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Chapter 3 Strategy and Information Systems
128
Q3-6 How Does Competitive Strategy Determine
Business Processes and the Structure of
Information Systems?

Figure 3-10 shows a business process for renting bicycles. The value-generating activities are
shown in the top of the table, and the implementation of those activities for two companies with
different competitive strategies is shown in the rows below.
The first company has chosen a competitive strategy of low-cost rentals to students. Accord-
ingly, this business implements business processes to minimize costs. The second company has
chosen a differentiation strategy. It provides “best-of-breed” rentals to executives at a high-end
conference resort. Notice that this business has designed its business processes to ensure superb
service. To achieve a positive margin, it must ensure that the value added will exceed the costs of
providing the service.
Now, consider the information systems required for these business processes. The student
rental business uses a shoebox for its data facility. The only computer/software/data component in
its business is the machine provided by its bank for processing credit card transactions.
The high-service business, however, makes extensive use of information systems, as shown
in Figure 3-11. It has a sales tracking database that tracks past customer rental activity and an
inventory database that is used to select and up-sell bicycle rentals as well as to control bicycle
inventory with a minimum of fuss to its high-end customers.

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