Management Information Systems - 2nd Semester Notes

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Compiled By: Muzammil Ahmad Khan and Kashif Shaikh

Sir Syed University of Engineering and Technology

Chapter No 2 Batch 2010Management Information Systems

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Management Information Systems

Chapter 2

Compiled By:

Muzammil Ahmad Khan

Muhammad Kashif Shaikh

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MIS Books

Text Book

1. Management Information System, 8th EditionBy: James A. O' Brien , George Marakas

Reference Books

1. Management Information System, 9th EditionBy: Kenneth C. Laudon, Jane P. Laudon

2. Introduction to Information Systems: Supporting and Transforming BusinessBy: Rainer, Turban, Potter, 1st Edition

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Marks Distribution

Mid Term ________ 15Assignment + Class Performance + Quiz + Presentation + Report ________ 5Semester Final Paper ________ 80Total Marks ________ 100

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Marks Distribution [ Sessional ]

Class Test ______________ 10 PointsAssignment ______________ 10 PointsClass Presentation ______________ 15 PointsProject ______________ 15 PointsTotal Points ______________ 50 Points

Performance Bonus ______________ 10 Points

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MIS Website

http://www.ssuet.edu.pk/courses/hs107/mis

http://taimoor/hs107/mis

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Course Instructors

Muhammad Kashif Shaikh [email protected] Professor, CEDRoom No: BS-04Section A, B,E (Computer, Batch 2009)

Muzammil Ahmad Khan [email protected] Professor, CEDRoom No: BS-04Section C, D (Computer, Batch 2009)

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Competing withInformation Technology

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Management Information Systems

Compiled By: Muzammil Ahmad Khan & Muhammad Kashif Shaikh

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Identify basic competitive strategies and explain how a business can use IT to confront the competitive forces it faces

Identify several strategic uses of IT and give examples of how they give competitive advantages to a business

Give examples of how business process reengineering frequently involves the strategic use of IT

Learning Objectives

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Identify the business value of using Internet technologies to become an agile competitor or to form a virtual company

Explain how knowledge management systems can help a business gain strategic advantages

Learning Objectives

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Technology is no longer an afterthought in business strategy, but the cause and driver

IT can change the way businesses compete

A strategic information system is any information system that uses IT to help an organization…

Gain a competitive advantageReduce a competitive disadvantageOr meet other strategic enterprise objectives

Strategic IT

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What does “Strategy” Means

Consists of competitive moves and business approaches used by managers to run the companyManagement’s “action plan” to

Grow the businessAttract and please customersCompete successfullyConduct operationsAchieve target levels oforganizational performance

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Why Do Strategies Evolve?

A company’s strategy is a work in progress

Changes may be necessary to react toShifting market conditionsTechnological breakthroughsFresh moves of competitorsEvolving customer preferencesEmerging market opportunitiesNew ideas to improve strategyCrisis situations

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The Strategy-Making, Strategy-Executing Process

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Strategic Vision vs. Mission

A strategic visionconcerns a firm’s future business path -“wherewe are going”

Markets to be pursuedFuture product/market/customer/technology focusKind of company management is trying to create

The mission statementof a firm focuses on its present business purpose - “who we are and what we do”

Current product and service offeringsCustomer needs being servedTechnologicaland businesscapabilities

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To succeed, a business must develop strategies to counter these forces…

Rivalry of competitors within its industryNew entrants into an industry and its marketsSubstitute products that may capture market shareBargaining power of customersBargaining power of suppliers

Competitive Forces

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The Five Forces Model of Competition

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Competitive Forces and Strategies

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Cost LeadershipBecome low-cost producersHelp suppliers or customers reduce costsIncrease cost to competitors

Example: Priceline uses online seller bidding so the buyer sets the price

Differentiation StrategyDifferentiate a firm’s products from its competitors’Focus on a particular segment or niche of market

Example: Moen uses online customer design

Five Competitive Strategies

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Innovation StrategyUnique products, services, or marketsRadical changes to business processes

Example: Amazon’s online, full- service customer systems

Growth StrategyExpand company’s capacity to produceExpand into global marketsDiversify into new products or services

Example: Wal- Mart’s merchandise ordering via global satellite tracking

Competitive Strategies (continued)

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Alliance StrategyEstablish linkages and alliances with customers, suppliers, competitors, consultants, and other companiesIncludes mergers, acquisitions, joint ventures, virtual companies

Example: Wal- Mart uses automatic inventory replenishment by supplier

Competitive Strategies (continued)

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These strategies are not mutually exclusiveOrganizations use one, some, or allA given activity could fall into one or more categories of competitive strategy

Not everything innovative serves to differentiate one organization from another

Likewise, not everything that differentiates organizations is necessarily innovative

Using Competitive Strategies

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Ways to Implement Basic Strategies

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Lock in Customers and SuppliersDeter them from switching to competitors

Build in Switching CostsMake customers and suppliers dependent on the use of innovative IS

Erect Barriers to EntryDiscourage or delay other companies from entering the marketIncrease the technology or investment needed to enter

Other Competitive Strategies

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Build Strategic IT CapabilitiesTake advantage of strategic opportunities when they ariseImprove efficiency of business practices

Leverage Investment in ITDevelop products and service that would not be possible without a strong IT capability

Other Competitive Strategies

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What is the business value in being customer-focused?

Keep customers loyalAnticipate their future needsRespond to customer concernsProvide top-quality customer service

Focus on customer valueQuality, not price, has become the primary determinant of valueConsistently

Customer-Focused Business

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Companies that consistently offer the best value from the customer’s perspective…

Track individual preferencesKeep up with market trendsSupply products, services, and information anytime, anywhereTailor customer services to the individualUse Customer Relationship Management (CRM) systems to focus on the customer

Providing Customer Value

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Building Customer Value via the Internet

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View the firm as a chain of basic activities that add value to its products and services

Primary processes directly relate to manufacturing or delivering productsSupport processes help support the day-to-day running of the firm and indirectly contribute to products or services

Use the value chain to highlight where competitive strategies will add the most value

The Value Chain and Strategic IS

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Using IS in the Value Chain

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A company that emphasizes strategic business use of IT would use it to gain a competitive differentiation

ProductsServicesCapabilities

Strategic Uses of IT

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Called BRP or simply ReengineeringFundamental rethinking and radical redesign of business processesSeeks to achieve improvements in cost, quality, speed, and service

Potential payback is high, but so is risk of disruption and failureOrganizational redesign approaches are an important enabler of reengineering

Includes use of IT, process teams, case managers

Reengineering Business Processes

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BPR Versus Business Improvement

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IT plays a major role in reengineering most business processes

Can substantially increase process efficienciesImproves communication Facilitates collaboration

The Role of Information Technology

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Many processes are reengineered with…Enterprise resource planning softwareWeb-enabled electronic business and commerce systems

A Cross-Functional Process

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IT that supports this process…CRM systems using intranets and the InternetSupplier-managed inventory systems using the Internet and extranetsCross-functional ERP software to integrate manufacturing, distribution, finance, and human resource processesCustomer-accessible e-commerce websites for order entry, status checking, payment, and serviceCustomer, product, and order status databases accessed via intranets and extranets

Reengineering Order Management

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Agility is the ability to prosperIn rapidly changing, continually fragmenting global marketsBy selling high-quality, high-performance, customer-configured products and servicesBy using Internet technologies

An agile company profits in spite ofBroad product rangesShort model lifetimesIndividualized productsArbitrary lot sizes

Becoming an Agile Company

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An agile company…Presents products as solutions to customers’ problemsCooperates with customers, suppliers and competitorsBrings products to market as quickly and cost-effectively as possibleOrganizes to thrive on change and uncertaintyLeverages the impact of its people and the knowledge they possess

Strategies for Agility

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How IT Helps a Company be Agile

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A virtual company uses IT to link…PeopleOrganizationsAssetsIdeas

Inter-enterprise information systems link…CustomersSuppliersSubcontractorsCompetitors

Creating a Virtual Company

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A Virtual Company

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Basic business strategiesShare information and risk with alliance partnersLink complimentary core competenciesReduce concept-to-cash time through sharingIncrease facilities and market coverageGain access to new markets and share market or customer loyaltyMigrate from selling products to selling solutions

Virtual Company Strategies

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A knowledge-creating company or learning organization…

Consistently creates new business knowledgeDisseminates it throughout the companyBuilds it into its products and services

Building a Knowledge-Creating Company

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Explicit KnowledgeData, documents, and things written down or stored in computers

Tacit KnowledgeThe “how-to” knowledge in workers’ mindsRepresents some of the most important information within an organization

A knowledge- creating company makes such tacit knowledge available to others

Two Kinds of Knowledge

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Successful knowledge managementCreates techniques, technologies, systems, and rewards for getting employees to share what they knowMakes better use of accumulated workplace and enterprise knowledge

Knowledge Management

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Knowledge Management Techniques

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Knowledge management systemsA major strategic use of ITManages organizational learning and know-howHelps knowledge workers create, organize, and make available important knowledgeMakes this knowledge available wherever and whenever it is needed

Knowledge includesProcesses, procedures, patents, reference works, formulas, best practices, forecasts, and fixes

Knowledge Management Systems (KMS)

Management Information Systems - 2nd Semester Notes

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