chapter 1 management information systems: business driven mis mcgraw-hill/irwin copyright © 2013 by...
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Chapter 1Management Information Systems: Business Driven MIS
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
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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
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©2011 The McGraw-Hill Companies, All Rights Reserved
SECTION 1.1
BUSINESS DRIVEN
MIS
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SECTION 1.1: LEARNING OUTCOMES
1. Describe the information age and the differences among 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
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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
COMPETING IN THE INFORMATION AGE
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• 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
COMPETING IN THE INFORMATION AGE
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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
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COMPETING IN THE INFORMATION AGE
• The core drivers of the information age
Data
Information
Business intelligence
Knowledge
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Data
• Data - Raw facts that describe the characteristics of an event or object
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Information
• Information - Data converted into a meaningful and useful context
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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
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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
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THE CHALLENGE: DEPARTMENTAL COMPANIES
Common Departments Working Independently
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Common Departments Working Interdependently
THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS
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• 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
THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS
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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
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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
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• 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
MIS Department Roles and Responsibilities
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©2011 The McGraw-Hill Companies, All Rights Reserved
SECTION 1.2
BUSINESS STRATEGY
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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
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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
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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 affect its market share by being first to market with a competitive advantage
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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
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THE FIVE FORCES MODEL – EVALUATING INDUSTRY
ATTRACTIVENESS
Porter’s Five Forces Model
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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
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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
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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
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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
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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
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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
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THE THREE GENERIC STRATEGIES
CHOOSING A BUSINESS FOCUS
Porter’s Three Generic Strategies
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THE THREE GENERIC STRATEGIES
CHOOSING A BUSINESS FOCUS
Porter’s Three Generic Strategies
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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
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VALUE CHAIN ANALYSIS – EXECUTING BUSINESS
STRATEGIES
• Primary value activities
Inbound logistics - Acquires raw materials and resources, and distributes to manufacturing as required
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 after the sale of goods and services
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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
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VALUE CHAIN ANALYSIS – EXECUTING BUSINESS
STRATEGIES
Porter’s Value Chain
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VALUE CHAIN ANALYSIS – EXECUTING BUSINESS
STRATEGIES
Value Chain and Porter’s Five Forces Model