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recognised for over twodecades. More recently, in economics and business management, frameworks and priorities haveshifted to a greater extent from the short-term and tactical to the long-term and strategic. This shift hasbeen at both corporate and national level, in response to challenges to business environments causedby the increase in global competition in almost every industry. These changes have caused allstakeholders in economic activities to reappraise their attitudes, not only to products but also to thelong-term relationships between buyers and suppliers.
MSc IT Management in Construction
Module: IT Management
Problem Exercise
Try to think of activities within your own company and to do with your own work. What is strategic?
What is tactical?
Discuss your thoughts about this exercise with your co-students and the module tutor using
the online discussion board and weekly tutorials.
2.2 Influencing Factors
Back in 1979, Michael Porter described how changes in the business environment are leading
companies to reconsider their views on `traditional' economic theories of competition. The theory of
perfect competition assumes:
free access to new participants in an industry
the availability of perfect market information to all within a particular sector
The extent to which these principles apply in practice affects the profit potential. Porter suggested that
a time of rapid business change enables managers to examine how much they can advantageously
influence the level of competition within their industry and therefore gain abnormal profits. This is
contrary to the usual perception that rapid change represents only a threat.
Other factors may also be important. According to Davenport and Short (1990), the quality movement,
in manufacturing and other sectors, has led organisations to start analysing their total business
process instead of its individual tasks or units. They suggest that major redesign of whole business
processes is occurring as part of a new industrial engineering climate. We will return to this theme in
the final part of this chapter. In 1984, Ives and Learmonth highlighted deregulation as a major cause of
the change in emphasis in business. They also identified global competition and declining cost of new
technologies as important stimuli. In addition, there are clear changes in access to industry and
particularly access to markets in construction – described later.
In conditions of rapid change, companies and business managers can no longer rely on a strict returnon-
investment (ROI) evaluation of business ventures of a tactical nature. They must explore valueadded
concepts of a strategic nature. The use of ROI as a criterion for business decision-making is
inappropriate in view of the changes which have occurred in modern business environments.
An ROI focus by senior management may turn attention toward narrow, well-defined targets as
opposed to broader strategic opportunities that are harder to analyse. Schwartz (1991) argues along
these lines in his proposals for taking the long view of economic situations. His work in economic
planning for Royal Dutch/Shell is based on long-term strategic planning. For the construction industry,
we will make a clear case in this module for IT to be viewed as part of a long term strategy going
beyond a mere consideration of its short-term financial returns.
MSc IT Management in Constru