Chapter 1 Management Information Systems Business Driven MIS

CHAPTER ONE OVERVIEW Chapter 1 • 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 1 -2

Chapter 1 SECTION 1. 1 BUSINESS DRIVEN MIS © 2011 The Mc. Graw-Hill Companies,

SECTION 1. 1: LEARNING OUTCOMES Chapter 1 1. Describe the information age and the differences among 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 1 -4

COMPETING IN THE INFORMATION AGE Chapter 1 Did you know. . . • Avatar, the movie, took over 4 yrs to make and cost $450 million • Lady Gaga’s real name is Joanne Angelina Germanotta • It costs $2. 6 million for a 30 - second advertising time slot during the Super Bowl 1 -5

COMPETING IN THE INFORMATION AGE Chapter 1 • 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 1 -6

COMPETING IN THE INFORMATION AGE Chapter 1 • 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 1 -7

COMPETING IN THE INFORMATION AGE Chapter 1 • The core drivers of the information age § Data § Information § Business intelligence § Knowledge 1 -8

Data Chapter 1 • Data - Raw facts that describe the characteristics of an event or object 1 -9

Information Chapter 1 • Information - Data converted into a meaningful and useful context 1 -10

Business Intelligence Chapter 1 • 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 1 -11

Knowledge Chapter 1 • Knowledge - Skills, experience, and expertise coupled with information and intelligence that creates a person’s intellectual resources • Knowledge worker – Individual valued for their ability to interpret and analyze information 1 -12

THE CHALLENGE: DEPARTMENTAL COMPANIES Chapter 1 Common Departments Working Independently 1 -13

THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS Chapter 1 Common Departments Working Interdependently 1 -14

THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS Chapter 1 • 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 1 -15

THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS Chapter 1 • 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 1 -16

MIS Department Roles and Responsibilities Chapter 1 • 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 organization’s knowledge • Chief privacy officer (CPO) – Responsible for ensuring the ethical and legal use of information 1 -17

MIS Department Roles and Responsibilities Chapter 1 • 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 1 -18

Chapter 1 SECTION 1. 2 BUSINESS STRATEGY © 2011 The Mc. Graw-Hill Companies, All

LEARNING OUTCOMES Chapter 1 4. Explain why competitive advantages are temporary 5. Describe Porter’s Five Forces Model and explain each of the five forces 6. Compare Porter’s three generic strategies 7. Demonstrate how a company can add value by using Porter’s value chain analysis 1 -20

IDENTIFYING COMPETITIVE ADVANTAGES Chapter 1 • 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 1 -21

IDENTIFYING COMPETITIVE ADVANTAGES Chapter 1 • Competitive advantage – A product or service that an organization’s customers place a greater value on than similar offerings from a competitor • First-mover advantage – Occurs when an organization can significantly affect its market share by being first to market with a competitive advantage 1 -22

IDENTIFYING COMPETITIVE ADVANTAGES Chapter 1 • Competitive intelligence –The process of gathering information about the competitive environment to improve the company’s ability to succeed • Competitive intelligence tools § Porter’s Five Forces Model § Porter’s Three Generic Strategies § Porter’s Value Chain Analysis 1 -23

THE FIVE FORCES MODEL – EVALUATING INDUSTRY ATTRACTIVENESS Chapter 1 Porter’s Five Forces Model 1 -24

Buyer Power Chapter 1 • 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 1 -25

Supplier Power Chapter 1 • 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 1 -26

Threat of Substitute Products or Services Chapter 1 § Threat of substitute products or services – High when there are many alternatives to a product or service and low when there are few alternatives 1 -27

Threat of New Entrants Chapter 1 • 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 1 -28

Rivalry among Existing Competitors Chapter 1 • 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 1 -29

Analyzing the Airline Industry Chapter 1 • Perform a Porter’s 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 1 -30

THE THREE GENERIC STRATEGIES CHOOSING A BUSINESS FOCUS Chapter 1 Porter’s Three Generic Strategies 1 -31

THE THREE GENERIC STRATEGIES CHOOSING A BUSINESS FOCUS Chapter 1 Porter’s Three Generic Strategies 1 -32

VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES Chapter 1 • 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 1 -33

VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES Chapter 1 • Primary value activities § Inbound logistics - Acquires raw materials and resources, and distributes to manufacturing as required § 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 after the sale of 1 -34

VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES Chapter 1 • 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 1 -35

VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES Chapter 1 Porter’s Value Chain 1 -36

VALUE CHAIN ANALYSIS – EXECUTING BUSINESS STRATEGIES Chapter 1 Value Chain and Porter’s Five Forces Model 1 -37