MIS4378 ADMIN exam 1 Ch 1-4

Creative Destruction

-GE's Approach under Jack Welch -Ask people to imagine how to destroy and grow your business

Four key IS infrastructure components:

-Hardware -Software -Networking -Data

The IT assets in IT infrastructure are:

-Hardware -Software and company apps -Network -Data -Website

IT Assets consist of:

-IT infrastructure -Information Repository

Zara's Value Chain of Primary activities for Operations:

-IT supports decisions about fabric, cut, and pricing -Products are hung on hangers to avoid ironing at stores -Price tags are already on the products -60% of merchandise is produced in house -Fabric is cut and dyed by robots in 23 highly automated factories

Zara's Value Chain of Primary activities for Inbound Logistics:

-IT-enabled JIT (just in time) strategy -Most dyes are purchased from Zara subsidiaries -Suppliers are located near production facilities

Primary activities in Porter's Value Chain Model are:

-Inbound Logistics-Materials, handling, delivery -Operations-Manufactoring, Assembly -Outbound Logistics-Order, Processing,Shipping -Marketing and Sales-Product, pricing, promotion, place -Service-Customer service, Repair

Infrastructure IT assets

-Information, technology, people and processes available to perform business processes and tasks. (not just technology!) -Might even include resources not owned by the firm (e.g., eBay, Facebook, LinkedIn)

The Value System

-Interconnecting relationships between organizations Extra info: -The value chain model can be extended by linking many value chains into a value system. -Much of the advantage of supply chain management comes from understanding how information is used within each value chain within the larger system.

Examples of Capabilities:

-Knowledge -Technical skills of IT staff -Friendly, helping nature of IT staff

Zara's Value Chain of Primary activities for Marketing and Sales:

-Limited inventory permits low percent of unsold goods (10%) -Point-of-Sales systems linked to HQ -Managers provide information on customer needs daily via hand-held computers

In Porter's Value Chain Model Competition can come from:

-Lowering the cost to perform an activity, increasing profit. -Adding value to a product or service so buyers will be willing to pay more (again, increasing profit).

Zara's Value Chain of Secondary activities for Human Resources:

-Managers are trained to understand customer needs and report to designers daily -Managers help Zara keep on cutting edge of fashion

Managerial Levers consist of

-Organization -Control -Culture

Supportive in Porter's Value Chain Model are:

-Organization -Human Resources -Technology -Purchasing

What is organizational strategy?

-Organizational design -Choices about work processes

Culture Managerial Levers consist of:

-Performance measurement and evaluation -Incentives and rewards -Values

Strategic approaches

-Porters generic strategies -Dynamic environment strategies

Five competitive forces with potential strategic use of information resources

-Potential threat of new enterants -Bargaining power of buyers -Threat of substitute products -Bargaining power of suppliers -Industry competitors

Two broad categories in Porter's Value Chain Model:

-Primary activities-relate directly to the value created in a product or service. -Support activities-make it possible for the primary activities to exist and remain coordinated.

The capabilities in Technical Skills are:

-Proficiency in systems analysis -Programming and web design skills -Data analysis/data scientist skills -Network design and implementation skills

Examples of Assets:

-Proprietary technology (e.g., platforms) -Online community -Customer information

Strategic use of Threat of substitute products :

-Redefine products and services -Improve price/performance

Strategic use of Bargaining power of suppliers :

-Selection of supplier -Threat of backward integration

The capabilities in Relationship Skills are:

-Spanning skills such as business-IT relationship management -External skills such as vendor-management

Strategic use of Potential threat of new enterants :

-Switching costs -Access to distribution channels -Economies of scale

IT capabilities consist of:

-Technical Skills (designing, developing, implementing IS) -IT Management Skills (managing the IT function and IT projects) -Relationship Skills (-Outside the organization (vendors, customers) -Within the organization (managers))

What is an IS Strategy?

-The plan an organization uses in providing information services

Porter's Value Chain Model

Addresses the activities that create, deliver, and support a company's product or service.

Mission Statement: We seek to be Earth's most customer-centric company for three primary customer sets: consumer customers, seller customers and developer customers.

Amazon

Software: What, Who, Where

What:The programs, applications, and utilities Who:System users and managers Where:The hardware it resides on and physical location of that hardware

Networking: What, Who, Where

What:The way hardware is connected to other hardware, to the Internet and to other outside networks Who:System users and managers; company that provides the service Where:Where the nodes, wires, and other transport media are

What do business models not include?

Where the business seeks to go, and only the revenue portion of how it expects to get there

When do customers buy the designs? Why?

Customers need to buy designs on the spot—it will be gone next time they visit

Information repository

Data captured, organized, and retrievable by the firm

Mission Statement: To provide the best customer service possible. Internally we call this our WOW philosophy.

Zappos

Zara's Value Chain of Secondary activities for Technology:

-All primary activities are supported by integrated technology -Automated conveyers speed up logistics

The information Systems Triangle consists of

-Business Strategy -Organizational Strategy -Information Strategy ALL THREE NEED TO BE BALANCED

The capabilities in IT Management Skills are:

-Business process knowledge -Ability to evaluate technology options -Project management skills -Envisioning innovative IT solutions

Strategic use of Bargaining power of buyers :

-Buyer selection -Switching costs -Differentiation

IT Influence on threat of new enterants :

-Can be lowered if there are barriers to entry -Sometimes IS can be used to create barriers to entry

Beware of Hypercompetition because

-Can lead to a "red ocean" environment (Cutthroat competition - zero sum game) -Every advantage is eroded—becoming a cost. -Sustaining an advantage can be a deadly distraction from creating new ones. -Initiatives are achieved through series of small steps. Get new advantage before old one erodes.

Zara's Value Chain of Primary activities for Outbound Logistics:

-Clothes move on miles of conveyer belts -Clothes reach stores within 48 hours of the order

Social Strategy Consists of:

-Collaboration -Engagement -Innovation

What is a strategy?

-Coordinated set of actions to fulfill objectives, purposes, or goals -It sets limits on what the organization seeks to accomplish -Starts with a mission

Three primary strategies for achieving competitive advantage

-Cost leadership -Differentiation -Focus

Strategic use of Industry competitors :

-Cost-effectiveness -Market access -Differentiation of product or service

The IT assets in Information Repository are:

-Customer information -Employee information -Marketplace information -Vendor information

Organization Managerial Levers consist of:

-Decision rights -Informal networks -Formal reporting relationships -Business Processes

Control Managerial Levers consist of:

-Decision rights -Performance measurement and evaluation -Data -Planning

Managers must take multiple views of the strategic landscape, such as:

-First View -Second View -Third View

What is a business strategy?

-Where a business seeks to go and how it expects to get there -It is not a business model, although it includes business models as one component of a business strategy

Achieving competitive advantage through Focus:

-limited scope - can accomplish this via cost leadership or differentiation within the segment

How often do customers visit Zara each year?

17 times a year compared to 4 times a year in an average store

On what were bonuses to doctors based under the "fix me" system in the Kaiser Permanente case (KP)?

Billings

What goal alignment has helped KP's success? Alignment between...

Business strategy, organizational design, and information systems strategy (KNOW THESE THREE)

IT Influence on Bargaining power of buyers :

Can be high if it's easy to switch. Switching costs are increased by giving buyers things they value in exchange such as lower costs, effort, or time; or useful information

Better to adopt a "blue ocean" strategy

Change the industry; create new segments/products

Example of IT Influence on Bargaining power of suppliers :

Computer-controlled cutting machine can cut 1,000 layers at a time. A large number of sewers are available.

GYB:

Counteract that by growing the business in some way to: Reach new customers/markets Better serve existing customers

IT Influence on Threat of substitute products :

Depends on buyers' willingness to substitute and the level of switching costs buyer's face

Collaboration in Social Strategy

Extend the reach of stakeholders to find and connect with one-another

What IS components are part of the goal alignment that has helped KP's success?

Fast communication with patients outside of face-to-face appointments; automatic email reminders to patients for exercise or medications

Key idea of Porters generic stratigies:

Firms achieve competitive advantage through cost leadership, differentiation, or focus.

D'Avenis says:

Goal of advantage should be disruption, not sustainability

What are information resources?

IT assets and capabilities (not just assets!)

Example of IT Influence on Threat of substitute products :

IT helps Zara offer extremely fashionable clothing that would last 10 wears. The result is trendy clothes at reasonable prices, making substitutes difficult

Innovation in Social Strategy

Identify, describe, prioritize new ideas

DYB:

Imagine how competitors would want to destroy your business.

In the Kaiser Permanente case (KP), What is the new basis for end-of-year bonuses?

Improved health of patients

Engagement in Social Strategy

Involve stakeholders in the business via blogs; communities

Achieving competitive advantage through Cost leadership:

Lowest-cost producer

How do you manage organizational, control, and cultural variables?

Managerial Levers

How many designs do they make each year and is it possible to make that many without IT?

More than 30,000, and No, of course not!

Zara's Value Chain of Primary activities for Service:

No focus on service; clothes only last 10 wears

In the Kaiser Permanente case (KP), Could only the IS components be changed to achieve their success?

No, the business strategy must be aligned with the IS, in addition to incentives

In the Kaiser Permanente case (KP),Could only the strategy be changed to achieve their success?

No, without the new incentives and new IS, employees would not wish to cooperate, nor would they be able to do so.

Strategic Landscape First View:

Porter's five competitive forces model

Strategic Landscape Second View:

Porter's value chain.

What would the new idea be called instead of a "fix me" system in the Kaiser Permanente case (KP)?

Proactive health system

Achieving competitive advantage through Differentiation:

Product is unique

Example of IT Influence on Bargaining power of buyers :

Recently, Zara has created a laser-created database of sizes for 10,000 "real" women volunteers. New products will be more likely to fit.

IT Influence on Industrial competitors :

Rivalry is high when it is expensive to leave an industry, the industry's growth rate is declining, or products have lost differentiation

Mission Statement: L.L. Bean

Sell good merchandise at a reasonable profit, treat your customers like human beings and they will always come back for more.

One IS Strategy:

Social Strategy

Key idea of Dynamic environment strategies:

Speed, agility, and aggressive moves and countermoves by a firm create competitive advantage.

IT Influence on Bargaining power of suppliers :

Strongest when there are few firms to choose from, quality of inputs is crucial, or the volume of purchases is insignificant to the supplier

What do business models include?

Subscriptions, advertising, licenses, etc.

Cost leadership strategic target and strategic advantage and example

Target-Industry wide Advantage-Low cost position ex: Wal-Mart

Differentiation strategic target and strategic advantage and example

Target-industry wide Advantage-uniqueness perceived by customer ex: Apple

Focus strategic target and strategic advantage and example

Target-particular segment only Advantage-BOTH uniqueness perceived by customer and low cost position ex uniqueness: Marriott ex cost leadership: Ritz Carlton

Application to Information Systems of Dynamic environment strategies:

The speed of change is too fast for manual response making IS critical to achieving business goals.

Zara's Value Chain of Secondary activities for Organization:

Tightly-knit collaboration between designers, store managers, market specialists, production managers, production planners

What was KP's Business Strategy in 2015?

To promote healthcare at a lower cost

Application to information systems of Porters generic stratigies:

Understanding which strategy is chosen by a firm is critical to choosing IS to complement the strategy.

Data: What, Who, Where

What:Bits of information stored in the system Who:Owners of data; data administrators Where:Where the information resides

Hardware: What, Who, Where

What:The physical devices of the system Who:System users and managers Where:Physical location of devices (cloud, datacenter, etc.)

Example of IT Influence on threat of new enterants :

Zara supports its tightly knit group of designers, market specialists, production managers, and planners. These relationships take time. Rich customer information in its database would take time to develop.

Example of IT Influence on Industrial competitors :

Zara tracks breaking trends and customer preferences. The result is the highest sales per square foot in the industry without much advertising, low inventories, only 10% of inventory unsold, new products from idea to shelves in 15 days, and manufacturing efficiencies

Strategic Landscape Third View:

focuses on the types of IS resources needed (Resource Based View).