1. Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin CHAPTER ONE MANAGEMENT INFORMATION SYSTEMS: BUSINESS DRIVEN MIS

2. 1-2 CHAPTER ONE OVERVIEW  SECTION 1.1 – BUSINESS DRIVEN MIS Competing in the Information Age The Challenge: Departmental Companies The Solution: Management Information Systems  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

3. SECTION 1.1 BUSINESS DRIVEN MIS SECTION 1.1 BUSINESS DRIVEN MIS

4. 1-4 LEARNING OUTCOMES 1.Describe the information age and the differences between data, information, business intelligence, and knowledge 2.Identify the different departments in a company and why they must work together to achieve success 3.Explain systems thinking and how management information systems enable business communications

5. 1-5 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

6. 1-6 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

7. 1-7 COMPETING IN THE INFORMATION AGE  Examples of the power of business and technology Amazon – Not a technology company; primary business focus is selling books Netflix – Not a technology company; primary business focus is renting videos Zappos – Not a technology company; primary business focus is selling shoes

8. 1-8 COMPETING IN THE INFORMATION AGE  The core drivers of the information age Data Information Business intelligence Knowledge

9. 1-9 DATA  Data - Raw facts that describe the characteristics of an event or object

10. 1-10 INFORMATION  Information - Data converted into a meaningful and useful context

11. 1-11 BUSINESS INTELLIGENCE  Business intelligence - Information collected from multiple sources such as suppliers, customers, competitors, partners, and industries that analyzes patterns, trends, and relationships for strategic decision making

12. 1-12 KNOWLEDGE  Knowledge - Skills, experience, 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

13. 1-13 THE CHALLENGE: DEPARTMENTAL COMPANIES Common Departments Working Independently

14. 1-14 Common Departments Working Interdependently THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS

15. 1-15 THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS  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

16. 1-16 THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS  Management Information Systems (MIS) – A business function, like accounting and human resources, which moves information about people, products, and processes across the company to facilitate decision-making and problem-solving

17. 1-17 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, maintaining, and distributing the organization’s knowledge  Chief privacy officer (CPO) – Responsible for ensuring the ethical and legal use of information

18. 1-18 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, speed, accuracy, availability, and reliability of IT

19. SECTION 1.2 BUSINESS STRATEGY SECTION 1.2 BUSINESS STRATEGY

20. 1-20 LEARNING OUTCOMES 4.Explain why competitive advantages are temporary 5.Describe Porter ’ s Five Forces Model and explain each of the five forces 6.Compare Porter ’ s three generic strategies 7.Demonstrate how a company can add value by using Porter’s value chain analysis

21. 1-21 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

22. 1-22 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

23. 1-23 IDENTIFYING COMPETITIVE ADVANTAGES  Competitive intelligence –The process of gathering information about the competitive environment to improve the company’s ability to succeed  Competitive intelligence tools Porter’s Five Forces Model Porter’s Three Generic Strategies Porter’s Value Chain Analysis

24. 1-24 THE FIVE FORCES MODEL – EVALUATING INDUSTRY ATTRACTIVENESS Porter’s Five Forces Model

25. 1-25 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

26. 1-26 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

27. 1-27 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

28. 1-28 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

29. 1-29 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

30. 1-30 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

31. 1-31 THE THREE GENERIC STRATEGIES CHOOSING A BUSINESS FOCUS Porter’s Three Generic Strategies

32. 1-32 THE THREE GENERIC STRATEGIES CHOOSING A BUSINESS FOCUS Porter’s Three Generic Strategies

33. 1-33 VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES  Business process – A standardized set of activities that accomplish a specific task, 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

34. 1-34 VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES  Primary value activities Inbound logistics - Acquires raw materials and resources, and distributes Operations - Transforms raw materials or inputs into goods and services Outbound logistics - Distributes goods and services to customers Marketing and sales - Promotes, prices, and sells products to customers Service - Provides customer support

35. 1-35 VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES  Support value activities Firm infrastructure – Includes the company format or departmental structures, environment, and systems Human resource management – Provides employee training, hiring, and compensation Technology development – Applies MIS to processes to add value Procurement – Purchases inputs such as raw materials, resources, equipment, and supplies

36. 1-36 VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES Porter’s Value Chain

37. 1-37 VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES Value Chain and Porter’s Five Forces Model

38. 1-38 LEARNING OUTCOME REVIEW  Now that you have finished the chapter please review the learning outcomes in your text