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CHAPTER ONE

MANAGEMENT
INFORMATION
SYSTEMS

BUSINESS DRIVEN
MIS

© The McGraw-Hill Companies, All Rights Reserved

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CHAPTER ONE OVERVIEW

 SECTION 1.1 – BUSINESS DRIVEN MIS
• Competing in the Information Age
• The Challenge of Departmental Companies and the MIS
Solution

 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

© The McGraw-Hill Companies, All Rights Reserved

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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

5 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 .

primary business focus is renting videos • Zappos – Not a technology company. primary business focus is selling books • Netflix – Not a technology company. 6 COMPETING IN THE INFORMATION AGE  Examples of the power of business and technology • Amazon – Not a technology company. primary business focus is selling shoes .

7 COMPETING IN THE INFORMATION AGE  The core drivers of the information age • Data • Information • Business intelligence • Knowledge .

Raw facts that describe the characteristics of an event or object . 8 Data  Data .

9 Information  Information .Data converted into a meaningful and useful context .

and industries that analyzes patterns. and relationships for strategic decision making . customers. trends. 10 Business Intelligence  Business intelligence - Information collected from multiple sources such as suppliers. partners. competitors.

Skills. 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 . 11 Knowledge  Knowledge . experience.

12 THE CHALLENGE: DEPARTMENTAL COMPANIES Common Departments Working Independently .

13 THE MIS SOLUTION Common Departments Working Interdependently .

14 THE MIS SOLUTION .

15 THE MIS SOLUTION .

16 SYSTEMS THINKING  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 .

and processes across the company to facilitate decision-making and problem-solving . which moves information about people. products. like accounting and human resources. 17 SYSTEMS THINKING  Management Information Systems (MIS) – A business function.

maintaining. 18 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. and distributing the organization’s knowledge  Chief privacy officer (CPO) – Responsible for ensuring the ethical and legal use of information .

availability. 19 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. and reliability of IT . speed. accuracy.

20 MIS Department Roles and Responsibilities .

SECTION 1. All Rights Reserved .2 BUSINESS STRATEGY © The McGraw-Hill Companies.

22 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 .

23 IDENTIFYING COMPETITIVE ADVANTAGES .

24 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 .

25 IDENTIFYING COMPETITIVE ADVANTAGES .

26 SWOT ANALYSIS  A SWOT analysis evaluates an organization’s strengths. weaknesses. opportunities. and threats to identify significant influences that work for or against business strategies .

27 THE FIVE FORCES MODEL – EVALUATING INDUSTRY ATTRACTIVENESS Porter’s Five Forces Model .

28 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 .

29 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 .

30 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 .

31 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 .

32 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 .

33 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 .

34 THE THREE GENERIC STRATEGIES CHOOSING A BUSINESS FOCUS Porter’s Three Generic Strategies .

35 THE THREE GENERIC STRATEGIES CHOOSING A BUSINESS FOCUS Porter’s Three Generic Strategies .

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 . 36 VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES  Business process – A standardized set of activities that accomplish a specific task.

Provides customer support .Promotes. and distributes • Operations .Transforms raw materials or inputs into goods and services • Outbound logistics . and sells products to customers • Service . prices. 37 VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES  Primary value activities • Inbound logistics .Distributes goods and services to customers • Marketing and sales .Acquires raw materials and resources.

environment. and supplies . resources. hiring. and systems • Human resource management – Provides employee training. and compensation • Technology development – Applies MIS to processes to add value • Procurement – Purchases inputs such as raw materials. equipment. 38 VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES  Support value activities • Firm infrastructure – Includes the company format or departmental structures.

39 VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES Porter’s Value Chain .

40 VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES Value Chain and Porter’s Five Forces Model .

Describe the information age and the differences between data. 41 REVISION QUESTIONS: 1. Explain systems thinking and how management information systems enable business communications . and knowledge. information. business intelligence. 2.

42 REVISION QUESTIONS 3. Explain why competitive advantages are temporary 4. Demonstrate how a company can add value by using Porter’s value chain analysis . Identify the four key areas of a SWOT analysis 5. Compare Porter’s three generic strategies 7. Describe Porter’s Five Forces Model and explain each of the five forces 6.