MIS 205 , CH - 2

Learning Objectives
► Know

the general systems model of the firm. firm.

Chapter 2
Information Systems for Competitive Advantage
1

► Understand

the eight-element environmental eightmodel as a framework for understanding the environment of a business organization. organization.

► Understand

that supply chain management involves the planning and coordination of physical resources that flow from the firm’s suppliers, through the firm, and to the firm’s customers. customers. that competitive advantage can be achieved with virtual as well as physical resources. resources.
2

► Recognize

Learning Objectives (Cont’d)
► Understand

Figure 2.1 The General System Model of the Firm

Michael E. Porter’s concepts of value chains and value systems. systems. the dimensions of competitive advantage. advantage.

► Know

► Recognize

the increasing challenges from global competitors and the importance of information and coordination in meeting those challenges. challenges.

► Understand

the challenges of developing global information systems. systems.
3 4

Faculty : khalid Alam

1

2 Eight-Element EightEnvironmental Model elements are organizations and individuals that exist outside the firm and have a direct or indirect influence on it. decisions. Such as suppliers. and governments. material. ► Global community is the geographic area where the firm performs its operations. stockholders and owners. labor unions. Information processor that transform data into information. money. competitors.MIS 205 . CH . information. Firm’s management. control mechanism include resource flow includes data. and information in the form of decisions.2 General System Model (Cont’d) ► Physical ► Virtual General System Model (Cont’d) ► Firm’s resource flow includes personnel. 7 8 Faculty : khalid Alam 2 . 6 5 The Firm & Its Environment ► Environmental Figure 2. ► Feedback loop is composed of the virtual resources. financial community. Performance standards to meet if the firm’s wants to achieve overall objectives. customers. machines. and money.

Often. inventory – raw materials. flow. ► Supply chain management manages the resources through the supply chain to ensure timely and efficient flow. Often. ► Personnel flow to competitors. ► Money flow from government. customers. ► Scheduling production. and to customers. CH . Often. Less often. workworkin-process. ingoods. ► Raw materials flow from suppliers. customers. ► Establishing transportation networks. through the firm. 12 11 Faculty : khalid Alam 3 . 9 chain is the pathway that facilitates the flow of physical resources from suppliers to the firm and then to customers. 10 Supply Chain Management Activities ► Forecasting Supply Chain Management Activities (Cont’d) ► Managing ► Executing customer demand. production.2 Environmental Resource Flows ► Information Physical Resource Flows – Supply Chain Management ► Supply flows from customers. ► Material flow to customers. ► Money flow to stockholders. customers. and finished goods. ► Transporting ► Tracking the flow of resources from suppliers. resources to customers. production. Often.MIS 205 . ► Ordering replenishment stock from suppliers. Less often. ► Material flow to suppliers. Less often. ► Receiving stock from suppliers.

► Is a crucial aspect of a firm’s ERP system. as perceived by the firm’s customers. ► Electronic systems provide the ability to track the flow of the resources as it occurs. ► Margin is the value of the firm’s products & services minus their costs. 15 16 Faculty : khalid Alam 4 . CH . ► Consists of the primary and support activities that contribute to margin. 13 14 Porter’s Value Chains ► Value Figure 2.MIS 205 .3 A Value Chain chain is created to achieve competitive advantage. Used to meet the strategic objectives of the firm. ► Increased margin is the objective of the value chain.2 Supply Chain Management ► Firm’s Competitive Advantage ► Competitive information systems can be used to perform the supply chain activities. advantage refers to the use of information to gain leverage in the marketplace. Uses virtual as well as physical resources.

and cultures. ► Value system is the linking of the firm’s value chain with those of its distribution channel members. ► Operational advantage deals with everyday transactions and processes. ► It consists of a parent company & its subsidiaries. system (IOS) is the IOS) linking of the firm’s value chain to those of other organizations. CH . human resources. ► Support value activities include the firm’s infrastructure. markets. 19 20 Faculty : khalid Alam 5 . ► Tactical advantage is when the firm implements a strategy better than its competitors. ► Business partners are the participating firms in the IOS. corporation (MNC) is a MNC) firm that operates across products.2 Porter’s Value Activities ► Primary Expanding the Scope of the Value Chain ► Interorganizational value activities manage the flow of physical resources through the firm.MIS 205 . nations. 18 17 Competitive Advantage Dimensions ► Strategic Challenges from Global Competitors ► Multinational advantage has a fundamental effect in shaping the firm’s operations. & technology. ► Each value activity includes purchased inputs. ► Information processing is crucial to minimize uncertainty.

Reduce overall costs of operation. 23 24 Faculty : khalid Alam 6 .MIS 205 . ► Lack of support from subsidiary managers. Ability to keep abreast of market needs globally. Telecommunications speed and quality. Software copyrights and licenses. ► Advantages of coordination include: Flexibility in responding. 21 22 GIS Challenges (Cont’d) ► Restrictions GIS Subsidiary Challenges ► Technological on hardware purchases and imports Data processing Data communications ► Transborder data flow (TDF) is the movement of machine-readable data across machinenational boundaries. Ability to respond market by market. Cultural & communications barriers. problems due to level of technology in subsidiary countries.2 Coordination in a MNC ► Coordination Challenges in Developing Global Information Systems information system (GIS) GIS) describes an information system that consists of networks that cross national boundaries. ► Global is key to achieving competitive advantage globally. CH . ► Challenges Politically imposed constraints.

Produce primarily historical information.MIS 205 . facilities. technology. databases. ► Completeness – the correct amount of aggregation and supports all areas of the decision being made. ► Image management 27 28 Faculty : khalid Alam 7 . lost. software. hand. CH . and discarding information at the proper time. processing data into information. Information overload is having too much information. information. ► Knowledge management (KM) is KM) acquiring data. and information. Data may not be available in digital format. information. financial. users. 100% ► Timeliness – should be available for decision making before a crisis situations develop or opportunities are lost. marketing. 26 Changing Nature of Knowledge Management ► Legacy Strategic Planning for Information Resources (SPIR) ► Chief information systems are earlier systems software and hardware that are incompatible or partially incompatible with current information technology. Information Officer (CIO) ► Chief Technology Officer (CTO) ► Strategic Planning Enterprise – executive committee Business areas – resources for human. manufacturing. ► Accuracy – strive for 100%. 25 – pertains to the problem at hand. using & communicating information in the most effective way.2 Knowledge Management ► Information Dimensions of Information ► Relevancy resources consist of hardware. information specialists. made.

► The IS plan reflects future demands for systems support. textbook). ► The infomation resources necessary to meet the objectives. CH .8 in textbook).7 SPIR development of strategic plans for information services & the firm so that the firm’s plan reflects the support to be provided by information services. ► Self-contained Selfreport (See example Figure 2. support. objectives.2 The SPIR Approach ► Concurrent Figure 2. services. period. 31 Faculty : khalid Alam 8 . 29 30 Core Content of a SPIR ► The objectives to be achieved by each category of systems during the time period.MIS 205 .

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