identifying and enhancing competitive strategies through information systems final- 2014

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MD SABUZ MIAH 2014 Identifying and enhancing competitive strategies through information systems LONDON SCHOOL OF COMMERCE

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Page 1: Identifying and enhancing competitive strategies through information systems  Final- 2014

LONDON SCHOOL OF COMMERCE

Identifying and enhancing competitive

strategies through information systems

2014MD SABUZ MIAH

Page 2: Identifying and enhancing competitive strategies through information systems  Final- 2014

Table of Contents

Abstract 2

Introduction 2

Roles of Information System 5

Key Issues for IS implementation 8

Information System at Heinz 21

Conclusion 22

References 22

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Page 3: Identifying and enhancing competitive strategies through information systems  Final- 2014

Abstract

In this paper author approaches a new fundamental building blocks of information

system implementation for HEINZ .Researcher tries to dig out organisational

contexts of HEINZ and relates this to information system research on

implementation. This method of implementation is a little bit organisational rather

than technical. Researcher argues that the existing approach is useful and relevant

but it needs a few modifications which will tackle parts of the problem.

Professor Peter Checkland and Sue Holwell (1988) argue that Information System

literature is a bit of confusion with many contradictory positions and approaches

adopted. They also added that there is negligence about the approach of IS based

on views of concept of organisation. Researcher tried to pave the way to make a

relation with the IS with organisational harmony.

Introduction

There is considerable pressure on most organisations to make their operational,

tactical and strategic process more efficient and effective due to the growth of global

competitive environment. To gain better information for decision making organisation

has chosen a group of components which can increase competiveness known as

Information System (IS) (Spalding, 1998). IS are playing a vital role to collaborate e

business, e commerce, management and operation for the strategic success of the

business (Hevner et al., 2004)

Ein-Dor and Segev (1978) states that Information System is applied to improve

management by directors of organisation, it is known as management information

systems (MIS). MIS is a collection of manpower’s, tools, procedures and software to

perform various business tasks at various levels in the organisation (Tripathi, 2011).

Information System is important to assure the profitability of the organisation by

gaining competitive advantage (Beaumaster, 199)

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Page 4: Identifying and enhancing competitive strategies through information systems  Final- 2014

About Heinz

Heinz ketchup is the world’s favourite. The ketchup is the only thing Heinz does

uncommonly well because no other company on earth with a reputation of quality,

great taste and nutrition. Heinz is providing superior nutritious food among the

people of the world. Heinz provides quality food for families of 200 countries around

the world of which 50 countries they are number one or two in market position. Heinz

is sailing more than 65o million bottles of ketchup every year. For millions of families

‘ if it isn’t Heinz, it is not ketchup’.

Change is inherent in today’s rapidly developing business culture, change occurs

continuously either random or planned(Regan & O’Connor,2002).Introducing an

information system change is just as much about helping to adapt the end user’s

behaviour as it is the improving the information processing system itself.

Information system is the system to communicate with people (Kroenke, 2007;

Davies, 2009). On top of that Gurbaxani and Whang (1991) states that the role of

information system in an organisation is to increase efficiency of operation, to

provide decision support, to process business transaction, to maintain

documentation and communication channel and to evaluate employee

performance.The main five components of Information System is hardware,

software, people, procedures and data.

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Page 5: Identifying and enhancing competitive strategies through information systems  Final- 2014

Fig: Components of IS

Davies (2009) defines key stages of information system implementation process

which is similar with O’Brien (2004) who described information system s

development cycles as a five step process which are-

1. Investigation

2. Analysis

3. Design

4. Implementation

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5. maintenance

Fig: IS implementation process

Roles of Information System

Cost Leadership : Information system is used to save the cost of doing

business or to reduce the cost of business processes or to lower the cost of

customer and supplier.(Booth, Robert and Sikes 2011)

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Differentiation: To develop differentiate features or to reduce the differentiate

advantages of competitor Information System is used. By adding online live

chatting services or social networking sites or free chat services can give an

extra advantage or differentiate the service of an organisation.

Innovation: Information system is used to identify and create new product and

services as well as to develop new or niche markets and can radically change

business process by automation (Chui and Flemming, 2011). With the help of

internet and communication better innovation can be achieved. Those parts

uses to develop network are very expensive and can be used as a single

compartment to get benefit for organisation, supplier and customer. By the

help of IS it is very easy to create new customers, external partners and

internal people.

Growth: Information system can be used to extend business globally because

it eases the controlling power over business by sitting in one place.

Alliance: Strategic alliance can be created end enhance relationship with the

help of IS.

Heinz is operating in a very competitive food industry and competing with other

companies who can change the market share. Any relationship change with

consumer or change in price of the product, or sales volume may have an impact on

financial output. It might happen because of the ability of competitor’s resources to

change the competitive environment. Retailers do have their own cheap brand which

is also a source of competition for certain product lines. These types of competition

may cause to reduce the price of the product or can increase capital, marketing and

other expenditures which in terms might result in the loss of category share. Such

types of change have got an impact on organisations net income. If this

consolidation continues the large r retailer may ask the product at a cheaper price

with promotional offers all the year round. If the company is unable to use its

expertise on marketing, product innovation, leadership positioning to respond to

those changes or unable to increase its price profitability and volume of growth can

be impacted largely in the adverse way.Business success depends on the financial

strength of supplier and customers. Their financial condition can be affected by

conditions and events which is beyond control.

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The economic and political condition of USA with other countries has an impact on

company’s performance. Changes in law and regulation, employee legislation, food

and drug laws, accounting standards, taxation requirement and environment law can

hamper the performance also. Other countries where Heinz do business may have

export import restriction, currency devaluation, recession, [political unrest, terrorist

activities can impact on business.

Heinz is highly dependable on raw material like tomatoes, cucumber, other fruits and

vegetables, other materials as input and water. The availability of these products

may fluctuate widely for natural disaster, pest infestation, and increased demand for

biofuel or unseen circumstances.

Damage or disruption to manufacturing or distribution capabilities due to weather,

terrorism, pandemic could impair to sell the product.

Success of the company could be impacted by the inability to introduce new product

with innovation, implementing cost cutting measures, supply chain efficiency,

information technology and system on a global basis and growing market share and

volume. Failure to implement plans within allocated time and cost could materially

adversely affect the company’s ability to increase net income.

Heinz is progressively reliant on information systems to accomplish and

maintenance a variety of business processes and activities and any substantial

breakdown, invasion, destruction or disruption of these systems could adversely

influence operations. In addition there is a risk of professional interruption and

reputational damage from leakage of confidential information. The incongruous use

of certain media vehicles could cause brand damage or information leakage.

Negative posts or comments about the organisation on any social networking

websites could seriously damage its reputation. On top of that the disclosure of non-

public company sensitive information through external media channel could lead to

information loss. Any business interruption or damage to the organisation’s

reputation could negatively impact the organisation’s financial condition, results of

operation and the stock market price.

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Fig: A simplified version of IS implementation

Key Issues for IS implementation

Category Key Factors Sources

Project Definition/Mission

-Information system helps

to direct and clarify the

goals of the subject.

- Definition of the project

entity is discussed

- How this project is

related with the business

is clearly spread among

Pinto (1998);

Somers & Nelson (2001);

Milis & Mercken (2002);

Nah et al. (2001);

Motwani et al. (2005)

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the employees.

- What are the aims of this

project and what benefits

could be gained through

this is properly identified

and traceable.

Project Schedule/Plan -Detail specification of

each and every

employees action plan is

distributed so that

everyone can be aware

about their dos and don’ts.

Pinto (1998);

Milis & Mercken (2002

Project Team - The project should be

run by a very experienced

and competent manager.

-Team members of the

project should be chosen

with complementary skills

and the very refined

employee of the

organisation.

Every project member

should be accomplish with

their responsibility,

authority and reward after

completion of the project.

- There should be a blend

of consultant and internal

employee for the project.

- Project team should have

Milis & Mercken (2002);

Somers & Nelson (2001);

Nah et al. (2001);

Motwani et al. (2005);

Gargeya & Brady (2005)

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proper knowledge about

the business functions.

- project team should be

re-located in such a place

from where each and

every one can work

together with harmony to

help and support each

other to gain a common

goal.

Management Involvement

& Support

- Support from top

management.

- there should be an

alignment with strategic

business goals

- the project should be

identified with top priority

-employees should be

communicate about

role of new system,

vision, importance in

advance

- Successful

implementation of the

project

Should be well

documented and

advertised so that next

time it can be followed as

a model.

Tan (1996);

Pinto (1998);

Somers & Nelson (2001);

Nah et al. (2001);

Motwani et al. (2005);

Gargeya & Brady (2005)

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Project management -To drive in project

management responsibility

should be distributed

among project members.

-Department for human

resource should be

involved for training

coordination and

disciplinary actions.

- Project management

should be in excellence of

its level.

Nah et al. (2001);

Motwani et al. (2005)

Client consultation -To implement and

facilitate Information

system consultant should

be recruited.

Pinto (1998);

Somers & Nelson (2001);

Gargeya & Brady (2005)

Technical tasks At the beginning of the

project testing and

troubleshooting of the

developed software should

be done.

- To troubleshoot errors is

very critical and the mid of

project, so to resolve any

issues (which might rise)

should work well with

vendors.

Tan (1996);

Pinto (1998);

Nah et al. (2001)

Monitoring and feedback -At each stage in the

process of implementation

Pinto (1998);

Nah et al. (2001);

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information should be

controlled

comprehensively.

-project target and

milestone should be set up

early and the progress

should be monitored

accordingly to that.

- Sufficient testing and

benchmarking should be

done as well.

Motwani et al. (2005);

Gargeya & Brady (2005)

Vendor/Customer

partnerships

Relationship with third

parties should be

improved and managed

efficiently.

Somers & Nelson, (2001);

Milis & Mercken (2002)

Change Management Organisation culture plays

a vital role during

information system

implementation so any

change of culture or

structure should be

managed

-During designing and

implementing the IS end

users should be involved.

- training for the user

should be highlighted

-project worker should get

commitment from the top

management

Nah et al. (2001);

Somers & Nelson (2001);

Milis & Mercken (2002);

Motwani et al. (2005);

Gargeya & Brady (2005);

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- Any types of change

regarding the project

should be

communicated

- The system should be

competent and apprehend

by managers and

employees

Table: Summary of Key Issues for Implementation Success (source: constructed by

the author, 2014)

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Figure: It illustrates the interrelationships in a customer-focused business. Intranets,

extranets, e-commerce Web sites, and Web-enabled internal business processes

form the invisible IS platform

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Figure: The value chain of Heinz, an example of the variety of strategic information

systems that can be applied to Heinz’s basic business processes for competitive

advantage.

The above figure provides illustrations of how and where details technological

innovation can be applied to basic company procedures using the value sequence

structure. For example, the figure demonstrates that combined workflow intranets

can increase the communications and cooperation required to enhance management

harmonisation and support services considerably. An intranet for member of staff

can help the human resources management to work with them easily, self-service

access to their benefits information. Extranets allow a company and its international

associates to use the Web to design products and procedures together. Lastly, e-

commerce Web sites can dramatically enhance purchasing of sources by offering on

the internet market segments for a company's supplier. The value sequence design

in Determine 2.8 also recognizes illustrations of ideal applications of computer

products to primary company procedures. These include automated just-in-time

warehousing techniques to back up incoming logistic processes that include stock

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storage space, computer-aided versatile production techniques, as well as on the

internet point-of-sale and order handling techniques to enhance the outgoing

logistics processes that manage client purchases. Information system can also assist

marketing and sales procedures by creating an engaging focused promotion

capability on the Internet and the Web. Lastly, a synchronized and incorporated

client relationship management system can considerably enhance client

assistance .Thus, the value sequence idea can help to recognize where and how to

apply the strategic abilities of information system innovation. It reveals how various

types of information system might be used to help Heinz to gain competitive benefits

in the marketplace. The examples of information technologies have support

reengineering the order management processes at Heinz.

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Information System can help Heinz to be an agile competitor with the help of

customers and business partners

Type of Agility Description Role of IS

Customers Ability to co-opt customers

in the

exploitation of innovation

opportunities

• As sources of innovation

ideas

• As co-creators of

innovation

• As users in testing ideas

or helping

other users learn about

the idea

Information system for

building and

enhancing virtual

customer

communities for product

design, feedback, and

testing

Partnering Ability to leverage assets,

knowledge,

and competencies of

suppliers,

distributors, contract

manufacturers,

and logistics providers in

the

exploration and

exploitation of

innovation opportunities

Information System

facilitating

Inter-firm collaboration,

such

as collaborative platforms

and portals, supply chain

systems

Operational Ability to accomplish

speed, accuracy,

and cost economy in the

exploitation of

innovation opportunities

Information System for

modularization

and integration of

business processes

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SOURCE: Adapted from V. Sambamurthy, Anandhi Bhaharadwaj, and Varun Grover,

“Shaping Agility through Digital Options: Reconceptualizing the Role of Information Technology in

Contemporary Firms,” MIS Quarterly, June 2003, p. 246

Innovation at HEINZ

Heinz is always coming up with new innovative products. Heinz is using Information

system for product innovation. Heinz is always blending old fashioned product

excellence with unparalleled modern day innovation. Heinz has set up global quality

and innovation centre where they do research for new varieties of the brand. There

is a feedback centre inside that where they connect with consumers in person and

get consumers valuable suggestions. The simulated retail environment helps them to

enhance their prowess and observe consumer behaviour.

Search and development team around the globe are famous for product and

packaging innovation. Heinz is listening to consumers and responding with fresh new

ideas to deliver. They have partnered with coca cola to get the PET bottle for their

ketchup. They have invented new Heinz Dip and Squeeze product which allows

customer more ketchup where it wanted and when it wanted with less mess.

A summary of how information technology can be used to implement five basic

competitive strategies is given below.

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Challenges for Information System

Order processing

Order rerouting Based on availability and capacity rerouting orders to other

location

Order Tracking If each and every order taken by different channels is not

visible impact company’s ability to service their customer’s.

Order Status To meet and manage customer’s expectations effectively

appropriate type and frequency of status update is

important.

Stock To minimize and manage stock out and rapidly respond

when the happen.

Order Shipment To accommodate a customer who wants their order to be

shipped in different location is very difficult if the system

does not allow.

Order Picking

Inventory Tracking To assume exact inventory is difficult if product is stocked

in different locations. System should automatically locate

stocks in different places and show them together with

their location.

Handheld device Handheld device should work in disconnected mode as

well.

Pick modification Modification should be allowed during picking an order.

Delivery

Labour management Warehouse employee, managers and drivers should be

capable of managing schedule on the basis of demand.

User Interface A common user Interface should be used for

management ,suppliers and customers

Labelling Labelling of address and packaging should be masked in

such a way that it will appear like they came from retailer.

Integrated solution Bundled transport management solution should available

which include software and hardware.

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Returns

Location returns Capabilities to process returns on customers place is

needed when returns can be made by delivery drivers due

to damage, missing or customer rejection.

Infrastructure

Hierarchy Hierarchy should be positioned according to the need or

nature of business and situation. Accountability should be

focused for decision taken.

Bandwidth The speed of internet (bandwidth) should be very high so

that during peak time the system will not slow down its

process.

Information System at Heinz

Company

websites

Company websites can be browsed from any platform i,e windows

or mac or any laptop, mobile, tablet and handheld devices.

Operations Enables to order online, talk with customer service department if

any problem arises, cross channel returns and coordination with

supplier, buyer and investor

Order

management

Regardless of channel orders can be visible with their delivery

process and improvement globally.

Synchronisation of

inventory

Enables management to view and manage inventory in different

location, production unit, warehouse and just in time.

Visibility of supply

chain

Internal and external supply chain is monitored and triggers any

exception recovery measures when needed

Product innovation New product innovation is helped to compete with competitor and

to get competitive advantage.

Management Hierarchy always inspired employees for any innovative

suggestion regarding product and organisational culture

improvisation.

Integration B2B, B2C and enterprise application integration to process critical

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business information.

Conclusion

In this assignment the significant element of information systems, recognising

competitive advantages and augmenting competitive strategies through information

systems was discussed. Organisations can relate tools such as Porter’s five forces

and value chain to evaluate their competitive position, inspect their competitive

advantages, and recognise appropriate competitive strategies. Information systems

can play a very important role in the success of organisation’s competitive strategies.

However competitive strategies alone cannot create magic. In order to meet the ‘IS’s

unmet potential’, both IS and non-IS executive need to work hard to have better

understanding each other’s areas (Roberts & Sikes 2008). The transparency in the

planning and execution of information systems projects should be visible to business

leaders. Accountability of information systems projects should be applied to both

information systems and business parts in the organisation.

References

Books

Laudon, K.C. & Laudon, J.P. 2012, Management information systems: Managing the

digital firm, 12 th edition, Prentice Hall.

O’Brien, J. A. & Marakas, G. M.2011, Management Information Systems, 10th

Edition, McGraw-Hill, New York, USA.

Pearlson, K. E. & Saunders, C. S. 2010, Managing and Using Information Systems:

A Strategic Approach, Fourth Edition, John Wiley & Sons, USA

Baltzan, p. & Phillips, A. 2010, Business Driven Technology, 4th edn, McGraw-Hill

Irwin, Boston,USA.

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Journals

Alexy, O. & Reitzig, M. 2012, ‘Managing the business risks of open innovation’,

McKinsey Quarterly,January 2012, pp. 1–5.

Booth, A., Roberts, R. & Sikes, J. 2011, ‘How strong is your IT strategy?’, McKinsey

on Business Technology, Number 23, Summer 2011, pp. 2–7.

Bughin, J., Chui, M. & Johnson, B. 2012, ‘The next step in open innovation’,

McKinsey Quarterly,June 2008, pp. 1–8.

V. Sambamurthy, Anandhi Bhaharadwaj, and Varun Grover, “Shaping Agility through

Digital Options: Reconceptualizing the Role of Information Technology in

Contemporary Firms,” MIS Quarterly, June 2003, p. 246

Websites

www.heinz.com

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