These can be used with strategic intent, especially for gaining competitive advantage. We take the case of Ford Motor, the second largest car maker in the US. While Ford has built many IS with strategic aspects, we focus on the IS for supplier – Ford relations.
Managers can use value chain analysis to identify opportunities to use IS for competitive advantage (Porter, 1985, 2001; Shank and Govindarajan, 1993). An organization (in our case, Ford) can be thought of as a big input – output process. This can be represented schematically as follows:
Ford Motor purchases automobile components and services from automotive companies in the industry. So at the left end in the schematic, supplies are purchased and brought into Ford. Ford then integrates those supplies (components) and makes cars, which it markets to customers. Ford then provides customer service after it sells the cars. In this entire process, there are opportunities for people in Ford to add value in various stages of the process. For example, supplies can be acquired more effectively and value can be added. Some other examples are adding value in making cars and improving sales. This process of adding value throughout the organization is called the Value Chain of the organization.
Value Chain Analysis is the process of analyzing the organization’s value chain to find out where value is added to products and services, and the costs of adding value. Since IS can automate many activities in the Value Chain, Value Chain Analysis is used widely in using IS for strategic competitive advantage. In this, one has to first draw the Value Chain and then flesh out each of the activities where value is added. Then costs are determined for such value addition activities. Then one has to compare and benchmark these activities with those of the competitors. Then one can use the appropriate IS for gaining competitive advantage. IS can be used at any