MIS 302 Test 1

Porter's Model of Industry Structure (5 forces)

"analyzing [these] forces illuminates an industry's fundamental attractiveness, exposes the underlying drivers of average industry profitability, and provides insight into how profitability will evolve in the future."; focuses externally and how the firm is positioned in the industry 1) Potential for new entrants 2) Bargaining Power of suppliers 3) Rivalry among existing competitors 4) Bargaining Power of buyers 5) Threat of substitutes

What are characteristics of complex adaptive systems?

-no one completely understands/controls -lots of elements -operates far from equilibrium -co-evolve with environment in nonlinear way

What are the categories of enterprise software?

1. ERP-enterprise resource planning 2. SCM-supply chain management 3. CRM-customer relationship management

What are the ways we find new peaks?

1. Keep moving (explore, be uncomfortable with status quo) 2. Deploy platoon of hikers (different experimenters) 3. Mix short/long jumps (adaptive walks--short term, long jumps--long term)

First Wave

1960s room-sized

Second Wave

1970s refrigerador sized minicomputers

Third Wave

1980s personal computers, Steve Jobs and IBM

Fourth Wave

1990s internet

Computer Architecture

4 parts of a computer: storage, input, processor, output

What is a bullwhip effect along a supply chain and how to eliminate it?

A bullwhip effect is the Variability in order size & order timing that INCREASES at each stage up the supply chain. TO STOP IT-you must have 1) VERTICAL INTEGRATION 2) ADD efficiently to supply chain (shorter and faster) LET ALL PARTICIPANTS HAVE ACCESS TO CONSUMER DEMAND INFORMATION

Complex Adaptive Systems (CAS)

A framework for business thinking and problem solving

To what degree has technology permeated every business discipline?

As technology becomes cheaper and more powerful, it pervades more industries and is becoming increasingly integrated into what were once nontech functional areas

What is the importance of grounding competitive advantage in strategic positioning?

Being different can lead to consistently outperforming rivals

What is the trajectory of disruptive technology?

Big bang, Interruption, frenzy (gilded age), crash or turning point - synergy (golden age) maturity, next great surge

Disintermediation

Both distributor and retailer omitted; ex. Dell

Examples of barriers to entry

Brand, regulation, distribution channels, capital intensity, switching costs, network effects

Byte Ranks

Byte-Kilobyte-Megabyte-Gigabyte-Terabyte-Petabyte

Example of process

CPU, main memory, special function cards

What is the impact of a disruptive technology?

Changes the landscape of communication and information

What are positive and negative global impacts of Moore's Law?

Computers are becoming faster in a short period of time (pro) and E-waste (con)

How does Zara's approach differ from the conventional wisdom in fashion retail?

Conventional wisdom suggest thats leveraging cheap contract manufacturing in developing countries can keep the cost of goods low, Zara produces everything itself

Marketing and sales

Customer engagement, pricing, promotion, and transaction

Key OS leaders in desktop, server, and mobile markets

Desktop--Windows, Mac Server--Windows, UNIX Mobile--Apple iOS, Android

What is an example of Open Source software? What is different about open source? Why would someone choose it over something that is packaged and made by someone like Microsoft?

Ex. Mozilla Firefox is different because the source code is released to the public..people choose Firefox because its more stable, faster, and more secure

Secondary components of value chain

Firm infrastructure, human resource management (HRM), technology/research and development, procurement

Example of cloud storage computing

Googledocs

What are the 5 components that make up an information system? Which one is the hardest to change and why?

Hardware, software, data, process, and people; people--training them with the new skills and have to pay them more if they work more

In the past decade, how has technology helped bring about radical changes across industries and throughout societies?

IT can be used to expand information, add efficiency, increase competitive advantage, etc.

What is information and from where is it derived? WHat wisdom can we get from the information we derive?

Information is derived from data analysis. Wisdom--understand customers need more from the data

Major components of computer architecture

Input, output, process, storage

Example of storage

Magnetic/optical disks, flashmemory and solid states

What kind of leadership do we need in a CAS?

Need leaders who have the following: sense making, improvisation skills, communication, wisdom, and respectful interaction

Example of cloud software computing

Netflix, Turbotax, Facebook

How is operational effectiveness different from strategic positioning?

Operational effectiveness: doing the same tasks better than your rival; the danger in this strategy is "sameness" ex HEB and Randall's Strategic positioning: doing different activities than your rivals or doing the same things in a completely different way: can be quite difficult to copy

Strategic positioning

Performing different tasks than rivals or the same task in different ways

Operational effectiveness

Performing the same tasks better than rivals can perform them

If you want to examine industry structure, what model do you look at?

Porter's Five Forces Model

If you want to choose your competitive strategy, what model do you look at?

Porter's Model of Competitive Strategy

If you want to link the parts of the value chain, what model do you look like?

Porter's Value Chain Model

What comes before technology?

STRATEGY comes before technology, this is important because without careful strategy, technology is not just worthless BUT actually could be damaging. *Ex: TIVO-dvr recording, easy to copy, loss money, no patents etc. also NASA-focused on tech not thinking about next stragety...whats after the shuttle?=UNPRODUCTIVENESS

What are common brands of packaged ERP software?

Sap and Oracle

What does path dependence mean?

Small random changes can lead to radically different outcomes (i.e. weather and traffic)

How do the different layers of the hardware/software stack relate to each other?

Storage is the container of all the software, and is where the OS is stored, Input is then processed by the OS, which runs in the RAM. Apps and programs will run from within the OS, and then the OS will provide an output.

What kind of data does Zara capture and how do they derive knowledge from this data?

Talk to customers about they want it put it on their PDA, look at what customers tried on but didn't buy, send what customers are buying to a database

Why is competitive advantage derived from operational effectiveness hard to sustain?

Technology can be copied very easily; ex: buying the same stuff as your rival, hiring people with similar backgrounds, copy the look on a rival's website, etc.

User Interface (UI)

The Junction between a user and computer program

What were the key reasons to Microsoft winning OS war as it relates to RAS?

They diversified--they provided many types of products instead of one product that only worked one way

Porter's Model of Competitive Advantage

This is the chart comparing cost, industry-wide scope, differentiation, and Focused Scope.

Hardware/software stack

Top: User Apps OS Hardware

Operations

Turning inputs into products or services

What wave of computing are we currently in?

Ubiquitous computing wave, weather-umbrella, lit pill box, iPad, iPhone

How does Zara differ with Gap in term of its strategy?

Vertically integrated, technology based, very little ads/sales

Volatile/nonvolatile memory

Volatile requires energy to maintain information, nonvolatile does not

Why do we care about disruptive technology?

We must be flexible in our mental model, shift business jobs, fueling globalization, redefining concepts of software and computing, drives decision making, raising privacy and security concerns

Major OS brands

Windows (controls 90% market), Mac OS, Linux

Explain how data, information, knowledge, and wisdom are related

Zara for example: They have the customer feedback (data), which gives them what clothes the customers like and don't like (information), gives the production team and idea of what clothes to design (knowledge) and then when they design the correct clothes due to the data and information they create a profit (wisdom)

Inventory=Death

Zara wins with INFORMATION SYSTEMS--vertical integration--just in time manufacturing--tech coordination--fine tuned logistics, technology MUST support business strategy (unlike Prada's invention)

How has Zara's parent company Inditex leveraged a technology-enabled strategy to become the world's largest fashion retailer?

Zara's design of clothing is based primarily on customer feedback. They use information systems to collect which clothes have been tried on and NOT purchased. They then ask the customer why they did not purchase the item---Allows customer satisfaction for a revised and improved item due

How has Dell's Value chain integration changed over time?

[How Dell started out]=Virtual Integration: Dell uses this information along with technology to eliminate the boundaries in the value chain among its suppliers, manufactures, and customers. Michael Dell describes this process as virtual integration. Technology has allowed coordination between the company's individual segments such as strategy-customer focus, supplier partnerships, mass customization, and just-in-time manufacturing. This helps to achieve new levels of efficiency, productivity, and remarkable returns to investors. [How Dell is Now]= Dell has started using more contract manufacturing, making them more like their competition and thus resulting in them losing their competitive advantage.

Robust Adaptive Strategies (RAS)

a company may use to live and prosper in a complex adaptive system

Moore's Law

a long term trend in the history of computing hardware whereby the number of transistors that can be placed inexpensively on an integrated circuit doubles every 18 months

Just-in-time manufacturing

a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs (tell production when to make the next part)

Vertical Integration

a single firm owns several layers of its value chain

Strategy

a word of military origin, refers to a plan of action designed to achieve a particular goal.

Infrastructure

all of the complementary firms in an industry

Desktop Application

an application that runs stand alone in a desktop or laptop

Information System (IS)

an integrated solution that combines 5 elements: hardware, software, data, procedures, and people who interact with and are affected by the system. Its critical for managers to think about systems, rather than just technologies, when planning for and deploying technology-enabled solutions

Programming Language

artificial language designed to communicate instructions to a machine, particularly a computer

Straddling

attempting to occupy more than one position, while failing to match the benefits of a more efficient singular focused rival

Solid state electronics

circuits or devices built entirely from solid materials and in which the electrons, or other charge carriers, are confined entirely within the solid material

What is a supply chain and how does disintermediation change a supply chain?

collapses the pathway between suppliers and consumers, which leads to less sharing of revenues and keeping interface with customers (data asset)

Software package or "suite"

collection of computer programs, usually application software and programming software of related functionality, often sharing a more-or-less common user interface and some ability to smoothly exchange data with each other

Server Farm

collection of computer servers usually maintained by an enterprise to accomplish server needs far beyond the capability of one machine, usually have backup servers

Server Farm

collection of computer servers usually maintained by an enterprise to accomplish server needs far beyond the capability of one machine, usually have backup servers. Can transfer to other server farms in case of a power outage

Industry

collection of firms with similar business models

Switching costs

consumers incur an expense to move from one product or service to another. A new entrant must not only demonstrate to consumers that an offering provides more value than the incumbent, they have to ensure that their value added exceeds the incumbent's value plus any perceived customer switching costs (could be money, time, data loss, contractual commitments, search cost, loyalty program)

Logistics (outbound and inbound)

coordinating and enabling the flow of people, information, goods, and other resources among locations

Outbound logistics

delivering products or services to consumers, distribution centers, retailers, or other partners

Cloud Computing

delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices as a metered service over a network

Imitation-resistant value chain

develop a way of doing business that others will struggle to replicate, and in nearly every successful effort of this kind, technology plays a key enabling role. example.. FreshDirect: the process of their value chain makes them successful

Storage (aka Hard Disk or Hard Drive)

device for storing and retrieving digital information, primarily computer data, nonvolatile

E-waste

discarded (often obsolete) electrical devices

How does diversity play a role in good strategy according to the articles we read?

diversify: not just having one, but multiple experiments to "attack" what we cannot predict ex: when purchasing stocks, you want to have a "diverse" portfolio in case one industry goes sour, you have several others that can hopefully keep you in the green

Mental Models

explanation of someone's thought process about how something works in the real work- shapes behavior and solves problem *have to have flexibility to evolve to be efficient

Enterprise Resource Planning (ERP)

facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders

Sustainable competitive advantage

financial performance that consistently outperforms their industry peers

Open source software

free to download, can change and submit back to founder (ex. Linux)

Inbound logistics

getting needed materials and other inputs into the firm from suppliers

Advantages of vertical integration

gives more control for working conditions, control over quality

Personal Digital Assistants (PDAs)

handheld computing devices that gather data and are meant to mobile use outside an office setting; ZARA uses them to get customer feedback

Disadvantages of contract manufacturing

have trouble monitoring quality of the product and working conditions that can be accused of using sweatshop labor and environmental abuse ex. Gap

Resource-based view of competitive advantage

if a firm is to maintain sustainable competitive advantage, it must control a set of exploitable resources that have 4 critical characteristics: 1. value 2. rare 3. imperfectly imitable (tough to imitate) 4. non substitutable. Having all 4 characteristics is key

Primary components of value chain

inbound logistics, operations, outbound logisitics, marketing and sales, support

Value Chain Model

inbound logistics->operations->outbound logistics->marketing and sales->service

Characteristics of Horizon 2

initiatives to build off existing capabilities to build new business

Characteristics of Horizon 3

initiatives to create business not in existence (what can I do next?)

Characteristics of Horizon 1

initiatives to defend or extend your current business

Disruptive technology

innovation that helps create a new market and value market -> disrupts an existing market & value network displacing an earlier technology--changes how things work

Operating System (OS)

interface between hardware and users and applications

Example of input

keyboard, mouse, microphone, scanner, USB

Sarbones-Oxley Act (SarbOx or SOX)

legislation enacted in the wake of accounting scandals in the early 2000s; act raised executive and board responsibility and tied criminal penalties to certain violations

What does punctuated equilibrium mean and what are examples of it in business world?

long periods of time where nothing changes followed by a revolutionary change (i.e. the stock market)

Advantages of contract manfucturing

lower costs and increased profits

Barrier to entry

makes it difficult for other firms to enter and industry and complete--when barriers to entry stop your competitors, sustainable profit more likely

Supply Chain Management (SCM)

management of a network of interconnected businesses involved in the ultimate provision or product and service packages required by end customers

Flash memory

mobile devices that hold memory even when the device is off

Supply chain

network of organizations and facilities that transforms raw materials into products delivered to customers (customers order from retailers, who order from distributors, who order from manufacturers, who order from suppliers)

Contract manufacturing

outsourcing production to third party firms

What is packaged ERP software and how is it different than custom ERP software?

packaged ERP software--better for product uniqueness custom ERP software--better for process uniqueness

Microprocessor

part of the computer that executes the instructions of a computer program (the brain of a computing device)

Hardware

physical components of IT, consisting of microelectronic based computing devices (computers, xbox)

HRM

recruiting, hiring, training, development

Technology

research and development

Support

service, maintenance, and customer support

Software

set of instructions that tells hardware what to do

SaaS (Software as a service)

software delivery model in which software and its associated data are hosted centrally (typically in the (Internet) cloud) and are typically accessed by users using a web browser

Database Management System (DBMS)

software package with computer programs that control the creation, maintenance, and use of a database

Enterprise application

software used by an organization to integrate many of its functions

Network effects

sometimes called network externalities or Metcalfe's Law--exist when a product or service becomes more valuable as more people use it; ex. Facebook

Magnetic/Optical storage

storage of data on a magnetized medium, without power, stored on a magnetic disk within the computer

Disadvantages of vertical integration

susceptible to problems in the headquarters' area (financial problems), rising costs of transportation, impacted by broader economic conditions

Customer Relationship Management (CRM)

technology to organize, automate, and synchronize business processes that interact with customers

Point of Sale (POS) systems

transaction processing systems that capture customer purchases (ex. cash registers) capture sales data and link it with inventory systems to subtract out a sold item

Example of output

video display, printer, speakers, slide projector, plotter

Random Access Memory (RAM)

volatile memory, stays on the computer as long as the computer stays on--does not save anything (the counter in the kitchen example)

Cost & differentiation

ways to compete in the industry (another way to compete: Product Uniqueness & Process Uniqueness, which is harder to copy); positional advantages since they describe the firms position in the industry as a leader in either cost or differentiation--this gives the value to the product

Horizontal Integration

when firms rely on other firms to complete their value chain

Fast follower problem

when savvy rivals learn from a previous seller's successes and missteps, and basically copies the idea and enters the market with a comparable or better product at a lower cost; example... DVR learned from TiVo

Economies of scale

when the cost of an investment can be spread across increasing units of production or in serving a growing customer base--firms that benefit from scale economies are sometimes referred to as being "scalable"

Examples of how technology has changed areas such as finance, marketing, operations, accounting, etc.

• Finance- ibankers work on IPOs and M&A using technology, evaluate firm based on technology, investment portfolio • Accounting - built on technology, records recorded and stored using info systems, audit reliability=reliability of technology, new field = tech audit • Supply chain - tech needed to produce goods and services and redesign • Management - well-developed IT mean competitive advantage, critical IT investments for company managing for a global firm means leveraging • Marketing - tied to tech, social media, use IT for sales, reputation, customer services & innovation