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Introduction to MIS1 Copyright © 1998-2002 by Jerry Post Introduction to MIS Chapter 10 Strategic Analysis.

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Presentation on theme: "Introduction to MIS1 Copyright © 1998-2002 by Jerry Post Introduction to MIS Chapter 10 Strategic Analysis."— Presentation transcript:

1 Introduction to MIS1 Copyright © by Jerry Post Introduction to MIS Chapter 10 Strategic Analysis

2 Introduction to MIS2 Strategy Connections to suppliers and customers. Become the best firm in the industry. Block the competitors by keeping your customers happy. Competition

3 Introduction to MIS3 Outline The Competitive Environment External Agents IS Techniques to Gain Competitive Advantage The Search for Innovation Research Engineering and Design Manufacturing Logistics and Supply Marketing Sales and Order Management Service Management Costs and Dangers of Strategies Operations, Tactics, Strategy E-Commerce Failures Cases: Travel Industry Appendix: Solving Business Problems and Cases

4 Introduction to MIS4 Competition is increasing in many industries, but it is particularly intense in the restaurant and fast food industry. Competition encourages firms to hold down costs, provide more variety, and provide new and better service to customers. Competition

5 Introduction to MIS5 Rivalry Among Existing Competitors Bargaining Power of Buyers Bargaining Power of Suppliers Threat of New Entrants Threat of Substitute Products or Services Porters Five Forces Model

6 Introduction to MIS6 Corporate Strategy Pattern of purposes and policies defining the company and its business Formulation (Deciding what to do.) Implementation (Achieving results.) 1. Identification of opportunity and risk. 2. Material, technical, financial, & human resources. 3. Personal values and aspirations. 4. Noneconomic responsibility to society. 1. Org. structure & relation. Division of work. Coord. divided responsib. Information systems. 2. Org. processes & behavior. Standards and measurement. Motivation & incentive systems. Control systems. Recruit & develop managers. 3. Top leadership. Strategic Organizational Personal Harvard Strategy

7 Introduction to MIS7 parts supplier parts supplier parts supplier warehouse supplier tool manufacturer Manufacturer workers wholesaler distributor retail store Consumers Production Chain

8 Introduction to MIS8 Barrier To Entry FirmRival Supplier Consumer Decreased Costs Improved Quality Ties To Customers Increased Switching Costs Wholesale Ties To Suppliers Control Of Distribution Innovation and Differentiation Methods to Gain Competitive Advantage

9 Introduction to MIS9 Barriers to Entry Economies of Scale (size) Economies of Scope (breadth) Product Differentiation Capital requirements Cost Disadvantages (independent of size) Distribution Channel Access Government Policy

10 Introduction to MIS10 Competitive Advantage Barriers to Entry Additional costs of creating an information system. Peoples Express Distribution Channels Prevent others from entering the industry. Napster Switching Costs Consumers incur learning and data transfer costs. Baxter Healthcare Lower Production Costs IS to cut costs. Wal-Mart Product Differentiation Add new features or create new products with IT. Federal Express & Merrill Lynch Quality Management Monitoring production lines and analyzing data. Digital Equipment Corp. Value Chain Expanding forward or back the value chain to find greater profits. Boeing Information Systems

11 Introduction to MIS11 Firm Infrastructure Human Resources Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service Margin Value Chain

12 Introduction to MIS12 Manufacturing Engineering and Design Marketing Research Customer Service Management Sales and Order Management Logistics/ Supply Suppliers Customers Production Process Innovation

13 Introduction to MIS13 Market Measures - Market share - Concentration - Growth - Profitability monitor rivals Business Operations & Rules Existing Data and IS Performance Measures - ROA- ROI - EPS- Growth - Subjective Corporate Strategy Development expectations goals rivalry strengths weaknesses opportunities critical success factors Business Strategies and Priorities Process Changes Data Needs IS Changes System Development & Implementation - Cost leadership - Differentiation - Innovation - Linkages - Re-engineering - Organization - Decentralization Developing Strategies

14 Introduction to MIS14 Search for Innovation Research Analysis & modeling, project management, work group support, databases, decision support. Engineering & Design CAD/CAM, testing, networks, work group support. Manufacturing Mass customization, links to customers & suppliers, quality monitoring, expert systems for maintenance, production databases, business integration. Logistics & Supply Just-in-time linkages, forecasts, models, links for design, transaction processing.

15 Introduction to MIS15 Search for Innovation Marketing Frequent buyer database, target market & media analysis, survey design and analysis, multimedia promotion design, links to customers and designers. Sales & Orders Portable computers for sales, ES for order customization, work group tools for customer support. Service Phone support, GIS locators, scheduling, ES diagnostics, databases. Management EIS, , bulletin boards, decision support systems, personal productivity tools, work group support Links to service providers Accountants Consultants Lawyers,...

16 Introduction to MIS16 Research Analysis and models Statistical analysis of data Project management and budgeting Work-group collaboration and communication

17 Introduction to MIS17 Engineering and Design CAD/CAM Integrated design database Production databases and model testing Expert Systems for manufacturability Work group communication

18 Introduction to MIS18 Manufacturing Links to customers Links to suppliers Mass customization Robotics Diagnostic Expert Systems Quality monitoring and control

19 Introduction to MIS19 Logistics and Supply Just-In-Time Inventory and EDI Configuration and design Searching for availability, pricing,... networks

20 Introduction to MIS20 Marketing Frequent buyer databases Point-of-Sale and trends Statistical analysis of data Geographic Information Systems Links to external marketing agencies Multimedia development of promotions Internet

21 Introduction to MIS21 Sales and Orders Sales force automation, hand-held computers Customer Internet access Expert Systems for product and option selection Expert Systems for configuration and shipping Front-line support: ES, , work groups

22 Introduction to MIS22 Service Portable computers for service anywhere Databases (e.g., customer service) Location monitoring of service personnel Product internal, automatic diagnostics Expert System diagnostic tools

23 Introduction to MIS23 Management Executive Information Systems Simulation (and rivalry games) Links to external partners (accounting, law,...) Electronic conferencing Work group communication, Standardization, Modularization, Franchises Knowledge Workers Client-server instead of hierarchical computing

24 Introduction to MIS24 Strategy Analysis Product Differentiation Skills & Resources Strong marketing. Product engineering. Basic research. Distribution channel cooperation. Organization Requirements Internal coordination. Incentives for innovation. Resources to attract skills. Risks Competitors imitate. Customers do not accept. Cost is too high. Cost Leadership Skills & Resources Continued capital investment. Process engineering. Continuous quality improvement. Tight supervision of costs. Products designed for low cost. Low cost distribution. Organization Requirements Tight cost controls. Frequent control reports. Highly structured org. Incentives based on qualitative measures.

25 Introduction to MIS25 Strategy Analysis Cost Leadership Risks Competitors imitate. Technology changes. Lose production or distribution advantage. Customer-Supplier Links Skills & Resources Influence with partners Communication channels Standards or agreements. Organization Requirements Flexibility to respond to customers. Service culture. Ability to adapt to emergencies. Risks Security threats. Changing standards. Competitors copy with more/better links.

26 Introduction to MIS26 Money for research Money for information technology Dangers: Capital Cost

27 Introduction to MIS27 You Rival Time IS Costs Time IS Costs Transaction Processing Network & DSS Network & link sales people Link to suppliers & customers Experimental technology & global links Competition Follows

28 Introduction to MIS28 Industry 1 (expands into industry 2) Industry 2 (new competitor) Customer New technology New services Same technology Changing Industry & Government Intervention

29 Introduction to MIS29 Security Production Firm Customer Data we wish to share. Data we want to protect. Need to control access. Need to worry about network interceptions and hackers. Security firewall Hackers or competitors rejected

30 Introduction to MIS30 E-Commerce Failures Hundreds of dot-com firms failed in 2001 and 2002 Most relied on pure Internet revenue. Outsourcing production and shipping. Most relied on advertising revenueoften revenue from other dot-com firms. Many believed in the importance of being first to market and becoming the biggest, best-known firm in a niche industry. Many believed that it was not necessary to make a profit on sales. Money from advertising and stock sales would be sufficient to keep the firm alive until the world changed. Most were wrong.

31 Introduction to MIS31 Cases: Travel Industry

32 Introduction to MIS32 Cases: The Sabre Group American Express What is the companys current status? What is the Internet strategy? How does the company use information technology? What are the prospects for the industry?

33 Introduction to MIS33 Appendix: Solving Problems Solve the right problem Choose the right tools Divide the system Make decisions Consider consequences Test the system Plan implementation Detail Organization Schedule Customer response Employee response Input Process Output Cause Feasibility

34 Introduction to MIS34 Appendix: Evaluating Projects Does the project fit with business goals and management style? Does the project improve the competitive position of the firm? How long will any competitive advantage last? What value or reward is created by the system? What level of technology is needed to create the system? experimental leading edge established old-hat What is the probability of technical success? What is the probability of commercial success? What are the costs involved in creating the system? Monetary Time Additional capital, marketing and management

35 Introduction to MIS35 Appendix: Good Business Analysis Identify the root causes of problems. Solid grasp of strategic components. Identify the critical success factors. Evaluate the financial implications. Thorough discussion of implementation. Realistic analysis of expected results. Effect on future growth and continued development. Effect on human resources. Understanding of target markets.

36 Introduction to MIS36 Solving Business Problems & Cases Solve the right problem Choose the right tools Divide the system Make decisions Consider the consequences Test the system Plan implementation Case hints

37 Introduction to MIS37 Appendix: Organization of Analysis Problem description Identify most important problems Identify causes of problems Plan Describe the new system Implementation plan Contingency plan Advantages Show how your plan solves the problems Explain additional benefits or opportunities

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