thursday, february 17, 20001 management of information systems: 45-870 mini-3 spring 2000
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Thursday, February 17, 2000 2
Agenda Schedule Reminders Return of Mid-Term Exam Discussion of IT Exercise III Extending Intranets: Extranets Using IT to create Strategic
Advantage
Thursday, February 17, 2000 3
Schedule Reminders Sonoco I/T Diagnosis
Due no later than Tuesday, 22-Feb, 2000, by start of class
Ford I/T Strategy Analysis No assignment due Article and discussion questions will
be distributed on Tuesday, 22-Feb We will discuss the article and
discussion questions informally in class on 29-Feb
Thursday, February 17, 2000 4
Schedule Reminders Guest Speakers
Feb 22, Mr. Alberto Espinosa, CEO of Mayor Maynot Deliver, Inc. to discuss:
ASP and web databases Technical aspects of IT Exercise III
Feb 24, Mr. Rob Trollinger, Principal, AT Kearney, to discuss:
Developing an I/T Strategy
Thursday, February 17, 2000 5
Return of Mid-Term Exam Grading/Curve Answers to Questions Re-grade request policy:
** Requests for re-grade of any item on the exam are to be made in writing only. Requestors should return the exam to Prof. Slaughter with a brief explanation of why they believe an item should be re-graded. **
Thursday, February 17, 2000 6
IT Exercise III: Web Business Opportunity Scenario:
You (and your team) own a small, high quality restaurant in the East End (of Pittsburgh)
Current focus on individual on-site diners
Decline in on-site dining clientele Offer limited delivery service
Thursday, February 17, 2000 7
IT Exercise III: Web Business Opportunity The Opportunity:
Proposal from Mr. Espinosa, CEO of Mayor Maynot Deliver, Inc.
New Internet Start-up company East End’s only Internet-enabled multi-
restaurant ordering and delivery service Delivers high quality food (generally not fast
food) from best restaurants to homes, offices, and hotels
Customer Profile: higher incomes, professionals, business travelers, graduate students, etc. Also larger groups or corporate customers.
Thursday, February 17, 2000 8
IT Exercise III: Web Business Opportunity Mayor Maynot Deliver, Inc.:
provides its own delivery service (customers charged a flat 15% delivery fee)
Menu items at same prices as in the restaurants Restaurants listed in company’s web directory
(where customers can order online on web pages created by each restaurant)
Restaurants included in company’s delivery service
Restaurants must pay a monthly fee of about (3-5%) of total sales volume ordered over the web each month
Thursday, February 17, 2000 9
Mayor Maynot Deliver, Inc. Website Prototype web site for company at:
http://softrade-11.gsia.cmu.edu/data/restaurants.html
Each restaurant responsible for creating and updating its menu order page and information in the company’s database
Company responsible for creating and maintaining other pages on the web site
Thursday, February 17, 2000 10
Your Assignment Evaluate this business opportunity and
decide whether to accept or reject it Technical Portion:
Register your restaurant name and type on the company’s web site
Register up to 20 different menu items and prices for your restaurant on the company web site
Create a web order page for your restaurant using FrontPage (see and follow exactly the technical instructions!)
Your web page should be attractive to customers and should be functional in terms of taking orders
Thursday, February 17, 2000 11
Your Assignment Technical Portion (cont’d):
Address the following questions Strengths/weaknesses of the company’s
design for the web site What functionality to add and why What technical concerns do you have and
how should Mayor Maynot Deliver, Inc. address them
Thursday, February 17, 2000 12
Your Assignment Strategic Portion
Address the following questions: How could this opportunity improve
competitive advantage for your restaurant What strategic challenges/threats does
this opportunity represent How would your business change if you
accepted this opportunity Will you accept this opportunity What would you want to modify or change
in the proposal
Thursday, February 17, 2000 13
Web Fair Assignment due at the beginning of class on
Thursday, March 2, 2000 Create a web page on your team web with
your answers to the technical and strategic questions. This page should have a hyperlink pointing to your restaurant order page
Your team will demonstrate your restaurant order page at the “web fair” and will explain to Prof. Slaughter whether you’ve decided to accept Mayor Maynot Deliver’s proposal and why
Thursday, February 17, 2000 14
CORPORATEINTRANET
EngineeringServer
Internet Web Sites
Internet Links
Customers
Extranet Links
H.R.Server
Other Company Locations
Intranet Links
Legacy DataServer
MarketingServer
Extranet Links
Suppliers
Linking Intranets to Extranets, the Internet
Thursday, February 17, 2000 21
IT for Strategic Advantage
How can IT be used to create competitive advantage Competitive Forces The Value Chain
Using the Internet Strategically
Thursday, February 17, 2000 22
What is a Strategy?
A strategy is a definition of a business.
It specifies the product / service to be provided and the segments of the market to which that product / service is directed. It defines the channels of distribution to the market segments and the kind of production processes that are required. Finally, it defines how the necessary capital will be provided and the kinds of people and organizational structure needed.
Thursday, February 17, 2000 23
Bargaining Powerof Suppliers
Bargaining Powerof Suppliers
Threat of New Entrants
Threat of New Entrants
Rivalry AmongExisting
Competitors
Rivalry AmongExisting
Competitors
Threat ofSubstitutesThreat of
Substitutes
Bargaining Powerof Customers
Bargaining Powerof Customers
The Competitive Environment
Thursday, February 17, 2000 24
Co
mp
eti
tive
Str
ate
gie
s
Competitive Forces
Differentiation
Cost
Innovation
Growth
Alliance
OtherStrategies
Supplier Customer Competitor NewEntrant Substitute
Thursday, February 17, 2000 25
BreakingBusinessBarrierswith IT
TimeBarriers
GeographicBarriers
CostBarriers
StructuralBarriers
How does IT impact Competitive Forces?
Thursday, February 17, 2000 26
How IT can be used to implement competitive strategies
Improve Business Processes Promote Business Innovation Lock in customers and suppliers Create switching costs Raise barriers to entry Leverage a strategic IT platform Develop a strategic information base
Thursday, February 17, 2000 27
Examples IT for cost leadership:
IT to differentiate:
IT to innovate:
IT to expand:
IT to foster alliance:
Thursday, February 17, 2000 28
The Value Chain Value Chain = system of interdependent,
linked activities Competitive Advantage = f(how well value
chain activities are defined, integrated, executed)
Primary Activities: inbound logistics, operations, outbound logistics, marketing & sales, service
Support Activities: firm infrastructure, human resource management, technology development, procurement
Thursday, February 17, 2000 29
INBOUNDLOGISTICS
OPERATIONS OUTBOUNDLOGISTICS
MARKETING AND SALES
SERVICE
PRIMARY ACTIVITIES
PROCUREMENT
TECHNOLOGY DEVELOPMENT
HUMAN RESOURCE MANAGEMENT
FIRM INFRASTRUCTURE
SU
PP
OR
T A
CT
IVIT
IES
Generic Value Chain
Thursday, February 17, 2000 30
INBOUNDLOGISTICS
OPERATIONS OUTBOUNDLOGISTICS
MARKETING AND SALES
SERVICE
PROCUREMENT
TECHNOLOGY DEVELOPMENT
HUMAN RESOURCE
MANAGEMENT
FIRM INFRASTRUCTURE
Information System TechnologyPlanning and Budgeting Technology
Office Technology
Training TechnologyMotivation Research
Product TechnologyComputer-Aided DesignPilot Plant Technology
•Diagnostic and Testing Technology•Communications Technology
•Transportation Technology•Material Handling Technology•Storage and Preservation Technology•Communication System Technology•Testing Technology
Information Systems TechnologyCommunication Systems TechnologyTransportation Systems Technology
Software Development ToolsInformation Systems Technology
•Basic Process Technology•Materials Technology•Machine Tools Technology•Materials Handling Technology•Packaging Technology•Testing Technology
•Transportation Technology•Material Handling Technology•Packaging Technology•Communications Technology
•Multi-Media Technology•Communication Technology
IT in the Value Chain
Thursday, February 17, 2000 31
Level 1: StrategicLevel 1: Strategic
Level 2: OffensiveLevel 2: Offensive
Level 3: DefensiveLevel 3: Defensive
Level 4: Cost-JustifiedLevel 4: Cost-Justified
Level 5: ControlledLevel 5: Controlled
LevelsTowardUse of ITTo CreateCompetitiveAdvantage
Levels of use of IT for Competitive Advantage
Thursday, February 17, 2000 32
How would you classify these organizations in terms of their level of investment in IT? FedEx Ford Amazon.com Walmart Federal Government Pennsylvania State Government PNC Bank Wells Fargo Bank
Question
Thursday, February 17, 2000 33
Sonoco Case For the Sonoco Case, in answering
the last set of questions: How would you classify the role/level
of IT in Sonoco, using these levels of competitive advantage?
In 1980’s/1990’s? With new business strategies? With an e-commerce strategy?