1 Zachary Zinkgraf May 11 2013 BMGT 301 Final Exam Study Guide Course Overview Why take this class It s the Digital Age Technology is changing the structure of the economy Greenspan IT professionals are scarce But even more valuable are people who understand the business of technology o You must be at least IS literate to succeed in an organization As a knowledge worker As a leader Even better be tech savvy to leverage the power of IT At the end of this class you will o Understand the business issues related to IT What is unique about digital goods What are the implications of Moore s Law How can IT can help me gain competitive advantage o Understand the linkage between the technology organization market and strategy Why is product differentiation so important these days How can I create strategic advantage using IT How should I compete in the digital age o Help you to be more successful Productivity software Excel Access Most important o Develop the ability of critical thinking on tech issues o How to make intelligent choices and tradeoffs o How to separate the hype from the reality o How to successfully transform organizations and work with technology Major Topics o Decision analysis It s importance and goals Biases in decision making Role of IT o Disruptive technologies What they are Disruptive and sustaining innovations The challenge for incumbents o The data asset in organizations Database principles and concepts 2 Information quality Relational databases Tables records fields Data mining o The digital enterprise o ERP systems The business value of IT journey and stages What they are and why there are important Risks in ERP implementation o Accounting and Finance systems o CRM systems What they are and why there are important Operational and analytical CRM Capital One and Harrah s Web 2 0 and social media o SCM systems What they are and why there are important The Bullwhip effect SC models o The Digital Market Platform mediated networks One sided and two sided networks Network effects and WTA dynamics o The Google Phenomenon The online search business Critical success factors Challenges o Proprietary and shared platforms The fight versus share decision Final Exam o 20 multiple choice questions 30 points o 7 short answer questions 10 points Chapter 13 Decision Making Decision Analysis Introduction o Goal make rational decisions under uncertainty Maximize your expected utility by making the right decision o Examples How much should I bid for that project Where to go shopping window shopping Should I play that game on the right o Expected utility payoff 3 Loss vs Gain die saved o Vaccine A 400 out of 600 people will die in this disease o Vaccine B with 1 3 probability nobody dies with 2 3 probability all 600 o Vaccine C 200 out of 600 people will be saved o Vaccine D with probability 1 3 all 600 are saved otherwise nobody is Prospect Theory Tversky and Kahneman Based on Loss vs Gain Mental Accounting o Money is not evaluated equal Case 1 You buy a 425 suit You can walk 15 minutes to another store Case 2 to save 7 A shift B not shift to save 7 C shift D not shift You buy a 25 pen You can walk 15 minutes to another store Implications o Be aware of our built in bias o Use IT to help you make better decisions o Decisions towards being more Scientific Data driven Evidence based Computation intensive o Business analytics tools like Excel are really useful Chapter 14 Disruptive Technologies Why are some technologies disruptive o Product level The new technology is superior to old ones Examples Steam boat Encarta Flash drive 4 o Business model level The existing business model is not compatible with new technology Examples Telegraph to the local exchange market Netflix Disruptive Technologies o Disruptive technologies are not radically new Most market leaders have prototypes or designs in their R D labs shelved o Disruptive technologies Represent a different package of performance attributes Performance attributes valued by present customers improves at rapid pace performance trajectory Performance Trajectories improve over time o Rate at which the performance of a technology or product is expected to Photocopiers number of copies per minute Networks Average bandwidth cost per MB Pharmaceuticals Percentage efficacy cost per dose absorption time and vehicle o Sustaining technologies o Disruptive technologies Maintain a steady rate of improvement Different set of attributes from mainstream customers Typically operate in fringe or niche markets attributes improve over time to start addressing mainstream markets Disruptive and Sustaining Innovations o Technological changes Sustaining tech advances tend to make incumbents stronger Disruptive tech advances tend to drive incumbents out of business o The 1 million dollar strategic question Why do incumbent firms miss the boat Well managed companies often fail because the very management practices that have allowed them to become industry leaders also make it extremely difficult for them to develop the disruptive technologies that ultimately steal away their markets C Christensen Enormous Technology Progress o The world s first gigabyte capacity disk drive The IBM 3380 introduced in 1980 was the size of a refrigerator weighed 550 pounds about 250 kg and had a price tag of 40 000 o Many sustaining innovations Making existing technologies better and better o Several disruptive technological changes Hard drive physical size 14 inch 8 5 25 3 5 History of Hard Drives o Until the mid 70s 5 Size 14 inch Major customers mainframe computer producers Capacity 130 MB and improve at 22 annually o 1978 1980 Capacity initially 10 MB Size 8 inch o However mainframe users needed 200MB o So IBM and makers of 14 disks ignored the market for 8 disk drives Did not satisfy their mainstream consumers o 8 disks had other important performance attributes Low cost Lightweight Lower power consumption Smaller stepper motor More Rugged Durable Ideal for smaller computers Improve at 40 annually o 1980 Major customers desktop PC Size 5 25 inch o 1984 Major customers portable computers like Compaq Size 3 5 inch Why disruptive to incumbent firms o New technology comes from other newly emerging low end market VoIP Linux open office o Not valued by main stream customers Incumbent firms listen too much to their existing customers Listen responsively to their customers Invest aggressively in the technology products and manufacturing capabilities that satisfy their current
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