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