Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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: Departmental Companies• The Solution: Management Information Systems

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

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LEARNING OUTCOMES

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

2. Identify the different departments in a company and why they must work together to achieve success

3. 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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COMPETING IN THE INFORMATION AGE

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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COMPETING IN THE INFORMATION AGE

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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COMPETING IN THE INFORMATION AGE

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 SOLUTION: MANAGEMENT INFORMATION SYSTEMS

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THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS

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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THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS

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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MIS DEPARTMENT ROLES AND RESPONSIBILITIES

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

SECTION 1.2

BUSINESS STRATEGY

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LEARNING OUTCOMES

4. Explain why competitive advantages are temporary

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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IDENTIFYING COMPETITIVE ADVANTAGES

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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IDENTIFYING COMPETITIVE ADVANTAGES

Competitive intelligence –The process of gathering information about the competitive environment to improve the company’s ability to succeed

Competitive intelligence tools• Porter’s Five Forces Model• Porter’s Three Generic Strategies• Porter’s Value Chain Analysis

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THE FIVE FORCES MODEL – EVALUATING INDUSTRY

ATTRACTIVENESSPorter’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 FOCUSPorter’s Three Generic Strategies

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THE THREE GENERIC STRATEGIES

CHOOSING A BUSINESS FOCUSPorter’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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VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES

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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VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES

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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VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES

Porter’s Value Chain

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VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES

Value Chain and Porter’s Five Forces Model

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LEARNING OUTCOME REVIEW

Now that you have finished the chapter please review the learning outcomes in your text