Chapter 2: Organizational Strategy, Competitive Advantage + IS Flashcards
What are organizations?
Deliberate structure of people working toward a specific purpose (check notes for MIS definition)
Business processes
Include? Cross Functional Processes
IS + Bu Processes ()
Business Process
An ongoing collection of related activities that create a product or service of value to the org, its Bu partners, and/or it’s Cu’s
Bu Process Elements
Inputs (i.e)
Resources ()
Outputs ()
Efficiency vs Effectiveness
Doing things right vs doing the right thing?
i.e. of Bu Processes
ACCT BPro:
Managing A/P
FIN BPro:
Producing Bu Forecasts
MRKT BPRO:
Collecting Sales Tax
PRO/OPMANG BPRO:
Processing Physical inventory
HR Bro:
Managing Pay + payroll
MIS BPRO:
Antivirus Control
Cross Functional Processes
No Single Functional area = responsible for everything
Steps = executed in a coordinated + collaborative way
Procurement & Fulfillment Cross - Functional processes ()
Airplane Ticket Diagram
I.e. of cross - Functional Operations (simple for CU, more complex for other parts)
()
IS’s vital role in 3 Bu Process Areas
- Executing the Process ()
- Capturing + Storing Process Data ()
- Monitoring Process Performance ()
IS’s help Execte Porcess by…
- Informing emp’s when it’s time to complete a task (i.e. reminder software?)
- Providing required data (i.e. Managers need Survey data from Emp’s?)
- Providing a means to complete a task (i.e. Financial Analysis can use Finance Functional area IS’s)
Capturing + Storing Process Data
Processes generate data (i.e Dates (17 - 5 - 2006), Times (9:00 AM), Prodcut numbers (27 units), Quantities, Prices ($19), Addresses (Wall Street), Names (Chauncey), Emp actions
IS’s capture + store process data (aka, Transaction data)
Capturing + Storing data provides immediate, ‘real time’ feedback (quick?)
Monitoring Process Performance
IS evaluates info to Determine how well a process is being executed
Evaluation occur at 2 levels
Process Level (i.e. Whole row of Airplane Flightcheck - in tables?)
Instance Level (1 specific airplane flight check - in table)
Monitoring
Identifies Problems for process improvement (i.e. making check - out table work at a faster pace?)
Measures of Excellence in Executing Bu Processes
- Cu Satisfaction ()
- Cost Reduction ()
- Cycle + Fulfillment Time ()
- Quality ()
- Differentiation ()
- Productivity ()
Bu Process Reengineering (BPR)
A Radical Redisign of an Org’s Bu Processes to inc productivity + Profitability (i.e. Subway rebranding itself from Sandwiches to Shoes/converting all previous stores to shoe shops)
Examines BP’s with clean slate approach
But Process Improvement (BPI)
An incremental approach to move an org toward a bu process centered operations (i.e. Like Nike adding + sign to logo, small changes)
Focuses on reducing variation in process outputs by identifying the underlying cause of variation (I.e. check slow sandwich shop employee stand, see what cause of slow/sloppy work, try to improve it)
6 Sigma = Popular Methodology for BPI
Focuses on
BPI 5 or 5 Basic Phases of Sucessful BPI
- Define (the problem?)
- Measure ()
- Anlayze ()
- Improve ()
- Control ()
BPI vs BPR
PBI
Low risk/low cost (I.e. change logo)
Incremental change (small changes)
Bottom - up approach ()
Takes less time
Quantifiable results (I.e see difference between average time slow sandwich artist made food vs after training/motivation)
All emp’s are trained in BPI
BPR:
High risk/high cost
Radical redesign (I.e smash hole into garden to make pool)
Top - down Approach ()
Time consuming (I.e. total rebrand of a comp, Like sell Ice Cream to selling Cars)
Impact can be overwhelming (more emotional, less quantifiable)
High failure rate
Bu Process Management (BPM)
A Management system used to support continuous BPI initiatives for core Bu processes over time
Important Conponents of BPM
- Process Modeling (using tech/diagrams????)
- Web - enabled technologies (items the Internet?)
- Bu Activity Monitoring (BAM)
()
Bu Process Management Suite (BPMS)
An integrated set of applications used for BPM
Emerging Trend of Social BPM
Technologies enabling emp’s to collaborate across functions (i.e. Marketing + IT department emp’s collobarate on x technology) + externally use Social Media Tools
Bu Pressures, 3 Categories
- Market Pressures
- Economic Pressures
- Societal/Legal/Political Pressures
I.e’s of Pressures from Pizza Chart (not actual name of chart)
Economic Pressures:
Global Economy + Strong Competition (every comp fight with every comp around world, strong competition force orgs to???)
Need for real-time Operations (need for companies to deliver faster?)
Changing workforce (workplace diversity has increased; Women, single parents, Minorities, People with Disabilities, not always need 5 - 9 Job, IT is Enabling Telecommuting Emp’s?)
Powerful Cu’s (Cu’s are spoiled by choices + there increasing consumer sophistication + expectation, they (consumer) =more knowledgable about:
Products + Services
Price Comparisons + Electronic Auctions,
Cu Relationship Management = important, cause Cu has power to spend or not spend money in your Bu)
Technology Pressures:
Technological Innovations and Obsolescence (Rapid development of both New + Substitute Prods & Servs ,cause old methods to awry, Netflix Innovation vs Blockbuster? Disruptive innovation?)
Information Overload (as a comp you deal with lvast stores of data, info, + knowledge
There are difficulties in managing data for decision making, lot of info, that may be too much in some cases, need to find way to organize to find important info/docs?)
Societal/Legal/Political Pressures:
Social Responsibility (treating people + other things fairly, ime of no SR = bad working conditions cause suicide nets to be constructed in Foxconn building
+ i.e.’s like Green IT:
It Facilitates design + Management
Carbon Management
International + U.S State environemntal laws
Energy Management
+ Digital Divide (gives 1 Laptop per child, to impoverished kids?)
Compliance with Gov Rrgulatoons + Deregulations (abiding by Gov rules + change in rules? i.e Loke USA Patriot Act that make comp’s ask users if they want cookies in website? + others like Sarbanes - Oxley, etc)
Ethical Issues (General standards of right + wrong,
i.e.: Info-Processng activities
Monitoring Emp email
Monitoring Emp Internet activity at work
+ Privacy of Cu data)
Terrorists attack + Homeland security (defending home from people that want to harm you?)
Globalization
The Integration + Interdependence of economic, social, cultural, + ecological facets of life, made possible by rapid advances in iT
“Global Village”
Metaphoric shrinking of the world into a village through the use of telecommunications
Main concept from “The World is Flat”. By Thomas Friedman
Tech is leveling Global Competition making the world “Flat”
Kind of Eurocentric, TBH
Globalization 1.0 (1st Era), 1492 - 1800
Focus:
On Countries
Drivers:
Muscle
Horse —> Wind (ships?) —> Steam Power (with combustion engine at end of era 1)
Globalization 2.0 (2nd era), 1800 - 2000
Focus:
Comp’s
Main Driver = Multinational Comp (East India Comp?)
1st Half of 2.0:
Driver = Falling transport cost (more effective means of transportation?)
2nd Half of 2.0:
Driver = Falling Telecom costs
Globalization 3.0 (3rd Era), 2000 - Present
Focus:
Groups + Individuals
Drivers:
Convergence of 10 forces or “Flatteners)
10Fl 1. Fall of Berlin Wall on Nov 9, 1989
Shifted the world toward Free - Market economies + away from centrally planed econ’s
10FL 2. Netscape goes public on Aug 9, 1995:
Popularized the Internet + World Wide Web (no wait in line for Internet)
10FL 3. Development of Workflow Software
Enabled computer applications (apps) to work with one another without human intervention
Enabled faster, closer, collaboration + coordination among emp’s, regardless of their location
10FL 4. Uploading
Empowered all Internet users to create content + put it on the Web
Led transition from passive approach to content to active, participatory, collaborative approach
10FL 5. Outsourcing
Contracting with an outside comp to perform a specific function that your comp was doing itself + then integrating their work back into your operation, i.e. moving Cu call centers to India
10FL 6. Offshroing
Relocating an entire operation, or certain tasks, to another country i.e.: moving an entire manufacturing operation to China
10FL 7. Supply Chaining
Technological revolution that led to the creation of networks composed of Comps, their Suppliers, + their Cu’s, all of which could collab + share info for increased efficiency (i.e. Drug comp work with supplier to make sure drug is safely transported to Cu?)
10FL 8. Insourcing
Delegating operations or jobs within a bu to another comp that specializes in those operations, i.e. Dell hires FedEx to “take over” Dell’s logistics process
10FL 9. Informing
The ability to search for info, best illustrated by search engines
10FL 10. The Steroids (Technologies that amplify other flatteners)
Computing, Instant messaging + file sharing, wireless technologies, Voice over internet Protocol, Video conferencing + Computer Graphics
Protection against Terrorist Attacks
Emp’s in Military reserves called to active duty
Info Tech used to identify + protect against terrorist + cyberterrorist attacks (these can case major damage/hackin?g)
Department of Homeland Security (DHS)’s US - VISIT program =
Network of biometric-screening systems
Organizational Responses 1. Strategic Systems
Provide Org’s with advantages that enable then to inc their market share and/or profits, to better negotiate with suppliers, + to prevent competitors from entering their markets
ORG RESPON 2. Cu Focus
Organizational attempts to provide superb Cu service can make the difference between attracting + retaining Cu’s vs losing them to competitors, Numerous IT tools + Bu Processes have been designed to keep Cu’s happy
ORG RESPON 3. Make-to-Order
A strat of producing customized (made to individual specifications) Prod + Serv’s (i.e. Custom Car)
ORG RESPON 4. Mass Customization
A comp produces a large quantity of items, but it customizes them to match the needs + preferences of individual cu’s
Mass Customization is essentially an attempt to perform make-to-order on a large scale
ORG RESPON 5. E - Business + E - Commerce
Conducting Bu electronically = an essential strat for comps that are competing in today’s bu environment
ORG RESPON 6. Electronic Commerce (EC or e - commerce)
Describes the process of: BUying, SElling, TRansferring, or EXchanging prods, serv’s or info via computer networks, including the Internet
(BUSETREX)
ORG RESPON 7. E - Business
A somewhat broader concept than ECom that includes: SErving CU’s, COllaborating with Bu Partners + Performing ELectronic TRansactions within an org
(ECSECOELTR)
Competitive Strategy
A statement identifying a bu’s approach to compete, it’s goals, + the plans + policies required to attain those goals
Strategic IS’s (SIS)
An IS that helps an org achieve + maintain a competitive advantages
Porter’s Competitive Forces Model
- Threat of Entry of New Competitors (i.e. Greater threat/easier to enter Pizza Business than Aircraft Carrier Bu)
- Bargaining Power of Suppliers (if you’re the only company available to produce/supply 1 product, there’s a lot of barg power, if there are alternatives than its less power for you?)
- Bargaining Power of Customers/Buyers (i.e.e if 1 T -shirt shop
sells shirts for 3 Dirhams and another for $3 million, a customer can choose to take their business to the cheaper one, they have a lot of power here if there are alternatives?, if no alt’s there’s less Cu power) - Threat of Substitute Products/Services (it’s not substituting one brand over another, more like seeing if one product/service can substitute another, i.e Cars could be substituted by Electric scooters)
- Rivalry Among Existing Firms Within the Industry (this is like Apple vs Samsung, if one is doing good, does the other need to worry?)
Porter’s Value Chain Model: Value Chain DEF
A sequence of activities through which the org’s inputs are transformed into valuable outputs
2 Types of Activities in Value Chain
- Primary Activities:
(which) Relate to Production + Distribution of Prod’s + Serv’s
(can see time + where value comes from?)
- Support Activities: (these) Support Primary Activities Contributing to Competitive advantage
(can’t exactly pinpoint time/where value comes from?)
Table on PG 54
Showcases diff examples of Primary + Support Activities
5 Primary Activities for Manufacturing
- Inbound Logistics
(inputs, i.e. Quality Control + Recieving Raw Materials, )
IS used here = Automated Warehousing systems
- Operations
(Manufacturing + Testing, i.e.Manufacturing, Packaging + Production Control)
IS used here = Computer - controlled machining systems (i.e. like Robots manufacturing cars)
+ Computer - aided flexible manufacturing
- Outbound Logistics (Storage + Distribution, i.e. Finishing Goods, Order Handling, Dispatch, Delivery, Invoicing)
IS used here = Automated Shipment Scheduling Systems, Online point of Sale + Order processing
- Marketing + Sales (monitor sales/ads bombard you???,
i.e. Cu Management, Order Taking, Promotion, Sales Analysis, Market Research)
IS used here = Computerized Ordering Systems; targeted marketing
- After Sales Service (or Cu service,
i.e.: Warranty, Maintenance, Edu + Training + upgrades)
IS used here = Cu Relationship Management Systems
4 Support Activities
- Firm’s Infrastructure (Accounting, Finance, Management +?): other i.e’s = Legal, Accounting, Finance Management
IS used here = Electronic scheduling + message system; collaborative workflow internet
- Human Resources Management:
i.e’s: Personnel, Recruiting, Training + Career Development
IS used here = Workforce planning systems (payroll?) + Emp benefits intranet
- Product + Technology Development (R&D)
i.e.: Product + Process design, Production engineering, R&D
IS used here = Computer - aided design systems, Prod development extranet with partners
- Procurement (of materials?)
i.e’s: Supplier Management, Funding, Subcontracting, Specification
IS used here = EComm Web Portal for Suppliers
Value Chain Analysis
Can use 5 Forces + Value Chain to analyze comp
Arrow diagram on Page 60:
i.e. “Firm Infrastructure” = 3.1% = Threat of Substitute Prod or Serv’s , The power of Cu’s to purchase alt’s?
Threat of new Entrants (power of competitors to enter market) inc, since 6,6% is seen in “Delivery in the prodct or service” = bad delivery
Buyer Power (power of cu’s to drive down prices) in “Value Added” triangle?
Supplier Power (power of suppliers to drive up prices of materials) is up? “Procurement” = 27%
This Manufacturing org since = “Make the product or service” section = 40.3%
Combin 5F with VC using direct i.e’s
If an org wants to decrease buyer’s/cu’s power, it can Construct it’s Value chain activity of “service after the sale” by Offering high levels of Quality cu service
i.e Mercedes Care (instead of going to cheap cheaper dealership/garage to get car, come here + get pampered + benefits?)
Allen Edmonds shoes (fix old shoes, make exterior new but inside = comfy + familiar, specialized service on website)
This will inc the switching costs for it’s cu’s, thereby decreasing their power (buyer power)
Information Intensity Graph
High info intensity of prod, High Info Intensity of VC = Newspaper, Banking, edu, Airlines (need non.- simple VC? +0
High InfInt of prod + Low Infint of VC =
Fashion Perishables
Low InfInt of prod + VC = Cement Bricks (means you don’t need complex value chain/ you only buy bricks form cheapest seller, no need QR code to post brick on website)
Low InfInt of Prod + High InfInt of VC:
Oil Refining, Legal Services (intense VC, not much info needed to make product??????uh?)
Generic Strats for Competitive Advantage
- Cost Leadership (I can sell at a lower cost than you), i.e. Ben & Jerry’s vs $1 mill dollar Ice Cream
- Differentiation (I am better because i’m different), i.e.: Mini Cooper brand
- Innovation (I’m doing something new + you can’t catch up): i.e. Samsung Foldable Phone
- Operational Effectiveness (I can do the same thing more efficiently than you), i.e Toyota Cars
- Cu Orientation/ted (I treat my Cu’s better than you do), i.e. Fancy Restaraunt/Rolls-Royce dealership
