Review Sheet for Final Spring 2014 BMGT 301 Chapters 2 6 7 9 10 11 and 13 Dr Karake Information systems interrelated components that manage information to support decision making and control and help with analysis visualization and product creation Chapter 2 Strategy Technology Strategy Set of decisions made to achieve competitive advantage Differentiate between operational effectiveness and strategic positioning how to achieve competitive advantage Operational effectiveness o Performing the same tasks better than rivals perform them lower costs o Can cause fast followers Strategic positioning o Performing different tasks than your rivals or performing the same tasks in a different way o Higher value revenue Differentiate between competitive advantage and sustainable competitive advantage Competitive advantage o Ability of a firm to outperform its competitors in financial measures o How to measure competitive advantage Accounting profits good for firms in identical or very comparable businesses Stock price can reflect values not included in accounting tables Sustainable competitive advantage o Financial performance that consistently outperforms industry averages o Competitive advantage that can be maintained o Affects firm value in a positive way o Not too many competitors can imitate it competitive o Can keep it up sustainable o Amazon and eBay are examples IT enables competitive advantage Be different o Be the first one there own a niche market so no one will compete with you Example FreshDirect o Product differentiation physical intangible attributes color size service quality etc Vertical build better product products differ in quality Civic vs Acura Horizontal position yourself in product space away from competitors used to appeal to distinct group of customers red and blue cars Supply side specific technologies lower cost of providing variety Demand side lower search costs thanks to internet online reviews o Price discrimination when sales of identical goods services are transacted at different prices New pricing strategies from the same provider Lowering costs o Make old ways of doing business cheaper automation substitution processing data cheaper counting inventory o New ways of doing business Dell why inventory information as substitute for inventory Understand the resource view of the firm concept resource based theory Resources tangible and intangible assets of a firm used to conceive of and implement strategies factories products reputation etc Capabilities subset of resources that enable a firm to take full advantage of other resources marketing skill cooperative relationships etc VRIS framework how a firm achieves a SCA assets and business models are simultaneously o Valuable o Rare o Not easily imitated o Not easily substituted Resource BY TYPE Characteristics Financial Borrowing capacity Internal funds generation Tangible Resources Physical Plant and equipment size location technology flexibility Land and buildings Raw materials Intangible Resources Technology Reputation Patents copyrights know how R D facilities Technical and scientific employees Brands customer loyalty company brand equity product reputation with suppliers customers government Indicators Debt Equity ratio Credit rating Net cash flow Market value of fixed assets Scale of plants Alternatives for fixed assets No of patents owned Royalty income R D expenditure staff Price premium Recognition Function Corporate Management MIS R D New Products Manufacturing Design Marketing BY FUNCTION Capability Financial management Strategic Control Coordinating decentralized business units Managing acquisitions Speed and responsiveness through rapid information transfer Research capability Development of innovative Sony 3M Design Capability Brand Management Design Capability Brand Management Exemplars Exxon Coca Cola General Electric Emerson Electric GE ABB Shell NationsBank ConAgra American Airlines LL Bean Merck AT T Apple Swatch Proctor Gamble PepsiCo Sales Distribution Promoting reputation Responsiveness to market trends Sales Responsiveness Efficiency and speed of distribution Customer service American Express The Gap Microsoft Glaxo Federal Express Walt Disney Value Creation Value Chain Once an organization chooses its strategy it can use tools such as value chain to determine the success or failure of its chosen strategy Connected series of activities each of which adds value or supports the addition of value to the firm s goods and services Every action an organization takes is either a primary activity or support activity Transaction is an exchange of goods or services value between two or more parties Value Chain Analysis of Strategic Opportunities Value chain model highlights the primary support activities that add a margin of value to a firm s Where information systems can best be applied to achieve a competitive advantage products or services Organizational Value Chain Primary support activities profit margin Primary activities inbound logistics obtaining raw materials operations creating the product outbound logistics shipping the product marketing and sales establishing customer need service selling the product after sale service and maintenance o Directly related to the production and distribution of the organization s products and services that create business value for the organization and its customers Support activities organizational infrastructure administration human resource management technology development procurement o Value chain activities that an organization conducts to support the creation of business values Value chain with typical strategic IS mapped onto it Upstream chains of suppliers Inbound logistics EDI based purchasing system operations computer integrated manufacturing Downstream chains of customers outbound logistics automated ordering system marketing and sales expert systems for salespeople service telemaintenance expert systems Basic strategy align IT with business objectives o Identify business goals and strategies o Break strategic goals into concrete activities and processes o Identify metrics for measuring progress o Determine how IT can help achieve business goals o Measure actual performance Coca Cola vs Google and Amazon o Coke is not an intense technology user and maintains its differentiated product through marketing and branding efforts o Amazon Google Facebook Wal Mart are intensely using IS to achieve competitive advantages others Continuous replenishment
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