Management Information Systems

1. Management Information Systems Managing Information Technology in the Business Enterprise

2. Chapter 2 Competing with Information Technology

3. Objectives • Identify basic competitive strategies and explain how IT may be used to gain competitive advantage. • Identify strategic uses of information technology. • How does business process engineering frequently use e-business technologies for strategic purposes?

4. (Objectives – continued) • Identify the business value of using e-business technologies for total quality management, to become an agile competitor, or to form a virtual company. • Explain how knowledge management systems can help a business gain strategic advantage.

5. Section I Fundamentals of Strategic Advantage

6. Fundamentals of Strategic Advantage • Competitive Forces (Porter) • Bargaining power of customers • Bargaining power of suppliers • Rivalry of competitors • Threat of new entrants • Threat of substitutes

7. Competitive Strategies & the Role of IT • Cost Leadership (low cost producer) • Differentiation • Innovation • Growth • Alliance • Other Competitive Strategies

8. Cost Leadership (low cost producer) • Reduce inventory (JIT) • Reduce manpower costs per sale • Help suppliers or customers reduce costs • Increase costs of competitors • Reduce manufacturing costs (process control)

9. Differentiation • Create a positive difference between your products/services & the competition. • May allow you to reduce a competitor’s differentiation advantage. • May allow you to serve a niche market.

10. Innovation • New ways of doing business • Unique products or services that include IT • New ways to better serve customers • Improve quality or efficiency • Reduce time to market • New distribution models

11. Growth • Expand production capacity • Expand into global markets • Diversify • Integrate into related products and services.

12. Alliance • Broaden your base of support with new linkages and alliances with customers, suppliers, competitors, and consultants • Mergers, acquisitions, joint ventures, virtual companies • Marketing, manufacturing, or distribution agreements.

13. Other Competitive Strategies • Locking in customers or suppliers • Build value into your relationship • Creating switching costs • Extranets • Proprietary software applications

14. Other Competitive Strategies (continued) • Raising barriers to entry • Improve operations or promote innovation • Leveraging investment in IT • Allows the business to take advantage of strategic opportunities

15. The Value Chain • Views a firm as a series, chain, or network of activities that add value to its products and services. • Improved administrative coordination • Training • Joint design of products and processes • Improved procurement processes • JIT inventory • Order processing systems

16. Value Chain (continued)

17. Section II Using Information Technology for Strategic Advantage

18. Strategic Uses Of Information Technology • Develop a focus on the customer • Business Process Reengineering (BPR) • Improve business quality • Become agile • The virtual company • Build learning organizations

19. Develop a Focus on the Customer • Customer value • Best value • Understand customer preferences • Track market trends • Supply products, services, & information anytime, anywhere • Tailored customer service

20. Business Process Reengineering (BPR) • Rethinking & redesign of business processes • Combines innovation and process improvement • There are risks involved. • Success factors • Organizational redesign • Process teams and case managers • Information technology

21. Improve Business Quality • Total Quality Management (TQM) • Quality from customer’s perspective • Meeting or exceeding customer expectations • Commitment to: • Higher quality • Quicker response • Greater flexibility • Lower cost

22. Become Agile • Four basic strategies • Customers’ perception of product/service as solution to individual problem • Cooperate with customers, suppliers, other companies (including competitors) • Thrive on change and uncertainty • Leverage impact of people and people’s knowledge

23. The Virtual Company • Uses IT to link people, assets, and ideas • Forms virtual workgroups and alliances with business partners • Interorganizational information systems with Internet, extranets, and intranets

24. The Virtual Company (continued) • Strategies • Share infrastructure & risk with alliance partners • Link complementary core competencies • Reduce concept-to-cash time through sharing

25. The Virtual Company (continued) • Strategies (continued) • Increase facilities and market coverage • Gain access to new markets and share market or customer loyalty • Migrate from selling products to selling solutions

26. Build Learning Organizations • Create, disseminate, and incorporate knowledge into products • Exploit two kinds of knowledge • Explicit documented knowledge • Tacit internal knowledge

27. Build Learning Organizations (continued) • Knowledge Management

28. Build Learning Organizations (continued) • Knowledge management systems • Help create, organize, and share business knowledge wherever and whenever needed within the organization

29. Summary • Information technology has strategic value • Customer focused e-Business is key strategy • Re-engineer business processes radically • Improve quality from customer viewpoint • Agile companies capitalize on change • Virtual companies combine talents of others • Knowledge creation and incorporation are major competitive strategies

30. Discussion Questions • You have been asked to develop e-business & e-commerce applications to gain competitive advantage. What reservations might you have about doing so? • How could a business use IT to increase switching costs and lock in its customers and suppliers?

31. Discussion Questions (continued) • How could a business leverage its investment in IT to build strategic IT capabilities that serve as a barrier to entry by new entrants into its markets? • What strategic role can information technology play in business process reengineering and total quality management?

32. Discussion Questions (continued) • How can Internet technologies help a business form strategic alliances with its customers, suppliers, and others? • How could a business use Internet technologies to form a virtual company or become an agile competitor?

33. Discussion Questions (continued) • IT can’t really give a company a strategic advantage, because most competitive advantages don’t last more than a few years & soon become strategic necessities that just raise the stakes of the game. Discuss. • MIS author & consultant Peter Keen says: “We have learned that it is not technology that creates a competitive edge, but the management process that exploits technology.” What does he mean?

34. Real World Case 1 - Royal Bank Financial • Which of the strategic uses of information technology does RBFG use? • Is IT a strategic advantage or a strategic necessity for financial firms like RBFG? • What additional IT support do you suggest for RBFG’s customer service?

35. Real World Case 2 – WESCO International, Inc. • Business-to-Business • Describe WESCO’s original system. • Describe WESCO’s new system.

36. Real World Case 2 (continued) • What are the business benefits to WESCO and its suppliers of its new e-procurement system? • Is WESCO’s new system a strategic use of IT?

37. Real World Case 2 (continued) • Does WESCO’s new system give the company a competitive advantage? • What other strategic moves could WESCO implement to gain competitive advantage?

38. Real World Case 3 – Staples, Inc. • What is the strategic business value to Staples and their large business clients of the new web-based procurement system? • What is the strategic business value to Staples and the value proposition to their customers of their new bricks-and-clicks capabilities?

39. Real World Case 3 (continued) • Is an integrated bricks-and-clicks strategy the Internet strategy that most businesses, large and small, should adopt? • What competitive strategies is Staples pursuing?

40. Real World Case 3 (continued) • What other e-business or e-commerce strategy would you recommend to Staples to help them gain a competitive advantage in their industry?

41. Real World Case – Ford, Dow Chemical, IBM, et al. • What is Six Sigma? • What do critics of Six Sigma see as its shortcomings?

42. Real World Case (continued) • Is Six Sigma “an enterprise-wide business strategy?” • What role does information technology play in Six Sigma business initiatives?

43. Real World Case (continued) • What are the benefits and limitations of Six Sigma as a business strategy? • Can Six Sigma make up for poor management and faulty vision?