the strategic role of information systems laudon & laudon ch 2
TRANSCRIPT
The Strategic Role of Information Systems
Laudon & Laudon CH 2
M I S Dr. Ernst-Gerd vom Kolke 2
L & L 2: Kinds of Information SystemsL & L 2: Kinds of Information SystemsKIND OF SYSTEM GROUPS SERVEDKIND OF SYSTEM GROUPS SERVED
STRATEGIC LEVEL SENIORSTRATEGIC LEVEL SENIOR MANAGERS MANAGERS
MANAGEMENT LEVEL MIDDLEMANAGEMENT LEVEL MIDDLE MANAGERS MANAGERS
OPERATIONAL OPERATIONAL OPERATIONAL OPERATIONAL LEVEL MANAGERS LEVEL MANAGERS
KNOWLEDGE LEVEL KNOWLEDGE &KNOWLEDGE LEVEL KNOWLEDGE & DATA WORKER DATA WORKER
Sales & Manufacturing Finance Accounting Human Res.Sales & Manufacturing Finance Accounting Human Res.MarketingMarketing
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L&L 2: Kinds of Information Systems
Operational Level Systems keep track of elementary activities and
transactions of the organization system type is called Transaction
Processing Systems (TPS)
examples: hotel reservation systems, order tracking systems
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L&L 2: Kinds of Information Systems
Knowledge Level Systems help to integrate knowledge into the
business (Knowledge Work System, KWS) help to control the flow of paperwork (Office
Automation Systems, OAS)
examples: CAD Systems, word processing/ desktop publishing, document imaging systems
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L&L 2: Kinds of Information Systems
Management Level Systems provide the management level with reports and serve monitoring and controlling functions (MIS) help making decisions (Decision Support Systems,
DSS) examples: report functions of Excel and Access,
solver and scenario manager in Excel
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L&L 2: Kinds of Information Systems
Strategic Level Systems serves strategic issues and long-term trends
(e.g. 5-year period) (Executive Support Systems, ESS) typical questions:
What business should we be in? What are the competitors doing? What will employment levels be in 5 years?
examples: ?
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L & L 2:Kinds of Information SystemsL & L 2:Kinds of Information SystemsSales and Marketing Systems Sales and Marketing Systems
OPERATIONAL OPERATIONAL Assistance in locating/ contacting prospective customers,Assistance in locating/ contacting prospective customers, LEVEL tracking sales, processing orders, customer service LEVEL tracking sales, processing orders, customer service
KNOWLEDGE LEVEL Identifying customers and markets using KNOWLEDGE LEVEL Identifying customers and markets using
data on demographics, markets, consumer data on demographics, markets, consumer behavavior and trends behavavior and trends
STRATEGIC LEVEL Monitoring of sales trends, STRATEGIC LEVEL Monitoring of sales trends, planning new products, planning new products,
monitoring of competitors’ performance monitoring of competitors’ performance
MANAGEMENT LEVEL Advertising and promotional campaigns, MANAGEMENT LEVEL Advertising and promotional campaigns, pricing decisions pricing decisions
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l & l 2:Kinds of Information Systemsl & l 2:Kinds of Information SystemsHuman Resources Information Systems Human Resources Information Systems
OPERATIONAL OPERATIONAL Track recruitment and placement of firm’s employees,Track recruitment and placement of firm’s employees, LEVEL track employee training, skill, performance appraisals LEVEL track employee training, skill, performance appraisals
KNOWLEDGE LEVEL Design career paths for employees, KNOWLEDGE LEVEL Design career paths for employees, job design and reporting relationships job design and reporting relationships
STRATEGIC LEVEL Planning long-term labor force needs STRATEGIC LEVEL Planning long-term labor force needs of the organization (skills, educational of the organization (skills, educational level, types and number of positions, costs) level, types and number of positions, costs)
MANAGEMENT LEVEL Monitor range and distribution ofMANAGEMENT LEVEL Monitor range and distribution of employee wages, salary and benefits employee wages, salary and benefits
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Strategic information systems don’t focus on long-term decision making
(like strategic level systems)
make use of strategic opportunities change the way a firm conducts its
business can provide competitive advantage
L&L 2: Strategic Role of Information Systems
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L&l 2: Strategic Role of Information Systems
Two models to identify strategic opportunities competitive forces model value chain model
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L&L 2: Competitive Forces Model
External competitive forces new market entrants pressure from substitute products/ services bargaining power of suppliers and
customers positioning of industry competitors
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L&L2: Competitive Forces ModelL&L2: Competitive Forces Model
THE FIRMTRADITIONAL COMPETITION
NEW MARKET ENTRANTS
SUPPLIERS CUSTOMERS
SUBSTITUTE PRODUCTS & SERVICES
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L&L 2: Strategies to counter competitive forces
Develop brand loyalty by product differentiation unique new and distinguishable products custom-tailored products
Information systems are the basis for creating these products examples: ATM-machines, custom jeans
by Levi’s
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L&L 2: Strategies to counter competitive forces
Create new market niches by focused differentiation provide specialized products for narrow target
markets in a superior way Information systems produce data to
improve sales and marketing techniques examples: American Express relationship billing,
Fingerhuts customized catalogue offers, Kraft Food’s selected coupons
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L&L 2: Strategies to counter competitive forces
Linkages to customers and suppliers raise switching costs and reduce
bargaining power for customers/ suppliers “lock” customers into firm’s products, tie
suppliers into delivery timetable and price structure
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L&L 2: Strategies to counter competitive forces
Manufacturer information systems “integrate” customer/ supplier operation examples: Baxter Healthcare’s “stockless
inventory”, GM’s just-in-time delivery
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L&L 2: Strategies to counter competitive forces
Low-cost production produce goods and services at prices
lower than competitors Information systems optimize inventory
replenishment/ orders examples: Wal-Mart’s continuous inventory
replenishment system
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L&L 2: Strategic Uses of the Internet
Product differentiation: virtual banking (Deutsche Bank, 1st. Nat. Bank Durango)
Focused differentiation: ? Links to customers/ suppliers: FedEx
“track system” Low-cost producer: Avex Electronics
EDI-System
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L&L 2: Value Chain Model
Firms are chains of activities, adding value to products/ services primary value creating activities in the
production/ distribution process secondary supporting activities
Identify the most value adding “leverage points” in a chain to enhance competitive position
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L&L 2: Value Chain Model
Information systems support the most value adding activities example: Gilette’s “low cost, high quality”-
system
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L&L 2: How Information Systems promote QualityL&L 2: How Information Systems promote Quality
Producer perspective: Conformance to specs
Customer satisfaction: quality of product and service
Total quality management quality control is an end in itself
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L&L 2: How Information Systems promote Quality
Total quality management quality is the responsibility of all poeple in an
organization Engineers try to avoid design errors Production workers try to spot defects Sales people try to present the product properly
basic measures to improve quality Simplify product/ production process (“fewer is better”) Reduce cycle time Establish benchmarks
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L&L 2: How Information Systems promote Quality
Mapping production and administrative processes
Analyze data (e.g. customer return transactions)
Use of Computer Aided Design (CAD) software designing precise products, testing products improve quality, precision