Week 5 - IT Strategy - Payoffs from Tech Adoption

IN the seminar for Week 4, we learned how to use financial data to make sense of business strategy and industry structure. These are the two main topics in Chapter 2. In addition to this, some in a couple of the quiz questions, we revisited tech adoption in conjunction with the resource based view to generate  expected duration of competitive advantage. More specifically we related this to the tech adoption in the context of the Whirlpool case. This week we are going to move to chapter 3 which deals with IT strategy. Our two primary objectives would be to understand the role that adoption of technological innovations can play on industry structure and different strategies related to IT strategy.

Topics and Readings for Week 5

Theory: We will look at IT strategy, alignment between IT and business strategy, and payoffs from IT investments. Read Chapter 3 and revisit (read carefully) the Whirlpool case

Seminar: Read the notes that I have posted on Learn on how we generate proxies for industry structure and run the accompanying script (script week 5). We use this as a foundation to perform an analysis of the payoffs from tech adoption in the case of Whirlpool.

Assignments for Week 5

The online quiz will be a based on Chapter 3  and material from the seminar. The quiz will be available on Friday at 12:30 pm.

Week 4 - Strategic Analytics (Using Accounting Data)

During our 3rd week, we considered the implications of technology adoption from a strategic standpoint (material in chapter 2) and started used analytics to make sense of topics covered in Chapter 2. We have seen how we can leverage confidence interval analysis and ROA decomposition to visualize/compare two firms following different business strategy.

Topics and Readings for Week 4

There is no lecture this week (Victoria Day).

Seminar: We will continue leveraging accounting data to understand business strategy, industry structure, and implications for competitive position. I have prepared some notes that will help you understand the logic/functions used for the ROA decomposition. The notes are available on Learn Week 4. 

We will leverage accounting data to generate proxies for industry structure and use this to establish the effect of industry structure on profitability.

Assignments for Week 4

The fourth online quiz will be a based on Chapter 2  and material from the seminar. The quiz will be available on Friday at 12:30 pm.

Week 3 - Introduction to Business Strategy

In last week’s lecture I asked the following question: If you were to identify competitors of Blackberry in the beginning of 200s, could you have included Apple and Google in the list? Chances are the answer would have been no. However, a few year later the competitive landscape had changed. In 2005 Google acquired Android, which by 2013 had become the most installed operating system (wikipedia). Apple introduced its highly successful iPhone in the summer of 2007. If you want to see the implications run the R script named (R_Blackberry.R) which is available on Learn. A more recent story is coming from Bloomberg (May 13) Apple’s $1 Billion China Deal Accentuates Ambitions for Cars. As you browse through this article try to think what it means in terms of the definition of competition and industry structure (topics covered in Chapter 2).

Topics and Readings for Week 3

Lecture: In order to understand the choices made by firms regarding technology adoption, we need to evaluate their choices in terms of their internal environment (resources and capabilities that the firm has been investing on and its strategic priorities) as well as the firm’s external environment (industry structure). These topics are covered in Chapter 2. (Read Chapter 2)

Seminar: We will review some of the theory that you have learned in your statistics class about confidence intervals and use it to generate confidence intervals for IT spending. (Review the R script posted on Learn CI_Analysis.R). We will use this as foundation to generate CI based on industry level IT spending data and industry level sales data from Compustat.  You will need to start reviewing the financial ratios (Read Appendix 2A) and ROA decomposition (Read Appendix 2B).

Assignments/Quizzes.

The online quiz will be a based on Chapter 2  and material from the seminar. The quiz will be available on Friday at 12:30 pm.

Prof. Stratopoulos

Week 2 - Patterns in IT Spending & Introduction to Business Strategy

We used the Amazon story about cloud computing to introduce the course. The objective was to show the implications of emerging technology for firms that develop/supply, as well as for firms that adopt the technology. Firms that supply the new technology hope that the technology will be adopted by a large percentage of the targeted population. We leveraged analytics and big data to explore adoption rate of cloud computing as well as the market reaction (investors and analysts implicit assumptions) regarding the expected adoption of cloud computing by the market. 

The special report on cloud computing let us see the same story from the adopting firms’ standpoint. Adoption of emerging technologies has important implications for performance and competitive position of adopting firms. Firms have to consider which technologies to invest on, when to adopt the technology, as well as monitor and evaluate the expected and realized benefits from these technology related investments. During the course we will be using the Whirlpool case study to explore the multifaceted implications of technology adoption and its competitive implications.

Topics and Readings for Week 2

Lecture: Adoption of emerging technologies implies that firms will allocate resources in their IT budget. In Chapter 1 we will explore some patterns related to IT spending over time and across industries. When firms invest in IT, they expect to achieve certain objectives. The justification, possible manifestations, and expected payoffs of IT spending are the remaining topics that we will discuss in the rest of chapter 1. (Read Chapter 1).

Firms invest in IT hoping to increase sales, reduce costs, or both. While the argument sounds reasonable, early empirical evidence showed that this expected positive association between IT spending and firm performance should not be taken for granted. Maximizing the payoffs from IT investment requires planning and the development of a vision regarding the role of IT in the organization (IT strategy) that is aligned with the firm's business strategy. We will start exploring strategic management related topics and business strategy in Chapter 2 (Read pp. 80-96)

Seminar: We will continue our practice problems related to technology adoption (Read Appendix 1B) and explore IT spending patterns (Read Appendix 1C-1D).  In exploring IT spending we will combine industry level IT spending data from IW500 with financial data from Compustat.

Assignments/Quizzes.

The second online quiz will be a based on Chapter 1  and the Whirlpool case, as well as material we cover in lecture/seminar. The quiz will be available on Friday at 12:30 pm.

All the best.

Prof. Stratopoulos