301 Exam #1
information systems
An integrated solution that combines six components: hardware, software, telecommunications, data, procedures, and the people who interact with and are impacted by the system.
Explain why environments are important for understanding a business
Business environments are constantly changing. New developments in technology, politics, customer preferences, and regulations happen all the time. In general, when businesses fail, it is often because they failed to respond adequately to changes in their environments. A firm must monitor changes in its environment and share information with key entities in that environment in order to stay in business.
An example of raw data from a national chain of automobile stores would be A) an average of 13 Toyotas are sold daily in Kentucky. B) 30-percent increase in Toyota RAV4 sales during September in Kentucky. C) 1 Toyota RAV4 sold March 3, 2013, in Louisville, Kentucky. D) 10-percent improvement in sales projections for Toyota sales next year. E) a demographic breakdown of all Toyota buyers in the past year.
C
collaborative filtering
A classification of software that monitors trends among customers and uses this data to personalize an individual's customer's experience
Describe how the Internet has changed competitive forces and competitive advantage.
The Internet has nearly destroyed some industries and severely threatened others. The Internet has also created entirely new markets and formed the basis of thousands of new businesses. The Internet has enabled new products and services, new business models, and new industries to rapidly develop. Because of the Internet, competitive rivalry has become much more intense. Internet technology is based on universal standards that any company can use, making it easy for rivals to compete on price alone and for new competitors to enter the market. Because information is available to everyone, the Internet raises the bargaining power of customers, who can quickly find the lowest-cost provider on the Web.
Explain how the value chain model can be used to identify opportunities for information systems.
Information systems can be used at each stage of the value chain to improve operational efficiency, lower costs, improve profit margins, and forge a closer relationship with customers and suppliers. Organizations can use information systems to help examine how value-adding activities are performed at each stage of the value chain. Information systems can improve the relationship with customers (customer relationship management systems) and with suppliers (supply chain management systems) who may be outside the value chain but belong to an extended value chain. Information systems can help businesses track benchmarks in the organization and identify best practices of their particular industries. After analyzing various stages in the value chain, an organization can devise a list of candidate applications for information systems.Explain how the value chain model can be used to identify opportunities for information systems.
Explain how the value web helps businesses identify opportunities for strategic information systems.
Information systems enable value webs that are flexible and adaptive to changes in supply and demand. Relationships can be bundled or unbundled in response to changing market conditions. Firms can accelerate their time to market and to customers by optimizing their value web relationships to make quick decisions on who can deliver the required products or services at the right price and location. Information systems make it possible for companies to establish and operate value webs.
long tail
Refers to an extremely large selection of content or products. This is a phenomenon where firms can make money by offering near limitless selection
Role of technology
Technology can play a key role in creating and reinforcing assets for sustainable advantage. This includes: a. enabling an imitation resistant value chain b. strengthening a firm's brand c. collecting useful data d. establishing switching costs e. creating a network effect f. creating or enhancing a firm's scale advantage g. enabling product or service differentiation h. offering an opportunity to leverage unique distribution channels
churn rate
The rate at which customers leave a product or service -Until recently, Netflix had a churn rate of less than 4 %
logistics
Coordinating and enabling the flow of goods, people, information, and other resources among locations
Fresh Direct Background
-New York City-based grocery firm, focused on the two most pressing problems for Big Apple shoppers—selection is limited and prices are high -The firm's "storefront" is a Web site offering a product mix heavy on fresh produce, as well as one-click menus and semiprepared specials like "meals in four minutes." Deliveries set out from a vast warehouse the size of five football fields located in a lower-rent industrial area of Queens. -This kind of size allows FreshDirect to offer a fresh goods selection that's over five times larger than local supermarkets
Zara data collection
To make sure that the stores carry the kinds of products customers want, Zara managers ask the customers (data collection) Zara's store managers are armed with personal digital assistants (PDAs) that can be used to: ◦Gather customer input ◦Chat up with customers to gain feedback on what they'd like to see more of Incentives for success—as much as 70 percent of salaries can come from commissions Staff also checks for customer preferences by looking at unsold items (clothes left in fitting rooms) PDAs are linked to the store's point-of-sale (POS) system Point-of-sale (POS) system: A transaction process that captures customer purchase information, showing how garments rank by sales Managers can send updates that combine the hard data captured at the cash register with insights on what customers would like to see
senior managers
(ess) need summary information that quickly informs them about the overall performance of the firm, such as gross sales revenues, sales by product group and region, and overall profitability.
middle managers
(mis) need more specific information on the results of specific functional areas and departments of the firm, such as sales contacts by the sales force, production statistics for specific factories or product lines, employment levels and costs, and sales revenues for each month or even each day. -Knowledge workers, such as engineers, scientists, or architects, design products or services and create new knowledge for the firm. They may need access to external scientific databases or internal databases with organizational knowledge.
operational managers
(tps)need transaction-level information, such as the number of parts in inventory each day or the number of hours logged on Tuesday by each employee. -Production or service workers actually produce the product and deliver the service. Production workers need access to information from production machines. Service workers need access to customer records so they can take orders and answer questions from customers.
Rivalry among existing competitors
- high when competition is fierce in a market and low when competition is more complacent Rivalry greatest if: -Competitors are numerous or are roughly equal in size and power. -Industry growth is slow (saturated). Slow growth precipitates fights for market share. -Exit barriers are high. -Rivals are highly committed to the business and have aspirations for leadership.
buyer power
-Assessed by analyzing the ability of buyers to directly impact the price they are willing to pay for an item. -High Buyers' switching cost = Less Buyer power -Buyers concentration --Few buyers with large market = share More buyer power -Buyer's Threat of backward integration --Example: Large automakers vs. Tire manufacturers -Seller's Threat of forward integration --Example: Movie producers vs. Movie theaters
supplier power
-Assessed by the suppliers' ability to directly impact the price they are charging for supplies -High Supplier concentration = More supplier power --Example: Drug industry vs. Hospitals -High cost to switch supplier =More supplier power -Presence of substitute inputs = Less supplier power
Advantages to atoms to bits: Netflix
-Netflix eliminates a huge chunk of its shipping and handling costs -Bandwidth costs are minimal
Fresh Direct advantage
-Worker shifts are highly efficient, avoiding the downtime lulls and busy rush hour spikes of storefronts. -Higher inventory turns mean the firm is selling product faster, so it collects money quicker than its rivals do. -Artificial intelligence software, coupled with some seven miles of fiber-optic cables linking systems and sensors, supports everything from baking the perfect baguette to verifying orders with 99.9 percent accuracy. -Since it lacks the money-sucking open-air refrigerators of the competition, the firm even saves big on energy (instead, staff bundle up for shifts in climate-controlled cold rooms tailored to the specific needs of dairy, deli, and produce). -The firm also uses recycled biodiesel fuel to cut down on delivery costs. -FreshDirect buys directly from suppliers, eliminating middlemen wherever possible.
Disadvantages to atoms to bits: Netflix
-Wrangling licensing costs is a challenge -The switch to Blu-ray DVDs means that Netflix will be forced to carry two sets of video inventory •Standard •High-definition
disruptive technologies
-come to the market with a set of performance attributes that existing customers don't value -over time the performance attributes improve to the point where they invade established markets ex) Kodak, home phones vs, mobile, netflix vs. blockbuster
Fresh Direct advantages to supplies
-eliminating the "slotting fees" (payments by suppliers for prime shelf space) common in traditional retail -Paying partners in days rather than weeks -Sharing data to help improve supplier sales and operations
threat of new entrants
-high when it is easy for new competitors to enter a market and low when there are significant entry barriers to entering a market -Other determinants --Economies of scale, patent protection, access to distribution channels, regulation and policy, etc. Example -Banking
five forces model
-intensity of intra-industry competition -barriers to entry (exit)/threat of new entrants -bargaining power of suppliers -bargaining power of buyers -threat of substitute products and services
Powerful resources
1. imitation: resistant value chains:others find hard to replicate 2. brand: proxy for quality and inspires trust 3. scale: advantages related to scale, economies of scale 4. switching costs and ata: costs consumer incur by switching providers 5. differentiation: be different; move away from being commoditized 6. network effects: when the value of a product or service increases as its numbers of users expands 7. distribution channels: the path through which products or services get to customers 8. patents
fast followers exists when
1. savvy rivals watch a pioneer's efforts 2. learn from their successes and missteps 3. then enter the market quickly with a comparable or superior product at a lower cost 4. before the mover can dominate
A(n) ________ is typically a major source of data for other systems. A) transaction processing system B) management information system C) executive support system D) decision-support system E) knowledge management system
A
Order data for baseball tickets and bar code data are examples of A) raw input. B) raw output. C) customer and product data. D) sales information. E) information systems.
A
You would use a(n) ________ in order to determine which of your suppliers has the best and worst records for keeping to your production schedule? A) MIS B) TPS C) UPS D) DSS E) CRM
A
pure play
A firm that focuses on a specific product, service or business mode. An internet pure pay is a firm that only operates through the internet channel, with no physical storefronts
Define the value web and show how it is related to the value chain.
A value web is a collection of independent firms that use information technology to coordinate their value chains to collectively produce a product or service. It is more customer driven and operates in a less linear fashion than the traditional value chain. The value web is a networked system that can synchronize the business processes of customers, suppliers, and trading partners among different companies in an industry or in related industries.
bitcoin
An open-source, decentralized payment system that operates in a peer-to-peer environment, without bank or central authority. Benefits: Eliminates transaction fees Used for international commerce without delay or transaction fees Straddles the line between transparency and privacy Concerns: Difficult to understand/use technology Has bad reputation (drug dealers, tax evaders, etc...) Security Volatility of the value of a bitcoin
What differentiates Netflix from Walmart and BB?
Brand: fast, reliable, wide selection, good recommendations Cinematch: collaborative filtering where customers rate movies (avg 200) Scale
A relocation control system that reports summaries on the total moving, house hunting, and home financing costs for employees in all company divisions would fall into the category of A) knowledge management systems. B) transaction processing systems. C) executive support systems. D) management information systems. E) decision support systems.
D
An example of a business using information systems to create new products and services is A) Wal-Mart's RetailLink system. B) the Mandarin Oriental hotel's customer-preference tracking system. C) Verizon's Web-based digital dashboard. D) Apple Inc.'s iPod. E) the San Francisco Giants play tracking system
D
The four major enterprise applications are A) SCMs, CRMs, DSSs, and KMSs. B) SCMs, CRMs, ESSs, and KMSs. C) enterprise systems, SCMs, DSSs, and CRMs. D) ERPs, SCMs, CRMs, and KMSs. E) TPSs, MISs, DSSs, and ESSs.
D
Which type of system would you use to forecast the return on investment if you used new suppliers with better delivery track records? A) TPS B) MIS C) CRM D) DSS
D
Describe the characteristics of DSS and how they benefit businesses.
Decision-support systems (DSS) support nonroutine decision-making for middle managers. • DSS provide sophisticated analytical models and data analysis tools to support semistructured and unstructured decision-making activities. • DSS use data from TPS, MIS, and external sources, in condensed form, allowing decision makers to perform "what-if" analysis. • DSS focus on problems that are unique and rapidly changing; procedures for arriving at a solution may not be fully predefined. • DSS are designed so that users can work with them directly; these systems include interactive, user-friendly software.
Describe the characteristics of ESS and explain how these systems differ from DSS.
Executive support systems help senior managers address strategic issues and long-term trends, both in the firm and in the external environment. • ESS address nonroutine decisions requiring judgment, evaluation, and insight because there is no agreed-on procedure for arriving at a solution. • ESS provide a generalized computing and communications capacity that can be applied to a changing array of problems. • ESS are designed to incorporate data about external events, such as new tax laws or competitors, but they also draw summarized information from internal MIS and DSS. • ESS are designed for ease-of-use and rely heavily on graphical presentations of data.
Describe the characteristics of MIS and explain how MIS differ from TPS and from DSS.
Middle management needs systems to help with monitoring, controlling, decision-making, and administrative activities. • MIS provide middle managers with reports on the organization's current performance. This information is used to monitor and control the business and predict future performance. • MIS summarize and report the company's basic operations using data supplied by TPS. The basic transaction data from TPS are compressed and usually presented in reports that are produced on a regular schedule. • MIS serve managers primarily interested in weekly, monthly, and yearly results, although some MIS enable managers to drill down to see daily or hourly data if required. • MIS generally provide answers to routine questions that have been specified in advance and have a predefined procedure for answering them. • MIS systems generally are not flexible and have little analytical capability. • Most MIS use simple routines, such as summaries and comparisons, as opposed to sophisticated mathematical models or statistical techniques. Examples include sales and profit per customer and per region, relocation summary and analysis, inventory control, capital investment analysis, and even a report on students who were here in the autumn but did not return in the spring. MIS differ from TPS in that MIS deal with summarized and compressed data from the TPS. While MIS have an internal orientation, DSS will often use data from external sources, as well as data from TPS and MIS. DSS supports "what-if" analyses rather than a long-term structured analysis of MIS. MIS are generally not flexible and provide little analytical capabilities. In contrast, DSS are designed for analytical purposes and are flexible.
threat of substitutes
More substitute products or services -More demand elasticity = More competition -Affordable substitutes = More switching -Low switching cost = More intense competition
Netflix background
Netflix is the world's leading Internet television network with over 83 million members in over 190 countries enjoying more than 125 million hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments. Founder: Reed Hastings -Uses Amazon Web Services
contract manufacturing
Outsourcing production to third-party firms. Firms that engage in this activity don't own the plants or directly employ the workers who produce the requested goods
Bandwidth Caps
Places a ceiling on a customer's total monthly consumption
primary vs. support activities
Primary activities are most directly related to production and distribution of the firm's products and services, which create value for the customer. Support activities make the delivery of primary activities possible and consist of organization infrastructure.
RFID
Small chip-based tags that wirelessly emit a unique identifying code for the item that they are attached to
Define and describe the value chain model
The value chain model highlights specific activities in the business where competitive strategies can best be applied and where information systems will most likely have a strategic impact. The model identifies specific, critical leverage points where a firm can use information technology most effectively to enhance its competitive position. The value chain model views the firm as a series of basic activities that add a margin of value to a firm's products or services. The activities are categorized as either primary or support activities. Primary activities are most directly related to production and distribution of the firm's products and services, which create value for the customer. Support activities make the delivery of primary activities possible and consist of organization infrastructure. A firm's value chain can be linked to the value chains of its suppliers, distributors, and customers.
windowing
This is an industry practice whereby content (usually a motion picture) is available to a given distribution channel for a specified time period or "window", usually under a different revenue model (usually ticket sale, license fee, etc.)
crowdsourcing
This is the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined generally large group of people in the form of an open call. -ex: netflix prize
transaction processing systems (tps) characteristics
Transaction processing systems (TPS) are computerized systems that perform and record daily routine transactions necessary in conducting business; they serve the organization's operational level. The principal purpose of systems at this level is to answer routine questions and to track the flow of transactions through the organization. • At the operational level, tasks, resources, and goals are predefined and highly structured. • Managers need TPS to monitor the status of internal operations and the firm's relationship with its external environment. • TPS are major producers of information for other types of systems. • Transaction processing systems are often so central to a business that TPS failure for a few hours can lead to a firm's demise and perhaps that of other firms linked to it.
point of sale (POS) system
Transaction processing systems that capture customer purchases. Cash registers and store checkout systems are examples of these systems. These systems are critical for capturing sales data and are usually linked to inventory systems to subtract out any sold items
vertical integration
When a single firm owns several layers in its value chain
Zara Background
Zara is a Spanish clothing and accessories retailer, founded in 1975 by Amancio Ortega and Rosalía Mera. • It is the flagship chain store of the Inditex group, the world's largest apparel retailer. • Founded: May 24, 1974 • Mango Bershka Stradivarius Pull & Bear • As of August 2016, the parent company had150,000 people of 130 nationalities working in 45 different languages (stock price 32.00 euros)
true sustainable advantage comes from
assets and business models that are simultaneously (Resource-based Theory): -valuable -rare -difficult to imitate -for which there are no substitutes
Netflix integration
backward: starting to create their own content forward: no - use aws for distribution
internal business environmental forces include
customers, supplies, stockholders, regulations and competitors
post pc era
digital world where wireless mobile devices allow novel ways of interacting with info systems. pcs will not go away but a new wave of tech will develop (early 2010)
customer relationship management systems
enable a business to better manage its relationships with existing and potential customers. With the growth of the Web, potential customers can easily comparison shop for retail and wholesale goods and even raw materials, so treating customers better has become very important. Business benefits include: •CRM systems provide information to coordinate all the business processes that deal with customers in sales, marketing, and service to optimize revenue, customer satisfaction, and customer retention. This information helps firms identify, attract, and retain the most profitable customers; provide better service to existing customers; and increase sales. •CRM systems consolidate customer data from multiple sources and provide analytical tools for answering questions such as: What is the value of a particular customer to the firm over his/her lifetime? •CRM tools integrate a business's customer-related processes and consolidate customer information from multiple communication channels, giving the customer a consolidated view of the company. •Detailed and accurate knowledge of customers and their preferences helps firms increase the effectiveness of their marketing campaigns and provide higher-quality customer service and support.
knowledge management systems
enable organizations to better manage processes for capturing and applying knowledge and expertise. These systems collect all relevant knowledge and experience in the firm, and make it available wherever and whenever it is needed to improve business processes and management decisions. They also link the firm to external sources of knowledge. •KMS support processes for acquiring, storing, distributing, and applying knowledge, as well as processes for creating new knowledge and integrating it into the organization. •KMS include enterprise-wide systems for managing and distributing documents, graphics, and other digital knowledge objects; systems for creating corporate knowledge directories of employees with special areas of expertise; office systems for distributing knowledge and information; and knowledge work systems to facilitate knowledge creation. •KMS use intelligent techniques that codify knowledge and experience for use by other members of the organization and tools for knowledge discovery that recognize patterns and important relationships in large pools of data.
sustainable competitive advantage
financial performance that consistently outperforms industry averages
support activities
firm infrastructure HR management tech development procurement/sourcing
5 megatrends
mobile social media big data cloud computing consumerization of it
supply chain management systems
help businesses better manage relationships with their suppliers. The objective of SCM is to get the right amount of product from the companies' source to the point of consumption with the least amount of time and with the lowest cost. SCM provide information to help suppliers, purchasing firms, distributors, and logistics companies share information about orders, production, inventory levels, and delivery of products and services so that they can source, produce, and deliver goods and services efficiently. SCM helps organizations achieve greater efficiency by automating parts of these processes or by helping organizations rethink and streamline these processes. SCM is important to a business because through its efficiency it can coordinate, schedule, and control the delivery of products and services to customers. Business benefits include the increased ability to: •Decide when and what to produce, store, and move. •Rapidly communicate orders. •Track the status of orders. •Check inventory availability and monitor inventory levels. •Reduce inventory, transportation, and warehousing costs. •Track shipments. •Plan production based on actual customer demand. •Rapidly communicate changes in product design.
primary activities
inbound logistics operations outbound logistics marketing and sales service
executive support systems (ess)
inputs: aggregate data; external, internal outputs: projections; responses to queries users: senior managers
decision support systems (dss)
inputs: optimized for data analysis, analytic models and data analysis tools outputs: interactive; simulations; analysis users: professionals, staff, managers
management information systems (mis)
inputs: summary transaction data; high-volume data; simple models outputs: summary and exception reports users: middle managers
transaction processing systems (tps)
inputs: transactions; daily events outputs: detailed reports; lists; summaries users: operations personnel; first line supervisors
enterprise systems
integrate the key business processes of an organization into a single central data repository. This makes it possible for information that was previously fragmented in different systems to be shared across the firm and for different parts of the business to work more closely together. This changes the work flow of an organization: • Information flows seamlessly throughout an organization, improving coordination, efficiency, and decision making. • Gives companies the flexibility to respond rapidly to customer requests while producing and stocking only that inventory necessary to fulfill existing orders. • Increases customer satisfaction by improving product shipments, minimizing costs, and improving a firm's performance. • Improves decision making by improving the quality of information for all levels of management. That leads to better analyses of overall business performance, more accurate sales and production forecasts, and higher profitability.
strategic positioning
performing different tasks than rivals or the same tasks in a different way
operational effectiveness
performing the same tasks better than rivals perform them
atoms to bits
physical to digital
similarities and differences between vca and five forces
similarities -developed by michael porter -based on an open system theory of two way interaction -both have an objective to find areas of improvement and look for areas in IS to invest money to improve differences -vca: inbound looking -five forces: outbound looking
external business environmental forces
technology and science, economy, international change, and politics
price discrimination
the practice of charging different customers different prices
net neutrality
the principle that Internet service providers should enable access to all content and applications regardless of the source, and without favoring or blocking particular products or websites.
Zara is so responsive through
vertical integration and technology-orchestrated coordination of suppliers, Just-in-time manufacturing, Finely tuned logistics (avg of 15 days from idea to the shelf)
straddling
when a first attempts to match the benefits of a success position while maintaining its existing position