Student Ch 01
Transcript of Student Ch 01
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Chapter One Overview
SECTION 1.1 INFORMATION SYSTEMS IN BUSINESS Information Technologys Role in Business
Information Technology Basics
Roles and Responsibilities in Information Technology Measuring Information Technologys Success
SECTION 1.2 BUSINESS STRATEGY Identifying Competitive Advantages
The Five Forces Model Evaluating Business Segments The Three Generic Strategies Creating a Business Focus
Value Chain Analysis Targeting Business Processes
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McGraw-Hill/I rwin 2008 The McGraw-Hill Companies, All Rights Reserved
SECTION 1.1
INFORMATIONSYSTEMS INBUSINESS
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LEARNING OUTCOMES
1. Describe the functional areas of a businessand why they must work together for thebusiness to be successful
2. Explain information technologys role inbusiness and how you measure success
3. Compare management information systems(MIS) and information technology (IT) anddefine the relationships among people,
information technology, and information
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INFORMATION TECHNOLOGYS
ROLE IN BUSINESS Information technology is everywhere in business
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Information Technologys Impact
on Business Operations
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Information Technologys Impact
on Business Operations Organizations
typically operate by
functional areas orfunctional silos
Functional areasare interdependent
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INFORMATION TECHNOLOGY BASICS
Information technology (IT) anycomputer-based tool that people use to
work with information and support theinformation and information-processingneeds of an organization
Information technology is an importantenablerof business success andinnovation
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INFORMATION TECHNOLOGY BASICS
Management information systems (MIS) thefunction that plans for, develops, implements,
and maintains IT hardware, software, and
applications that people use to support the
goals of an organization
MIS is a business function, similar toAccounting, Finance, Operations, and Human
Resources
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INFORMATION TECHNOLOGY BASICS
When beginning to learn about
information technology it is important to
understand the following:
Information
IT resources
IT cultures
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Information
Data - raw facts that describe thecharacteristic of an event
Information - data converted into ameaningful and useful context
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IT Resources
People use
Information
technologyto
work with
Information
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IT Cultures
Organizational information cultures
include:
Information-functional culture Information-sharing culture
Information-inquiring culture
Information-discovery culture
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ROLES AND RESPONSIBILITIES IN IT
Information technology is a relatively newfunctional area, having only been around
formally for around 40 years
Recent IT strategic positions include:
Chief Information Officer (CIO)
Chief Technology Officer (CTO)
Chief Security Officer (CSO)
Chief Privacy Officer (CPO)
Chief Knowledge Office (CKO)
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ROLES AND RESPONSIBILITIES IN IT
Average CIO compensation by industry
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ROLES AND RESPONSIBILITIES IN IT
What concerns CIOs the most
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ROLES AND RESPONSIBILITIES IN IT
Chief Technology Officer (CTO) responsible forensuring the throughput, speed, accuracy, availability, andreliability of IT
Chief Security Officer (CSO) responsible for ensuringthe security of IT systems
Chief Privacy Officer (CPO) responsible for ensuring
the ethical and legal use of information
Chief Knowledge Office (CKO) - responsible forcollecting, maintaining, and distributing the organizations
knowledge
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ROLES AND RESPONSIBILITIES IN IT
Skills pivotal for success in executive IT roles
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The Gap Between Business
Personnel and IT Personnel Business personnel possess expertise in
functional areas such as marketing,
accounting, and sales
IT personnel have the technologicalexpertise
This typically causes a communicationsgap between the business personnel andIT personnel
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Improving Communications
Business personnel must seek to increasetheir understanding of IT
IT personnel must seek to increase theirunderstanding of the business
It is the responsibility of the CIO to ensureeffective communication betweenbusiness personnel and IT personnel
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MEASURING INFORMATION
TECHNOLOGYS SUCCESS Key performance indicator(KPI) measures
that are tied to business drivers
Metrics are detailed measures that feed KPIs
Performance metrics fall into the nebulous area
of business intelligence that is neither
technology, nor business centered, but requires
input from both IT and business professionals
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Efficiency and Effectiveness
Metrics Efficiency IT metric measures the
performance of the IT system itself including
throughput, speed, and availability
Effectiveness IT metric measures the impactIT has on business processes and activities
including customer satisfaction, conversionrates, and sell-through increases
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Benchmarking Baselining
Metrics Regardless of what is measured, how it is
measured, and whether it is for the sake of
efficiency or effectiveness, there must be
benchmarks baseline values the system seeksto attain
Benchmarking a process of continuouslymeasuring system results, comparing those
results to optimal system performance
(benchmark values), and identifying steps and
procedures to improve system performance
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Benchmarking Baselining
Metrics E-governement benchmarks
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The Interrelationships of Efficiency
and Effectiveness IT Metrics Effectiveness IT metrics focus on an
organizations goals, strategies, and
objectives and include: Usability
Customer satisfaction
Conversion rates Financial
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The Interrelationships of Efficiency
and Effectiveness IT Metrics Security is an issue for any organization offering
products or services over the Internet
It is inefficient for an organization to implement
Internet security, since it slows down processing
However, to be effective it must implement Internet
security Secure Internet connections must offer encryption
and Secure Sockets Layers (SSL denoted by the lock
symbol in the lower right corner of a browser)
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The Interrelationships of Efficiency
and Effectiveness IT Metrics
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OPENING CASE QUESTIONSApple - Merging Technology, Business and Entertainment
1. What might have happened to Apple if its top executiveshad not supported investment in iPods?
2. Formulate a strategy for how Apple can use efficiency IT
metrics to improve its business
3. Formulate a strategy for how Apple can use effectivenessIT metrics to improve its business
4. Why would it be unethical for Apple to sell its iTunescustomer information to other businesses?
5. Evaluate the effects on Apples business if it failed to
secure its customers information and it was accidentallyposted to an anonymous Web site
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McGraw-Hill/I rwin 2008 The McGraw-Hill Companies, All Rights Reserved
SECTION 1.2
BUSINESSSTRATEGY
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LEARNING OUTCOMES
6. Explain why competitive advantages aretypically temporary
7. List and describe each of the five forces inPorters Five Forces Model
8. Compare Porters three generic strategies
9. Describe the relationship between businessprocesses and value chains
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IDENTIFYING COMPETITIVE
ADVANTAGES
To survive and thrive an organization
must create a competitive advantage
Competitive advantage a product orservice that an organizations customers
place a greater value on than similar offerings
from a competitor
First-mover advantage occurs when anorganization can significantly impact its
market share by being first to market with a
competitive advantage
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IDENTIFYING COMPETITIVE
ADVANTAGES
Organizations watch their competition throughenvironmental scanning Environmental scanning the acquisition and
analysis of events and trends in the environmentexternal to an organization
Three common tools used in industry to analyze
and develop competitive advantages include: Porters Five Forces Model
Porters three generic strategies
Value chains
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THE FIVE FORCES MODEL
EVALUATING BUSINESS SEGMENTS
Porters Five Forces Model determines therelative attractiveness of an industry
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Buyer Power
Buyer power high when buyers havemany choices of whom to buy from andlow when their choices are few
One way to reduce buyer power isthrough loyalty programs
Loyalty program rewards customersbased on the amount of business they dowith a particular organization
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Supplier Power
Supplier power high when buyers havefew choices of whom to buy from and low
when their choices are many
Supply chain consists of all parties involved inthe procurement of a product or raw material
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Supplier Power
Organizations that are buying goods and
services in the supply chain can create a
competitive advantage by locatingalternative supply sources (decreasing
supplier power) through B2B marketplaces
Business-to-Business (B2B) marketplace
an Internet-based service that brings together
many buyers and sellers
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Supplier Power
Two types of business-to-business (B2B)marketplaces
Private exchange a single buyer posts itsneeds and then opens the bidding to anysupplier who would care to bid
Reverse auction an auction format in
which increasingly lower bids are solicitedfrom organizations willing to supply thedesired product or service at an increasinglylower price
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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 andlow when there are few alternatives from
which to choose
Switching cost costs that can makecustomers reluctant to switch to another
product or service
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Rivalry Among Existing
Competitors Rivalry among existing competitors
high when competition is fierce in a
market and low when competition is morecomplacent
Although competition is always moreintense in some industries than in others,
the overall trend is toward increased
competition in just about every industry
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THE THREE GENERIC STRATEGIES
CREATING A BUSINESS FOCUS
Organizations typically follow one of
Porters three generic strategies when
entering a new market Broad cost leadership
Broad differentiation
Focused strategy
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THE THREE GENERIC STRATEGIES
CREATING A BUSINESS FOCUS
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Value Creation
Once an organization chooses itsstrategy, it can use tools such as thevalue chain to determine the success or
failure of its chosen strategy Business process a standardized set of
activities that accomplish a specific task, suchas processing a customers order
Value chain views an organization as aseries of processes, each of which addsvalue to the product or service for eachcustomer
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Value Creation
Value chains with Porters Five Forces
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OPENING CASE QUESTIONSApple - Merging Technology, Business and Entertainment
6. Did Apple gain a competitive advantage from its decisionto invest in an online music business?
7. How can Apple use environmental scanning to gainbusiness intelligence?
8. Using Porters Five Force Model, analyze Apples buyerpower and supplier power
9. Which of the three generic strategies is Apple following?
10. Which of Porters Five Forces did Apple address through
its introduction of the iPod?
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CLOSING CASE ONESay Charge It with Your Cell Phone
3. Which of Porters three genericstrategies is this new technologyfollowing?
4. Describe the value chain of using cellphones as a payment method
5. What types of regulatory issues mightoccur due to this type of technology?
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CLOSING CASE TWO
Innovative Business Managers1. Choose one of the companies listed above and
explain how it could use a CIO, CTO, and CPOto improve business
2. Why is it important for all of DreamWorksfunctional business areas to work together?Provide an example of what might happen if theDreamWorks marketing department failed towork with its sales department
3. Why is information technology important to anorganization like the Boston Red Sox? Every
organization needs information to remain
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CLOSING CASE TWO
Innovative Business Managers4. Which of Porters Five Forces is most
important to Home Depots business?
5. Which of the three generic strategies isPepsiCo following?
6. Explain the value chain and how acompany like GE can use it to improveoperations
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CLOSING CASE THREEThe World is Flat Thomas Friedman
1. Do you agree or disagree with Friedmansassessment that the world is flat? Be sure to
justify your answer
2. What are the potential impacts of a flat world fora student performing a job search?
3. What can students do to prepare themselves forcompeting in a flat world?
4. Identify a current flattener not mentioned on