1. What’s Happening?!
Job creation incentive program seems to have backfired financially on the state of California.
Three California congressmen are questioning the sale of IBM’s PC manufacturing to a China company based on national defense concerns.
SBC is negotiating to buy AT&T for $16 billion.

2. What’s Happening?! Knight-Ridder advertising revenue for 2004 was $648
million. Newspaper revenue was $747 million. Online media
revenue was $31 million.
Oracle expects higher profits. Seeks closer ties with IBM.
New university – Cal State East Bay.

3. Chapter 6 Summary
Business Vision

4. Chapter Objectives
Positioning vision as the starting point in directing, posturing and running a business.
Understanding the significance of the vision process.
Remembering that vision triggers the entire business and information technology management process.

5. What is a Vision? A photograph of the future
It must be realistic and credible -- and most certainly attractive to the organization
Concrete and easily understood ideas about the long-range future of the business

6. What Must Be Accomplished
Establish a clear vision of the future.
Provide a basis for sharing values and views.
Send a message regarding the importance of the vision process throughout the entire organization to gain consensus and momentum.
Make things happen! Action needs to become a high priority.

7. The Vision to Action Process
Implementation
(Action)
Agreement &
Commitment
Tactics and
Business Plan
Strategy
Feedback
Vision
Sensing
Opportunity

8. Vision Uncertainty The dynamics of the market
Rapidly changing technologies
The logic and need to address changing employee values and traditional methods
The shift from old regulatory practices to new practices in many industries

9. Customer Service Frequently Drives the Vision!
For USAA, General McDermott’s four step process:
Automation
Lower employee attrition
Improve job training
Decentralize decision making by empowering employees

10. USAA Role and significance of IT? An executive partnership
Technology experimentation and assimilation
Leveraging of information systems
Strategic architecture
Horizontal integration of applications.

11. Whirlpool Decided that it would become the global leader in
the large appliance industry.
Initially identified product technology and
procurement as key factors to realize this goal.
Added information systems as an essential third
factor to achieve this goal.

12. Conclusions Successful companies are the result of good leadership.
Talented leadership is demonstrated in the following
forms:
Determining the direction of the business.
Promoting the need for action.
Fostering an environment for well directed information systems.

13. Possible Exam Questions
What factors influence the creation of a vision?
What impact does a vision have on information systems?

14. Implementing a Vision: Strategy, Tactics and Business Plan
Chapter 7 Introduction
Implementing a Vision:
Strategy, Tactics and Business Plan
Introduce your self
Tell what you will do

15. Chapter Objectives
Provide an understanding of how to transition a vision into reality through strategy, tactics, and business plans.
Better appreciate how strategies should dictate the role and significance of information systems.
Understand challenges that a company faces in formulating appropriate strategies.
Chapter Objectives:
Understanding how transition a vision into reality using strategy, tactics and business plans

16. Chapter 7 In Just One Slide!
The Four Components of Possible Business Success
Vision: What the company wants to look like in the future.
Strategy: Ideas on how to accomplish the vision, by doing an external and internal analysis of the company.
Tactics: The specific, time-oriented method of implementing the decided strategies.
Business Plan: The plan for allocating company resources. (aka: Operating Plan or Budget)

17. Elements of a Business Strategy
Competitive framework: What market are you in? How big is it? Who are your competitors, and what are their strategies?
Market target: What type of customer are you selling to? What are their needs, attitudes, and priorities?
Basis for perceived competitive superiority: How do your customers define your product or service as superior?
Key profit drivers: What makes your product or service profitable?
Product portfolio: Interrelating a product or service with the above four points.

18. Business Strategy Challenges
Is the strategy consistent with our vision?
Is the scope of strategy right?
Is there are logical balance between short term and long term objectives?
How does this compare to the industry leader?
How aggressive should the strategy be implemented?
Do people skills exist and are they availability?
Are capital and operating funds available?
We will go over challenges such as
Industry Strategy leader
Implementation
People
Funding
Fit
Balance
scope

19. External Analysis Internal Analysis
Begins with vision
Past successes and failures lead to new strategies
Strategies analyzed by internal and external sources
SWOT analysis
Must make sense to shareholders + employees
Implementation
Internal Analysis

20. Example: Progressive Corporation
Vision:
Reduce the economic cost and human trauma of automobile
accidents and provide services that delight consumers.
Plan of Action:
Make major changes to the definition of their business and
financial objectives.
Align core business strategies based on these changes.
Chapter Example
Progressive Corp
Vision: reduce economic cost and trauma and provide services
Plan: redefinition of business and financial objectives
Achieved through:
IS supported their vision through:
Express Quote
Immediate Response
ProRater Plus
Market changes:
Broadening customers (non-standard -> all drivers)

21. Senior management provides a vision and macro strategy
Implementers: split macro into micro strategies
Implementers must understand (arrows)

22. Business Plan The most straight-forward part of the entire process.
Deals with allocation of funds, people and other
resources.
Part that deals with allocation of resources and people

23. IT Based Strategies Federal Express Whirlpool USA Today Xerox
MARKET PLACE
OPERATIONS
SIGNIFICANT
STRUCTURAL
CHANGE
Federal Express
USA Today
Charles Schwab
Whirlpool
Xerox
USAA
L.L. Bean
McKesson
BancOne
Boeing
Frito-Lay
Wal-Mart
SSC-M: It supports business strategies that help create a change in companies markets (Fedex vs. Post office)
SSC-O: IT can change operations of a company (Whirlpool)
TTP-M: USAA expanding growth through products + services rather than new customers
TPP-O: Boeing – 777 designed and built using IT
TRADITIONAL
PRODUCTS
AND PROCESSES
Figure 7-6

24. Plan for Action!
As has been emphasized: the point of all of this is to
make things happen. Key to such an effort:
Simple Strategy
Aggressive Implementation
SS (when possible): Easier implementation
Implementation: understanding, acceptance, and support from company
Accomplish Objectives: Provide value

25. Conclusions
Business strategies can frequently work without information systems support.
IS support can be a key enabler of a successful business strategy.
IS implementations won’t contribute to the success of the company unless the right strategies are in place.
In the current business environment, identifying and implementing the best possible strategies often faces major challenges.
Business Strategies don’t require IS
IS should support strategies
IS won’t be successful unless they support the right strategies

26. Implementing a Vision: Strategy, Tactics and Business Plan
Chapter 7
Implementing a Vision:
Strategy, Tactics and Business Plan

27. If we know where we are and something about how we got there, we might see where we are trending--and if the outcomes which lie naturally in our course are unacceptable, to make timely changes Abraham Lincoln President of the United States

28. Primary Business Challenges
Deciding what things are worth doing.
Getting things done!

29. If the strategy is a hammer, the tactic is a nail
If the strategy is a hammer, the tactic is a nail. The actual end results are accomplished by the nail. If the nail isn't hammered correctly then the battle is lost. Sometimes the hammer also misses the nail.

30. Be Careful Do not confuse strategies with vision.
It can be relatively easy to come up with a vision.
The challenge is to turn it into reality through appropriate strategies and tactics.

31. Global Management Managers must be prepared to engage in heightened
international competition and have the ability to:
Manage organizations in different cultural settings.
Establish a value system within the organization.
Market products in different countries.
Adapt to changing markets.
Develop appropriate strategies dealing with finance, accounting, manufacturing, marketing and management of the organization.

32. Defining the Process Elements
Vision: Identifies what the organization wants to look like at some logical point in the future.
Strategy: How a company will achieve the long-term goal of the vision.
Tactics: More specific time-oriented, measurable ways to make a vision a reality.
Business Plan: Allocation of funds and other resources.

33. When in Doubt
Whether dealing with vision, strategies or tactic think customer!
Remember that a major difference between companies is how they treat their customers.
Also the importance of doing necessary homework on competitors.

34. Porter Strategy Guidelines
Primary Strategies:
Differentiation
Least Cost
Supporting Strategies:
Innovation
Growth
Alliances

35. Business Strategy Model Guidelines
1. What products and/or services do we intend to offer?
2. What price range of products do we intend to offer?
2. What customer targets do we intend to pursue?
3. What geographic markets do we intend to address?
4. How will we obtain products to sell to our customers?
5. How will we deal with sales to our customers?
6. What company structure do we intend to create?
7. What information systems approach will we take?

36. Important Strategy Options
Focus versus breadth:
Regional, national and/or selectively global
Products
Services
Markets
Business processes
Business partners
Innovation
Cost
Speed to market

37. Focus Challenges The grass is always greener.
Failure to see important changes in markets or product areas.
The constant need for revenue and profit growth.
The difficulty in self-renewal of the base business.

38. Great Focused Companies
Southwest Airlines
Wal-Mart Stores
Dell

39. More Strategy Challenges
One of the most difficult things in developing appropriate
strategies is competitive analysis.
Good companies develop strategies that are believable,
executable and achievable.
Good strategies spell out multi-year plans: the market segments to be pursued, market share numbers that
must be achieved, expense levels that must be managed and
resources that must be applied.
These must be reviewed regularly and become the driving
force behind everything that the company does.

40. Base for Execution Strategic clarity. High performance culture.
World-class processes.

41. Strategy Clarity
Clearly communicated understanding of this is based on the vision for the company.
Here are the core business strategies and this is how you should carry out your job.
Superb execution is more about values and commitments.
Successful execution comes from belief and conviction and not from procedures.

42. Business Strategies!? How important are they, really?
Do business strategies really make a difference between success and failure of a company?

43. Need to ask the following questions:
What is driving competition in our industry or one that we might enter?
What actions are competitors likely to take and what is the best way to respond?
How will our industry evolve over time?
How can we be best positioned to compete in the long run?

44. Strategy Consistency? Internal Factors Resource Factors
Environment Factors
Communication and Implementation Considerations

45. Strategy Consistency? Internal Factors: Are the goals achievable?
Do key operating policies address the goals?
Do key operating policies reinforce each other?
Resource Factors:
Do the goals and policies match the resources available to the company relative to competitors?
Does the timing of the goals and policies reflect the company’s ability to change?

46. Strategy Consistency? Environment Factors:
Do the goals and policies exploit industry opportunities?
Do the goals and policies deal with industry threats that are possible with available resources?
Does the timing of the goals and policies reflect the ability of the environment to absorb the planned impact.
Are the goals and policies consistent with societal concerns?

47. Strategy Consistency? Communication and Implementation Considerations:
Are the goals understood by the implementers?
Is there congruence between the goals and policies and the values of the implementers to insure commitment?
Is there sufficient management capability and availability to assure effective implementation?

48. Competitive Strategy Process
A. What is the company doing now?
Current strategy?
Assumptions about the company’s relative position, strengths and weaknesses, competitors and industry trends.

49. Competitive Strategy Process
B. What is happening in the business environment (industry).
Validity of industry opportunities and significance of threats.
Key factors for competitive success.
Capabilities and limitations of existing and potential competitors.
Company strengths and weaknesses relative to present and future competitors?

50. Competitive Strategy Process
C. What should the company do?
Test the assumptions and strategy.
Consider alternative strategies.
Chose the strategy that best relates to the company’s situation relative to external opportunities and threats.

51. IEA
Internal
External
Action

52. Progressive Corporation
1988 Performance
Record Revenue
Record Earnings
Outstanding Company Culture
Highly Respected Business Leader
Well Regarded Company
Could Things Possibly Be Better?

53. Progressive Corporation
1989 Impact
Voters Passed Proposition 103 in California Resulting in $52 Million Being Put into an Escrow Account.
Allstate Gained a Larger Market Share in Progressive’s Niche Market for the First Time.

54. Progressive Corp. Business
Progressive decided that it was really
in the business of reducing human
trauma and economic costs of auto
accidents.

55. Progressive Corp. Vision
We seek to be an excellent, innovative,
growing and enduring business by reducing
the human trauma and economic costs of
auto accidents in cost-effective and profitable
ways that delight customers.

56. Progressive’s New Business Strategies
A New Definition of the Business.
Establish Lower Profit Margin Objectives.
Pursue a Broader Auto Insurance Market.
Provide Consumer Access to Policy Rates.
Provide Policy Information to Customers.
Guarantee Policy Renewal.
Utilize Multiple Distribution Channels.
Promote Company Identity.

57. Progressive’s New Business Strategies
Curtail Diversification.
Reduce Operating Expenses.
Assign Business Process Ownership.
Establish a New Employee Compensation System.

58. IS Support of New Strategies
Express Quote Service.
Immediate Response System.

59. Vision, Customer Value Proposition, Core Values and Objectives
Progressive Vision:
We seek to be an excellent, innovative, growing and enduring business by cost effectively and profitably reducing the human trauma and economic costs of auto accidents and other mishaps, and by building a recognized, trusted, admired, business generating brand.
We seek to earn a superior return on equity and to provide a positive environment which attracts quality people who develop and achieve growth plans.

60. Progressive Customer Value Proposition:
Our customer value proposition provides a litmus test for customer interaction, relationships and innovation.
Fast, Fair, Better
That’s what you can expect from Progressive. Everything we do recognizes the needs of busy customers who are cost-conscious, increasingly savvy about insurance and ready for easy, new ways to quote, buy and manage their policies, including claims service that respects their time and reduces the trauma and inconvenience of loss.

61. Progressive Core Values:
Progressive’s core values are pragmatic statements of what works best for us in the real world.
They govern our decisions and behavior.
We want them to be understood and embraced by all Progressive people.
Growth and change provide a new perspective, requiring regular refinement of core values.

62. Progressive Core Values
Integrity We revere honesty. We adhere to high ethical standards, report precisely and completely, encourage disclosing bad news and welcome disagreement.
Golden Rule We respect all people, value the differences among them and cope with them in the way we want to be dealt with. This requires us to know ourselves and to try to understand others.
Objectives We strive to communicate clearly Progressive’s ambitious objectives and our people’s personal and team objectives. We evaluate performance against all these objectives.

63. Progressive Core Values
Excellence We strive constantly to improve in order to meet and exceed the highest expectations of our customers, shareholders and people. We teach and encourage our people to improve performance and to reduce the costs of what we do for customers. We base our rewards on results and promote on ability.
Profit The opportunity to earn a profit is how the competitive free-enterprise system motivates investment to enhance human health and happiness. Expanded profits reflects our customers’ and claimants’ increasingly positive view of Progressive.

64. Peter Lewis Currently Chairman of the Board
“We sell speed, not insurance.”
Glenn Renwick, President and Chief Executive Officer
Raymond Voelker, Chief Information Officer

65. IS Exec Identity Crisis
“My world collapsed recently during a strategic planning meeting between the information systems organization and our marketing department.”
“How can we in IS help you to realize your goals?” asked the IS Director. This seemed like a good open-ended question, and I was waiting for the vice-president of marketing to embrace IS in his confidence. We were prepared to act as a full business partner with the marketing department.
“Beyond capacity planning for your computers, I don’t know how you can help. I’m not even sure what your role is in all of this” replied the VP of Marketing.

66. Information Technology Impact
Work
People
Organization

67. Information Technology Impact
Semi-automated batch system (out-dated)
Increased complexity for route salesman and plants
Information Technology
Information
Work
10 day information float
People
Organization
Route Salesman
Regional Competitors

68. Information Technology Impact
Communications Network and Hand-held Computer
Increased complexity for route salesman and plants
Information Technology
Information
Work
Reduced information float to 24 hours
People
Organization
Route Salesman
Account Specialist
Merchandiser
Decentralized Marketing Organization

69. Yum! Brands KFC Pizza Hut Taco Bell Long John Silver
All American Food (A&W)
Created as Tricon Global Restaurants on October 6, 1997 as a spin off from Pepsi.

70. Yum! Brands
The world’s largest quick service restaurant company with more than 33,000 units in more than 100 countries involving 840,000 employees.
36% are outside the US

72. Long Term Goals To be the premier global restaurant company.
Transform the Quick Service Restaurant industry with multi-branding.
Become the best restaurant company investment.

73. Business Strategies Drive International Growth
Multi-brand Great Brands
Improve Operations of Brand Portfolio with Customer Mania

74. International Growth
In 1992 McDonalds had 4,000 international restaurants. Today it has over 16,000 with a $1 billion profit from these operations.
Yum! has 11,800 (6,800 KRC and 4,400 Pizza Hut) with nearly $400 million in international profit.
Burger King is third with a profit of $50 million.

76. International Growth Focus
Seven countries but China, UK, Mexico and Korea will receive most of the capital investment with an objective of opening 1,000+ new international units.
China currently has 800 KFCs and 100 Pizza Huts with plans to open 200 new units per year.
65% of this growth will be through joint venture partners and franchises.

77. International Challenges
Customer food preference and taste.
Standard of living—product cost.
Currency fluctuations.
Brand strength and unit consistency.
Distribution system.
Building an international team for the company.

78. Multi-branding
McDonalds has been the envy of this industry since its units average $1.6 million a year (almost twice that of Yum!)
Multi-branding gives customers more choices and variety.
Typically, sales rise at least 20% when a second brand is added to another Yum! brand. Has added $100,000 to $400,000 to a unit.
Pasta Bravo will be tested as a multi-brand with Pizza Hut.
40% of multi-branding is being done by franchisees.

81. The Three Components of a New Strategy
Vision
Internal
Assessment
External
Assessment
A New Strategy
Figure 7-1

82. Strategy Considerations
Competitive Environment
Market Target
Basis for Perceived Competitive Advantage
Key Profit Drivers
Product and/or Service Portfolio
Hello, Porter Competitive Model!

83. Strategy-to-Tactics Implementation
Defining the range of business that the company will pursue.
Responding in an appropriate and timely manner.
Delegating of responsibilities for formulating specific strategies to people who are closer to the demands of the customer and market.

84. Managing for Results Control Objectives Authority Responsibility
Training
Motivation
Performance
Results
Reward
Control
Figure 7-4

85. Strategy Implementation
Senior Management
Vision
Business Uncertainties
and Macro
Strategies
Empowered Implementers
Company Culture
Micro
Strategies
and
Tactics
Risks to be Avoided
Critical Performance
Factors
Key Enterprise
Business Processes
Figure 7-3

86. Information Needs Senior Management Empowered Implementers
Emerging Opportunities and Threats
External Impact of Strategies and Tactics
Internal Impact of Strategies and Tactics
Performance Measurements
Empowered
Implementers
Figure 7-5

87. Strategic Management Process

88. SWOT Analysis
Strength: A collective organizational competency, asset or capability that enables it to achieve a high level of success.
Weakness: A collective organizational competence, asset or capability that is competitively inferior and provides a vulnerability that can be exploited.
Opportunity: A trend or event that could lead to a positive change in position if addressed by a strategic response.
Threat: A trend or event that could lead to a negative change in position if not addressed by a strategic response.
Source: The Art of Strategic Planning
for Information Technologies

89. SWOT Analysis Vision Goals Company Values Financial Status
Cash Position
ROI Position
Societal Demands
Competition
Core Competencies
People Skills
Overall Resources
Strengths
Weaknesses
Opportunities
Threats
Suggest strategies that should be tested against

90. A Logical Approach Find a tactic that will work.
Build it into a strategy.

91. Employee downsizing, right-sizing or
dumb-sizing (take your choice)
should not be based solely on cost
cutting.

92. Smart Sizing
Consistent with the vision and strategies of the organization.
Help build future strengths of the company while streamlining or eliminating unnecessary processes and functions.
A big of a price to pay for anything less than this.

93. Company Infrastructure
Data Management
User Applications
Voice Management
Network Management
Plan Process
Financial Strategy
Organization
Figure 7-7

94. Essential to Run a Business
Vision
Strategy
Tactics
The Importance of these
Factors as Key Priorities
Continues When People
Are Empowered with
More Authority
and Responsibility

95. IT Based Strategies Federal Express Whirlpool USA Today Xerox
MARKET PLACE
OPERATIONS
SIGNIFICANT
STRUCTURAL
CHANGE
Federal Express
USA Today
Charles Schwab
Whirlpool
Xerox
USAA
L.L. Bean
McKesson
BancOne
Boeing
Frito-Lay
Wal-Mart
TRADITIONAL
PRODUCTS
AND PROCESSES
Figure 7-6

96. Which Way Should the Arrows Go?
Business Vision
and Strategies
Right Sizing
Total Quality
Management
Re-engineering

97. Conclusions A strategy should often be kept relatively simple.
Success relies on gaining understanding, acceptance, and support by people within the company.
The strategy must accomplish its objectives by providing direct or indirect value to customers.
Information Systems can only be successful if it supports the right business strategies.