Kenneth C. Laudon,Jane P. Laudon Management Information System 12th Edition pdf

value web 

is a collection of

independent firms that use information technology to coordinate their value

chains to produce a product or service for a market collectively. It is more

customer driven and operates in a less linear fashion than the traditional value

chain.

Figure 3-12 shows that this value web synchronizes the business processes of

customers, suppliers, and trading partners among different companies in an

industry or in related industries. These value webs are flexible and adaptive to

changes in supply and demand. Relationships can be bundled or unbundled in

response to changing market conditions. Firms will accelerate time to market

and to customers by optimizing their value web relationships to make quick

decisions on who can deliver the required products or services at the right price

and location.

SYNERGIES, CORE COMPETENCIES, AND NETWORK-

BASED STRATEGIES 

A large corporation is typically a collection of businesses. Often, the firm is

organized financially as a collection of strategic business units and the returns

to the firm are directly tied to the performance of all the strategic business

units. Information systems can improve the overall performance of these

business units by promoting synergies and core competencies. 

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Chapter 3

Information Systems, Organizations, and Strategy

107

S y n e r g i e s

The idea of synergies is that when the output of some units can be used as

inputs to other units, or two organizations pool markets and expertise, these

relationships lower costs and generate profits. Recent bank and financial firm

mergers, such as the merger of JP Morgan Chase and Bank of New York as well

as Bank of America and Countrywide Financial Corporation occurred precisely

for this purpose.

One use of information technology in these synergy situations is to tie

together the operations of disparate business units so that they can act as a

whole. For example, acquiring Countrywide Financial enabled Bank of America

to extend its mortgage lending business and to tap into a large pool of new cus-

tomers who might be interested in its credit card, consumer banking, and other

financial products. Information systems would help the merged companies

consolidate operations, lower retailing costs, and increase cross-marketing of

financial products.

E n h a n c i n g   C o r e   C o m p e t e n c i e s

Yet another way to use information systems for competitive advantage is to

think about ways that systems can enhance core competencies. The argument

is that the performance of all business units will increase insofar as these

business units develop, or create, a central core of competencies. A