Chapter No 2 Batch 2010

Management Information Systems

Chapter 2

Management Information Systems

Compiled By:
Muzammil Ahmad Khan
Muhammad Kashif Shaikh
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Compiled By: Muzammil Ahmad Khan and Kashif Shaikh

MIS Books

ƒ Text Book

1. Management Information System, 8th Edition

By: James A. O' Brien , George Marakas

ƒ Reference Books

1. Management Information System, 9th Edition

By: Kenneth C. Laudon, Jane P. Laudon
2. Introduction to Information Systems: Supporting and
Transforming Business
By: Rainer, Turban, Potter, 1st Edition

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Chapter No 2 Batch 2010
Management Information Systems

Marks Distribution

ƒ Mid Term ________ 15

ƒ Assignment + Class Performance +
Quiz + Presentation + Report ________ 5
ƒ Semester Final Paper ________ 80
ƒ Total Marks ________ 100

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Marks Distribution [ Sessional ]

ƒ Class Test ______________ 10 Points

ƒ Assignment ______________ 10 Points
ƒ Class Presentation ______________ 15 Points
ƒ Project ______________ 15 Points
ƒ Total Points ______________ 50 Points

ƒ Performance Bonus ______________ 10 Points

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Chapter No 2 Batch 2010
Management Information Systems

MIS Website

ƒ http://www.ssuet.edu.pk/courses/hs107/mis

ƒ http://taimoor/hs107/mis

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Course Instructors

ƒ Muhammad Kashif Shaikh mkshaikh@ssuet.edu.pk

Assistant Professor, CED
Room No: BS-04
Section A, B,E (Computer, Batch 2009)

ƒ Muzammil Ahmad Khan muzammil.ssuet@yahoo.com

Assistant Professor, CED
Room No: BS-04
Section C, D (Computer, Batch 2009)

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Chapter No 2 Batch 2010
Management Information Systems

Management Information Systems

Chapter

2
Competing with
Information Technology

Compiled By: Muzammil Ahmad Khan & Muhammad Kashif Shaikh

Compiled By: Muzammil Ahmad Khan and Kashif Shaikh

Learning Objectives

ƒ Identify basic competitive strategies and explain

how a business can use IT to confront the
competitive forces it faces
ƒ Identify several strategic uses of IT and give
examples of how they give competitive
advantages to a business
ƒ Give examples of how business process
reengineering frequently involves the strategic
use of IT

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Management Information Systems

Learning Objectives

ƒ Identify the business value of using Internet

technologies to become an agile competitor or to
form a virtual company
ƒ Explain how knowledge management systems
can help a business gain strategic advantages

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Strategic IT

ƒ Technology is no longer an afterthought in

business strategy, but the cause and driver
ƒ IT can change the way businesses compete
ƒ A strategic information system is any
information system that uses IT to help an
organization…
ƒ Gain a competitive advantage
ƒ Reduce a competitive disadvantage
ƒ Or meet other strategic enterprise objectives

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Management Information Systems

What does “Strategy” Means

ƒ Consists of competitive moves and business

approaches used by managers to run the
company
ƒ Management’s “action plan” to
ƒ Grow the business
ƒ Attract and please customers
ƒ Compete successfully
ƒ Conduct operations
ƒ Achieve target levels of
organizational performance
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Why Do Strategies Evolve?

ƒ A company’s strategy is a work in progress

ƒ Changes may be necessary to react to
ƒ Shifting market conditions
ƒ Technological breakthroughs
ƒ Fresh moves of competitors
ƒ Evolving customer preferences
ƒ Emerging market opportunities
ƒ New ideas to improve strategy
ƒ Crisis situations

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The Strategy-Making, Strategy-Executing Process

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Strategic Vision vs. Mission

ƒ A strategic vision ƒ The mission statement

concerns a firm’s of a firm focuses on its
future business path -
present business
“where
we are going” purpose - “who we are
ƒ Markets to be pursued and what we do”
ƒ Future ƒ Current product and
product/market/ service offerings
customer/technology ƒ Customer needs being
focus served
ƒ Kind of company ƒ Technological
management is and business
trying to create
capabilities

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Competitive Forces

ƒ To succeed, a business must develop strategies

to counter these forces…
ƒ Rivalry of competitors within its industry
ƒ New entrants into an industry and its markets
ƒ Substitute products that may capture market share
ƒ Bargaining power of customers
ƒ Bargaining power of suppliers

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The Five Forces Model of Competition

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Competitive Forces and Strategies

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Five Competitive Strategies

ƒ Cost Leadership
ƒ Become low-cost producers
ƒ Help suppliers or customers reduce costs
ƒ Increase cost to competitors
ƒ Example: Priceline uses online seller bidding so the
buyer sets the price
ƒ Differentiation Strategy
ƒ Differentiate a firm’s products from its
competitors’
ƒ Focus on a particular segment or niche of market
ƒ Example: Moen uses online customer design
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Competitive Strategies (continued)

ƒ Innovation Strategy
ƒ Unique products, services, or markets
ƒ Radical changes to business processes
ƒ Example: Amazon’s online, full- service customer
systems
ƒ Growth Strategy
ƒ Expand company’s capacity to produce
ƒ Expand into global markets
ƒ Diversify into new products or services
ƒ Example: Wal- Mart’s merchandise ordering via global
satellite tracking

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Competitive Strategies (continued)

ƒ Alliance Strategy
ƒ Establish linkages and alliances with customers,
suppliers, competitors, consultants, and other
companies
ƒ Includes mergers, acquisitions, joint ventures,
virtual companies
ƒ Example: Wal- Mart uses automatic inventory
replenishment by supplier

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Using Competitive Strategies

ƒ These strategies are not mutually exclusive

ƒ Organizations use one, some, or all
ƒ A given activity could fall into one or more
categories of competitive strategy
ƒ Not everything innovative serves to differentiate
one organization from another
ƒ Likewise, not everything that differentiates
organizations is necessarily innovative

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Ways to Implement Basic Strategies

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Other Competitive Strategies

ƒ Lock in Customers and Suppliers

ƒ Deter them from switching to competitors
ƒ Build in Switching Costs
ƒ Make customers and suppliers dependent on the
use of innovative IS
ƒ Erect Barriers to Entry
ƒ Discourage or delay other companies from
entering the market
ƒ Increase the technology or investment needed to
enter

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Other Competitive Strategies

ƒ Build Strategic IT Capabilities

ƒ Take advantage of strategic opportunities when
they arise
ƒ Improve efficiency of business practices
ƒ Leverage Investment in IT
ƒ Develop products and service that would not be
possible without a strong IT capability

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Customer-Focused Business

ƒ What is the business value in being customer-

focused?
ƒ Keep customers loyal
ƒ Anticipate their future needs
ƒ Respond to customer concerns
ƒ Provide top-quality customer service
ƒ Focus on customer value
ƒ Quality, not price, has become the primary
determinant of value
ƒ Consistently

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Providing Customer Value

ƒ Companies that consistently offer the best value

from the customer’s perspective…
ƒ Track individual preferences
ƒ Keep up with market trends
ƒ Supply products, services, and information
anytime, anywhere
ƒ Tailor customer services to the individual
ƒ Use Customer Relationship Management (CRM)
systems to focus on the customer

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Building Customer Value via the Internet

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The Value Chain and Strategic IS

ƒ View the firm as a chain of basic activities that

add value to its products and services
ƒ Primary processes directly relate to
manufacturing or delivering products
ƒ Support processes help support the day-to-day
running of the firm and indirectly contribute to
products or services
ƒ Use the value chain to highlight where
competitive strategies will add the most value

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Using IS in the Value Chain

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Strategic Uses of IT

ƒ A company that emphasizes strategic business

use of IT would use it to gain a competitive
differentiation
ƒ Products
ƒ Services
ƒ Capabilities

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Reengineering Business Processes

ƒ Called BRP or simply Reengineering

ƒ Fundamental rethinking and radical redesign of
business processes
ƒ Seeks to achieve improvements in cost, quality,
speed, and service
ƒ Potential payback is high, but so is risk of
disruption and failure
ƒ Organizational redesign approaches are an
important enabler of reengineering
ƒ Includes use of IT, process teams, case managers

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BPR Versus Business Improvement

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The Role of Information Technology

ƒ IT plays a major role in reengineering most

business processes
ƒ Can substantially increase process efficiencies
ƒ Improves communication
ƒ Facilitates collaboration

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A Cross-Functional Process

ƒ Many processes are reengineered with…

ƒ Enterprise resource planning software
ƒ Web-enabled electronic business and commerce
systems

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Reengineering Order Management

ƒ IT that supports this process…

ƒ CRM systems using intranets and the Internet
ƒ Supplier-managed inventory systems using the
Internet and extranets
ƒ Cross-functional ERP software to integrate
manufacturing, distribution, finance, and human
resource processes
ƒ Customer-accessible e-commerce websites for
order entry, status checking, payment, and service
ƒ Customer, product, and order status databases
accessed via intranets and extranets
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Becoming an Agile Company

ƒ Agility is the ability to prosper

ƒ In rapidly changing, continually fragmenting
global markets
ƒ By selling high-quality, high-performance,
customer-configured products and services
ƒ By using Internet technologies
ƒ An agile company profits in spite of
ƒ Broad product ranges
ƒ Short model lifetimes
ƒ Individualized products
ƒ Arbitrary lot sizes
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Strategies for Agility

ƒ An agile company…
ƒ Presents products as solutions to customers’
problems
ƒ Cooperates with customers, suppliers and
competitors
ƒ Brings products to market as quickly and cost-
effectively as possible
ƒ Organizes to thrive on change and uncertainty
ƒ Leverages the impact of its people and the
knowledge they possess
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How IT Helps a Company be Agile

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Creating a Virtual Company

ƒ A virtual company uses IT to link…

ƒ People
ƒ Organizations
ƒ Assets
ƒ Ideas
ƒ Inter-enterprise information systems link…
ƒ Customers
ƒ Suppliers
ƒ Subcontractors
ƒ Competitors

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A Virtual Company

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Virtual Company Strategies

ƒ Basic business strategies

ƒ Share information and risk with alliance partners
ƒ Link complimentary core competencies
ƒ Reduce concept-to-cash time through sharing
ƒ Increase facilities and market coverage
ƒ Gain access to new markets and share market or
customer loyalty
ƒ Migrate from selling products to selling solutions

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Building a Knowledge-Creating Company

ƒ A knowledge-creating company or learning

organization…
ƒ Consistently creates new business knowledge
ƒ Disseminates it throughout the company
ƒ Builds it into its products and services

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Two Kinds of Knowledge

ƒ Explicit Knowledge
ƒ Data, documents, and things written down or
stored in computers
ƒ Tacit Knowledge
ƒ The “how-to” knowledge in workers’ minds
ƒ Represents some of the most important
information within an organization
ƒ A knowledge- creating company makes such tacit
knowledge available to others

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Knowledge Management

ƒ Successful knowledge management

ƒ Creates techniques, technologies, systems,
and rewards for getting employees to share
what they know
ƒ Makes better use of accumulated workplace and
enterprise knowledge

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Knowledge Management Techniques

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Knowledge Management Systems (KMS)

ƒ Knowledge management systems

ƒ A major strategic use of IT
ƒ Manages organizational learning and know-how
ƒ Helps knowledge workers create, organize, and
make available important knowledge
ƒ Makes this knowledge available wherever and
whenever it is needed
ƒ Knowledge includes
ƒ Processes, procedures, patents, reference works,
formulas, best practices, forecasts, and fixes

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