ISA 235 Final Exam
What is the general way organizations obtain competitive advantage?
-Competitive advantage is a feature of a product or service on which customers place a greater value than they do on similar offerings from competitors -provide the same product or service either at a lower price or with additional value that can fetch premium prices -competitive advantage is temporary!! Identifying Competitive Advantages: Evaluate: SWOT analysis, Five forces model Set strategy:three generic strategies execute:value chain analysis
Demonstrate understanding that MIS is not technology it is a business function
-MIS is a business function like accounting and HR -Incorporates systems thinking to help companies operate cross-functionally -To fulfill product orders MIS for sales moves a single customer order across all functional areas i.e sales,order fullfillment, shipping, billing and customer service -although different areas handle different parts of the sale due to MIS, to the customer the sale is one continuous process -To perform the MIS function effectively almost all companies have an internal MIS department called (IT),(IS) or (MIS)
common ebusiness forms
-content providers: provide digital content such as news, music,photos or videos >netflix,itunes,cnn -infomediaries:provide speicalized info on behalf of producers of goods and services and their potential customers >zillow,bizrate,bloomberg -online markeplaces:bring together buyers and sellers of products and services >amazon,ebay,priceline -service providers:provide services such as photo sharing,video sharing,online backup and storage >flickr,mapquest,Youtube -transaction brokers:process online sales transactions >etrade,charlesschwab,fidelity
Value Chain analysis
-views a firm as a series of business processes that each add value to the product or service -put business strategy in motion through value chain -useful tool to determine how to create the greatest possible value for customers -goal is to identify processes in which the firm can add value for the customer and create a competitive advantage for itself with a cost advantage or product differentiation -groups a firm's activities into primary value activities and support value activities Primary Value Activities >inbound logistics: acquries raw materials and resources and distributes >outbound logistics: distributes goods and services to customers >marketing and sales: promotes, prices and sells products to customers >service : provides customer support Secondary Value activities >firm infrastructure: company format or departmental structures, environment and systems >Human Resource Mgmt: provides employee training, hiring and compensation >Technology Development: applies MIS to processes to add value >Procurement: purchases inputs such as raw materials, resources, equipment and supplies Firm may add value by using high quality raw materials or offering next day free shipping on any order. A hotel might use MIS to track customer reservations and then inform front desk employees when a loyal customer is checking in so the employee can call the guest by name and offer additional services. Examining the firm as a value chain lalows managers to identify the important business processes that add value for the customers adn then find MIS solutions to support them. MIS adds value to both primary and support value activities. Ex. the development of a marketing campaign management system that could target marketing campaings more efficiiently, reducing marketing cost (primary value activity). ex.the development of a human resources system that could reward employees based on performance (secondary)
the four ebusiness models
1)business to business (B2B): businesses buying from and selling to each other on the internet >80% of all online businesses >ex.Medical Billing Service, software sales/licencing >more complex with greater security 2)business to consumer (B2C): sells products or services directly to consumers online >brick and mortar >click and mortar >pure play (virtual online) >eshop:online version of a retail store i.e gap or amazon 3)consumer to business (C2B): consumer that sells a product or service to a business over the internet >customers at priceline.com set own prices 4)consumer to consumer(C2C): customers selling goods over the internet ex.craigslist/ebay
ebusiness advantages
1)expanding global reach: easy access to real time information,information richness (depth/breadth of details), information reach (# of people a firm can communicate with all over the world) >buyers need info richness, sellers need info reach >ebusiness operates 24/7 reducing transaction cost >firm's website is a focal point of cost-effective communication and marketing strategy ; online store has a global marketplace 2)opening new markets: increases niche product sales and allows for mass customization (tailor a product/service to customers' specifications) & personalization (when a company knows enough about a customers likes and dislikes and can fashion offers appealing to that customer) 3) reducing costs: not limited by shelf space, offers infinite products, cuts out intermediaries because business sells directly to customer, business processes require less time, inexpensively attracts new customers, low start up costs 4)improves effectiveness: measure ebusiness success by using MIS effectiveness metrics such as revenue generate by web traffic etc. >interactivity: measures advertising effectiveness by counting visitor interactions with target ad, time spent viewing the ad etc. >clickstream data: tracks the exact pattern of a consumer's navigation through a website; reveals page views, pattern of websites visited, length of stay on site,date/time visited, #of customers with shopping carts
Core Drivers of the Information Age
1.Data: raw facts that describe the characteristics of an event or object ex.order date,amount sold,customer number,quantity ordered 2.Information: data converted into a meaningful and useful context ex.best-selling product,worst-selling product, worst customer 3.Business Intelligence: information collected from multiple sources that analyzes patterns,trends and relationships for strategic decision making ex.lowest sales per week compared with the economic interest rates OR best-selling product by month compared to sports season and city team wins and losses 4.Knowledge: the skills,experience and expertise, coupled with information and intelligence that create a person's intellectual resources ex. choosing not to fire a sales representative who is underperforming knowing that the person is experiencing family problems OR listing products that are about to expire first on the menu or creating them as a daily special to move the product
ebusiness revenue models
1.advertising fees 2.license fees 3.subscription fees 4.transaction fees 5.value added service fees *all ebusiness must have a revenue model*
Web 2.0 characteristics
>content sharing through open sourcing >user contributed content : created and updated by many users for many users i.e wikipedia,flickr,youtube,yelp,etc >collaboration inside the organization :set of tools that supports the work of teams or groups by facilitating sharing/flow of information >collaboration outside the organization:most common is crowdsourcing i.e idea that collective intelligence is greater than sum of individual parts; crowdfunding: raising small amoutns from large number of individuals via internet
networking with business 2.0
>social media: websites that rely on user participation and user contributed content >social network:app that connects people by matching profile information >social networking: practice of expanding your business by personal network
compare AS-IS and To-Be models
AS IS model: business process modeling begins with a functional process representation of the process problem or and AS-IS process. Represents the current state of the operation that has been mapped without any specific improvements or changes to existing processes the next step is to build a TO-BE process model TO BE model: displays how the process problems will be solved or implemented ; show the results of applying change improvement opportunities to the current (AS-IS) process model . This ensures that the process is fully and clearly understood before the details of a process solution are decided on
Understand the concept of business strategy:
Business Strategy is a leadership plan that achieves a specific set of goals or objectives such as: -developing new products or services -entering new markets -increasing customer loyalty -attracting new customers -increasing sales Business strategy helps a company combat challenges and reach their goals as well as gain competitive advantage. Stakeholders drive business strategy. Business strategy can change depending on stakeholder's perspective. Competitive Advantage: a product or service that an organization 's customers place a greater value on than similar offerings from a competitor.
Identify how different departments in a company are challenged in working together to achieve success
Companies are organized by department such as accounting, sales,finance,hr,operations managment,marketing etc. For a firm to be successful all departments must work interdependently aka together as a single unit sharing common information. Successful companies operate cross-functionally integrating operations of all departments Systems are a primary enabler of companies working cross-functionally.
Understand importance of decision making for managers at each of the three primary organization levels (strategic,managerial,operational)
Different levels of an organization require different types of information to assist in decision making, problem solving, and opportunity capturing. (bottom to top of pyramid) Operational level: (structured decisions=established processes that offer potential solutions) employees develop, control, and maintain core business activities to run the day to day operations (long-term decisions) Managerial level: (semi-structured decisions=few established processes help evaluate potential solutions) employees are continuously evaluating company operations to hone the firm's abilities to identify, adapt to, and leverage change (short term and medium range decisions) Strategic level: (unstructured decisions=no decisions or rules exist to guide) managers develop overall business strategies, goals and objectives as part of the company's strategic plan ( short term decisions)
Business Process
Firms make profits by taking raw inputs and applying a business process to turn them into a product or service that customers find valuable. A business process is a standardized set of activities that accomplish a specific task such as a specific process. Once a firm identifies the industry it wants to enter and the generic strategy it will focus on it must choose the business processes required to create its products or services.
Explain how management information systems enable business communications: (add more to this)
MIS is a business function like accounting and HR which moves info about people,products, and processes across the co. to facilitate decision making and problem solving To fulfill product orders MIS for sales moves a single customer order across all functional areas i.e sales,order fullfillment, shipping, billing and customer service
Know the business tools for analyzing business strategies
SWOT analysis: identifies project position Porter's Five Forces Model: evaluates industry attractiveness The Three Generic Strategies: Chooses a Business Focus Value Chain Analysis: Executes Business Strategy
Be able to explain systems thinking:
Systems thinking is a way of monitoring the entire system by viewing multiple inputs being processed or transformed to produce outputs while continously gathering feedback on each part.
Information Age
The present time during which infinite quantities of facts are available to anyone who can use a computer
evolution of the web
Web 1.0: read only web; static text based information catalyst for ebusiness and ecommerce; extended to reach many businesses to global markets Web 2.0: the next generation of internet use , a more mature disticntive communications platform characterized by new qualities such as collaboration, sharing and free >encourages user participation >formation of communities that contribute to content >technical skills no longer required to publish content to WWW Web 3.0:based on "intelligent" web applications, using natural language processing, machine based learning and reasoning >a way for people to describe information so computers can start to understand relationships >goal of 3.0: tailor online searches and requests specifically to users' preferences and needs brought upon mobile business >mbusiness: the ability to purchase goods and services through a wireless-internet enabled device
know the value of business process modeling
a company's strategic vision should provide guidance on which business processes are core aka linked to the firm's critical success factors diagraming business processes allows for easy communication and understanding of how core business processes are helping or hindering the business model-a simplified representation or abstraction of reality help managers >calculate risks >understand uncertainty >change variables >manipulate time to make decisions
semantic web
a component of web 2.0 that describes things in a way that computers can understand
disruptive technology w/examples
a new way of doing things that initially does not meet the needs of existing customers > open new markets and destroy old ones >enter low end of the marketplace >eventually evolves to displace high end competitors and their reigning technology >does not lead ex.internet,3D printing, autonomous vehicles, sony
ebusiness model
a plan that details how a company, creates, delivers and generates revenues on the internet
Porter's Five Forces Model
analyzes the competitive forces within the environment which a company operates to asses the potential for profitability in an industry purpose:combat competitive forces by identifiying opportunities, competitive advantages and competitive intelligence if the forces are strong they INCREASE competition, if the forces are weak, they DECREASE competition 1.Buyer Power: the ability of buyers to affect the price they must pay for an item >if buyer power is high customers can force a company and its competitors to compete on price i.e drives price down reduce buyer power by: manipulating switching costs, loyalty programs 2.Supplier Power: supplier's ability to influence the prices they charge for supplies >if supplier power is high , supplier can influence industry by charging higher prices,limiting quality of services,shifting costs to industry participants When supplier power is high , buyers lose revenue because they cannot pass on raw material prices to increase to their customers 3. Threat of Substitute Products/Services: the power of customers to purchase alternatives >This is high when there are many alternatives to a product/service and low when there are few alternatives to choose from reduce threat by offering additional value through wider product distribution 4.Threat of New Entrants: power of competitors to enter markets High when it is easy to enter a new market, low when there are barriers 5.Rivalry Among Existing competitors: the power of competitors High when competition is fierce in a market, low when competitors are more complacent reduce by: product differentiation
describe Artificial Intelligence
artificial intelligence simulates human thinking and behavior such as the ability to reason and learn. its ultimate goal is to build a system that can mimic human intelligence intelligent systems: commercial applications of AI including sensors,software and devices that emulate and enhance human capabilities. They boost productivity in factories by monitoring equipment and signaling when preventive maintenance is required. >expert systems >neural networks >genetic algorithms >intelligent agents >virtual reality AI systems increase the speed and consistency of decision making, solve problems with incomplete information and resolve complicated issues that cannot be solve by conventional computing
tools for collaboration with business 2.0
blogs:online journal users can post own comments,graphics,video wiki:collaborative website users can add remove and change content i.e wikipedia,lexipedia mashup:content from more than 1 source to create new product/service i.e zillow,infopedia,songdna
ecommerce
buying and selling of goods and services over the internet. Refers only to ONLINE transactions
ebusiness
commerce along with all the activities related to internal and external business operations such as servicing customer accounts, collaborating with partners and exchanging real-time information >opened up a new market place for any companies willing to move business online
source code
contains instructions written by a programmer specifying the actions to be performed by computer software
differentiate between customer facing and business facing process
customer facing processes: front-office processes, result in a product or service received by an organization's external customer >fulfilling orders >communicating with customers >sending out bills >marketing information business facing processes: back office processes, invisible to the external customer but essential to the effective management of the business >goal setting >day to day planning >giving performance feedback and rewards >allocating resources
classify strategic support systems and how managers can use these systems to make decisions and gain competitive advantages
decision making at the strategic level requires both business intelligence and knowledge to support the uncertainty and complexity associated with business strategies EIS:specialized DSS that supports senior level executives and unstructured long-term non routine decisions requiring judgement, evaluation and insight
world wide web (WWW)
different from the internet, it is what provides access to internet information through documents including text, graphics and audio that uses a special formatting language called HTML >this is just a part of the internet
classify managerial support systems and how managers can use these systems to make decisions and gain competitive advantages
encompass analytical information which is all of the organizational information and its primary purpose is to support the performance of managerial analysis or semistructured decisions. Includes transactional information along with other information scubas market and industry information. Examples are trends, sales,product statistics and future growth projections Online Analytical Processing (OLAP): the manipulation of information to create business intelligence in support of strategic decision making Decision support systems (DSS's): model information using OLAP which provides assistance in evaluating and choosing among different sources of action ex. doctors enter symptoms into DSS so it can help diagnose and treat patients
classify operational support systems and how managers can use these systems to make decisions and gain competitive advantages
encompass transactional information which is all of the information contained within a single business process or unit of work and it supports daily operational or structured decisions ex. when customers are purchasing stocks, making a reservation or withdrawing cash from an ATM online transaction processing(OLTP): the capture of transaction and decent information using technology to 1)process information 2)store information 3) update existing information transaction processing system (TPS): the basic business system that serves the operational level (analysts) and assists in making structured decisions. ex operational accounting system such as payroll system or order entry system
SWOT analysis
evaluates an organization's Strength's, Weaknesses, Opportunities,Threats to identify significant influences that work for or against business strategy
MIS and business process improvement streamlining
happens at the managerial level improves business process efficiency by simplifying or eliminating unnecessary steps. Removes bottlenecks and eliminates redundancy. >bottlenecks: occur when resources reach full capacity and cannot handle any additional demands >redundancy: occurs when a task or activity is unnecessarily repeated for example if both the sales department and the acc. dept check sales credit
MIS and business process improvement automation
happens at the operational level it is the process of computerizing manual tasks, making them more efficient and effective and dramatically lowering operational costs; reduces cost and increases the speed of performing activities ex. payroll is such a tedious task for accountants to do so they use TPS to automate
MIS and business process improvement reengineering
happens at the strategic level it is the analysis and redesign of workflow within and between enterprises ex. of the basic steps in business model reengineering set project scope-->study competition-->create new processes-->implement solution systems thinking plays a big role in BPR bc BPR occurs at the systems level or company-wide level and the end-to-end view of a process
closed source
is any proprietary software licensed under exclusive legal right of the copyright holder
how did the internet enable changes to longstanding business processes?
it was a catalyst for ecommerce and ebusiness
understand the concept of efficiency and effectiveness metrics and how they are used by businesses
many managers turn to higher level metrics such as efficiency and effectiveness metrics to measure MIS projects. Measuring MIS projects helps determine the best practices for an industry. efficiency metrics:measure the performance of MIS itself, such as throughput, transaction speed, and system availability *extent to which a firm is using its resources in an optimal way* focus on technology itself effectiveness metrics: measure the impact MIS has on business processes and activities, including customer satisfaction and customer conversion rates *how well a firm is achieving its goals and objectives* large increases in productivity typically result from increases in effectiveness which focus on CSF's determined according to an organization's goals, strategies and objectives *optimal area organization wants to operate in is: high efficiency and high effectiveness
internet
massive network that connects computers all over the world and allows them to communicate with one another >originally military emergency communication system >disruptive technology
Define business related metrics
metrics: measurements evaluate results to determine if a project is meetings its goals Critical Success Factors: (metrics) the crucial steps companies perform to achieve their goals and objectives and implement their strategies Key Performance Indicators: (metrics) the quantifiable metrics a company uses to evaluate progress towards critical success factors. Can be internal or external CSFS are elements crucial for a business strategy's success. KPI's measure the progress of CSFs with quantifiable measurements. One CSF can have several KPI's
The three generic strategies
not organization or industry specific, can be applied to any business product or service 1)Broad Cost Leadership: broad market/low cost ex.Walmart broad range of products at low prices, its business strategy is to be the low-cost provider of goods for the cost-conscious consumer 2)Broad differentiation:broad market/high cost ex.Neiman Marcus offers a broad range of differentiated products at high prices, its business strategy offers a variety of specialty and upscale products to affluent customers 3)Focused strategy:narrow market/high cost or narrow market/low cost ex.Tiffany&Co offers differentiated product,jewlery, at high prices its business strategy allows it to be a high-cost provider of premier designer jewlery to affluent customers ex.Payless offers a specific product,shoes, at low prices, its business strategy is to be the low cost provider of shoes.Competes with Walmart which also sells low-cost shoes by offering a far bigger selection of sizes and styles
sustaining technology w/examples
produces an improved product that customers are eager to buy >lead in their markets >provide better,faster, and cheaper products in an established market >never lead in markets opened by disruptive technology ex.faster car,larger hard drive
visualization
produces graphical displays of patterns and complex relationships in large amounts of data. EIS use visualization to deliver specific key information to top managers at a glance with little or no interaction with the system
open source
refers to any software that is made free for any 3rd party to review and modify
granularity
refers to the level of detail in the model or the decision making process. The greater the granularity the deeper the level of detail or fineness of data. Moving up through the organizational pyramid, managers deal less with the details (finer information) and more with meaning fun aggregations of information (coarser information)
ebusiness revenue generating strategies
search engine optimization (SEO): determines how to make URL's more attractive to search engines resulting in higher ranking websites can generate revenue through: >pay per click:generates revenue each time a user clicks on a link that takes the user directly to an online agent waiting for a call >pay-per-call:generates revenue each time a user clicks on a link that takes the user directly to an online agent waiting for a call >pay-per-conversion:generates revenue each time a website visitor is converted to a customer
understand decision making how it differs by level and how each level uses systems to make those decisions
strategic level: uses CSF's focusing on effectiveness EIS managerial level: uses KPI's focusing on efficiency and CSF's focusing on effectiveness DSS,OLAP operational level: KPI's focusing on efficiency TPS,OLTP
business process modeling
the activity of creating a detailed flow chart or process map of a work process showing its inputs,tasks and activities in a structured sequence
ebusiness collaboration tools
the evolution of the web progressively enhanced business collaboration tools >email >instant messaging: provides real time communication >podcasting >videoconferencing >content management systems: help companies manage the creation,storage ,editing and publication of their website content
Chief Information Officer(CIO)
the head of the MIS department, is responsible for 1)overseeing all uses of MIS and 2) ensuring that MIS strategically aligns with business goals and objectives
why was the internet a big disruptor?
the internet was originally meant as an emergency military communication system whose purpose turned into a communication tool. It brought upon the world wide web (WWW), ecommerce, ebusiness which caused a paradigm shift aka changing the way companies and organizations behave.
disintermediation
the introduction of ebusiness brought about disintermediation which is when a company sells directly to the customer online and cust out the intermediary >lets the company shorten the order process and add value with reduced costs
explain the value of business processes for a company
to avoid pitfall and protect competitive advantage a company must constantly evaluate its business process in its value chain business process: a standardized set of activities that accomplish a specific task such as processing a customer's order. Transforms a set of inputs into a set of outputs. >improving the efficiency and effectiveness of a business process will improve the firm's value chain
click stream data
tracks the exact pattern of a consumer's navigation through a website it can reveal >number of page views >pattern of websites visited >length of stay on a website >date and time visited >number of customers with shopping carts >number of abandoned shopping carts
understand the usefulness of workflow control systems,BPMN and analytics to business process improvement
workflow: includes the tasks, activities, and responsibilities required to execute each step in a business process workflow control systems: monitor processes ensure tasks, activities and responsibilities are executed as specified