Using MIS 4e

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Nov 20, 2013 (3 years and 8 months ago)

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Information Systems for
Competitive Advantage

Using MIS 4e
Chapter 3




Q1:

How does organizational strategy determine information systems
structure?

Q2:

What five forces determine industry structure?

Q3:

How does analysis of industry structure determine competitive
strategy?

Q4:

How does competitive strategy determine value chain structure?

Q5:

How do business processes generate value?

Q6:

How does competitive strategy determine business processes and
the structure of information systems?

Q7:

How do information systems provide competitive advantages?

Q8:

2021?

Study Questions

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Figure 3
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1

Q1: How Does Organizational Strategy
Determine Information Systems Structure?

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Organizations examine the structure of their industry and determine a
competitive strategy

Competitive strategy determines value chains determine business
processes

Structure of business processes determines design of supporting
information systems

Q2: What Five Forces Determine Industry
Structure?

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Q2: What Five Forces Determine Industry
Structure? (cont’d)

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Five Forces at FlexTime

Q3: How Does Analysis of Industry Structure
Determine Competitive Strategy?

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Porter’s Four Competitive Strategies


Focus downtown


Urban, city workers


Sophisticated environment


Adults only


Provide superior product,
intense, to
-
the
-
max
workouts that leave clients
“pumped and excited”

Focus,
Differentiated
Strategy

FlexTime Competitive Strategy

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Q4 How Does Competitive Strategy

Determine Value Chain Structure?

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Value
is amount of money a customer is willing to pay for a
resource, product, or service. Difference between value an
activity generates and its cost is called
margin.

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Support Activities in the Value Chain

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Technology

R & D, New Techniques,
Methods, Procedures

Procurement

Raw Materials

Human Resources

Training, Recruiting,
Compensation

Firm Infrastructure

General Management, Finance,
Accounting, Legal, Government
Affairs

Support Activity

Description

Bicycle Maker’s Value Chain

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Interactions across value activities readily supported by
information systems


Manufacturing systems use linkages to reduce costs

Value Chain Linkages

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Sales forecasts
to plan
production

Production plan used
to determine raw
materials needs

Material needs
used to schedule
purchases

Just
-
in
-
time
inventory

Reduced
Inventory sizes
and costs


Network of activities that generate value by
transforming inputs into outputs

Business process


Cost of inputs plus cost of activities

Cost of a business
process


Equals value of the outputs minus cost

Margin of a
business process


Transforms input resources into output
resources

Activity


Flow between or among activities

Resources


Inventories, store physical items

Facilities store
resources

Q5 How Do Business Processes Generate
Value?

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Three Examples of Business Processes for
Bicycle Manufacturer

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1.
Materials ordering process transforms cash into a raw materials inventory

2.
Manufacturing process transforms raw materials into finished goods

3.
Sales process transforms finished goods into cash

Notice activities get data resources from databases and
put data into databases

Business processes vary in cost and effectiveness. Streamlining
business processes to increase margin (add value, reduce costs, or
both) is key to competitive advantage


Querying both databases allows
purchasing department to make
decisions on raw materials quantities and
customer demand


With this data, purchasing can reduce
size of raw materials inventory, reducing
production costs and add margin to value
chain

Example of using a
linkage across
business processes
to improve process
margin:

Three Business Processes for Bicycle
Manufacturer (cont’d)

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Improved Ordering Process

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Purchase Bicycle
Parts activity
queries both raw
materials
inventory
database and
finished goods
inventory
database

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You are the operations manager for Yikes! Bikes, a
manufacturer of high
-
end mountain bicycles

New owners being deceitful about their plans to turn
company into a low
-
cost, low
-
service producer.

Most employees will lose their job, but new owners not
being honest with employees about that

New owners say you might be promoted to new general
manager. Should you trust them?

Q: Should you tell employees what you know?

Ethics Guide: Yikes! Bikes

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Q6 How Does Competitive Strategy
Determine Business Processes and
Structure of Information Systems?

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Q6 How Does Competitive Strategy Determine
Business Processes and Structure of
Information Systems? (cont’d)

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High
-
Service Business Bike Rental

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Extensive use
of
information
systems

Organizations analyze their industry and choose a
competitive strategy

Given a strategy, business processes to span
value
-
generating activities are designed

Those processes determine scope and
requirements of each organization’s information
systems

Bottom Line

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Q7:
How Do Information Systems Provide

Competitive Advantages?

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Creating
new
products or
services


Enhancing

existing products
or services


Differentiating


By cost


By quality

Two Ways to Respond to the Five
Competitive Forces

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Lock in customers


By creating high switching costs

Lock in suppliers


Make it easy to connect to and work with your
organization

Create entry barriers

Establish alliances

Creating better business processes

Competitive Advantage via Business
Processes

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Superior customer service


Making it easy for customers to do


business by minimizing data entry:


Drop
-
down lists, automatic fill
-
ins,
contact lists for customers


Minimizing data
-
entry errors

ABC, Inc., an
actual company,
created a
competitive
advantage in
shipping industry
by:

Following slides shows some web pages of ABC’s
information system

How Does an Actual Company Use IS to
Create Competitive Advantages?

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Fig3
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ABC, Inc. Web Page to Select Recipient from
Customer Records

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ABC, Inc. Web Page to Select Contact from
Customer Records

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ABC, Inc., Web Page to Specify Email
Notification

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ABC, Inc., Web Page to Print a Shipping
Label

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Enhancing existing products

Differentiating products

Locking in customers

Raising barriers to market entry

Increasing profit margins by decreasing
costs and decreasing errors

How Does This System Create a Competitive
Advantage?

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Assume FlexTime keeps pace with emerging research on
optimal workout schedules
(
www.angelfire.com/wa3/loserschallenge/cardio.html
,
www.sportsci.org/jour/0101/cf.htm
)


Could develop information systems to track client
workouts and intensity, then relate data into net
cardiovascular benefits.


Could correlate workout data with dietary data and
client weight loss or gain.


Maybe provide data to medical insurers and help its
active clients to obtain reductions in medical insurance
premiums.


FlexTime

could,
but

s
hould it?

Is it worthwhile for
FlexTime to develop such systems?

Optimist
view

Q8
2021?

What Does Flextime Look Like in 2021?

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No longer a single business entity.
Maybe it becomes a federation of
trainers, workout spaces, dieticians,
and recreational sports leagues.


Federation uses free data storage,
data communication, and emerging
collaboration tools and systems to
appear as a virtual organization to
clients, but is composed of
independently owned and operated
small business entities.


Who knows?

Suppose
economic
downturn
proves too
much for
FlexTime and
it is forced to
reconfigure
into a shadow
of former self

Pessimistic View

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Digital divide segregates “haves” and “have
-
nots”

Using the Internet is a matter of access to knowledge

Advantages accrue to those who have easy access

Digital divide between those who have Internet access and those
who don’t


Divide deepens education, income, social differences


Internet access might be available at public places, but:


Not everyone served


Not as convenient as home access

Guide: Limiting Access to Those Who Have
Access

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Intellectual capital resides on Internet
readily available


Cheaper product customer
support


Reduces warehousing costs


Reduces mailings costs

Benefits for
businesses

Benefits of Access

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What groups of people in the United States are not connected to
the Internet?

Does it make sense for benefactors, such as
Bill and Melinda
Gates
, to provide access to those in poverty?

What keeps the elderly from accessing the Internet?

Should the government help the elderly?

What could be done to provide Internet access for the poorly
educated?

What role, if any, could local governments have? State? Federal?
United Nations?

Issues to Think About

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If you are from outside the United States, what is
the connectivity situation in your country?

Is there a digital divide there?

Are some countries more behind in connectivity
trends than others?

What does this mean for their ability to compete?
What does this mean for citizens of those
countries?

Issues to Think About

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Knowledge grows exponentially

just like capital

Digital divide can create or worsen social
problems

Businesses and government should explore their
responsibilities with respect to the digital divide

Take Away from Guide

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Who will be your competitors when you
seek a job after you graduate from college?

What will be your competitive advantage in
the job market?

What can you do before you graduate to
develop your competitive advantage?

Guide: Your Personal Competitive Advantage

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Switching costs?


Differentiating
products?


Creating barriers?


Establishing alliances?


Reducing costs,
increasing revenues?

How could
these
concepts
help you
get and
keep a
job?

Guide: Your Personal Competitive Advantage
(cont’d)

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