) Entry barriers determine the relative threat of new competitors o The capital required to enter the industry and the cost to customers to switch to a competitor Threat of substitute products (can lower profitability of competitors) The willingness of buyers to switch and relative cost and performance of substitutes are key factors Bargaining power of buyers (determine prices and long-term profitability) Stronger when there are relatively few buyers but many sellers When products offered are all essentially the same Bargaining power of suppliers (affect the industries profitability) Strong when industry has many buyers and few dominant suppliers An industry that doesn’t represent a key customer group for suppliers Degree of rivalry between competitors High in industries with equally sized competitors or little differentiation between products o Strengths, Weaknesses, Opportunities, Threats (SWOT) matrix Illustrate what the firm is doing well, where is can improve, what opportunities are available, and what environmental factors threaten the future of the organization Set Direction o Defining the mission, vision, values, objectives, and goals of the organization o VISION/MISSION STATEMENT Communicates an organization’s overarching aspirations to guide it through changing objectives, goals, and strategies Forms a foundation for making decisions and taking action Seldom change once they are formulated Effective statement consists of Mission statement Vision of a desirable future Set of core values MISSION STATEMENT – defines the organization’s fundamental purpose for existing Ex. Google’s mission: “to organize the world’s information and make it universally accessible and useful” VISION – Concise statement of what the organization intends to achieve in the future Good vision include o Motivates and inspires o Easy to communicate, simple to understand, and memorable o Challenging, yet achievable and moves the organization to greatness CORE VALUES – identify a few widely accepted principles that guide how people behave and make decisions o OBJECTIVES Statement of a compelling business need that an organization must meet to achieve its vision and mission Ex. John Hopkins Medicine o GOALS Specific result that must be achieved to reach an objective Specify how to determine whether the objective is being met Depending on the difference between actual and desired results, adjustments may be needed in the objectives, goals, and strategies and projects Big Hairy Audacious Goals (BHAGs) SMART goals o Specific Use action verbs and specify who, what, when, where, why o Measurable Include numeric or descriptive measures that define criteria such as quantity, quality, and cost so progress toward meeting the goal can be determined o Achievable Goals should be ambitious yet realistic and attainable o Relevant Goals should strongly contribute to the mission of the department o Time constrained Time limit should be set to help define the priority to assign to meeting the goal Define Strategies o Strategy – describes how an organization will achieve its vision, mission, objectives, and goals o Frequently used themes Increase revenue Attract and retain new customers Increase customer loyalty Reduce the time required to deliver new products to market o Ex. Amazon and its possible use of delivery drones to gain technological advantage Deploy Plan o Strategic planning done at lower levels within the organization depends on the amount of autonomy granted those unites as well as the leadership style and capabilities of the managers in charge o Develop more detailed plans for initiatives, programs, and projects that align with the firm’s objectives, goals, and strategies SETTING THE IT ORGANIZATIONAL STRATEGY Identify those technologies, vendors, competencies, people, systems, and projects IT strategic plan is strongly influenced by new technology innovations and innovative thinking by other inside and outside the organization Only 10% of surveyed CIOs stated that their IT organization is viewed by fellow employees as a game-changing organization that is asked to lead product innovation efforts and open new markets IT staff must be able to recognize and understand business needs and develop effective solutions Identifying IT Projects and Initiatives o Often, experienced IT managers are assigned to serve as liaisons with the business units in order to gain a deeper understanding of each business unit and its needs IT managers are then able to identify and define IT projects needed o Project Type Breakthrough Growth Innovation Enhancement Maintenance Mandatory Prioritizing IT Projects and Initiatives o An iterative process of setting priorities and determining the resulting budgeting, staffing, timing is needed to define which projects will be initiated and executed o IT investment board of business unit executives Viable project must relate to a specific organizational goal Tangible benefits – can be measured directly and assigned monetary value Ex. The number of staff before and after the completion of initiative can be measured and the monetary value is the decrease in staff costs (salary, benefits, and overhead) Intangible benefits – cannot directly be measured and cannot easily be quantified in monetary terms Ex. Increase in customer satisfaction due to an initiative is important but is difficult to measure and can’s easily be converted to monetary value What kinds of costs are associated with the project? Preliminary costs and benefits are weighed Risk is another factor to consider Some projects enable other projects Is the organization capable of taking on this project? EFFECTIVE STRATEGIC PLANNING: CHEVERON
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