1. McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 1 The Information Age in Which You Live: Changing the Face of Business

2. 1-2 INTRODUCTION  Management information systems (MIS) – helping people perform all tasks related to information processing and management. 3 key resources: 1. People 2. Information 3. Technology

3. 1-3 MIS RESOURCE #1: INFORMATION Information is often aggregated data that has meaning such as average age, youngest and oldest customer, and a histogram of customer ages Data – raw facts

4. 1-4 MIS RESOURCE #1: INFORMATION Business intelligence – collective information that supports important, strategic decision making

5. 1-5 MIS RESOURCE #2: PEOPLE  People are the most important resource in any organization, with a focus on  Technology literacy – knowing how/when to apply technology  Information literacy – knowing how to use information  Ethical responsibilities

6. 1-6 MIS RESOURCE #3: INFORMATION TECHNOLOGY

7. 1-7 FINANCIAL IMPACT OF INFORMATION TECHNOLOGY  IT can definitely impact break-even analysis  Fixed costs – costs you incur even if you don’t sell anything  Variable costs – costs you incur when you sell something (COGS)  Revenue – how much you sell one unit for

8. 1-8 FINANCIAL IMPACT OF INFORMATION TECHNOLOGY Reduce Fixed Costs Reduce Variable Costs Increase Revenue Recommendation EnginesRecommendation Engines Long-Tail EconomicsLong-Tail Economics Many othersMany others

9. 1-9 INDUSTRY IMPACT OF INFORMATION TECHNOLOGY Porter’s Five Forces Model helps business people understand the relative attractiveness of an industry and the industry’s competitive pressures.

10. 1-10 Buyer & Supplier Power  Buyer power – high when buyers have many choices and low when their choices are few  Supplier power – high when buyers have few choices and low when choices are many  The inverse of each other

11. 1-11 Threat of Substitute Products and Services and New Entrants  Threat of substitute products and services – high when there are many alternatives for buyers  Threat of new entrants – high when it is easy for competitors to enter the market  Rivalry among existing competitors – high when competition is fierce

12. 1-12 STRATEGY IMPACT OF INFORMATION TECHNOLOGY  Porter identified 3 generic business strategies for beating the competition 1. Overall cost leadership 2. Differentiation 3. Focus

13. 1-13 STRATEGY IMPACT OF INFORMATION TECHNOLOGY Cost leadership - offering the same or better quality product or service at a price that is less than what any of the competition is able to do Differentiation - offering a product or service that is perceived as being “unique” in the marketplace Focus - focusing on offering products or services to a particular segment or buyer group, within a segment of a product line, to a specific geographic market, etc

14. 1-14 Run-Grow-Transform (RGT) Framework  Run-grow-transform (RGT) framework – the allocation in terms of percentages of IT dollars on various types of business strategies