What’s Happening?!

1. What’s Happening?! Federal Reserve comments regarding interest rates spooked the stock market. An increasing number of TV stations that broadcast in digital e multicasting which further increases the number of available channels. San Jose mayor had a mild stroke while delivering his annual state of the city address. Superbowl Sunday will bring the latest in colossal TV ads.

2. Revised Course Syllabus Feb. 10 is not Advisement Day! Has been updated on the course web page. Feb. 5 – Section I and II are due. Feb. 12 – Midterm Exam Feb. 19 – Bob Sanguedolce, eBay Mar. 9 – Student ATP presentations Mar. 11 – Final class Mar. 16 – Final exam

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

7. Implementation (Action) The Vision to Action Process 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 • Employee attrition • Improved job training • Decentralized decision making through empowering employees

10. Role and Contribution of IS • A horizontal integration of applications • An executive partnership • Technology experimentation and assimilation • Leveraging their information systems • Strategic architecture

11. Whirlpool’s Global VisionTaking a company’s best capabilities and leveraging them in its worldwide operations Stakeholder Value Where Vision Way Values What Total Quality Value Creating Objectives People Commitment Growth & Innovation How Customer Satisfaction Worldwide Excellence System Strategic Planning Leadership Whirlpool People Fact-Based Management Customer Satisfaction Quality Process & Products Measurement & Results

12. Conclusions • Successful companies are the result of good leadership. • Talented leadership is demonstrated in the following forms: • Determining the direction of the business. • Operational efficiency and effectiveness. • Implementation and maintenance of a well directed information system.

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

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

15. Chapter Objective Provide an understanding of how a company makes the transition from vision to action.

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

17. The Three Components of a New Strategy Vision External Assessment Internal Assessment A New Strategy

18. 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.

19. Breakdown Relative to New Strategies: External Analysis Vision: Internal Analysis

20. Tactics and Their Implementation • Strategies are passed down from Senior Management to various employees in the organization. • These employees use their various skills to implement these strategies. The implementation is called a tactic.

21. Business Plan • The business plan could be a very broad subject, but here is one possible explanation: • A business plan can be formed by analyzing the successful tactics implemented by a company. • The tactics provide details as to how the company should allocate its resources.

22. Summary of Progressive Corporation’s Strategies • Change the definition of the business and financial objectives to ensure long term success. • Change the primary market segment they would serve. • Streamline internal operations. • Create new information systems to accommodate their new business strategies.

23. Conclusions • Information systems can be a competitive resource as long as they support the right business strategies. • To develop a strategy, a company should decided what things are worth doing, and most importantly, these things should be achieved.

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

25. 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

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

27. 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.

28. 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 its homework on its competitors.

29. Defining the Three Key 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.

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

31. Business Strategies Every company has a competitive strategy, either explicit or implicit. The strategy may have been developed through a planning process or it may have evolved through the activities of various functional departments. Left on its own, each functional department will inevitably pursue approaches dictated by its professional orientation and/or the incentives of those in charge. The sum of these departmental approaches rarely produces the best strategy for the company.

32. Business Strategy There are significant benefits to be gained through a process to formulate strategies that insure that at least policies, if not actions of functional departments, are coordinated and directed at a common set of goals. Developing a competitive strategy involves creating a process on how a company is going to compete, what its goals should be and what policies are needed to achieve those goals.

33. 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?

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

35. 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?

36. 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?

37. 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?

38. 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.

39. 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?

40. 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.

41. IEA Internal External Action

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

43. 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.

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

45. 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.

46. 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.

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

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

49. 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.

50. 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.