McLeod_CH02.ppt 230KB Mar 29 2011 02:55:52 AM

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Management

Information Systems,

10/e

Raymond McLeod and George

Schell

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Chapter 2

Information Systems for Competitive

Advantage

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Management Information S ystems, 10/e Raymond Mc Leod and George Schell

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Learning Objectives

► Know the general systems model of the firm._{Know the general systems model of the firm.} ► Understand the eight-element environmental _{Understand the eight-element environmental}

model as a framework for understanding the

environment of a business organization.

► Understand that supply chain management _{Understand that supply chain management}

involves the planning and coordination of physical

resources that flow from the firm’s suppliers,

through the firm, and to the firm’s customers.

► Recognize that competitive advantage can be _{Recognize that competitive advantage can be} achieved with virtual as well as physical

achieved with virtual as well as physical

resources.

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Learning Objectives (Cont’d)

► Understand Michael E. Porter’s concepts of _{Understand Michael E. Porter’s concepts of}

value chains and value systems. value chains and value systems.

► Know the dimensions of competitive _{Know the dimensions of competitive}

advantage. advantage.

► Recognize the increasing challenges from _{Recognize the increasing challenges from}

global competitors and the importance of global competitors and the importance of

information and coordination in meeting information and coordination in meeting

those challenges. those challenges.

► Understand the challenges of developing _{Understand the challenges of developing}

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Learning Objectives (Cont’d)

► Know the basic types of information _{Know the basic types of information}

resources available to the firm. resources available to the firm.

► Know the dimensions of information that _{Know the dimensions of information that}

should be provided by an information should be provided by an information

system. system.

► Know how to manage knowledge in the form _{Know how to manage knowledge in the form}

of legacy systems, images, and knowledge. of legacy systems, images, and knowledge.

► Understand how a firm goes about strategic _{Understand how a firm goes about strategic}

planning – for the firm, its business areas, planning – for the firm, its business areas,

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[image:6.720.54.690.35.509.2]

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General System Model

(Cont’d)

►Physical resource flow includes _{Physical resource flow includes}

personnel, material, machines, and

money.

►Virtual resource flow includes data, _{Virtual resource flow includes data,}

information, and information in the

form of decisions.

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General System Model

(Cont’d)

►Firm’s control mechanism include_{Firm’s control mechanism include}  _{Performance standards to meet if the}_{Performance standards to meet if the}

firm’s wants to achieve overall objectives. firm’s wants to achieve overall objectives.

 _{Firm’s management.}_{Firm’s management.}

 _{Information processor that transform data}_{Information processor that transform data}

into information. into information.

►Feedback loop is composed of the _{Feedback loop is composed of the}

virtual resources.

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The Firm & Its Environment

► Environmental elements_{Environmental elements} are organizations _{are organizations}

and individuals that exist outside the firm and individuals that exist outside the firm

and have a direct or indirect influence on it. and have a direct or indirect influence on it.

 _{Such as suppliers, customers, labor unions,}_{Such as suppliers, customers, labor unions,}

financial community, stockholders and financial community, stockholders and owners, competitors, and governments. owners, competitors, and governments.

► Global community_{Global community} is the geographic area _{is the geographic area}

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[image:10.720.68.694.61.492.2]

Figure 2.2 Eight-Element

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Environmental Resource

Flows

►Information flows from customers. Often._{Information flows from customers. Often.} ►Material flow to customers. Often._{Material flow to customers. Often.}

►Money flow to stockholders. Often._{Money flow to stockholders. Often.}

►Raw materials flow from suppliers. Often._{Raw materials flow from suppliers. Often.} ►Money flow from government. Less often._{Money flow from government. Less often.} ►Material flow to suppliers. Less often._{Material flow to suppliers. Less often.}

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Physical Resource Flows –

Supply Chain Management

►Supply chain_{Supply chain} is the pathway that _{is the pathway that}

facilitates the flow of physical

resources from suppliers to the firm

and then to customers.

►Supply chain management_{Supply chain management}

manages the resources through the

supply chain to ensure timely and

efficient flow.

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Supply Chain Management

Activities

►Forecasting customer demand._{Forecasting customer demand.} ►Scheduling production._{Scheduling production.}

►Establishing transportation networks._{Establishing transportation networks.} ►Ordering replenishment stock from _{Ordering replenishment stock from}

suppliers.

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Activities (Cont’d)

►Managing inventory – raw materials, _{Managing inventory – raw materials,}

work-in-process, and finished goods.

►Executing production._{Executing production.}

►Transporting resources to customers._{Transporting resources to customers.} ►Tracking the flow of resources from _{Tracking the flow of resources from}

suppliers, through the firm, and to

customers.

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Supply Chain Management

►Firm’s information systems can be _{Firm’s information systems can be}

used to perform the supply chain

activities.

►Electronic systems provide the ability _{Electronic systems provide the ability}

to track the flow of the resources as it

occurs.

►Is a crucial aspect of a firm’s ERP _{Is a crucial aspect of a firm’s ERP}

system.

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Competitive Advantage

►Competitive advantage_{Competitive advantage} refers to the _{refers to the}

use of information to gain leverage in

the marketplace.

 _{Uses virtual as well as physical}_{Uses virtual as well as physical} resources.

resources.

 _{Used to meet the strategic}_{Used to meet the strategic} objectives of the firm.

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Porter’s Value Chains

►Value chain_{Value chain} is created to achieve _{is created to achieve}

competitive advantage.

►Consists of the primary and support _{Consists of the primary and support}

activities that contribute to margin.

►Margin_Margin is the value of the firm’s _{is the value of the firm’s}

products & services minus their costs,

as perceived by the firm’s customers.

►Increased margin is the objective of _{Increased margin is the objective of}

the value chain.

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[image:18.720.82.678.99.489.2]

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Porter’s Value Activities

►Primary value activities_{Primary value activities} manage _manage

the flow of physical resources through

the firm.

►Support value activities_{Support value activities} include the _{include the}

firm’s infrastructure.

►Each value activity includes purchased _{Each value activity includes purchased}

inputs, human resources, &

technology.

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Expanding the Scope of the

Value Chain

►Interorganizational system_{Interorganizational system} (₍IOS_IOS) is _{) is}

the linking of the firm’s value chain to

those of other organizations.

►Business partners_{Business partners} are the _{are the}

participating firms in the IOS.

►Value system_{Value system} is the linking of the _{is the linking of the}

firm’s value chain with those of its

distribution channel members.

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Competitive Advantage

Dimensions

►Strategic advantage_{Strategic advantage} has a _{has a}

fundamental effect in shaping the

firm’s operations.

►Tactical advantage_{Tactical advantage} is when the firm _{is when the firm}

implements a strategy better than its

competitors.

►Operational advantage_{Operational advantage} deals with _{deals with}

everyday transactions and processes.

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Challenges from Global

Competitors

►Multinational corporation_{Multinational corporation} (₍MNC_MNC) is _{) is}

a firm that operates across products,

markets, nations, and cultures.

►It consists of a parent company & its _{It consists of a parent company & its}

subsidiaries.

►Information processing is crucial to _{Information processing is crucial to}

minimize

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Coordination in a MNC

►Coordination is key to achieving _{Coordination is key to achieving}

competitive advantage globally.

►Advantages of coordination include:_{Advantages of coordination include:}  _{Flexibility in responding.}_{Flexibility in responding.}

 _{Ability to respond market by market.}_{Ability to respond market by market.}

 _{Ability to keep abreast of market needs}_{Ability to keep abreast of market needs}

globally. globally.

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Challenges in Developing

Global Information Systems

►Global information system_{Global information system} (₍GIS_GIS) ₎

describes an information system that

consists of networks that cross

national boundaries.

►Challenges_Challenges

 _{Politically imposed constraints.}_{Politically imposed constraints.}

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GIS Challenges (Cont’d)

►Restrictions on _{Restrictions on}

 _{hardware purchases and imports}_{hardware purchases and imports}  _{Data processing}_{Data processing}

 _{Data communications}_{Data communications}

►Transborder data flow_{Transborder data flow} (TDF)_(TDF) is the _{is the}

movement of machine-readable data

across national boundaries.

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GIS Subsidiary Challenges

►Technological problems due to level of _{Technological problems due to level of}

technology in subsidiary countries.

 _{Telecommunications speed and}_{Telecommunications speed and} quality.

quality.

 _{Software copyrights and licenses.}_{Software copyrights and licenses.}

►Lack of support from subsidiary _{Lack of support from subsidiary}

managers.

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Knowledge Management

►Information resources consist of hardware, _{Information resources consist of hardware,} software, information specialists, users,

software, information specialists, users,

facilities, databases, and information.

►Knowledge management_{Knowledge management} (₍KM_KM) is _{) is} acquiring data, processing data into

acquiring data, processing data into

information, using & communicating

information in the most effective way, and

discarding information at the proper time.

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Dimensions of Information

►Relevancy _Relevancy– pertains to the problem at _{– pertains to the problem at} hand.

hand.

►Accuracy _Accuracy– strive for 100%._{– strive for 100%.}

►Timeliness_Timeliness – should be available for _{– should be available for}

decision making before a crisis situations

devlop or opportunities are lost.

►Completeness_Completeness – the correct amount of _{– the correct amount of}

aggregation and supports all areas of the

decision being made.

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Changing Nature of

Knowledge Management

►Legacy information systems_{Legacy information systems} are _are

earlier systems software and hardware

that are incompatible or partially

incompatible with current information

technology.

 _{Produce primarily historical information.}_{Produce primarily historical information.}  _{Data may not be available in digital}_{Data may not be available in digital}

format. format.

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Strategic Planning for

Information Resources (SPIR)

►Chief Information Officer (CIO)_{Chief Information Officer (CIO)} ►Chief Technology Officer (CTO)_{Chief Technology Officer (CTO)} ►Strategic Planning_{Strategic Planning}

 _{Enterprise – executive committee}_{Enterprise – executive committee}

 _{Business areas – resources for human,}_{Business areas – resources for human,}

information, financial, marketing, information, financial, marketing,

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The SPIR Approach

►Concurrent development of strategic _{Concurrent development of strategic}

plans for information services & the

firm so that the firm’s plan reflects the

support to be provided by information

services.

►The IS plan reflects future demands for _{The IS plan reflects future demands for}

systems support.

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Core Content of a SPIR

►The objectives to be achieved by each _{The objectives to be achieved by each}

category of systems during the time

period.

►The information resources necessary _{The information resources necessary}

to meet the objectives.

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►Self-contained report (See example _{Self-contained report (See example}

Figure 2.8 in textbook).