Lecture Management information systems: Solving business problems with information technology – Chapter 10

In this chapter you will learn: How can you use information technology to improve your organization and make it better than your competitors? How competitive is your world? What are the main factors affecting a firm’s competitive advantage? Where do you begin looking for an edge?,...

Introduction to MIS 1

Copyright © 1998-2002 by Jerry Post

Introduction to MIS

Chapter 10Strategic Analysis

  Introduction to MIS   3

Outline

 The Competitive Environment

 External Agents

 IS Techniques to Gain Competitive Advantage

 The Search for Innovation

 Costs and Dangers of Strategies

 Operations, Tactics, Strategy

 E-Commerce Failures

 Cases: Travel Industry

 Appendix: Solving Business Problems and Cases

Competition is increasing in many industries, but it is particularly intense in the restaurant and fast food industry

Competition encourages firms to hold down costs, provide more variety, and provide new and better service to

customers.

Competition

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Rivalry Among Existing Competitors Bargaining Powerof Buyers

Bargaining Power

of Suppliers

Threat of New Entrants

Threat of Substitute Products or Services

Porter’s Five Forces Model

Corporate Strategy

Pattern of purposes and policies defining the company and its business

Formulation (Deciding what to do.)

Implementation (Achieving results.)

2 Org processes & behavior.

Standards and measurement.

Motivation & incentive systems.

Control systems.

Recruit & develop managers.

3 Top leadership.

Strategic Organizational

Personal

Harvard Strategy

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parts supplier supplierparts supplierparts

warehouse warehouse

supplier supplier

supplier

tool manufacturer Manufacturer

workers

wholesaler wholesaler

distributor distributor

distributor

retail store retail store

retail store retail store

Consumers

Production

Chain

Improved Quality

Ties To Customers

Increased Switching Costs Wholesale

Ties To Suppliers

Control Of Distribution

Innovation and Differentiation

Methods to Gain

Competitive Advantage

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Barriers to Entry

 Prevent others from entering

the industry Napster

 Switching Costs

 Consumers incur learning

and data transfer costs

Baxter Healthcare

 Lower Production Costs

 IS to cut costs Wal-Mart

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Firm Infrastructure Human Resources Management Technology Development

Procurement

Inbound

Logistics Operations Outbound Logistics Marketing & Sales Service

M arg in

M ar

gi n

Value Chain

Engineering and Design

Marketing

Research

Customer Service

Management

Sales and Order Management

Logistics/

Supply Suppliers

Customers

Production

Process Innovation

Process Changes Data Needs

IS Changes

System Development

& Implementation

­ Cost  leadership

Developing Strategies

Search for Innovation

 Research

 Analysis & modeling, project

management, work group support, databases, decision support.

 Engineering & Design

 CAD/CAM, testing, networks,

work group support.

 Logistics & Supply

 Just-in-time linkages, forecasts, models, links for design, transaction

processing.

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Search for Innovation

 Marketing

 Frequent buyer database,

target market & media analysis, survey design and analysis, multimedia

promotion design, links to customers and designers.

 Sales & Orders

 Portable computers for

sales, ES for order customization, work group tools for customer support.

 Service

 Phone support, GIS locators, scheduling, ES diagnostics, databases.

 EIS, e-mail, bulletin boards, decision support systems, personal productivity tools, work group support

 Links to service providers

 Accountants

 Consultants

 Lawyers,

Research

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Engineering and Design

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Logistics and Supply

Marketing

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Sales and Orders

Service

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Management

 Organization Requirements

 Internal coordination.

 Incentives for innovation.

 Resources to attract skills.

 Risks

 Competitors imitate.

 Customers do not accept.

 Cost is too high.

 Cost Leadership

 Skills & Resources

 Continued capital investment.

 Process engineering.

 Continuous quality improvement.

 Tight supervision of costs.

 Products designed for low cost.

 Low cost distribution.

 Organization Requirements

 Tight cost controls.

 Frequent control reports.

 Highly structured org.

 Incentives based on qualitative measures.

 Customer-Supplier Links

 Skills & Resources

 Influence with partners

 Communication channels

 Standards or agreements.

 Organization Requirements

 Flexibility to respond to customers.

 Service culture.

 Ability to adapt to emergencies.

Money for research

Money for information technology

Dangers:

Capital Cost

Network & link sales people

Link to suppliers

& customers

Experimental technology

& global links

Competition

Follows

Industry 1(expands into

industry 2)

Industry 2(newcompetitor)

Customer Customer

Customer Customer

Customer Customer

Customer

Customer

New technology New services

Same technology

Changing Industry &

Government Intervention

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Security

Production Firm

Customer

Data we wish to share.

Data we want to protect.

Need to control access.

Need to worry about network interceptions and hackers.

Security firewall

Hackers

or competitors

rejected

E-Commerce Failures

production and shipping

from other dot-com firms

market and becoming the biggest, best-known firm in a niche industry

profit on sales Money from advertising and stock

sales would be sufficient to keep the firm alive until the world changed

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Cases: Travel Industry

Cases: The Sabre Group

American Express

What is the company’s current status?

What is the Internet strategy?

How does the company use information technology?

What are the prospects for the industry?

www.sabre.com

www.americanexpress.com

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Appendix: Solving Problems

Solve the right problem

Choose the right tools

Divide the system

Customer response Employee response

Input Process Output Cause Feasibility

Appendix: Evaluating Projects

 Does the project fit with business goals and management style?

 Does the project improve the competitive position of the firm?

 How long will any competitive advantage last?

 What value or reward is created by the system?

 What level of technology is needed to create the system?

 experimental

 leading edge

 established

 old-hat

 What is the probability of technical success?

 What is the probability of commercial success?

 What are the costs involved in creating the system?

 Monetary

 Time

  Introduction to MIS   35

Appendix: Good Business Analysis

Solving Business Problems & Cases

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Appendix: Organization of Analysis

 Identify most important problems

 Identify causes of problems

 Show how your plan solves the problems

 Explain additional benefits or opportunities