K201 MIS Notes for Final Exam Chapter 3 A How Does Organizational Strategy Determine Information Systems Structure an organization s goals and objectives are determined by its competitive strategy competitive strategy determines the structure features and functions of all I S Industry Structure Competitive Strategy Value Chains Business Processes I S B What 5 Forces Determine Industry Structure five forces determine industry profitability Force Bargaining Power of Customers Threat of Substitutions Bargaining Power of Suppliers Threat of New Entrants Rivalry Strong Force Toyota s purchase of auto paint because they will purchase in large quantities Frequent travelers choice of auto rental New car dealers they control the true price of a vehicle and a customer can t verify it Corner latte stand it is an easy business to replicate Used car dealers there are many to choose from Weak Force My power over the procedures of my university Patients using only effective drug for their cancer Grain farmers in a surplus year over supply makes product less valuable Pro football team number of teams is controlled by the NFL Google or Bing very expensive to develop C How Does Analysis of Industry Structure Determine Competitive Strategy Porter created a competitive strategy model to go with his 5 forces firms engage in one of these strategies at a time Industry Wide Focus Cost Lower cost across the industry Lowest cost within an industry segment Differentiation Better product service across the industry Better product service within an industry segment D How Does Competitive Strategy Determine Value Chain Structure competitive strategies are what give businesses value Value how much money that a customer is willing to pay for a resource product or Service Margin difference between value and the cost Value Chain network of value creating activities contain 5 primary activities and 4 support activities 1 Primary Activities in the Value Chain Inbound logistics Operations Manufacturing Outbound logistics Sales and Marketing Customer Service Receiving storing and disseminating inputs to the products Transferring inputs into the final products Collecting storing and physically distributing the products to buyers Inducing buyers to purchase the products and providing a means for them to do so Assisting customers use of the products and thus maintaining and enhancing the products value 2 Support Activities in the Value Chain contribute indirectly to the production sale and service of the product Procurement finding vendors setting up negotiating Technology research and development Human resources recruiting compensation evaluation training Firm infrastructure general management finance accounting E How Do Business Processes Generate Value Business process network of activities that generate value by transforming inputs into Outputs Cost cost of the inputs and cost of all the activities Activity business function that receives inputs and produces outputs Repository collection of something databases F How Does Competitive Strategy Determine Business Processes and the Structure of Information Systems depends on if you are trying to minimize costs of maximize the reward G How Do Information Systems Provide Competitive Advantages 1 Competitive Advantage Via Products there are three ways to do this a creating new processes or services b enhancing products or services c differentiating products or services 2 Competitive Advantage via Business Processes there are 5 ways to do this a locking in customers buyers b locking in suppliers c raising barriers to market entry d establishing alliances e reducing costs Chapter 7 A What Are the Basic Types of Processes 1 How Do Structured Processes Differ from Dynamic Ones structured processes are formally defined and standardized processes that involve day to day operations dynamic process are flexible informal processes that are adaptive and involve less structural managerial decisions examples of structured include customer returns order entry purchasing payroll examples of dynamic include collaboration social networking ambiguous situations 2 How Do Processes Vary by Organizational Scope workgroup processes enterprise processes inter enterprise processes 3 Workgroup Processes exists to enable workgroups to fulfill the charter purpose and goals of a particular group or department Workgroup IS exists to support one or more processes within the workgroup also called functional Information Systems functional application the systems part of it 4 Enterprise Processes span an organization and support activities in multiple departments enterprise IS are much larger and have hundreds to thousands of users users undergo training and are observed solutions to problems involve more than one workgroup duplicate data is eradicated for enterprise IS or carefully managed Inter Enterprise Processes span across two or more independent organizations IEP Information Systems involve thousands of users problems are solved by meeting contract or litigation because of their use by multiple companies they are extremely difficult to change 5 B How Can Information Systems Improve Process Quality process quality is broken into efficiency and effectiveness Process efficiency ratio of process outputs to inputs Process effectiveness measure of how well a process achieves organizational Efficiency 1 How Can Processes Be Improved change the process structure change the process resources change both process structure and resources 2 How Can IS Improve Process Quality performing an activity augmenting a human who is performing an activity controlling data quality and process flow C How Do IS Eliminate the Problems of Information Silos Information silo the condition that exists when data are isolated in separated information systems workgroups use the same data in their own personal IS and it causes problems 1 What Are the Problems of Information Silos data duplication data inconsistency disjointed processes limited information and lack of integrated info isolated decisions lead to organizational inefficiencies increased expense 2 How Do Organizations Solve the Problems of Information Silos the best way is to integrate it into one database if this is not possible then manage it another way is using Inter Enterprise IS that store information from multiple databases in one cloud and manage it like one database D How Do CRM ERP and EAI Support Enterprise Processes 1 The Need for Business Process