1 E-Leader, Slovakia 2006 Strategic Information Management Michal Gregus and Eleonora Benova Faculty of Management Comenius University Bratislava, Slovak republic michal.gregus@fm.uniba.sk and eleonora.benova@fm.uniba.sk Abstract In this paper on an example of a standard company we identify a strategic information system (IS) issues in an organization. We critically analyze and critically evaluate the organization’s practice to solve the problems connected with the implementing strategic information systems. We try to discuss the wider organizational implications of the steps taken by the organization in the use of IS and their consequences. Introduction In this paper we will consider a company in Slovakia, with above average industry performance. Geographic accessibility of the company’s major markets in WE and CEE, together with low cost operations, represent the major competitive advantages of the firm. Declining markets, existing production, overcapacity in Europe, and increased imports from Asian low cost countries intensify competition and enhance further industry consolidation. The company has a long-term history of local ‘big successful enterprise operating in a mature industry and stable CEE environment, with all implications on organizational structures, systems, company culture, processes, leadership and peoples’ mindset. After privatization of the company in mid 1990’s, international company took- over management control (50% shareholder). The company became strategic business unit (SBU) of the multinational enterprise (MNE). The integration of the company into MNE structures triggered massive restructuring and downsizing processes within this SBU and implied cultural clashes. On the other hand the integration created the opportunity to utilize the synergies from common distribution channels, procurement and production planning. Core thesis Lack of the company’s emphasis on information systems integration with customers and suppliers, and the resulting poor/inefficient information and information exchanges within the value system, represents the major missed opportunity for value creation and was one of the underlying reasons for company’s takeover. The company’s over reliance on internal value chain optimization as a source of competitive advantage has proved to be an unsustainable source of competitive advantage. Business Strategy The company’s competitive strategy can be characterized as a hybrid strategy (Johnson and Scholes 2002), where the low cost base (cost leadership), reinvested in low price, is merged with differentiation based on quality, reliability, flexibility, innovation and sustainable value creation for all key stakeholders. The company’s current business strategy can be characterized as a turnover strategy (Gerstein 1983) that followed the company’s take-over and subsequent integration of this SBU into MNE structures. The turnaround strategy has not been driven by poor financial performance (SBU has enjoyed sound financial performance), but rather by the desire of new shareholders to increase productivity and to change organizational culture and structure, which are necessary measures asserting sustainable competitive advantage of a low cost, lean and entrepreneurial enterprise. Despite the management rhetoric (Carter and Jackson 2004) expressed in MNE’s business strategy, in reality the cost cutting and strong centralization are dominant in SBU, in the context of a mature industry, severe price competition and the SBU’s background. This paper examines the alignment of IS and business strategy and the contribution of IS practices towards business objectives.