Strategic Uses of Information Resources ;Case Study: Capital One
While students are encouraged to discuss the assignments with each other, each student must complete and submit the assignments individually. See the course schedule
for all due dates. Each homework assignment must include a cover page similar to the examples (for the first two homework assignments) presented below. The cover page
should include your name, the course number, the course topic (as listed below and in the course schedule), the name of the case analyzed in the assignment, and the
due date. For example:
Your Name
Homework Assignment 1
Strategic Uses of Information Resources
Case Study: Capital One
February 6, 2017
Each homework assignment should be 3-5 pages (not including the cover page), 1.5-spaced, and have 1-inch margins, 12-point font size, and Calibri font. All pages
except for the first should have a page number in the lower right corner. References, if necessary, must be listed at the end of the assignment and cited in the main
text. Quote appropriately. Do not plagiarize! 
Finally, please use numbered section breaks (1, 2, 3…) to facilitate grading. The details of the assignments are
presented below.
Homework Assignment 1 (Strategic Uses of Information Resources)
Read Managing and Using IS (Ch. 2) and answer the following question:
1. Use either Porter’s five competitive forces model or Porter’s value chain model (as described in this chapter) to describe how information technology (IT) might be
used to provide a winning position for a local dry cleaner. (10 points)
Read the Capital One Case Study (BB > Course Documents) and answer the following questions:
2. It seems pretty clear that the defender should always enjoy an information advantage, relative to a competitor attempting to capture its most profitable customers.
That is, the attacker is making educated guesses about who might be profitable and who might not be; the defender it would appear always has more accurate information
on who has been profitable and who has not been.
a. Given this apparent advantage, why do some defenders (when attacked) appear unable to duplicate the attackers’ strategies and thus unable to defend themselves
effectively? (4 points)
b. What specific factors prevented other banks from countering Capital One’s initial attack? (4 points)
3. Consider Capital One (actually, at the time, Signet Bank) and its initial attack on AT&T Universal, CitiBank, and Chase. Capital One clearly had higher operating
expenses than the large, scale-intensive issuers it was attacking and Capital One clearly was charging lower prices, with lower APRs and sometimes lower annual fees.
How could it also have become the most profitable issuer, following a low-price, high-cost strategy? (4 points)
4. With great enthusiasm the expert management team at Capital One concluded that information-based strategy and test-and-learn would allow them to dominate in online
gift retailing. After all who, better than a credit card company, could predict what you or someone like you would want to buy? How successful has Capital One been as
an online merchant? Why? (4 points)
5. Provide an example of one industry (other than credit card or the other industries discussed in the Capital One Case Study) that have a strong customer
profitability gradient (c.p.g.) and describe the c.p.g. for the industry. (4 points)
