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Exam 1 Study Guide / Review

Exam Date: Tuesday (1/10)

Porters 5 forces (External)

1. Supplier power
a. Supplier power is high when buyers have few choices from whom to buy from
and low when buyers have many choices.
b. In other words, businesses would rather have more potential suppliers so they
have a higher probability to negotiate price, quality, and delivery terms.
2. Buyer power
a. Buyer power is high when buyers have many choices from whom to buy and low
when buyers have many choices from whom to buy and buy power is low when
buyers have few choices.
b. Example: Textbook industry. Years back students only choice was to buy their
books from the university. Now, the internet provides many other potential book
3. Threat of new entrants
a. The threat that new competitors will enter your market is high when entry is easy
and low when there are significant barriers to enter.
b. Entry barrier a feature that customers have learned to expect from businesses
in an industry. A competitor must offer this feature in order to be successful.
4. Threat of substitute products
a. The threat of substitutes are high when there are substitutes to an organizations
product or service, therefore is is low when there are few alternatives.
b. Examples: Online music services and CDs, ethanol and gasoline
5. Rivalry among competitors
a. The threat from rivalry is high when there is intense competition among many
companies in one market and vice versa.
b. Example: Grocery stores (wal-mart, Pick n Save, festival, piggly wiggly) all
compete with each other on price. They develop different ways to appeal to their
customers like rewards program, faster checkout lines, and coupons.
Resource based view (Internal): VRIN
Not easily mobile
IT not the sustained (sole) source of competitive advantage

ERP (Enterprise software) can reach across functions/departments and flows based on
functions. *It creates transparency and coordinates across organization. It is more integrated
than each department having separate software (separate software = separate data)
Transactional Information systems feeds databases and captures all the data. It is the
workhorse of the pyramid.
- Supports the monitoring, collection, storage, and processing of data from the
organizations basic business transactions, each of which generates data. The TPS
collects data continuously, typically in real timethat is, as soon as the data are
generatedand it provides the input data for the corporate databases. The TPSs are
critical to the success of any enterprise because they support core operations.
Other Porter model: Value Chain
(Only need to know definition)
Value Chain A sequence of activities through which the organizations inputs, whatever they
are, are transformed into more valuable outputs, whatever they are.
Value chain model identifies points where an organization can use information technology to
achieve competitive advantage.
ROI (return on investment) measures effectiveness in generating profits with its available
assets. It is a percentage, the higher the percentage, the higher the return.
Disintermediation taking someone/something out of the middle, a tendency of computers.
Vertical Integration (Maybe question) High degree of vertical integration = a great deal of control
over the process. If a business is very horizontally integrated they have less control over their
supply chain.
Volatile memory - loses memory when disconnected from power. Non volatile does not.
** Moores law. How fast do capacities double? Every 18mos to 2 years. Impact increases in
hardware processing power while decreasing in size.
Disruptive technologies. Main attributes/characteristics:
- Starts not as effective as existing technology
- Improves exponentially and takes over the existing technology
Relationship between: Data, knowledge, wisdom, information Data is the raw numbers and
text, it has no meaning when it is considered in isolation. It is missing context to give it meaning,
with context it becomes information. Information is used to develop knowledge. Result of having
sufficient knowledge is wisdom.

SQL (Structured Query Language) language used to manipulate databases

Data mining looking at data and IDing patterns
CPU (central processing unit) Part of the computer for executing instructions
Cake stack question Basically a layering analogy where the different layers build off each
other to build a system that a user can use

redesign processes of an organization Business Process Reengineering & Business Process

1. BPR: Radical redesign to increase productivity and profitability. Examines business
processes with a clean state approach
2. BPI: Incremental approach to move an organization toward business process centered
operations. Focused on reducing variations in process outputs by identifying the
underlying cause of the variation. Five phases are; define, measure, analyze, improve,

Strategies of acquiring software:

1. Purchase a prewritten application
a. Pros: Cost effective & time saving. Many different types of off the shelf software.
Company can try software before purchasing
b. Cons: Software may not match what company needs. May be too difficult or
impossible to modify
2. Customize a prewritten application
a. Pros: Can modify software to suit companys needs
b. Cons: Can be too expensive or may become obsolete in a short amount of time
3. Lease the application
a. Pros: Can save time and money. Attractive for small and medium size
enterprises that do not have an IT department
b. Cons: May not fit company needs
Why would a company be motivated to write its own software? (It is going to take more time and
use more resources) To directly control, and support a strategy that cannot be bought.
- These companies may be pioneers, the first to do something
TCO (Total cost of ownership) Total made in IT in a period of time
- Support, debug, maintain, train users, install costs...
Relationships between tables* Operators that illustrate an association between two entities
There are three types of relationships:
One-to-one: Both tables can have only one record on either side of the relationship.
Each primary key value relates to only one (or no) record in the related table. They're
like spousesyou may or may not be married, but if you are, both you and your spouse
have only one spouse. Most one-to-one relationships are forced by business rules and
don't flow naturally from the data.
One-to-many: The primary key table contains only one record that relates to none, one,
or many records in the related table. This relationship is similar to the one between you
and a parent. You have only one mother, but your mother may have several children.
Many-to-many: Each record in both tables can relate to any number of records (or no
records) in the other table. For instance, if you have several siblings, so do your siblings
(have many siblings). Many-to-many relationships require a third table, known as an
associate or linking table, because relational systems can't directly accommodate the
Asking what PESTLE is for: External view of the market conditions for a particular business
(Political, Economic, Social, Technological, Legal, Environmental)
Strategic Position matters against External Forces

True False
If IT can be the sole source of... ?enterprise software? ----> False
Enterprise System, more or less functional D
epartment Software ?
Enterprise System is more functional

Data Silo is a repository of fixed data that remains under the control of one department

and is isolated from the rest of the organization

Transactional Software System :
Pyramid - Levels and what they do
The workhorse
Taking someone out of the middle
- Computers

What does it mean to us for a company to become vertically intergrated.

Ex.) Clothing Business
Sewing ---> selling ---> etc.
But Not growing cotton
Vertical Integration - Has more control of their supply chain
Volatile ? and other examples look at
General Qs about Moore's Law
Ex) how fast do ____ double? A: every two years
2 main Attributes of Disruptive Technology

Starts off as ____ then ___

Improves really fast

How would you rank

Data - Lowest Form (Raw numbers or text) just ones or zeros NO MEANING, missing Context
- When given Context turns into Info. then Knowledge, then Wisdom
Language to manipulate . SQL
Data Mining

:Looking at data and trying to identify patterns

What part of a comp. Is responsible for executing instructions ----> M

Redesign of processes in an organization and Terminology associated with it.
Normalization- Separating data into distinct elements. Streamlining complex grouping of data
to minimize redundant data elements and awkward many-to-many relationships.
Data Mart- A low cost scaled-down version of a data warehouse that is designed for the
end-user needs in a strategic business unit or an individual department.
Data Warehouse- A repository of historical data that are organized by subject to support
decision makers in the organization.
Ways of acquiring software: (3) and most expensive & error prone vs. least & error prone
Why would a company choose to write software?
- To have direct control
- Need the software to cater to an exact need that is not available as of yet
TCO (total cost of ownership) IT over time:
What it costs to operate, maintain, etc.
(most expensive means is to write your own software)
Primary Key- An Identifier such as ID number or SSN (Not as common anymore SSN)
Secondary Key- Doesnt identify the record with complete accuracy (such as Name or address)
Foreign Key- A field on a table that uniquely identifies another table

Elements of a data base:

- File = group of related records
- Record = group of related fields
- Field= group of characters as words or numbers that describe an entity

OLAP= Online Analytical Processing

Viewing data using multiple dimensions
- Business transactions are processed online as soon as they occur. For example, when
you pay for an item at a store, the system records the sale by reducing the inventory on
hand by one unit, increasing sales figures for the item by one unit, and increasing the
stores cash position by the amount you paid. The system performs these tasks in real
time by means of online technologies.
3 types of things you can do in a database (NOT looking for CREATIVE ANSWER)
- Select, Join, and Project operations allow data from two data tables to be combined and
only certain information to be displayed
Class Questions:
3-4, true false
3-4, ? Fill in the Blank?
#, multiple choice
Last hour segment of class