ITM 209 Exam 1
Click-and-mortar
A business that operates in a physical store and on the Internet • i.e. Barnes & Noble
Brick-and-mortar
A business that operates in a physical store without an Internet presence • i.e. T.J. Maxx
Pure Play
A business that operates on the Internet only without a physical store • i.e. Google
Neural Networks
A category of AI that attempts to emulate the way the human brain works • Analyze large quantities of information to establish patterns and characteristics when the logic or rules are unknown • Learn and adjust to new circumstances on their own • Lend themselves to massive parallel processing • Function without complete or well-structured information • Cope with huge volumes of information with many dependent variables • Analyze nonlinear relationships in information • Finance industry relies on these • i.e. credit card companies checking for fraud • Fuzzy Logic: a mathematical method of handling imprecise or subjective information Fuzzy logic and neural networks are often combined to express complicated/subjective concepts in a form that makes it possible to simplify the problem and apply rules that are executed with a level or certainty
Web 3.0
- Based on "intelligent" Web applications using natural language processing, machine-based learning and reasoning, and intelligence applications
Porter's Three Generic Strategies Examples
- Broad market/low cost: Wal-mart competes by offering a broad range of products at low prices. Its business strategy is to be the low-cost provider of goods for the cost-conscious consumer - Broad market/high cost: Neiman Marcus competes by offering a broad range of differentiated products at high prices. Its business strategy is to offer a variety of specialty and upscale products to affluent consumers - Narrow market/low cost: Payless competes by offering a specific product, shoes, at low prices. Its business strategy is to be the low-cost provider of shoes. Payless competes with Wal-Mart, which also sells low-cost shoes, by offering a far bigger selection of sizes and styles - Narrow market/high cost: Tiffany & Co. competes by offering a differentiated product, jewelry, at high prices. Its business strategy allows it to be a high-cost provider of premier designer jewelry to affluent consumers
Business Process Improvement
- Continuous process improvement model: attempts to understand and measure the current process and make performance improvements accordingly - Document As-Is process, establish measures, follow process, measure performance, identify and implement improvements - Automation: the process of computerizing manual tasks, making them more efficient and effective, and dramatically lowering operational costs o TPSs are often used for to automate business processes
Disruptive vs. Sustaining Technologies
- Disruptive technology: a new way of doing things that initially does not meet the needs of existing customers o Tend to open new markets and destroy old ones o Enter low end of the marketplace and eventually evolve to displace high-end competitors and their reigning technologies o i.e. Sony, Charles Schwab, Hewlett-Packard, IBM, Intel, Intuit, Microsoft, Oracle, Quantum - Sustaining technology: produces an improved product customers are eager to buy o Tend to provide us with better, faster, and cheaper products in established markets
Business Process Management
- Focuses on evaluating and improving processes that include both person-to-person workflow and system-to-system communications - Drivers of BPM: o Modeling for understanding and documentation o Modeling for redesign o Modeling for execution and compliance - Allows business processes to be executed more efficiently and measures the performance and identifies opportunities for improvement - Benefits include: o Update processes in real-time; improve cycle time o Reduce overhead expenses; improve productivity o Automate key decisions; improve forecasting o Reduce process maintenance cost; reduce operating cost o Improve customer service
Business Process Reengineering
- Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in cost, quality, speed, and service - Business Process Reengineering (BPR): the analysis and redesign of workflow within and between enterprises o Focus on the core processes that are critical to performance rather than on marginal processes that have little impact o In the extreme, BPR assumes the current process is irrelevant, does not work, or is broken and must be overhauled form scratch 1. Set project scope 2. Study competition 3. Create new process 4. Implement solution
eBusiness Advantages and Challenges
- Identifying limited market segments - Managing consumer trust o The physical separation between buyer and selling, the physical separation between buyer and merchandise, and customer perceptions about the risk of doing business online provide unique challenges o To build trust: be accessible and available to communicate in person with your customers - Ensuring consumer protection - Adhering to taxation rules o Must obey a patchwork of rules about which customers are subject to sales tax on their purchases and which are not
Internet and the World Wide Web
- Internet: a massive network that connects computers all over the world and allows them to communicate with one another; synonymous with the WWW - Organizations must be able to transform as markets, economic environments, and technologies change - Focusing on the unexpected allows an organization to capitalize on the opportunity for new business growth from a disruptive technology - The Internet began as an emergency military communications system operated by the Department of Defense - Gradually the Internet moved from military pipeline to a communication tool for scientists to businesses - Reasons for WWW growth o Mirco computer revolution o Advancements in networking o Easy browser software o Speed, convenience, and low cost of email o Web pages easy to create and flexible
Process Improvements
- Process Improvement is used to eliminate unnecessary work and improve productivity - Process Improvement involves identifying, analyzing, and improving the process - Process Improvement involves taking action to ensure process is controlled vs. re-building the structural costs we eliminated - Improvement in processes is critical to seizing and maintaining a competitive advantage - Continuous process improvement model: attempts to understand and measure the current process and make performance improvements accordingly - Document As-Is process, establish measures, follow process, measure performance, identify and implement improvements
Web 1.0
- Text based? - Web 1.0 (Business 1.0): a term to refer to the WWW during its first few years of operation between 1991 and 2003 - E-commerce: the buying and selling of goods and services over the Internet - E-business: includes e-commerce along with all activities related to internal and external business operations - Entrepreneurs began creating the first forms of e-business - E-business opened up a new marketplace for any company willing to movie its business operations online - E-business created a paradigm shift, transforming entire industries and changing enterprise wide business processes that fundamentally rewrote traditional business rules
Web. 2.0
- The next generation of Internet use - a more mature, distinctive communication platform characterized by new qualities of collaboration, sharing, and free o User distributed content o Content sharing through open sourcing o Collaboration inside the organization o Collaboration outside the organization - Encourages user participation and the formation of communities that contribute to the content - Technical skills no longer required to use and publish information to the WWW, eliminating entry barriers for online business
eBusiness Measurements
- What are the most effective types of measurements and what are examples? - Most companies measure the traffic on a Web site as the primary determinant of the Web site's success - However, a large amount of Web site traffic does not necessarily equate to large sales - Many organizations with high Web site traffic have low sales volumes - Clickstream data: tracks the exact pattern of a consumer's navigation through a website o Can reveal: Number of page views Pattern of websites visited Length of stay on a website
Business Competitive Advantages Using IT Enablers
- When performing value chain analysis, a firm could survey customers about the extent to which they believe each activity adds value to the product or service - Then the competitive advantage decision for the firm is whether to o 1. Target high value-adding activities to enhance their value further o 2. Target low value-adding activities to increase their value o 3. Perform some combination of the two IT can support many competitive strategies including broad cost leadership, broad differentiation, and focused strategies IT can help: o Build customer-focused businesses o Reengineer business processes o Businesses become agile companies o Create virtual companies o Build knowledge-creating companies
The Internet of Things
- loT is the interconnection of uniquely identifiable embedded computing devices within the existing Internet infrastructure - Things, in the loT, can refer to a wide variety of devices such as heart monitoring implants, electric clams in coastal waters, or automobiles with build-in sensors - i.e. smart thermostat systems and washer/dryers that utilize wifi for remote monitoring - loT is also expected to generate large amounts of data from diverse locations - Know slide 9 of lecture 9/28
Porter's Three Generic Strategies Model
1) Broad Cost Leadership 2) Broad Differentiation 3) Focused Strategy
B2C eBusiness Types
1. Brick-and-mortar 2. Click-and-mortar 3. Pure play
Virtual Reality
A computer-simulated environment that can be a simulation of the real world or an imaginary world • Augmented reality: the viewing of the physical world with computer-generated layers of information added to it • Haptic interface: uses technology to allowing humans to interact with a computer through bodily sensations and movements, i.e. cell phone vibrating in your pocket - Data Mining systems: sift instantly through information to uncover patterns, trends, correlations, and relationships Include many forms of AI such as neural networks and expert systems Predictive Analytics offers insights and improved decision making, especially in "big data" domains
Process
A group of business activities undertaken by an organization in pursuit of a common goal Business processes is usually interdependent (operate with other processes)
eBusiness Models
A plan that details how a company creates, delivers, and delivers value on the Internet
Intelligent Agents
A special-purpose, knowledge-based information system that accomplishes specific tasks on behalf of its users • Usually have a graphical representation for an information search agent, such as Sherlock Holmes • Shopping Bot: simplest example of intelligent agents, it is software that will search several retailer websites and provide a comparison of each retailer's offerings, price and availability • Multiagent system: groups of intelligent agents can work independently and interact with each other • i.e. environmental scanning and competitive intelligence, model stock market fluctuations, predict the escape routes people seek in a burning building, anticipate how changes in conditions will affect the supply chain
Business Process
A standardized set of activities that accomplish a specific task, such as processing a customer's order o Transform a set of inputs into a set of outputs (goods or services) for another person or process by using people and tools
Genetic Algorithms
An AI system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem, essentially an optimizing system: it finds the combination of inputs that gives the best outputs • Mutation: the process within the genetic algorithm of randomly trying combinations and evaluating the success (or failures) of the outcome • Best suited for decision-making environments that thousands or millions of solutions are possible • i.e. investment companies in trading decisions
Porter's Five Forces Model
Analyzes the competitive forces within the environment in which a company operates to assess the potential for profitability in an industry Buyer Power Supplier Power Threat of Substitute Product or Services Threat of New Entrants Rivalry amongst Existing Competitors
Business-to-Consumer (B2C):
Applies to any business that sells its products or services directly to consumers online
Consumer-to-Business (C2B)
Applies to any consumer who sells a product or service to a business on the Internet o The demand for C2B businesses will increase over the next few years due to customers' desire for greater convenience and lower prices o i.e. priceline.com
Business-to-Business (B2B)
Applies to businesses buying from and selling to each other over the Internet o Electronic marketplace (e-market): interactive business communities providing a central market where multiple buyers and sellers can engage in e-business activities o 80% of all online business and are more complex with greater security needs than other types o i.e. Oracle and SAP
Consumer-to-Consumer (C2C)
Applies to consumers offering goods and services to each other on the Internet o Communities of interest: people interact with each other on specific topics, such as golfing and stamp collections o Communities of relations: people come together to share certain life experiences, such as cancer patients, senior citizens, and car enthusiasts o Communities of fantasy: people participate in imaginary environments, such as fantasy football teams and playing one-on-one with Michael Jordan
Reverse Auction
Buyers use to purchase a product or service, selecting the seller with the lowest bid
Expert Systems
Computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems • Most common AI system in the business arena because they fill the gap when human experts are difficult to find or retain or are too expensive • i.e. playing chess, assist in medical diagnosis
Online Auctions
Electronic Auctions (e-auction) Forward Auction Reverse Auction
Value Chain and Value Chain Analysis
Firms make profits by applying a business process to raw inputs to turn them into a product or service that customer find valuable Business Process: a standardized set of activities that accomplish a specific task, such as processing a customer's order
Guest Speaker General Electric - 9/14/16
GE Matt Logar and Dave Della Vedova - Founded by Thomas Edison in 1878 - Most revenue comes from capital, next energy services/oil & gas/power & water - Industrial Internet: driving customer value through the use of data analytics o Forces shaping the Industrial Internet: IoT Intelligent machines Big data Analytics o Equipment: improved asset utilization and performance Visualization of highly relevant machine data for better asset management Improve operations and asset ROI o Operations: improved workflow and scheduling Reduce operational waste and System bottlenecks Real-time monitoring on use and scheduling of resources (doctors, nurses, patients, equipment assets) o Safety: improved patient care delivery Hand Hygiene....deep analytics with minimal change to existing workflow Dose Management...extensive data sets highlight variation to assist optimization & standardization - Simplification: contemporizing our technologies to enable the Sunday/Monday experience - Employee experience & security: a balancing act between - o Access anywhere, any device, application choice o Risk, visibility, compliance - Cyber Security: protecting our competitive advantage o Threat landscape Advanced Persistent Threat Cyber Crime (growing fast) Industrial Control Systems (ICS) (growing fast) Hacktivism
Business-facing processes (back-office processes)
Invisible to the external customer but essential to the effective management of the business o Goal setting, day-to-day planning, giving performance feedback and rewards, and allocating resources
Operational, Managerial and Strategic Support Systems
Managerial Decision-Making Challenges o 1. Managers need to analyze large amounts of information o 2. Managers must make decisions quickly o 3. Managers must apply sophisticated analysis techniques, such as Porter's strategies or forecasting, to make strategic decisions Decision-Making Process o 1. Problem identification o 2. Data collection o 3. Solution generation o 4. Solution test o 5. Solution selection o 6. Solution implementation o Analytics: the science of fact-based decision making
Managerial Support Systems
Managerial Level: employees are continuously evaluating company operations to hone the firm's abilities to identify, adapt to, and leverage change Managerial decisions cover short- and medium-range plans, schedules, and budgets along with policies, procedures, and business objectives for the firm Allocate resources and monitor performance of organizational subunits (including departments, divisions, process teams, project teams, and other work groups) Semi structured decisions: occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision o These are managerial decisions o i.e. decisions about producing new products or changing employee benefits range from unstructured to semi structured
Decision Support Systems
Model information using OLAP, which provides assistance in evaluating and choosing among different courses of action o Enables high-level managers to examine/manipulate large amounts of detailed data from different internal/external sources o Analyzing complex relationships among thousands or even millions of data items to discover patterns, trends, and exception conditions o Uses 4 quantitative models: What-if analysis, Sensitivity analysis, Goal-seeking analysis, and Optimization analysis o i.e. doctors may enter symptoms into a decision support system so it can help diagnose and treat patients TPSs supply transactional data to DSS; the DSS then summarizes and aggregates the information from the different TPSs, which assist managers in making semi structured decisions
Workflow control systems:
Monitor processes to ensure tasks, activities, and responsibilities are executed as specified
Operational Support Systems
Operational Level: employees develop, control, and maintain core business activities required to run the day-to-day operations Structured decisions: arise when established processes offer potential solutions o These are operational decisions o Made frequently, almost repetitive in nature o They affect short-term business strategies o i.e. recording inventory, creating the employee staffing and weekly production schedules
HBR: Staple Yourself To An Order
Order Management Cycle (OMC): the ten steps from planning to post sales service, that define a company's business system; every customer's experience is determined by a company's OMC The best way for managers to learn this lesson, when OMC is substituted for narrow functional interests -> conflicting systematic solutions, and pass it on to their whole work force is to staple themselves to an order so they can track it as it goes through the OMC Horizontal gaps: o The number of times an order or the information about an order physically moves horizontally from one functional department to another o Since most companies are run vertical-wise, every time an order moves horizontally, it risks falling through the gaps
Rivalry among Existing Competitors
Rivalry is high when competition is fierce in a market and low when competitors are more complacent Product Differentiation: when a company develops unique differences in its products or services with the intent to influence demand, can use differentiation to reduce rivalry
Customer-facing Processes (front-office processes)
Result in a product or service received by an organization's external customer o Fulfilling orders, communicating with customers, and sending out bills and marketing information
Electronic Auctions (e-auction)
Sellers and buyers solicit consecutive bids from each other and prices are determined dynamically
Forward Auction
Sellers use as a selling channel to many buyers and the highest bid wins
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
Executive Information Systems
Specialized DSS that supports senior-level executives and unstructured, long-term, non-routine decisions requiring judgment, evaluation, and insight o Granularity: the level of detail in the model or the decision-making process Lower management deals with detailed information (finer information), executive management deals with meaningful aggregations of information (coarser information) The greater the granularity, the deeper the level of detail or fitness of data
Strategic Support Systems
Strategic Level: managers develop overall business strategies, goals, and objectives as part of the company's strategic plan Monitor the strategic performance of the organization and its overall direction in the political, economic, and competitive business environment Unstructured decisions: occurring in situations in which no procedures or rules exists to guide decision makers toward the correct choice o These are strategic decisions o Infrequent and extremely important o Typically related to long-term business strategy o i.e. enter a new market, enter a new industry over the next 3 or so years o Managers rely on many sources of information, along with personal knowledge, to find solutions
Systems Thinking and Systems Components
System thinking: a way of monitoring the entire system by viewing multiple inputs being processes or transformed to produce outputs while continuously gathering feedback on each part - Focuses on how the thing being studied interacts with the other constituents of the system - a set of elements that interact to produce behavior - of which it is a part - Expands its view to take into account larger and larger number of interactions as an issue is being studied or a problem is being solved
Buyer Power
The ability of buyers to affect the price they must pay for an item Factors include, number of customers, their sensitivity to price, size of orders, difference between competitors, and availability of substitute products High buying power: customers can force a company and its competitors to compete on price, which typically drives it down Ways to reduce buyer power: - Switching Costs: they are costs that make customers reluctant to switch to another product or service - Loyalty Programs: reward customers based on their spending • Good example of using MIS to reduce buyer power
Transaction Processing Systems
The basic business system that serves the operational level (analyst) and assists in making structured decisions o i.e. an operational accounting system such as a payroll system or and order-entry system o Inputs are source documents: the original transaction record
Business process characteristics:
The processes have internal and external users o A process is cross-departmental o The processes occur across organizations o The processes are based on how work is done in the organization o Every process should be documented and fully understood by everyone participating in the process o Processes should be modeled to promote complete understanding
Supplier Power
The suppliers' ability to influence the prices they charge for suppliers (including materials, labor, and services) Factors include, number of suppliers, size of suppliers, uniqueness of services, and availability of substitute products Supply chain: all parties involved, directly or indirectly, in obtaining raw materials or a product High supplier power: the supplier can influence the industry by - Charging higher prices - Limiting quality or services - Shifting costs to industry participants When supplier power is high, the buyers will pass on the increase to their customers by raising prices on the end product Ways of decreasing supplier power: - Using MIS to find alternative products - Buyers can use MIS to form groups or collaborate with other buyers, increasing the size of the buyer group and reducing supplier power
Threat of Substitute Product or Services
The threat of substitutes is high when there are many alternatives to a product or service and low when there are few alternatives from which to choose Want to be in a market with few substitutes Ways to reduce threat of substitutes - Offering additional value through wider product distribution - Offer various add-on services, making substitutes less of a threat
Threat of New Entrants
Threat of new entrants is high when it is easy for new competitors to enter a market and low when there are significant entry barriers to joining a market Entry Barrier: a feature of a product or service that customer shave come to expect, and entering competitors must offer the same for survival
AI Systems
Various commercial applications of artificial intelligence; AI systems Increase speed and consistency of decision making, solve problems with incomplete information, and resolve complicated issues that cannot be solved by conventional computing o Five most familiar AI systems: Expert Systems Neural Networks (artificial neural network) Genetic Algorithms Intelligent Agents Virtual Reality
Value Chain Analysis
Views a firm as a series of business processes, each of which adds value to the product or service o It is a useful tool for determining how to create the greatest possible value for customers o 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
