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Chapter 3 Information Systems, Organizations, and Strategy 133

are absolutely critical to your success. Here, supply chain management systems
that coordinate the flow of resources into your firm, and customer relationship
management systems that coordinate your sales and support employees with
customers, are two of the most common system applications that result from a
business value chain analysis. We discuss these enterprise applications in detail
later in Chapter 9.
Using the business value chain model will also cause you to consider
benchmarking your business processes against your competitors or others in
related industries, and identifying industry best practices. Benchmarking
involves comparing the efficiency and effectiveness of your business processes
against strict standards and then measuring performance against those
standards. Industry best practices are usually identified by consulting compa-
nies, research organizations, government agencies, and industry associations as
the most successful solutions or problem-solving methods for consistently and
effectively achieving a business objective.
Once you have analyzed the various stages in the value chain at your
business, you can come up with candidate applications of information systems.
Then, once you have a list of candidate applications, you can decide which
to develop first. By making improvements in your own business value chain
that your competitors might miss, you can achieve competitive advantage by
attaining operational excellence, lowering costs, improving profit margins, and
forging a closer relationship with customers and suppliers. If your competitors
are making similar improvements, then at least you will not be at a competitive
disadvantage—the worst of all cases!
In the Interactive Session on Technology, we can see how value chain
analysis might have helped automakers refine their competitive strategies.
Ford, GM, and other leading automakers are adding more value to their products
by offering software interfaces and applications for improving vehicle perfor-
mance, providing entertainment, and integrating with other systems for main-
tenance and future traffic control.

Extending the Value Chain: The Value Web
Figure 3.9 shows that a firm’s value chain is linked to the value chains of its
suppliers, distributors, and customers. After all, the performance of most firms
depends not only on what goes on inside a firm but also on how well the firm
coordinates with direct and indirect suppliers, delivery firms (logistics partners,
such as FedEx or UPS), and, of course, customers.
How can information systems be used to achieve strategic advantage at
the industry level? By working with other firms, industry participants can
use information technology to develop industry-wide standards for exchang-
ing information or business transactions electronically, which force all market
participants to subscribe to similar standards. Such efforts increase efficiency,
making product substitution less likely and perhaps raising entry costs—thus
discouraging new entrants. Also, industry members can build industry-wide,
IT-supported consortia, symposia, and communications networks to coordinate
activities concerning government agencies, foreign competition, and compet-
ing industries.
Looking at the industry value chain encourages you to think about how
to use information systems to link up more efficiently with your suppliers,
strategic partners, and customers. Strategic advantage derives from your abil-
ity to relate your value chain to the value chains of other partners in the pro-
cess. For instance, if you are Amazon.com, you want to build systems that:

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