Chapter1 - Foundations of is in Business

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What is needed in managing a business or a process?

• Mc Kinsey defines it using a precise model,



Why Information Systems –competitive

advantage

• When a firm sustains profits that exceed theaverage for its industry, the firm is said topossess a competitive advantage over its rivals.

• A major goal of business strategy is to achieve

a sustainable competitive advantage



What’s up with this competitive advantage ?

• Two basic types of competitive advantage

▫ Cost advantage

▫ Differentiation advantage

A competitive advantage exists when the firm is able to

deliver the same benefits as competitors but at a lowercost (cost advantage), or deliver benefits that exceed those of competing products (differentiationadvantage)



Why Competitive Advantage ?

• Competitive advantage enables the firm to create superior value for its customers and superior profits for itself.

Value for customer

Profits

fort

hebusines

s

Low High

High

Low Useless Charity

Notsustainable

Rational



Why Information Systems – Value Chain

• To analyze the specific activities through which firms cancreate a competitive advantage, it is modelled as a chain

of value-creating activities. The resulting model is knownas the value chain

• Goal of the following activities is to create value that exceeds the cost of providing the product or service, thusgenerating a profit margin.



Components of Value chain

• –Inbound logistics

▫ receiving, warehousing, and inventory control of input materials.

• –Operations

▫ value-creating activities that transform the inputs into the final product.

• –Outbound logistics

▫ activities required to get the finished product to the customer, including warehousing, order fulfilment, etc.

• –Marketing & Sales:

▫ activities for getting buyers to purchase the product, including channelselection, advertising, pricing, etc.

• –Service

▫ activities that maintain and enhance the product's value includingcustomer support, repair services, etc.



So, … what is there in an Information

System (IS) ?• Set of interrelated components: collect, manipulate,

disseminate data and information

• Provide feedback to meet an objective (increasing profit,improving customer service)

▫ Examples: Hotel Information System, AirlineReservation System, Railway Reservation System,

ATMs, Banks



Concepts: Data Versus Information

• Data

▫ raw facts–Alphanumeric, image, audio, and video

• Information▫ Organized collection of facts–

▫ Have value beyond the facts themselves



Characteristics of Valuable

Information



What do you see here ??



The Concept of a System• A system is a set of elements or components that interact

to accomplish goal(s).

• The elements themselves and the relationships amongthem determine how the system works.

• Systems have inputs, processing mechanisms, outputs,

and (optional) feedback



Concept of a system

Input Output

Process

Feedback

Source



Modeling a System

• model= an abstraction / approximation used torepresent reality.

• Models enable us to explore and gain an improvedunderstanding of real-world situations.

• Managers and decision makers use models to help them•▫ understand what is happening in their organizations

▫ make better decisions.



Business Information SystemsMost common types of information systems used in

business organizations:

• Electronic and mobile commerce systems

• Transaction processing systems

• Management information systems

• Decision support systems• Specialized business information systems



Management Information System (MIS)

• An 'MIS' is a planned system of the collecting,processing, storing and disseminating data in the form of

information needed to carry out the functions of management.

• In a way it is a documented report of the activities those

were planned and executed. According to Philip Kotler" A marketing information system consists of people,

equipment, and procedures to gather, sort, analyze,evaluate, and distribute needed, timely, and accurateinformation to marketing decision makers."

http://en.wikipedia.org/wiki/Philip_Kotler

http://en.wikipedia.org/wiki/Philip_Kotler



Business leader’s Three Roles in IT/IS

Success

Select

Build

Buy

Raw materials

Adopt Exploit Finishedgoods



Thank You



• What do you think is a dabbawala’s MIS ?

• Describe the relation between MIS and artificialintelligence

Understanding basic MIS



Understanding MIS• Classify as data or information

▫ News report about the stock prices

▫ Gossip report about whom Paris Hilton is dating currently

▫ The display on your Caller ID

▫ The Sun rises in the East

Chapter1 - Foundations of is in Business

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