Introduction to MIS1 Strategic Analysis

Introduction to MIS2 Strategy Connections to suppliers and customers. Become the best firm in the industry. Block the competitors by keeping your customers happy. Competition

Introduction to MIS3 Outline  The Competitive Environment  External Agents  IS Techniques to Gain Competitive Advantage  The Search for Innovation  Research  Engineering and Design  Manufacturing  Logistics and Supply  Marketing  Sales and Order Management  Service  Management  Costs and Dangers of Strategies  Operations, Tactics, Strategy  E-Commerce Failures  Cases: Travel Industry  Appendix: Solving Business Problems and Cases

Introduction to MIS4 Competition is increasing in many industries, but it is particularly intense in the restaurant and fast food industry. Competition encourages firms to hold down costs, provide more variety, and provide new and better service to customers. Competition

Introduction to MIS5 Rivalry Among Existing Competitors Bargaining Power of Buyers Bargaining Power of Suppliers Threat of New Entrants Threat of Substitute Products or Services Porter’s Five Forces Model

Introduction to MIS6 Corporate Strategy Pattern of purposes and policies defining the company and its business Formulation (Deciding what to do.) Implementation (Achieving results.) 1. Identification of opportunity and risk. 2. Material, technical, financial, & human resources. 3. Personal values and aspirations. 4. Noneconomic responsibility to society. 1. Org. structure & relation. Division of work. Coord. divided responsib. Information systems. 2. Org. processes & behavior. Standards and measurement. Motivation & incentive systems. Control systems. Recruit & develop managers. 3. Top leadership. Strategic Organizational Personal Harvard Strategy

Introduction to MIS7 parts supplier parts supplier parts supplier warehouse supplier tool manufacturer Manufacturer workers wholesaler distributor retail store Consumers Production Chain

Introduction to MIS8 Barrier To Entry FirmRival Supplier Consumer Decreased Costs Improved Quality Ties To Customers Increased Switching Costs Wholesale Ties To Suppliers Control Of Distribution Innovation and Differentiation Methods to Gain Competitive Advantage

Introduction to MIS9 Barriers to Entry  Economies of Scale (size)  Economies of Scope (breadth)  Product Differentiation  Capital requirements  Cost Disadvantages (independent of size)  Distribution Channel Access  Government Policy

Introduction to MIS10 Competitive Advantage  Barriers to Entry  Additional costs of creating an information system. People’s Express  Distribution Channels  Prevent others from entering the industry. Napster  Switching Costs  Consumers incur learning and data transfer costs. Baxter Healthcare  Lower Production Costs  IS to cut costs. Wal-Mart  Product Differentiation  Add new features or create new products with IT. Federal Express & Merrill Lynch  Quality Management  Monitoring production lines and analyzing data. Digital Equipment Corp.  Value Chain  Expanding forward or back the value chain to find greater profits. Boeing Information Systems

Introduction to MIS11 Firm Infrastructure Human Resources Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service Margin Value Chain

Introduction to MIS12 Manufacturing Engineering and Design Marketing Research Customer Service Management Sales and Order Management Logistics/ Supply Suppliers Customers Production Process Innovation

Introduction to MIS13 Market Measures - Market share - Concentration - Growth - Profitability monitor rivals Business Operations & Rules Existing Data and IS Performance Measures - ROA- ROI - EPS- Growth - Subjective Corporate Strategy Development expectations goals rivalry strengths weaknesses opportunities critical success factors Business Strategies and Priorities Process Changes Data Needs IS Changes System Development & Implementation - Cost leadership - Differentiation - Innovation - Linkages - Re-engineering - Organization - Decentralization Developing Strategies

Introduction to MIS14 Search for Innovation  Research  Analysis & modeling, project management, work group support, databases, decision support.  Engineering & Design  CAD/CAM, testing, networks, work group support.  Manufacturing  Mass customization, links to customers & suppliers, quality monitoring, expert systems for maintenance, production databases, business integration.  Logistics & Supply  Just-in-time linkages, forecasts, models, links for design, transaction processing.

Introduction to MIS15 Search for Innovation  Marketing  Frequent buyer database, target market & media analysis, survey design and analysis, multimedia promotion design, links to customers and designers.  Sales & Orders  Portable computers for sales, ES for order customization, work group tools for customer support.  Service  Phone support, GIS locators, scheduling, ES diagnostics, databases.  Management  EIS, , bulletin boards, decision support systems, personal productivity tools, work group support  Links to service providers  Accountants  Consultants  Lawyers,...

Introduction to MIS16 Research  Analysis and models  Statistical analysis of data  Project management and budgeting  Work-group collaboration and communication

Introduction to MIS17 Engineering and Design  CAD/CAM  Integrated design database  Production databases and model testing  Expert Systems for manufacturability  Work group communication

Introduction to MIS18 Manufacturing  Links to customers  Links to suppliers  Mass customization  Robotics  Diagnostic Expert Systems  Quality monitoring and control

Introduction to MIS19 Logistics and Supply  Just-In-Time Inventory and EDI  Configuration and design  Searching for availability, pricing,... networks

Introduction to MIS20 Marketing  Frequent buyer databases  Point-of-Sale and trends  Statistical analysis of data  Geographic Information Systems  Links to external marketing agencies  Multimedia development of promotions  Internet

Introduction to MIS21 Sales and Orders  Sales force automation, hand-held computers  Customer Internet access  Expert Systems for product and option selection  Expert Systems for configuration and shipping  Front-line support: ES, , work groups

Introduction to MIS22 Service  Portable computers for service anywhere  Databases (e.g., customer service)  Location monitoring of service personnel  Product internal, automatic diagnostics  Expert System diagnostic tools

Introduction to MIS23 Management  Executive Information Systems  Simulation (and rivalry games)  Links to external partners (accounting, law,...)  Electronic conferencing  Work group communication,  Standardization, Modularization, Franchises  Knowledge Workers  Client-server instead of hierarchical computing

Introduction to MIS24 Strategy Analysis  Product Differentiation  Skills & Resources  Strong marketing.  Product engineering.  Basic research.  Distribution channel cooperation.  Organization Requirements  Internal coordination.  Incentives for innovation.  Resources to attract skills.  Risks  Competitors imitate.  Customers do not accept.  Cost is too high.  Cost Leadership  Skills & Resources  Continued capital investment.  Process engineering.  Continuous quality improvement.  Tight supervision of costs.  Products designed for low cost.  Low cost distribution.  Organization Requirements  Tight cost controls.  Frequent control reports.  Highly structured org.  Incentives based on qualitative measures.

Introduction to MIS25 Strategy Analysis  Cost Leadership  Risks  Competitors imitate.  Technology changes.  Lose production or distribution advantage.  Customer-Supplier Links  Skills & Resources  Influence with partners  Communication channels  Standards or agreements.  Organization Requirements  Flexibility to respond to customers.  Service culture.  Ability to adapt to emergencies.  Risks  Security threats.  Changing standards.  Competitors copy with more/better links.

Introduction to MIS26 Money for research Money for information technology Dangers: Capital Cost

Introduction to MIS27 You Rival Time IS Costs Time IS Costs Transaction Processing Network & DSS Network & link sales people Link to suppliers & customers Experimental technology & global links Competition Follows

Introduction to MIS28 Industry 1 (expands into industry 2) Industry 2 (new competitor) Customer New technology New services Same technology Changing Industry & Government Intervention

Introduction to MIS29 Security Production Firm Customer Data we wish to share. Data we want to protect. Need to control access. Need to worry about network interceptions and hackers. Security firewall Hackers or competitors rejected

Introduction to MIS30 E-Commerce Failures  Hundreds of dot-com firms failed in 2001 and 2002  Most relied on pure Internet revenue. Outsourcing production and shipping.  Most relied on advertising revenue—often revenue from other dot-com firms.  Many believed in the importance of being first to market and becoming the biggest, best-known firm in a niche industry.  Many believed that it was not necessary to make a profit on sales. Money from advertising and stock sales would be sufficient to keep the firm alive until the world changed.  Most were wrong.

Introduction to MIS31 Cases: Travel Industry

Introduction to MIS32 Cases: The Sabre Group American Express What is the company’s current status? What is the Internet strategy? How does the company use information technology? What are the prospects for the industry?

Introduction to MIS33 Appendix: Solving Problems Solve the right problem Choose the right tools Divide the system Make decisions Consider consequences Test the system Plan implementation Detail Organization Schedule Customer response Employee response Input Process Output Cause Feasibility

Introduction to MIS34 Appendix: Evaluating Projects  Does the project fit with business goals and management style?  Does the project improve the competitive position of the firm?  How long will any competitive advantage last?  What value or reward is created by the system?  What level of technology is needed to create the system?  experimental  leading edge  established  old-hat  What is the probability of technical success?  What is the probability of commercial success?  What are the costs involved in creating the system?  Monetary  Time  Additional capital, marketing and management

Introduction to MIS35 Appendix: Good Business Analysis  Identify the root causes of problems.  Solid grasp of strategic components.  Identify the critical success factors.  Evaluate the financial implications.  Thorough discussion of implementation.  Realistic analysis of expected results.  Effect on future growth and continued development.  Effect on human resources.  Understanding of target markets.

Introduction to MIS36 Solving Business Problems & Cases  Solve the right problem  Choose the right tools  Divide the system  Make decisions  Consider the consequences  Test the system  Plan implementation  Case hints

Introduction to MIS37 Appendix: Organization of Analysis  Problem description  Identify most important problems  Identify causes of problems  Plan  Describe the new system  Implementation plan  Contingency plan  Advantages  Show how your plan solves the problems  Explain additional benefits or opportunities