Chapter 1: Real World Case – WH Smith PLC Why did WH Smith need a new retail management system? What were their goals? How well did the system meet the goals? How has the staff been included in the process? Is this important? Why or why not?

Chapter 1 Quiz – True/False One of major components of an Information System (IS) is the people resource. The people resources of an information system deals exclusively with the IS specialists. Since 1960s information systems have been widely available to a broad spectrum of end users. The number 1,023 is an example of data, while the fact that a customer's account balance is $1,023 is information. E-Business is defined as the use of Internet technologies to internetwork and empower business processes, electronic commerce, and enterprise communication and collaboration within a company and with its customers, suppliers, and other business stakeholders. WH Smith’s web-based SCM system allows its store managers to easily access sales and inventory data.

Chapter 2 Learning Objectives Michael Porter’s 5 Competitive Forces Model Value Chain & Competitive Strategies Strategic Use of Information Technology

Porter’s 5 Competitive Forces Model Threat of New Entrants - The easier it is for new companies to enter the industry, the more cutthroat competition there will be. Factors that can limit the threat of new entrants are known as barriers to entry. Some examples include: Existing loyalty to major brands Incentives for using a particular buyer (such as frequent shopper programs) High fixed costs Scarcity of resources High costs of switching companies Government restrictions or legislation Power of Suppliers - This is how much pressure suppliers can place on a business. If one supplier has a large enough impact to affect a company's margins and volumes, then they hold substantial power. Here are a few reasons that suppliers might have power: There are very few suppliers of a particular product There are no substitutes Switching to another (competitive) product is very costly The product is extremely important to the buyer, they can not do without it The supplying industry has a higher profitability than the buying industry Power of Buyers - This is how much pressure customers can place on a business. If one customer has a large enough impact to affect a company's margins and volumes, then they hold substantial power. Here are a few reasons that customers might have power: Small number of buyers Purchases of large volumes Switching to another (competitive) product is simple The product is not extremely important to the buyer, they can do without it for a period of time. Customers are price sensitive Availability of Substitutes - What is the likelihood that someone will switch to a competitive product or service? If the cost of switching is low, then this poses to be a serious threat. Here are a few factors that can affect the threat of substitutes: The main issue is the similarity of substitutes. For example, if the price of coffee rises substantially, a coffee drinker is likely to switch over to a beverage like tea because the products are so similar. If substitutes are similar, then it can be viewed in the same light as a new entrant. Competitive Rivalry - And last but not least, this describes the intensity of competition between existing firms in an industry. Highly competitive industries generally earn low returns because the cost of competition is high. A highly competitive market might result from: Many players of about the same size, no dominant firm. Little differentiation between competitors products and services. A mature industry with very little growth. Companies can only grow by stealing customers away from competitors. http://www.investopedia.com/features/industryhandbook/porter.asp

The Value Chain Improved administrative coordination Training Joint design of products and processes Improved procurement processes JIT inventory Order processing systems Views a firm as a series, chain, or network of activities that add value to its products and services.

Competitive Strategies Cost Leadership (e.g. Wal-Mart) Differentiation (e.g. Nordstrom) Innovation (e.g. eBay) Growth (e.g. Starbuck) Alliance (e.g. Sears, LandsEnd) Others (e.g. lock in customers/suppliers, high switching cost, barrier to entry, etc.) Cost Leadership (low cost producer) Reduce inventory (JIT) Reduce manpower costs per sale (see Real World Case 1) Help suppliers or customers reduce costs Increase costs of competitors Reduce manufacturing costs (process control) Differentiation Create a positive difference between your products/services & the competition. May allow you to reduce a competitor’s differentiation advantage. May allow you to serve a niche market. Innovation New ways of doing business Unique products or services New ways to better serve customers Reduce time to market New distribution models Growth Expand production capacity Expand into global markets Diversify Integrate into related products and services. Alliance Broaden your base of support New linkages Mergers, acquisitions, joint ventures, “virtual companies” Marketing, manufacturing, or distribution agreements. Other Competitive Strategies Locking in customers or suppliers Build value into your relationship Creating switching costs Extranets Proprietary software applications Raising barriers to entry Improve operations or promote innovation Leveraging investment in IT Allows the business to take advantage of strategic opportunities

Strategic Uses Of Information Technology Focus on the customer (e.g. CRM) to deliver high(er) customer value Business Process Reengineering (BPR) for cost, quality, speed, and service improvements Total Quality Management (TQM) from customer’s perspective (e.g. Six Sigma) to improve business quality Agility … Virtual company … Major competitive differentiator Develop a focus on the customer Customer value Best value Understand customer preferences Track market trends Supply products, services, & information anytime, anywhere Tailored customer service Business Process Reengineering (BPR) Rethinking & redesign of business processes Combines innovation and process improvement There are risks involved. Success factors Organizational redesign Process teams and case managers Information technology Improve business quality Total Quality Management (TQM) Quality from customer’s perspective Meeting or exceeding customer expectations Commitment to: Higher quality Quicker response Greater flexibility Lower cost Becoming agile Four basic strategies Customers’ perception of product/service as solution to individual problem Cooperate with customers, suppliers, other companies (including competitors) Thrive on change and uncertainty Leverage impact of people and people’s knowledge The virtual company Uses IT to link people, assets, and ideas Forms virtual workgroups and alliances with business partners Interorganizational information systems Virtual Company Strategies Share infrastructure & risk with alliance partners Link complementary core competencies Reduce concept-to-cash time through sharing Increase facilities and market coverage Gain access to new markets and share market or customer loyalty Migrate from selling products to selling solutions

An Agile Company Provides solution to customer’s (unique) individual problem; value-based pricing Be able to cooperate with customers, suppliers, other companies/competitors Is organized so that it can thrive on change and uncertainty Leverages impact of people and their knowledge

A Virtual Company IT links people, assets, and ideas Forms virtual workgroups and alliances with business partners (with complementary core competencies) Shares infrastructure & risk with partners Gains access to new market (market shares) & customers Inter-organizational (Enterprise-wide) IS Virtual Company Strategies Share infrastructure & risk with alliance partners Link complementary core competencies Reduce concept-to-cash time through sharing Increase facilities and market coverage Gain access to new markets and share market or customer loyalty Migrate from selling products to selling solutions