Module:- Information System Management and Strategy

Question 1

McFarlan 's strategic grid is a tool used to assess the strategic direction that a firm 's IT resources ought to take . It gives an illustrated view of how these resources are faring currently and how they will be contributing to the firm 's strategy in the future . The grid , as its name implies , contains four sections or quadrants . These are labelled as follows

Support : IT application has little or no strategic benefit to the firm and performs a normal function in supporting activities

Turnaround : the existing systems contribute

a lot but still require a lot of attention if they are to be turned into a strategic tool

Factory : the IT systems are important but provide a clear strategic (or competitive ) advantage

Strategic : existing (and future ) investment in such systems are critical to the firms success and future strategic direction

These quadrants are placed on the two axes with a low to high impact scale on each . The vertical axis depicts the strategic impact of current IS /IT applications that lie within the four defined quadrants and how they fare in their current strategic importance to the firm . The horizontal axis depicts their future importance according to the predicted competitive environment

Various IS /IT applications can be classified under one (or at times both ) of these quadrants . It is better to take one application or system and see how it can fall through all quadrants as time goes on . If an airline firm were to implement a new ticketing system a few years ago such as system would help it connect to its agents and create a better way to book s from customers . A few years back this would have been a system that would lie in the strategic quadrant of McFarlan 's strategic grid because such a system would have created barriers to entry for new entrants into the industry and provided the firm with a competitive advantage in terms of operations . Furthermore , such a system would keep on providing a firm with a certain strategic advantage and thus it will be placed in the strategic quadrant . After a few years when more players in the industry would have acquired similar systems its importance would go down but still remain in the factory or key operational quadrant due to the operational benefits such a system provides . If the same firm starts to invest in a new system which is better than its existing one , that new system would lie in the high potential or turnaround quadrant because currently that system is not of much use but will be so in the near future . Subsequently , once the new system is implemented the existing one (or some modules of it ) might still be functional especially among agents who are not willing enough to switch over to a new system . In this case , the old system would lie in the support quadrant where a system might be important otherwise but is not a huge contributor to the firm...