mis manual

MANAGEMENT INFORMATION SYSTEMS

Course Manual

PGP (2009-2011)

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MANAGEMENT INFORMATION SYSTEMS

Course Code: CIS 602

Credit Unit: 1

Term: III Trimester

Area: Information Technology

Facilitator: E-mail Meeting Time

Ms. Vandana Srivastava [email protected] 04:00 - 05:00 P.M

Ms. Ritu Khanna [email protected] 04:00 - 05:00 P.M

Mr. Nalin Jha [email protected] 04:00 - 05:00 P.M

Ms. Priyanka Kapoor [email protected] 04:00 - 05:00 P.M

Mr. Yavar Ehsan [email protected] 04:00 - 05:00 P.M

Ms. Abdul Khan [email protected] 04:00 - 05:00 P.M

Course Objectives:

The objective of this course is to expose the students to the managerial issues relating to information

systems and help them identify and evaluate various options in this regard. The course aims to ensure that

students have an appreciation of management issues and the role played by IT in the overall strategy of the

business.

Syllabus Outline:

1. Unit – I (Foundation Concepts)

Foundations of Information Systems in Business

Competing with Information Technology

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mailto:[email protected]






2. Unit – II (Information Technologies)

Telecommunications and Networks

The Networked Enterprise

Telecommunications Network Alternatives

3. Unit – III (Business Applications)

Enterprise Business Systems

Case study: Wal-Mart and Mattel: SCM Best Practices

Enterprise Business Systems

Case Study: eBay Inc.: Managing Success in a Dynamic Online Marketplace

4. Unit- IV (Development Processes)

Developing Business / IT Solutions

Planning for Information Systems , SDLC

5. Unit – V (Management Challenges)

Security and Ethical Challenges

Enterprise and Global Management of IT

Learning Outcomes:

1. Knowledge of MIS, and its applications

2. Learn the application of MIS knowledge to the selection and design of systems appropriate to

management requirements.

3. Develop an awareness of how MIS may make a contribution to the strategic management of an

organization.

4. Knowledge of the management of IT and how the contribution of IT might be maximised.

5. The aim of this course is to ensure that students have an appreciation of management issues and

the role played by IT in the overall strategy of the business. The course takes a broader look at IT

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than the technical perspective. It is also intended to explore the issues surrounding the management

of IT development projects and also the provision of an IT infrastructure to an organization.

Main Course Book:

O’Brien James A., Management Information Systems, Tata McGraw Hill Edition, New Delhi, 7th Edition

References:

1. MIS by WS Javadekar Tata McGraw Hill 1999.

2. Laudon, Kenneth C and Laudon, Jane Price, Management Information Systems, Pearson India.

3. MIS by Gorden B. Davis, Margrethe Holson.

4. Information Systems for Managers by Ashok Arora / Akshaya Bhatia – Excel Publishers 1999.

5. Sadagopan, S.., “Management Information Systems”, 2003, PHI.

6. Kumar Muneesh, Business Information Systems, Vikas Publishing House, New Delhi, 1999.

7. Jaiswal & Mittal, MIS.

8. E-Commerce – Cutting Edge of Business – Kamlesh K Bajaj, Debjani Nag – Tata McGraw Hill,

1/e,2003,

9. Global Electronic Commerce – Theory and class studies J Christopher Westland, Theodre, H K

Clark – University Press

10. E-Commerce concepts, models Strategies – C S V Moorthy – Himalaya Publications.

11. E-Commerce – an Indian Perspective – P T Joseph – Prentice Hall, 2/e, 2005.

12. Strategic Management of e-Business – Stephen Chen, John Wiley & Co.

Session Plan:

Session Topic ReferencesCases/ Assignment

Additional Readings

Unit 1: Foundation Concepts

Session 1 O’Brien - MIS, by EFFY OZ,

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Foundations of Information Systems in Business

IS in Business- Introduction- Information technologies- IS framework- Roles of IS-Trends in IS- Role of e-business in IS

Chapter 1 (Page: 3-10)

Thomson publications,5th edition, Business Information Systems

Session 2

- Types of IS- Developing IS solutions- Challenges of ethics & IT-- Challenges of IT career- IS Functions

O’Brien - Chapter 1 (Page: 11-20)

Session 3

Components of IS

-System concepts- define system- components of an IS- IS resources- IS activities


Aviall Inc.: From Failure to Success with IT (Pg: 36)

Session 4

Competing with Information Technology

Fundamentals of Strategic Advantage

- Strategic IT- Competitive strategy concepts & forces- Competitive Strategies- Building a customer focused business- The value chain & Strategic IS


GE, Dell, Intel and Others: The competitive advantage of Information Technology (Pg: 41)

MIS, Laudon & Laudon, 10th Edition, Information Systems, Organizations & Strategy

Session 5Using IT for Strategic Advantage

- Strategic uses of IT-The role of IT


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- Becoming an agile company- creating a virtual company- Building a knowledge creating company

Session 6 Guest Lecture

Unit 2: Information Technologies

Session 7

Telecommunications and Networks:The Networked Enterprise

- Networking the enterprise- trends in telecommunication- business value of telecommunication network- The internet revolution- Business value of internet- Intranet & it’s business value- Extranets & it’s business value


Boeing Company and Others: Converging Voice & Data using Voice Over IP (Pg: 209)

Principles of Information Systems, Ralph Stair & George Reynolds, 8th edition, Telecommunication & Networks

Session 8

Telecommunications Network Alternatives- network model- types of telecomm network- Telecomm media- Wireless technologies- Telecomm processors- Telecomm software’s- Network Topologies- N/w Architecture & Protocols- convergence of devices and services


Unit 3 : Business Applications

Session 9Enterprise Business SystemsEnterprise Architecture PrinciplesCRM: The Business Focus

- Introduction- What is CRM

The three phases of CRM customer’s profile,

personalization and correlation


Agilent Technologies and Russ Berrie: Challenges of implementing ERP Systems (Pg: 255)

IT Support for supply chain management, (Page: 81), MIS for the information age-6th edition-by Stephen Haag, Maeve Cummings & Amy Phillips

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- Benefits & Challenges of CRM- Trends in CRM

Session 10

Enterprise Resource Planning: The Business Backbone

- Introduction- What is ERP- Benefits & Challenges of ERP


Whirlpool Corp: Rush to ERP Leads to Shipping Snafus (pg: 259)

Session 11

Enterprise Resource Planning: The Business Backbone

- The cost of ERP- Causes of ERP failures- Trends in ERP

Session 12

Supply Chain Management: The Business Network

- Introduction- What is SCM- EDI


MIS, by EFFY OZ, Thomson publications, 5th edition, Business Functions & Supply Chains

Session 13

Supply Chain Management

- The Role of SCM- Benefits & Challenges of SCM- Trends in SCM


CVS, McKesson, and MPT: Web-based SCM Integration (Pg: 269)

Session 14Case study: Wal-Mart and Mattel: SCM Best Practices

Case study attached with manual


MID TERM

Session 16 Electronic Commerce Systems

- Introduction to e-Commerce- The Scope of e-commerce- e-Commerce Technologies- Categories of e-Commerce- Essential ecommerce processes


Information systems, The foundation of E-Business, Steven Alter, 4th edition, Customer, Product & E-Commerce

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Session 17

Electronic Commerce Fundamentals

- Electronic payment processes

E-commerce Applications and Issues

-E-Commerce application trends- B2C E-Commerce


Session 18

E-commerce Applications and Issues

- E-Commerce success factors- Web store requirements- B2B E-Commerce- E-Commerce Market Places- Clicks & Bricks in E-Commerce


Session 19


Case study attached with the manual

Unit 4 : Development Processes

Session 20

Developing Business / IT Solutions

Developing Business Systems

-IS Development- The Systems Approach- Systems Thinking- The systems development cycle- Feasibility Study

O’Brien - Chapter 12 (Page: 391- 414)

Information systems, The foundation of E-Business, Steven Alter, 4th edition, Building & Maintaining Information Systems

Session 21

Developing Business Systems

- System Analysis- System Design- End-User Development- Prototyping Approach


The ROWE Cos. And Merrill Lynch: The ROI Process in Business/IT Planning (Pg: 365)

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Session 22

Implementing Business Systems

-Implementation- Implementing New systems- Evaluating hardware, software and services.- Other implementation activities- IS maintenance


Unit 5 : Management Challenges

Session 23

Security and Ethical Challenges

Security, Ethical, and Societal Challenges of IT

- IT Security, ethics & Society- Ethical responsibility of professionals- Computer Crime- Privacy issues- Health Issues- Societal Issues


F-Secure, Microsoft, GM and Verizon: The Business Challenge of Computer Viruses (Pg: 425)

MIS, Laudon & Laudon, 10th Edition, Ethical & Social Issues in Information Systems, Securing Information Systems


Session 25

Security Management of IT-Tools of security management- Security Measures- System controls and auditsIT standards like ITIL, COBIT, BS7799


Assignment: Analyzing Business Processes for a given Enterprise System

Session 26

Enterprise and Global Management of IT

- Business & IT- Managing IT- Business / IT Planning- Managing the IS function- Failures in IT Management


Global Exchange Services & Allstate: Challenges & Solutions in Offshore Systems Development (Pg: 478)

MIS, Laudon & Laudon, 10th Edition, Managing Global Systems.

Session 27 Managing Global IT O’Brien - Chapter 14

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- Global IT Management- Global business / IT strategies- Global Business / IT Applications- Global IT Platforms- Global Data access issues

(Page: 463-476)

Session 1: IS in Business

In this session, concepts of Information systems will be discussed and its fundamental roles in business.

This session will provide an overview of the five basic areas of information systems knowledge needed by

business professionals. Discussion on the trends in Information system will be done. The student will be

able to explain knowledge of IS, its importance for business professionals.

Chapter: Foundations of Information Systems in Business, Ch-1 (Pg-3)

Session 2: Types of IS

This session will differentiate among the major types of information systems. The session focuses on the

challenges of Ethics and IT faced by professionals and businesses. Overview of the challenges of IT career

is provided along with various Information system functions. You will be able to differentiate major types of

IS, their application in business & how it supports its business processes, decision making & strategies for

competitive advantage.


Session 3: Components of Information system

At the end of the session the student will be able to identify the components of real world Information

System. In this session system concepts will be discussed along with its characteristics. Explanation on

Information system Resources and Information system Activities will be given.


Session 4: Fundamentals of Strategic Advantage

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By the end of the session, the student will be able to identify basic competitive strategies using Information

technology to confer competitive forces faced by a business. Competitive strategy concepts & forces will be

covered. Details of the value chain & Strategic Information System will be explained in this session.

Chapter: Competing with Information Technology, Ch-2 Section-I (Pg-40)

Session 5: Using IT for Strategic Advantage

This session will guide the student to classify the business value of using Internet Technologies to become

an agile competitor. The concepts like: becoming an agile company and creation of a virtual company will

be briefly discussed. The student will be explained about Knowledge Management Firms.

Chapter: Competing with Information Technology, Ch-2 Section-II (Pg-51)

Session 7: The Networked Enterprise

This session will help you learn major trends in the industries, technologies and business applications of

telecommunications & internet technologies. The importance of networking an enterprise and its related

topics will be discussed. The student will be able to identify the business value of Internet, Intranet and

Extranet applications.

Chapter: Telecommunications and Networks, Ch-6 Section-I (Pg-169)

Session 8:

Also, you will learn about the basic components, functions & types of telecommunications network used in

business. The student will be able to identify the functions of major types of telecommunications network,

software, media and services.

Chapter: Telecommunications and Networks, Ch-6 Section-II (Pg-183)

Session 9: Customer Relationship Management

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This unit will explain you about the various aspects like Business processes supported, Customer &

business value provided, Potential challenges and trends of the areas: Customer Relationship Management

This session will lay its focus on defining CRM, The phases of CRM and the benefits and challenges of

Customer Relationship management.

Chapter: Enterprise Business Systems, Ch-8 Section-I (Pg-245)

Session 10: Enterprise Resource Planning


business value provided, Potential challenges and trends of the areas: Enterprise Resource Management.

This session will lay its focus on defining ERP, its benefits and Challenges.

Chapter: Enterprise Business Systems, Ch-8 Section-II (Pg-253)

Session 11: Enterprise Resource Planning


business value provided, Potential challenges and trends of the areas: Enterprise Resource Management.

The cost of implementing an ERP is a major point that will be discussed in this session. The major causes

of ERP Failures and the trends in enterprise Resource Planning are also covered under the session.


Session 12: Supply Chain Management


business value provided, Potential challenges and trends of the areas: Supply chain Management Systems.

In this session SCM will be explained and defined along with concepts like Electronic Data Interchange.

Chapter: Enterprise Business Systems, Ch-8 Section-III (Pg-260)

Session 13: Supply Chain Management

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business value provided, Potential challenges and trends of the areas: Supply chain Management Systems.

Concepts like the Role of SCM and its benefits & challenges of SCM will be covered. Trends in SCM will be

discussed in detailed.

Chapter: Enterprise Business Systems, Ch-8 Section-III (Pg-260)

Session 14:

Case study: Wal-Mart and Mattel: SCM Best Practices. (case study attached)

Session 16: Electronic Commerce Systems

After reading this unit you should be able to identify major categories & trends of e-commerce applications.

Identify the essential processes of an e-commerce system and business value of several types of e-

commerce market places. The scope of E-commerce will be discussed along with the technologies of E-

commerce.


Session 17: Electronic Commerce Fundamentals



commerce market places.


Session 18: E-commerce Applications and Issues



commerce market places. E-Commerce categories B2B and B2C will be defined and discussed in detail.


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Session 19:


Session 20: Developing Business Systems

By the end of the session you will be able to learn and classify the approach applied for the development of

information system & e-business systems solutions which meets the business needs of a company. This

session explains in details the steps and issue of Information system Development. The systems thinking

approach is discussed. Focus is put on the systems development lifecycle.

Chapter: Developing Business / IT Solutions, Ch-12 Section-I (Pg-391)

Session 21: Developing Business Systems


information system & e-business systems solutions which meets the business needs of a company. All the

phases of the systems development lifecycle are explained in detail.

Chapter: Developing Business / IT Solutions, Ch-12 Section-I (Pg-400)

Session 22: Implementing Business Systems


information system & e-business systems solutions which meets the business needs of a company. The

student will be able to identify Implementation of new systems also evaluation of the hardware, software

and the services.

Chapter: Developing Business / IT Solutions, Ch-12 Section-II (Pg-406)

Session 23: Security, Ethical, and Societal Challenges of IT

In this unit you will identify several ethical issues, several types of security management strategies and

defenses and how they can ensure the security of business applications of IT. All the concepts like: IT

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Security, ethics & Society and Ethical responsibility of professionals will be discussed in this session. Also,

the student will be able discuss details on Computer Crime, Privacy issues, Health Issues, Societal Issues.

Chapter: Security and Ethical Challenges, Ch-13 Section-I (Pg-423)

Session 25: Security Management of IT

You will be able to propose ways that business managers & professionals can help to lesson the harmful

effects. The student will be able to identify Tools of security management and various Security Measures.

System controls and audits is another area that will be covered in this session.

Chapter: Security and Ethical Challenges, Ch-13 Section-II (Pg-445)

Session 26: Enterprise and Global Management of IT

After reading & studying this chapter you should be able to identify the three components of IT

management. Explain how failures in IT management can be reduced by the involvement of business

managers in planning & management. The student will be able to understand the management of

Information system functions.

Chapter: Enterprise and Global Management of IT, Ch-14 Section-I (Pg-463)

Session 27: Managing Global IT

Explain the effect on global business/IT strategy of the trend toward a transnational business strategy by

international business organizations. The session will lay its focus on global business and IT strategies. The

session will also discuss IT applications in Global business. Issues of global data access are also covered in

this session.

Chapter: Enterprise and Global Management of IT, Ch-14 Section-II (Pg-477)

Brief:

The course introduces students to the organizational and managerial foundations of systems, their strategic

role, and the organizational and management changes driving electronic business and the emerging digital

firm. It provides an extensive introduction to real-world systems, focusing on their relationships to

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organizations, management, business processes, and important ethical and social issues. The student is

provided with the technical foundation for understanding information systems and for making wise

information technology choices. Also tools are provided to explain how companies use new information

systems to redesign their organizations and business processes and the role of new technologies such as

web services for rapid application development and digital integration.

Assessment Criteria

S.NO PARAMETER WEIGHT AGE

1 Midterm 20%

2 Group project 20%

3 End Term 60%

Explanation of Assessment Parameter

Group Project and Presentation

The project will include a report and presentation about any contemporary topic relating to Information

Systems and their implementations in an organization. This will be a group project. The information can be

drawn from sources on the internet, magazines, journals, etc. or from a person in the industry. The report

should have 10-12 pages in total.

Final Project Report & Viva: 20%

The final report must be a professional document, no longer than 30, Arial (11) 1.5-spaced, typed pages.

Cite all references used throughout the paper. This reference section will not count against the page limit.

Any charts and tables can be included as appendices and do not count against the page limit. List your

sources of information, including articles, interviews, etc. attach your filled in questionnaire and data

tabulated sheets.

Midterm & End Term Examinations

The midterm and end term examinations carry 20% and 60% weightage respectively and will consist of a

subjective paper based on the concepts discussed in class.

Case Analysis:

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Case analysis is the key to the development of your abilities to select, evaluate and apply concepts, models

and theories of Information systems. Each case opens with the story of a business including the businesses

Information Systems challenges, the characters involved and the issues. Everyone in business knows that

almost every business problem has a human element; this aspect of managing IT related challenges is

realistically represented in each case. In discussing a case (both in class and in your written submission),

do not merely restate facts. The business situations presented in the cases are complex and frequently

involve a series of interrelated problems. Develop your insight into the key problem.

In preparing for a case discussion prior to class, you must address the following issues:

Categorize the key problems associated with the business organization;

Identify the problem in terms of Information Technology.

Classify the various processes and information changes that could be proposed to formulate more

efficient enterprise wide Information Systems.

Propose your solution to the problem.

In proposing a solution, keep the following points in mind:

Use the information given in the case. Do not extrapolate or use your information in present

scenario.

Clearly state your assumptions.

Give a sensible solution.

Consider both the pros and cons of your solution;

Choose a specific course of action. Does it follow from your analysis?

The format of this write-up reflects the logical steps you need to follow in analyzing the case:

Statement of problem,

Alternative solutions

Your chosen solution (including tactical details) and

Supporting logic and analyses.

Wal-Mart and Mattel: Supply Chain Management Best Practices

Being a supplier to Wal-Mart is a two-edged sword,” says Joseph R.Eckroth Jr., CIO at Mattel Inc.

(www.mattel.com). “They’re a phenomenal channel but a tough customer. They demand excellence.”

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http://www.mattel.com/

It’s a lesson that the El Segundo, California-based toy manufacturer and thousands of other

suppliers learned as the world’s largest retailer, Wal-Mart Stores (www.walmart.com), built an inventory and

supply chain management system that changed the face of the business. By investing early and heavily in

cutting-edge technology to identify and track sales on the individual item level, the Bentonville Arkansas-

based retail giant made its IT infrastructure a key competitive advantage that has been studied and copied

by companies around the world.

“We view Wal-Mart as the best supply chain operator of all time,” says Pete Abell, retail research

director at high-tech consultancy AMR Research in Boston. Abell says he expects the company to remain in

the vanguard. “Wal-Mart is evolving; they’re not standing still,” he says. The company is still pushing the

limits of supply chain management, he says, searching for and supporting better technology that promises

to make its IT infrastructure more efficient. Radio frequency identification (RFID) microchips, for example,

may replace bar codes and security tags with a combination technology that costs less money.

Early on, Wal-Mart saw the value of sharing that data with suppliers, and it eventually moved that

information online on its Retail Link website. Opening its sales and inventory databases to suppliers is what

made Wal-Mart the powerhouse it is today, says Rena Granofsky, a senior partner at J.C.Williams Group, a

Toronto-based retail consulting firm. While its competition guarded sales information, Wal-Mart approached

its suppliers as if they-were partners, not adversaries, says Granofsky. By implementing a collaborative

planning, forecasting, and replenishment (CPFR) program, Wal-Mart began a just-in-time inventory program

that reduced carrying costs for both the retailer and its suppliers. “There’s a lot less excess inventory in the

supply chain because of it,” says Granofsky.

That efficiency is the key factor in maintaining Wal-Mart’s low-price leadership among retailers, says

Abell. “Their margins can be far lower than other retailers’ because they have such an efficient supply

chain,” he says. The company’s cost of goods is 5 to 10 percent less than that of most of its competitors,

Abell estimates.

Wal-Mart’s success with supply chain management has inspired other retail companies, which are

now playing catch-up, says Abell. “Others are now just starting. They’ve all had inventory systems, but

sharing the data with their partners hasn’t been easy,” he says. Wal-Mart’s influence has extended beyond

the retail sector. Mattel’s Eckroth says that he studied Wal-Mart’s supply chain best practices when he

worked at a manufacturing division of General Electric Co. “They’re a benchmark company,” he says.

One reason Wal-Mart is studied so closely is that it gets buy-in from its suppliers to an incredible

degree. That’s because its programs and practices benefit not just the retailer but its partners as well, says

Eckroth. CPFR, he says has “blurred the lines between supplier and customer. You’re both working to the

same end: To sell as much product as possible without either of us having too much inventory. We’ve

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learned that if we listen to Wal-Mart, take their initiatives seriously, and align our strategies with making

them successful, we both can succeed.”

Mattel has learned a lot from working with Wal-Mart and is bringing those lessons to bear in its

relationship with other channels, says Eckroth. “Getting the supply chain optimized inside of Mattel is only

50 percent of the equation,” he says. “The other 50 percent is getting tightly linked with every one of our

customers so that we’re reacting as quickly as they’re giving us data.” Tight links, Eckroth says, will enable

Mattel to tackle the next big business problem: increasing manufacturing efficiency.

“My ability to get information about the sales pace of a toy and either ramping up or shutting down

manufacturing depends on my having data,” he says. Having sales data on a daily or hourly basis is

necessary to figure out on a micro level what is selling best where and tailor manufacturing accordingly. The

greatest efficiencies will appear when the kind of trusting mutually beneficial relationship Mattel has with

Wal-Mart is duplicated with the rest of the manufacturer’s retail outlets.

“Having that data on a global basis from every one of my customers allows me to optimize the sales

of my products and the fill rates of my customers,”Eckroth says. “The theme for the future is that at the end

of the day, there can be symbiotic relationship between companies.”

Case Study Questions:

1. Do you agree that Wal-Mart is “the best supply chain operator of all time”? Why or why not?

2. What has Mattel learned from Wal-Mart? How well are they applying it to their own business?

Explain your evaluation.

3. What can other businesses learn from the experiences of Wal-Mart and Mattel that could improve

their supply chain performance? Use an example to illustrate your answer.

eBay Inc.: Managing Success in a Dynamic Online Marketplace

It began as a trading site for nerds, the newly jobless, home-bound housewives, and bored retirees to sell

sub prime goods: collectibles and attic trash. But eBay (www.ebay.com) quickly grew into a teeming

marketplace of 30 million, with its own laws and norms, such as a feedback system in which buyers and

sellers rate each other on each transaction. When that wasn’t quite enough, eBay formed its own police

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http://www.ebay.com/

force to patrol the listings for fraud and kick out offenders. The company even had something akin to a

bank: Its PayPal payment-processing unit allows buyers to make electronic payments to eBay sellers who

can’t afford a merchant credit card account. “eBay is creating a second, virtual economy,” says W.Brian

Arthur, an economist at think tank Santa Fe Institute. ‘It’s opening up a whole new medium of exchange.”

eBay’s powerful vortex is drawing diverse products and players into its profitable economy, driving its

sellers into the heart of traditional retailing, a $2 trillion market. Among eBay’s 12 million daily listings are

products from giants such as Sears Roebuck, Home Depot, Walt Disney, and even IBM. More than a

quarter of the offerings are listed at fixed prices. The result, says Bernard H.Tenenbaum, president of a

retail buyout firm, is “They’re coming right from the mainstream of the retail business.”

So what started out as a pure consumer auction market-place is now also becoming a big time business-to-

consumer and even business-to-business bazaar that is earning record profits for eBay’s stockholders. And

as the eBay economy expands, CEO Meg Whitman and her team may find that managing it could get a lot

tougher, especially because eBay’s millions of passionate and clamorous users demand a voice in all major

decisions. This process is clear in one of eBay’s most cherished institutions: the Voice of the Customer

program. Every couple of months, the executives of eBay bring in as many as a dozen sellers and buyers,

especially its high-selling “Power Sellers,” to ask them questions about how they work and what else eBay

needs to do. And at least twice a week, it holds hour-long teleconferences to poll users on almost every new

feature or policy, no matter how small.

The result is that users feel like owners, and they take the initiative to expand the eBay economy –

often beyond management’s wildest dreams. Stung by an aerospace downturn, for instance, machine-tool

shop Reliable Tools Inc., tried listing a few items on eBay in late 1998. Some were huge, hulking chunks of

metal, such as a $7,000 2,300-pound milling machine. Yet they sold like ice cream in August. Since then,

says Reliable’s auction manger, Richard Smith, the company’s eBay business has “turned into a monster.”

Now the Irwin dale (California) shop’s $1 million in monthly eBay sales constitutes 75 percent of its overall

business. Pioneers such as Reliable prompted eBay to set up an industrial products marketplace in January

that’s on track to top $500 million in gross sales this year.

Then there is eBay Motors. When eBay manager Simon Rothman first recognized a market for cars on

eBay in early 1999, he quickly realized that such high-ticket items would require a different strategy than

simply opening a new category. To jump-start its supply of cars and customers, eBay immediately bought a

collector-car auction company, Kruse International for $150 million in stock, an later did a deal to include

listings from online classifieds site, AutoTrader.com, Rothman also arranged insurance and warranty plans,

an escrow service, and shipping and inspection services.

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This approach worked wonders. Sales of cars and car parts at a $5 billion-plus annual clip are

eBay’s single largest market. That has catapulted eBay in from of no.1 U.S. auto dealer AutoNation in

number of used cars sold. “eBay is by far one of my better sources for buyers,” says Bradley Bonifacius,

Internet sales director at Dean Stallings Ford in Oak ridge, Tennessee.

And for now, the big corporations, which still account for fewer than 5 percent of eBay’s gross sales,

seem to be bringing in more customers than they steal. Motorola Inc., for example, helped kick off a new

wholesale business for eBay last year, selling excess and returned cell phones in large lots. Thanks to the

initiative of established companies such as Motorola, eBay’s wholesale business jumped nine fold, to $23

million, in the first quarter.

As businesses on eBay grow larger, they spur the creation of even more businesses. A new army of

merchants, for example, is making a business out of selling on eBay for other people. From almost none a

couple of years ago, these so-called Trading Assistants now number nearly 23,000. This kind of organic

growth makes it exceedingly tough to predict how far the eBay economy can go. Whitman professes not to

know. “We don’t actually control this,” she admits. “We have a unique partner – millions of people.”

Case Study Questions

1. Why has eBay become such a successful and diverse online marketplace? Visit the eBay website to

help you answer, and check out their many trading categories, specially sites, international sites, and

other features.

2. Why do you think eBay has become the largest online/off-line seller of used cars, and the largest

online seller of certain other products, like computers and photographic equipment?

3. Is eBay’s move from a pure consumer-to-consumer auction marketplace to inviting large and small

businesses to sell to consumers and other businesses, sometimes at fixed prices, a good long-term

strategy? Why or why not?

CASE STUDY- DAILEY’S RESTAURANT

The installation of a computer-based information system has enabled Dailey’s restaurant in Atlanta to

streamline their operations and promote tighter internal controls over their business.

A waiter takes an order at a table and then enters it online via one of the six terminals located in the dining

room. The order is routed to a printer in the appropriate preparation area: the cold item-printer if it is a salad,

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the hot-item printer if it is a hot sandwich; or a bar-printer if it is a drink. A customer’s meal check listing the

items ordered and the respective prices is automatically generated. This ordering system eliminates the old

three-carbon copy guest check system as well as any problems caused by the waiter’s handwriting. When

the kitchen runs out of a food item, the cook sends an “out of stock” message, which will be displayed on

the dining room terminal when waiters try to order that item. This gives the waiter faster feedback, enabling

them to give better service to the customers.

Other system features aid management in the planning and control of their restaurant business. The system

provides up-to-the minute information on the food items ordered and breaks out percentage showing sales

of each item versus total sales. This helps management plan menus according to customer’s tastes. The

system also compares the weekly sales total versus food cost, allowing planning for tighter cost controls. In

addition, whenever an order is voided, the reason for the void is keyed in. This may help later in

management decisions, especially if the voids are consistently related to food or service. Acceptance of the

system by the users is exceptionally high since the waiters and waitresses were involved in the selection

and design process.

a. In managing the business of a restaurant, what are some decisions that must be made in the

area of:

i. Strategic planning

ii. Managerial control

iii. Operational control

b. What would make this system a more complete management information system rather than just

doing transaction processing?

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