Date post: | 07-Nov-2014 |
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Strategic Strategic Information Information
SystemsSystemsfor Competitive for Competitive
AdvantageAdvantage
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The IS Pyramid
TPS
MIS
EIS/SISQuestions: EIS? MIS? TPS? DSS?
• Functionality• Whom to support?• What IT to adopt?
DSS
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Data Warehouses , Data Marts & Data Mining
Transactional/Operational Systems
Analytical Processing Systems
TPS
MIS
EIS
Databases
Enterprise Data
Warehouses
Manufacturing
Marketing
Extraction,Transformation
Sales
Data Marts
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Data Warehouses
A data warehouse is a relational and or multidimensional database management system designed to support management decision making.
The data in the “warehouse” is stored in a single, agreed-upon format even when underlying operational databases store the data differently.
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Data Warehouses
Data Warehouse Advantages It removes barriers among functional areas by
offering a way to reconcile views from multiple sources, thus providing a look at activities that cross functional lines.
It reports on trends across multidivisional and/or multinational operating units, including trends or relationships in areas such as merchandising, production planning, and so forth.
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Multidimensional Database Model can be the core of data warehouses data are stored in arrays consists of at least three dimensions dimensions are the edges of the cube, and
represent the primary “views” of the business data the data are intimately related and can be viewed
and analyzed from different perspectives, which are called dimensions
allows for the effective, efficient, and convenient storage and retrieval of large volumes of data
8Figure 5.13 Relational databases
9Figure 5.14 Multidimensional databases
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Data Marts a scaled-down version of a data warehouse that
focuses on a particular function area usually designed to support the unique business
requirements of a specific department or business process. Example : Marketing data mart
takes less time to build, costs less, and less complex the indiscriminate introduction of multiple data marts
with no linkage to each other, or to an enterprise data warehouse, will cause problems
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Data Mining provides a means of extracting previously
unknown, predictive information from the base of accessible data in data warehouses
discovers hidden patterns, correlations, and relationships among organizational data
predicts future trends and behaviors, allowing businesses to make proactive, knowledge-driven decisions
functions of data mining classification » clustering » association sequencing » forecasting
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EIS or SIS
Executive Information Systems / Strategic Information Systems
To address “competition”To assist in determining:• Strategic decisions• Planning horizon• Competitive forces• Value-added activities• Information technology
TPS
MIS
EIS
CompetitiveAdvantages:
Cost,Quality, and
Velocity
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The Role of IT & SIS in The Role of IT & SIS in Strategic ManagementStrategic Management
Competitive tools (speed, service, innovation, cost and quality)
Reengineering business processes Inter-organizational linkage (networking,
telecommunications, EAI, e-commerce, supply chain optimization, etc.)
Knowledge management – competitive (business) intelligence (products, customers, competitors, markets, environments, regulation, technology, etc.)
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Porter’s Competitive Forces Porter’s Competitive Forces ModelModel
Existing competitors New competitors The bargaining power of suppliers The bargaining power of
customers/buyers Substitutes
ResponseStrategies?
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1. Threat of New Entrants
The ease with which firms can enter into a new market or industry is a critical variable in the strategic management process.
1. AMD vs. Intel1. AMD began producing chips that could compete with Intel
products
2. Word vs. WordPerfect1. WordPerfect dominated word processing in the 1980’s but
Microsoft introduced a competing product and kept chipping away at WordPerfect domination. Today Word Dominates.
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1. Threat of new entrants Implications for firm
Increased capacity in the industry Reduced prices Decreased market share
Potential Use of IS to Combat Competitive Force Better web site to reach customers and
differentiate product Inventory control system to lower costs and
better manage excess capacity
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2. Bargaining Power of Suppliers
Powerful Suppliers can exert considerable influence on the buyers (e.g. dictating terms, controlling prices).
Examples: MICROSOFT was so powerful with Windows it
insisted that Windows Explorer be the default Web browser. - It took government intervention to reduce that power
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2. Bargaining power of suppliers Implications for firm
Reduced quality Prices raised
Potential Use of IS to Combat Competitive Force Use internet to establish closer electronic ties
with suppliers and to create relationships with new suppliers located far away
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3. Bargaining Power of Buyers
A powerful buyer may often dictate terms to suppliers which has a strong impact on the way they do business
Example: Dell Computer: Dell’s JIT delivery demands
forced suppliers to build facilities near Dell.
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3. Bargaining power of buyers Implications for firm
Increased quality Reduced prices Demand for more services, quicker delivery, etc.
Potential Use of IS to Combat Competitive Force Implement CRM system to serve customers better Implement CAD/CAM system to improve product
quality
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4. Threat of substitute products and services
The competition engendered by a Threat of Substitute often comes from products outside the industry. Computers destroyed the typewriter industry TV nearly destroyed newspapers Airlines threaten busses & trains Online trading replaces human brokers.
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4. Threat of substitute products and services
Implications for firm Losing customers for life Decreased market share
Potential Use of IS to Combat Competitive Force Use DSS and customer purchase database to
assess trends and customer needs better Use CAD systems to redefine products
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5. Rivalry among existing firms Pure competition among rival firms drives
profits to zero. But firms strive for a comparative advantage over rivals … continuously changing to keep an edge
If you don’t change – you’re DEAD! Wal-mart is a price leader Pharma developed alliances Car Manufacturers rely on improving quality and
innovation
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5. Rivalry among existing firms
Implications for firm Competition in price, product distribution, and
service Potential Use of IS to Combat Competitive
Force Implement information system to reduce costs
and be able to act and react more quickly Implement web site to offer better service to
customers
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Value Chain ModelsModels that highlights the primary and support activities that add a margin of VALUE to a firm’s products and/or services where the information systems can be applied to achieve a competitive advantage.
FactoriesFactories WarehouseWarehouse D.C.D.C.
Delivery Delivery
Cu
sto
mer
sSuppliersSuppliers
Value Chain ModelPrimary Activities
InboundLogistics Operations
OutboundLogistics
MarketingMarketingSalesSales
ServicesServices
Support Activities
FactoriesFactories WarehouseWarehouse D.C.D.C.
Delivery Delivery
Cu
sto
mer
sSuppliersSuppliers
What IT/IS Can Be Applied?
Primary Activities
InboundLogistics Operations
OutboundLogistics
MarketingMarketingSalesSales
ServicesServices
Support ActivitiesAutomated
WarehousingSystems
IntegratedManufacturing Planning &
Control Systems
AutomatedShipment &Scheduling
Systems
Marketing Research
DSS;CRM
Field Service Scheduling Systems;
Equipment Maintenance
Systems
FactoriesFactories WarehouseWarehouse D.C.D.C.
Delivery Delivery
Cu
sto
mer
sSuppliersSuppliers
What IT/IS Can Be Applied?
Primary Activities
InboundLogistics Operations
OutboundLogistics
MarketingMarketingSalesSales
ServicesServices
Support Activities
E-Administration; Office Automation
Workforce Planning Systems
Computer-Aided Design
Computerized
OrderingSystems;
CRM
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DiscussionConflicts in Strategic Business Objectives
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If you were a Chief Marketing Officer…What are your business goals?
Increase market sharesIncrease salesIncrease revenuesHigh customer service level
What to do to achieve these goals? Offer high product availabilityOffer high product variability – mass customization
Impacts?
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If you were a Chief Manufacturing Officer…What are your business goals?
Keep low operating costs
What to do to achieve these goals? Keep long production runs on a few products(mass production)Keep fewer changeoversMaintain high inventories of raw materials andwork-in-process subassemblies
Impacts?
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If you were a Chief Financial Officer…What are your business goals?
Keep investment and costs low
What to do to achieve these goals? Keep long production runs on a few products(mass production)Keep fewer changeoversMaintain low inventories of raw materials andwork-in-process subassemblies
Impacts?
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DiscussionStrategic Decisions Making on Supply Chain Management
PlantsPlants
Dealers Dealers RetailersRetailers
CustomersCustomers
SuppliersSuppliers
DistributorsDistributors
Strategic Supply Chain Decisions
Site Location / Expansion Facility Missions / New Lines / New Processes Product Sourcing / To Make or to Buy? Inventory Deployment Strategy Transportation Strategy Service Territory Alignment
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The Solutions…The Solutions…
Integrated Enterprise Resource Planning and Scheduling System
Supply Chain Optimization & Synchronization