Using MIS 10 th Edition Chapter 3 Strategy

“We Can't Be Everything to Everybody. ” • Known for providing security monitoring. •

Study Questions Q 3 -1 How does organizational strategy determine information systems structure? Q

Strategy Determines Information Systems Q 3 -1 How does organizational strategy determine information systems

Five Forces Determine Industry Structure Q 3 -2 What five forces determine industry structure?

Use Five-forces Model to Identify Sources of Strong Competition Q 3 -2 What five

Assessing the Five Forces at Falcon Security Q 3 -2 What five forces determine

Porter's Four Generic Competitive Strategies Q 3 -3 How does analysis of industry structure

The Lure of Love Bots Ethics Guide • The problem: 15 percent of the

Drone Manufacturer’s Value Chain Q 3 -4 How does competitive strategy determine value chain

Task Descriptions for Primary Activities of the Value Chain Q 3 -4 How does

Three Examples of Business Processes for Material Ordering Process Q 3 -5 How do

Improved Material Ordering Process Using Integrated Databases Q 3 -5 How do business processes

Low-Cost Rental Operations Value Chain Q 3 -6 How does competitive strategy determine business

High-Service Rental Value Chain Q 3 -6 How does competitive strategy determine business processes

Business Process and Information Systems for High-Service Bike Rental Q 3 -7 How do

Principles of Competitive Advantage Q 3 -7 How do information systems provide competitive advantages?

The Autonomous Race So What? • Nearly all major automakers are investing in and

The Autonomous Race (cont’d) So What? • What vulnerabilities could be exploited by equipping

Using IS to Create Competitive Advantages Q 3 -7 How do information systems provide

Using IS to Create Competitive Advantages (cont’d) Q 3 -7 How do information systems

Two Roles for Information Systems Regarding Products Q 3 -7 How do information systems

Web Page to Select a Contact from the Customer’s Records Q 3 -7 How

ABC Web Page to Select a Contact from Customer’s Records Q 3 -7 How

Web Page to Specify Email Notification Q 3 -7 How do information systems provide

Web Page to Print Shipping Label Q 3 -7 How do information systems provide

Strategy and Information Systems in 2027 Q 3 -8 2027? • Pace of change

Innovations by Technology Companies Q 3 -8 2027? Market Cap. In Billions Search Smartphone

Hacking Smart Things Security Guide • Internet of Things (Io. T) – Internet-enabled devices.

Internet of Threats Security Guide • What about securing data stored on Internetenabled smart

Internet of Threats (cont’d) Security Guide • What are some benefits or risks for

Director of Architecture Career Guide Gabe Chino in Financial Services Q. What attracted you

Active Review Q 3 -1 How does organizational strategy determine information systems structure? Q

The Amazon of Innovation Case Study 3 Figure 3 -19 Innovation at Amazon Source:

The Amazon of Innovation (cont'd) Case Study 3 • Amazon’s business lines have three

Fulfillment Fees for Regular-Sized Goods for a Company Like Falcon Security Case Study 3

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“We Can't Be Everything to Everybody. ” • Known for providing security monitoring. • Current focus on security contracts. • Mateo wants to focus on law enforcement agencies, search & rescue, federal government. • Good money in agricultural surveying, industrial inspection, real estate videos, and wedding videos too. Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -2

Study Questions Q 3 -1 How does organizational strategy determine information systems structure? Q 3 -2 What five forces determine industry structure? Q 3 -3 How does analysis of industry structure determine competitive strategy? Q 3 -4 How does competitive strategy determine value chain structure? Q 3 -5 How do business processes generate value? Q 3 -6 How does competitive strategy determine business processes and the structure of information systems? Q 3 -7 How do information systems provide competitive advantages? Q 3 -8 2027? Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -3

Strategy Determines Information Systems Q 3 -1 How does organizational strategy determine information systems structure? Figure 3 -1 Organizational Strategy Determines Information Systems Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -4

Five Forces Determine Industry Structure Q 3 -2 What five forces determine industry structure? • Competitive Forces – Competition from vendors who manufacture substitutes. – Competition from new competitors. – Competition from existing rivals. • Bargaining Power Forces – Bargaining power of suppliers. – Bargaining power of customers. Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -5

Use Five-forces Model to Identify Sources of Strong Competition Q 3 -2 What five forces determine industry structure? Force Example of Strong Force Example of Weak Force Bargaining power of customers Toyota’s purchase of auto paint (because Toyota is a huge customer that will purchase paint in large volume) Your power over the procedures and policies of your university Threat of substitutions Frequent traveler’s choice of auto rental Patients using the only drug effective for their type of cancer Bargaining power of suppliers New car dealers (because they control what the “true price” of a vehicle is and the customer cannot reliably verify the accuracy of that price) Grain farmers in a surplus year (an oversupply makes the product less valuable and less profitable) Threat of new entrants Corner latte stand (because it is an easy business to replicate) Professional football team (because the number of teams is tightly controlled by the NFL) Rivalry Used car dealers (because there are many to choose from) Google or Bing (expensive to develop and market a search engine) Figure 3 -3 Examples of Five Forces Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -6

Assessing the Five Forces at Falcon Security Q 3 -2 What five forces determine industry structure? Force Falcon Security Example Bargaining power of customers A large account wants more services at a lower price Threat of substitutions Force Strength Falcon Security's Response Strong Lower prices, or diversify into other markets Replace drones with wireless IP Web cameras Medium Offer differentiating services, like Li. DAR, that cameras can't provide Bargaining power of suppliers We're increasing the cost of the drones we sell Weak Threat of new entrants Amazon begins offering package delivery and surveillance via drones Rivalry A new drone company expands its operations into the state We'll make our own drones Medium Offer differentiating services and enter other markets Weak Offer additional features like direct streaming video to the customer Figure 3 -4 Five Forces at Falcon Security Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -7

Porter's Four Generic Competitive Strategies Q 3 -3 How does analysis of industry structure determine competitive strategy? Figure 3 -5 Porter's Four Competitive Strategies Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -8

The Lure of Love Bots Ethics Guide • The problem: 15 percent of the total subscribers were female, while 85 percent were male • “The key to maintaining subscribers on this type of site is keeping them interested” • To keep subscribers paying, “all we have to do is send them some messages from a dummy account” • All interactions can be handled with AI bots • Are the owner’s actions illegal? Unethical? Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -9

Drone Manufacturer’s Value Chain Q 3 -4 How does competitive strategy determine value chain structure? Figure 3 -6 Drone Manufacturer's Value Chain Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -10

Task Descriptions for Primary Activities of the Value Chain Q 3 -4 How does competitive strategy determine value chain structure? Figure 3 -7 Task Descriptions for Primary Activities of the Value Chain Source: Based on Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (The Free Press, a Division of Simon & Schuster Adult Publishing Group). Copyright © 1985, 1998 by Michael E. Porter. Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -11

Three Examples of Business Processes for Material Ordering Process Q 3 -5 How do business processes generate value? Figure 3 -8 Three Examples of Business Processes Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -12

Improved Material Ordering Process Using Integrated Databases Q 3 -5 How do business processes generate value? Figure 3 -9 Improved Material Ordering Process Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -13

Low-Cost Rental Operations Value Chain Q 3 -6 How does competitive strategy determine business processes and the structure of information systems? Figure 3 -10 Operations Value Chains for Bicycle Rental Companies Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -14

High-Service Rental Value Chain Q 3 -6 How does competitive strategy determine business processes and the structure of information systems? Figure 3 -10 Operations Value Chains for Bicycle Rental Companies Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -15

Business Process and Information Systems for High-Service Bike Rental Q 3 -7 How do information systems provide competitive advantages? Figure 3 -11 Business Process and Information Systems for High-Service Bike Rental Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -16

Principles of Competitive Advantage Q 3 -7 How do information systems provide competitive advantages? Figure 3 -12 Principles of Competitive Advantage Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -17

The Autonomous Race So What? • Nearly all major automakers are investing in and have already been testing their own self-driving cars. • Nearly 93 percent of crashes have been attributed to operator error being the “definite or probable” cause. • Identify some implications of driverless vehicles. • What legal obstacles face producers of driverless vehicles? Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -18

The Autonomous Race (cont’d) So What? • What vulnerabilities could be exploited by equipping self-driving vehicles with Internet access? • What are some logistical issues that could arise from a delivery vehicle without a human operator? • What impact will the widespread use of driverless vehicles have on other industries related to the automotive industry? Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -19

Using IS to Create Competitive Advantages Q 3 -7 How do information systems provide competitive advantages? • Enhances existing products. • Differentiates products. • Locks in customers. • Raises barriers to market entry. • Increases profit margins by decreasing costs and decreasing errors. Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -20

Using IS to Create Competitive Advantages (cont’d) Q 3 -7 How do information systems provide competitive advantages? • Maintains customer account data – IS collects information for ABC (adds value). – IS saves customers time by automatically filling in part of form (adds value for customer). • Package & information delivery system – IS helps customer to select delivery address and generate shipping labels. – What value does shipper get? Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -21

Two Roles for Information Systems Regarding Products Q 3 -7 How do information systems provide competitive advantages? Figure 3 -13 Two Roles for Information Systems Regarding Products Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -22

Web Page to Select a Contact from the Customer’s Records Q 3 -7 How do information systems provide competitive advantages? Figure 3 -14 ABC, Inc. , Web Page to Select a Recipient from the Customer's Records Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -23

ABC Web Page to Select a Contact from Customer’s Records Q 3 -7 How do information systems provide competitive advantages? Figure 3 -15 ABC, Inc. , Web Page to Select a Contact from the Customer's Records Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -24

Web Page to Specify Email Notification Q 3 -7 How do information systems provide competitive advantages? Figure 3 -16 ABC, Inc. , Web Page to Specify Email Notification Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -25

Web Page to Print Shipping Label Q 3 -7 How do information systems provide competitive advantages? Figure 3 -17 ABC, Inc. , Web Page to Print a Shipping Label Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -26

Strategy and Information Systems in 2027 Q 3 -8 2027? • Pace of change and integration of new technology fast and increasing. • Augmented reality devices, like Google Glass and Microsoft's Holo. Lens, will change competitive landscape. • New businesses based on advances in self-driving cars, drones, 3 D printing. • New products constructed in someone’s garage. Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -27

Innovations by Technology Companies Q 3 -8 2027? Market Cap. In Billions Search Smartphone AI Smartwatch AR/VR Drones Self-driving Car Apple $539 i. Phone (2007) Siri (2011) Apple Watch (2015) ? (dev. ) Alphabet $480 Google (1998) Nexus (2013) Now (2012) Wear (os) (2014) Daydream VR & Magic Leap (dev. ) Wing (dev. ) Self-driving Car (dev. ) Microsoft $395 Bing (2009) Lumia (2011) Cortana (2014) Band (2014) Hololens (2016) Facebook $306 Facebook (2004) FAIR (dev. ) Oculus Rift (2016) Ascenta (dev. ) Samsung $162 Galaxy S (2010) S Voice (2012) Gear S 2 (2013) Gear VR (2015) Company Figure 3 -18 Innovations by Technology Companies Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -28

Hacking Smart Things Security Guide • Internet of Things (Io. T) – Internet-enabled devices. – Outfitting every object with Internet access hazardous, even dangerous, proposition. • Unintended risks associated with incorporating this capability into things. Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -29

Internet of Threats Security Guide • What about securing data stored on Internetenabled smart devices? – How to protect 10, 20, or 30 different Internetenabled devices in your home? – Could hacker hijack webcam in your living room, or actually hijack your car? – What businesses and government agencies could benefit? Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -30

Internet of Threats (cont’d) Security Guide • What are some benefits or risks for businesses adopting new Internet-enabled devices? • How about supply chain, customer service? What else? Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -31

Director of Architecture Career Guide Gabe Chino in Financial Services Q. What attracted you to this field? A. “I have always been interested in how technology can enhance our lives. After getting some exposure to programming in college, I was hooked. I realize there is no end to innovation and creativity in this field, so I am never bored. ” Q. What advice would you give to someone who is considering working in your field? A. “My advice would be to always watch where the tech field is going. If this field is really for you, stay current with the latest IT trends. ” Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -32

Active Review Q 3 -1 How does organizational strategy determine information systems structure? Q 3 -2 What five forces determine industry structure? Q 3 -3 How does analysis of industry structure determine competitive strategy? Q 3 -4 How does competitive strategy determine value chain structure? Q 3 -5 How do business processes generate value? Q 3 -6 How does competitive strategy determine business processes and the structure of information systems? Q 3 -7 How do information systems provide competitive advantages? Q 3 -8 2027? Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -33

The Amazon of Innovation Case Study 3 Figure 3 -19 Innovation at Amazon Source: Data from Amazon. com: http: //phx. corporate-ir. net/phoenix. zhtml? p=irolcorporate. Timeline&c=176060, accessed April 2016. Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -34

The Amazon of Innovation (cont'd) Case Study 3 • Amazon’s business lines have three categories: • Online retailing – Own inventory – Associates program – Consignment • Order fulfillment • Cloud services Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved 3 -35