Introduction to Management Information Systems Chapter 2 Purpose of Information SystemsLearning ObjectivesReviewThree main purposes of information systems1. Competitive AdvantageEvery morning a gazelle wakes up and knows it will have to run faster than the fastest lionEvery morning a lion wakes up and knows it will have to run faster than the slowest gazelleBut lion or gazelle, one thing is sure: when the day begins, you’d better start runningCompetitive AdvantagesMarket Competition: Porter’s Five Forces ModelInternet has changed the five forcesEight Principles of Competitive AdvantageCase: IS Creates & Enhances AmazonPersonalized ShoppingPersonal Address Book Locks In1-click check outGold Box New DealsCustom Book RecommendationsStrategic AllianceAmazon’s Competitive AdvantagesBe Careful2. Problem SolvingOther problems3. Decision MakingDecision ProcessRelationshipIS for Decision MakingSummaryOpposing Forces: I don’t need a computer to do businessSlide 30Suggested Blogging TopicReading AssignmentIntroduction to Management Information SystemsChapter 2 Purpose of Information SystemsHTM 304 Fall 072Learning ObjectivesUnderstand the three purposes of information systemsKnow the eight principles of competitive advantageUnderstand how information systems create competitive advantageDefine problem Recognize that different information systems are needed to solve different problem definitionsKnow the characteristics of decision makingUnderstand how information systems facilitate decision making3ReviewDefinition of management information systemsProcess of information system developmentFocus of this chapter4Three main purposes of information systemsTo gain competitive advantageTo solve problemsTo assist in decision making51. Competitive AdvantageThere is an old African proverb …6Every morning a gazelle wakes up and knows it will have to run faster than the fastest lion7Every morning a lion wakes up and knows it will have to run faster than the slowest gazelle8But lion or gazelle, one thing is sure: when the day begins, you’d better start running9Competitive AdvantagesDefinition – An advantage over competitors in some measure such as cost, quality, or speed, leads to control of a market and to larger- than average profits.Definition – An advantage over competitors in some measure such as cost, quality, or speed, leads to control of a market and to larger- than average profits.10Market Competition: Porter’s Five Forces Model11Internet has changed the five forcesRead the assignment and choose a verb for each blank: (try not to use the same words)1. Internet __________ traditional barriers to entry.3. Internet ______ the bargaining power of suppliers.4. Internet ______ the bargaining power of customers.5. Internet ______ the existence of substitute products and services.2. Internet ______ the intensity of competition among existing competitors.12Eight Principles of Competitive AdvantageCreate & improveproductsRaise barriers Increase trust & cut costs Information System may help in all the eight areas.Information System may help in all the eight areas.13Case: IS Creates & Enhances Amazon MissionTo be Earth's most customer-centric company where people can find and discover anything they want to buy onlineTechnology innovation drives Amazon growthPersonalized shopping experienceBook discovery through Search Inside the Book1-Click® ShoppingGold Box New DealsCommunity features like Listmania and Wish ListsShares storefront technology via Web servicesTechnologies used to manage logistics and reduce costs14Personalized Shopping15Personal Address Book Locks In161-click check out17Gold Box New Deals18Custom Book Recommendations •Uses IS to compare your shopping preferences to millions of others for recommendations19Strategic Alliance20Amazon’s Competitive Advantages1. Create new product or service?2. Enhance products or services? 3. Differentiate products or services?4. Lock in customers and buyers?5. Lock in suppliers?6. Raise barriers to market entry?7. Establish alliances?8. Reduces costs21Be CarefulWebsites also provide product descriptions (+ Search inside the book) to better inform shoppers. Will this become a competitive advantage for the store?222. Problem SolvingInformation Systems can be used for problem solvingA Laptop Problem (page 30)Problem: a perceived difference between what is and what ought to be.Problem definition: defines the difference by describing both the current situation and the desired situation, e.g. the customer support representative do not have data about the prior call to best assist a customerSolution: 1. A CRM System to store customer information and all the interactions (Chapter 7)2. Knowledge Management System to provide customer procedures to fix the laptops (Chapter 9)3. A Manufacturing Quality-Control Information System to eliminate possible faulty laptops23Other problemsMIS in use 2-1 (page 32)Some other examples:Company directory updates.Company A has personnel transfer between department frequently. Jessie is the personnel in charge of publishing company phone books. Every 6 months, she send out a form to all the employees to see if they need to update their contact information. She then organize the changes into a new file and order new prints which will be available for distribution in 2 weeksProblem: –Costly publishing–phone books become obsolete quicklyhow IS can help?243. Decision MakingInformation System can facilitate decision makingDecision LevelsOperational: day-to-day activitiesHow many widgets should we order? e.g. Transaction processing systems (TPS)Managerial: allocation and utilization of resources. How much should we budget for computer hardware and software for department A? e.g. Management Information Systems (MIS)Strategic: broader-scope, organizational issues.Should we acquire company A? or allied with company B? e.g. Executive information systems (EIS)25Decision ProcessStructured DecisionWell understood and accepted methods for decision makingFor example: Formula available to calculate when and how many units of material to order.Many formulae can be learnt from HTM 406.Unstructured DecisionImplicit decisions. No agree-on decision making method.For example, predicting of the future economy and effect of strategic alliance.26RelationshipDecision TypeDecisionProcess27IS for Decision MakingUse formula to produce results. Computers do the work. Computers help commu-nication
View Full Document
Unlocking...