CHAPTER ONE

MANAGEMENT INFORMATION SYSTEMS: BUSINESS DRIVEN MIS

McGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

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CHAPTER ONE OVERVIEW

SECTION 1.1 BUSINESS DRIVEN MIS
Competing in the Information Age The Challenge: Departmental Companies The Solution: Management Information Systems

SECTION 1.2 BUSINESS STRATEGY

Identifying Competitive Advantages The Five Forces Model Evaluating Industry Attractiveness The Three Generic Strategies Choosing a Business Focus Value Chain Analysis Executing Business Strategies

SECTION 1.1 BUSINESS DRIVEN MIS

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LEARNING OUTCOMES
1. Describe the information age and the differences between data, information, business intelligence, and knowledge 2. Identify the different departments in a company and why they must work together to achieve success 3. Explain systems thinking and how management information systems enable business communications

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COMPETING IN THE INFORMATION AGE

Did you know . . . Avatar, the movie, took over 4 yrs to make and cost $450 million Lady Gagas real name is Joanne Angelina Germanotta It costs $2.6 million for a 30second advertising time slot during the Super Bowl

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COMPETING IN THE INFORMATION AGE

Fact - The confirmation or validation of an event or object

Information age - The present time, during which infinite quantities of facts are widely available to anyone who can use a computer

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COMPETING IN THE INFORMATION AGE

Examples of the power of business and technology
Amazon Not a technology company; primary business focus is selling books Netflix Not a technology company; primary business focus is renting videos Zappos Not a technology company; primary business focus is selling shoes

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COMPETING IN THE INFORMATION AGE

The core drivers of the information age
Data

Information
Business intelligence Knowledge

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DATA
Data - Raw facts that describe the characteristics of an event or object

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INFORMATION
Information - Data converted into a meaningful and useful context

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BUSINESS INTELLIGENCE
Business intelligence Information collected from multiple sources such as suppliers, customers, competitors, partners, and industries that analyzes patterns, trends, and relationships for strategic decision making

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KNOWLEDGE
Knowledge - Skills, experience, and expertise coupled with information and intelligence that creates a persons intellectual resources Knowledge worker Individual valued for their ability to interpret and analyze information

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THE CHALLENGE: DEPARTMENTAL COMPANIES

Common Departments Working Independently

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THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS

Common Departments Working Interdependently

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THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS

Systems thinking A way of monitoring the entire system by viewing multiple inputs being processed or transformed to produce outputs while continuously gathering feedback on each part

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THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS

Management Information Systems (MIS) A business function, like accounting and human resources, which moves information about people, products, and processes across the company to facilitate decision-making and problem-solving

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MIS DEPARTMENT ROLES AND RESPONSIBILITIES

Chief information officer (CIO) Oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives
Chief knowledge officer (CKO) Responsible for collecting, maintaining, and distributing the organizations knowledge Chief privacy officer (CPO) Responsible for ensuring the ethical and legal use of information

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MIS DEPARTMENT ROLES AND RESPONSIBILITIES

Chief security officer (CSO) Responsible for ensuring the security of IT systems
Chief technology officer (CTO) Responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT

SECTION 1.2 BUSINESS STRATEGY

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LEARNING OUTCOMES
4. Explain why competitive advantages are temporary
5. Describe Porters Five Forces Model and explain each of the five forces 6. Compare Porters three generic strategies

7. Demonstrate how a company can add value by using Porters value chain analysis

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IDENTIFYING COMPETITIVE ADVANTAGES

Business strategy A leadership plan that achieves a specific set of goals or objectives such as

Developing new products or services

Entering new markets

Increasing customer loyalty

Attracting new customers Increasing sales

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IDENTIFYING COMPETITIVE ADVANTAGES

Competitive advantage A product or service that an organizations customers place a greater value on than similar offerings from a competitor First-mover advantage Occurs when an organization can significantly impact its market share by being first to market with a competitive advantage

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IDENTIFYING COMPETITIVE ADVANTAGES

Competitive intelligence The process of gathering information about the competitive environment to improve the companys ability to succeed
Competitive intelligence tools
Porters Five Forces Model Porters Three Generic Strategies Porters Value Chain Analysis

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THE FIVE FORCES MODEL EVALUATING INDUSTRY ATTRACTIVENESS

Porters Five Forces Model

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BUYER POWER
Buyer power The ability of buyers to affect the price of an item
Switching cost Manipulating costs that make customers reluctant to switch to another product
Loyalty program Rewards customers based on the amount of business they do with a particular organization

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SUPPLIER POWER
Supplier power The suppliers ability to influence the prices they charge for supplies
Supply chain Consists of all parties involved in the procurement of a product or raw material

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THREAT OF SUBSTITUTE PRODUCTS OR SERVICES

Threat of substitute products or services High when there are many alternatives to a product or service and low when there are few alternatives

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THREAT OF NEW ENTRANTS

Threat of new entrants High when it is easy for new competitors to enter a market and low when there are significant entry barriers
Entry barrier A feature of a product or service that customers have come to expect and entering competitors must offer the same for survival

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RIVALRY AMONG EXISTING COMPETITORS

Rivalry among existing competitors High when competition is fierce in a market and low when competitors are more complacent
Product differentiation Occurs when a company develops unique differences in its products or services with the intent to influence demand

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ANALYZING THE AIRLINE INDUSTRY

Perform a Porters Five Forces analysis of each of the following for a company entering the commercial airline industry
Buyer power Supplier power

Threat of substitute products/services

Threat of new entrants

Rivalry among competitors

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THE THREE GENERIC STRATEGIES CHOOSING A BUSINESS FOCUS

Porters Three Generic Strategies

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THE THREE GENERIC STRATEGIES CHOOSING A BUSINESS FOCUS

Porters Three Generic Strategies

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VALUE CHAIN ANALYSIS EXECUTING BUSINESS STRATEGIES

Business process A standardized set of activities that accomplish a specific task, such as a specific process
Value chain analysis Views a firm as a series of business processes that each add value to the product or service

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VALUE CHAIN ANALYSIS EXECUTING BUSINESS STRATEGIES

Primary value activities
Inbound logistics - Acquires raw materials and resources, and distributes Operations - Transforms raw materials or inputs into goods and services

Outbound logistics - Distributes goods and services to customers

Marketing and sales - Promotes, prices, and sells products to customers Service - Provides customer support

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VALUE CHAIN ANALYSIS EXECUTING BUSINESS STRATEGIES

Support value activities
Firm infrastructure Includes the company format or departmental structures, environment, and systems Human resource management Provides employee training, hiring, and compensation Technology development Applies MIS to processes to add value Procurement Purchases inputs such as raw materials, resources, equipment, and supplies

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VALUE CHAIN ANALYSIS EXECUTING BUSINESS STRATEGIES

Porters Value Chain

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VALUE CHAIN ANALYSIS EXECUTING BUSINESS STRATEGIES

Value Chain and Porters Five Forces Model

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LEARNING OUTCOME REVIEW

Now that you have finished the chapter please review the learning outcomes in your text