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
