© The McGraw-Hill Companies, All Rights Reserved CHAPTER ONE MANAGEMENT INFORMATION SYSTEMS...

© The McGraw-Hill Companies, All Rights Reserved

CHAPTER ONE

MANAGEMENT INFORMATION

SYSTEMS

BUSINESS DRIVEN MIS

CHAPTER ONE

MANAGEMENT INFORMATION

SYSTEMS

BUSINESS DRIVEN MIS

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CHAPTER ONE OVERVIEW

SECTION 1.1 – BUSINESS DRIVEN MIS• Competing in the Information Age• The Challenge of Departmental Companies and the MIS

Solution

SECTION 1.2 – BUSINESS STRATEGY• Identifying Competitive Advantages• The Five Forces Model – Evaluating Industry

Attractiveness• The Three Generic Strategies – Choosing a Business

Focus• Value Chain Analysis – Executing Business Strategies


SECTION 1.1

BUSINESS DRIVEN MIS

SECTION 1.1

BUSINESS DRIVEN MIS

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LEARNING OUTCOMES

1. Describe the information age and the differences between data, information, business intelligence, and knowledge

2. Explain systems thinking and how management information systems enable business communications

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COMPETING IN THE INFORMATION AGE

Did you know . . .

Avatar, the movie, took over 4 yrs to make and cost $450 million

Lady Gaga’s real name is Joanne Angelina Germanotta

It costs $2.6 million for a 30-second advertising time slot during the Super Bowl

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Fact - The confirmation or validation of an event or object

Information age - The present time, during which infinite quantities of facts are widely available to anyone who can use a computer

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Examples of the power of business and technology

• Amazon – Not a technology company; primary business focus is selling books

• Netflix – Not a technology company; primary business focus is renting videos

• Zappos – Not a technology company; primary business focus is selling shoes

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The core drivers of the information age

• Data

• Information

• Business intelligence

• Knowledge

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Data

Data - Raw facts that describe the characteristics of an event or object

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Information

Information - Data converted into a meaningful and useful context

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Business Intelligence

Business intelligence - Information collected from multiple sources such as suppliers, customers, competitors, partners, and industries that analyzes patterns, trends, and relationships for strategic decision making

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Knowledge

Knowledge - Skills, experience, and expertise coupled with information and intelligence that creates a person’s intellectual resources

Knowledge worker – Individual valued for their ability to interpret and analyze information

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THE CHALLENGE: DEPARTMENTAL COMPANIES

Common Departments Working Independently

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Common Departments Working Interdependently

THE MIS SOLUTION

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THE MIS SOLUTION

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THE MIS SOLUTION

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SYSTEMS THINKING

Systems thinking – A way of monitoring the entire system by viewing multiple inputs being processed or transformed to produce outputs while continuously gathering feedback on each part

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SYSTEMS THINKING

Management Information Systems (MIS) – A business function, like accounting and human resources, which moves information about people, products, and processes across the company to facilitate decision-making and problem-solving

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MIS Department Roles and Responsibilities

Chief information officer (CIO) – Oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives

Chief knowledge officer (CKO) - Responsible for collecting, maintaining, and distributing the organization’s knowledge

Chief privacy officer (CPO) – Responsible for ensuring the ethical and legal use of information

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Chief security officer (CSO) – Responsible for ensuring the security of IT systems

Chief technology officer (CTO) – Responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT

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SECTION 1.2

BUSINESS STRATEGY

SECTION 1.2

BUSINESS STRATEGY

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LEARNING OUTCOMES

3. Explain why competitive advantages are temporary

4. Identify the four key areas of a SWOT analysis

5. Describe Porter’s Five Forces Model and explain each of the five forces

6. Compare Porter’s three generic strategies

7. Demonstrate how a company can add value by using Porter’s value chain analysis

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IDENTIFYING COMPETITIVE ADVANTAGES

Business strategy – A leadership plan that achieves a specific set of goals or objectives such as

Developing new products or services

Entering new markets

Increasing customer loyalty

Attracting new customers

Increasing sales

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Competitive advantage – A product or service that an organization’s customers place a greater value on than similar offerings from a competitor

First-mover advantage – Occurs when an organization can significantly impact its market share by being first to market with a competitive advantage

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SWOT ANALYSIS A SWOT analysis evaluates an organization’s

strengths, weaknesses, opportunities, and threats to identify significant influences that work for or against business strategies

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THE FIVE FORCES MODEL – EVALUATING INDUSTRY ATTRACTIVENESS

Porter’s Five

Forces Model

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Buyer Power

Buyer power – The ability of buyers to affect the price of an item

• Switching cost – Manipulating costs that make customers reluctant to switch to another product

• Loyalty program – Rewards customers based on the amount of business they do with a particular organization

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Supplier Power

Supplier power – The suppliers’ ability to influence the prices they charge for supplies

• Supply chain – Consists of all parties involved in the procurement of a product or raw material

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Threat of Substitute Products or Services

Threat of substitute products or services – High when there are many alternatives to a product or service and low when there are few alternatives

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Threat of New Entrants

Threat of new entrants – High when it is easy for new competitors to enter a market and low when there are significant entry barriers

• Entry barrier – A feature of a product or service that customers have come to expect and entering competitors must offer the same for survival

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Rivalry Among Existing Competitors

Rivalry among existing competitors – High when competition is fierce in a market and low when competitors are more complacent

• Product differentiation – Occurs when a company develops unique differences in its products or services with the intent to influence demand

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Analyzing the Airline Industry

Perform a Porter’s Five Forces analysis of each of the following for a company entering the commercial airline industry

• Buyer power

• Supplier power

• Threat of substitute products/services

• Threat of new entrants

• Rivalry among competitors

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THE THREE GENERIC STRATEGIES CHOOSING A BUSINESS FOCUS

Porter’s Three Generic Strategies

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THE THREE GENERIC STRATEGIES CHOOSING A BUSINESS FOCUS

Porter’s Three Generic Strategies

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VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES

Business process – A standardized set of activities that accomplish a specific task, such as a specific process

Value chain analysis – Views a firm as a series of business processes that each add value to the product or service

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Primary value activities

• Inbound logistics - Acquires raw materials and resources, and distributes

• Operations - Transforms raw materials or inputs into goods and services

• Outbound logistics - Distributes goods and services to customers

• Marketing and sales - Promotes, prices, and sells products to customers

• Service - Provides customer support

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Support value activities

• Firm infrastructure – Includes the company format or departmental structures, environment, and systems

• Human resource management – Provides employee training, hiring, and compensation

• Technology development – Applies MIS to processes to add value

• Procurement – Purchases inputs such as raw materials, resources, equipment, and supplies

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Porter’s Value Chain

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Value Chain and Porter’s Five Forces Model

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