Business concepts and applications

Strategic Information Technology

The three options for organizational strategies that will be discussed are the global strategy, the cooperative strategy and the E-business strategy. A global strategy implies an international presence for an organization. This international presence may translate into production outlets in foreign countries or presence on foreign markets or a combination of the two.

Porter (1986) was one of the first who conducted studies on global strategy. As more and more companies operated in similar economic systems and implemented technological change that made them more efficient and productive, the incentive was to expand on an international level, in order to benefit from emerging markets, from new resources (often at lower costs) and from economies of scale that could thus be generated.

Many of the large multinationals are employ a global strategy. Some of the most eloquent examples include Coca-Cola, Apple Computers and many of the car producers such as Ford or Toyota. Many of these companies share similar characteristics that make them a good example for global strategies: they have outsourced many of their production facilities in developing countries, for lower costs, and are present on many of the foreign markets.

The current dynamic and competitive business environment sometimes brings the need for a cooperative strategy. In a cooperative strategy, the organization plans to partner with one or several other organizations, putting together resources, in order to reach a commonly agreed set of objectives (Mowery, 1996). More and more, such a cooperative approach implies technology transfer and access to knowledge, although the entities taking part in this cooperative agreement remain independent.

One of the interesting examples of a cooperative strategy is the alliance that Lufthansa and United Airlines formed in 1993. This was called the Star Alliance and its main purpose was to put together the resources of the two organizations, particularly information and technology resources. It was important, for example, to be able to share resources in almost any airport around the world. The Alliance was successful and more airlines joined in the next years.

An e-business strategy focuses on employing the online environment and ICT instrument to conduct business. In the age of the Internet, e-business has become a successful way of doing business in an efficient manner, of reaching out to clients in a cost-effective way and of being able to maximize revenues at a relatively lower cost than before.

Many of the organizations have chosen an entirely e-business strategy, which meant that they migrated their business entirely online or have started such a business focusing entirely on the online environment. Successful examples in this sense include Amazon or eBay. Even if Amazon operates as a huge marketplace and retailer, it has no brick and mortar location. Its entire strategy is e-business driven. eBay's model is similar when it comes to its focus on the online.