K201 Lecture Exam Study Guide PDF

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K201 Lecture Exam  

Process by which organizations develop their information systems: o They develop their info systems based on their specific competitive strategy Porters 5 Forces Model o Five competitive forces determine industry profitability o The two strongest forces are from customers and rivalry o Bargaining power of customers  (Toyota is the customer) Toyota’s purchase of auto paint because Toyota is a huge customer (therefor has a lot of power) that purchases paint (or supplies) in large volume… a company would want Toyota’s business even if they have to sell them paint at a lower price than normal because they bring so much business and therefor profit o Threat of substitutions  A frequent travelers choice of auto rental (lots of auto rental options to chose from) …Auto rental company=strong threat of substitution o Bargaining power of suppliers  (New car dealers are the supplier) New car dealers control the “true price” of the vehicle and customer cannot bargain = strong bargaining power for new car supplier o Threat of new entrants  Pizza shop…strong threat of new entrants because it is an easy business to replicate o Rivalry  Used car dealers have strong rivalry because there are so many choices…customers can bargain and find best price  Google and bing have weak rivalry… expensive to develop and market a search engine o What affects bargaining power?  # of customers  size of order  cost of changing  differences between competitors o What affects supplier power  Number of supplier  Size of suppliers  Uniqueness of service  Cost of changing o What affects threat of new entrants  Time and cost of entry  Specialist knowledge  Economies of scale  Barriers to entry (ex. Regulations)

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o What affects threat of substitutes?  Availability of substitute  Substitute performance  Cost of substitute  Switching costs o What affects competitive rivalry?  Number of competitors  Quality differences  Switching costs  Customer loyalty Four Competitive Strategies o Basically lowest cost or differentiation o Industry-wide cost leadership (lowest cost) o Industry segment cost leadership o Industry-wide differentiation- better product/service across the industry o Industry segment differentiation Example of Competitive Strategy o Car rental company:  Industry wide low cost: provide lowest cost car rental across the whole entire rental car industry  Industry segment low cost: lowest car rental costs to U.S. domestic business travelers  Differentiation: perhaps having only high quality cars, cars with different amenities, a fast check in process, or cleaner cars  Can do this industry wide or in specific industry segment (ex. Cleanest rental cars for domestic U.S. business travelers) Value- the amount of money that a customer is willing to pay for a resource product of service Margin- the difference between the value that an activity generates and the cost of the activity o Ex. Company pays 10$ to makes product and sells it for 15$ margin is the difference so margin= 5$ o Business with differentiation strategy will only use that strategy if it has a positive cost margin (makes them different while also making money) Value Chain o Network of value-creating activities o Consists of 5 primary activities and 4 support activities o Primary Activities- contribute directly to the production, sale and service of a product;  Inbound logistics  Receiving, storing and handling raw inputs that go into products  Ordering and receiving in accordance with agreements set up by procurement (a support activity)  Operations/Manufacturing  Transforming inputs into the final products

Outbound Logistics  Collecting, storing, and physically distributing the products to buyers  Sales and Marketing  Inducing buyers to purchase the products and providing a means for them to do so  Customer Service  Assisting customers’ with use of the products and thus maintaining and enhancing the products’ value o Each primary activity accumulates cost and adds value to the product o Support Activities- contribute indirectly to the production, sale, and service of the product  Procurement  The process of finding venders, setting up contractual agreements, and negotiation prices  Difference between inbound logistics and procurement- inbound logistic is concerned with ordering and receiving in accordance with agreements set up by procurement  Technology  Research and development  Developing new techniques, methods, and procedures  Human Resources  Recruiting, compensation, evaluation, training of employees  Firm Infrastructure  General management, finance, legal, accounting, government affairs What’s the connection between a business process & value? o Value Chain Linkages o Business processes- a network of activities that generate value by transforming inputs into outputs o Linkages- the interactions across value activities  Example of a business process and value chain:  Making a production plan to reduce inventory costs  Use sales forecasts to plan production, then use production plan to determine raw material needs and then schedule raw material purchases accordingly = “just-in-time inventory” (reduces inventory sizes and costs) o Business process design- making more efficient business processes that integrate the activities of all departments in the value chain (integrated, cross departmental business systems) How does a company’s competitive strategy affect or determine their business processes & information systems? o Ex. Company #1’s competitive strategy is low cost car rentals to students  Business process is to minimize cost  Information system will be low cost and not as efficient 

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 Printed rental form, cash only o Company #2’s competitive strategy is high quality fast check in process car rental to business men  Business process is ensure superb service  Information system will be costly and more effective  Track past rentals, upsell, different payment options, automated inventory system to check rentals out Competitive Advantage and Information Systems o Gain competitive advantage via products by:  Creating new products or services  Enhancing existing products/services  Differentiating products/services from competitors o Via business processes:  Lock in customers  High switching costs – making it difficult for customers to switch to another product  Lock in suppliers  Creating entry barriers  Making it difficult/expensive for new competitor to enter market  Establishing alliances  With other organizations  Reducing costs  Reduce prices and increase profitability o How does the company use IS to create competitive advantage  Information systems can help enhance an existing service  Like an IS that helps create an easier ordering and shipping process for the customer and reduces errors  IS can differentiate  A better system that competitors don’t have  A good IS can lock in customers  Customers like the IS and wont want to switch  And can reduce costs if it is a good IS Chapter 7 Structured Processes Vs. Dynamic Processes o Structured- formally defined, standardized processes involving day-to-day operations; exceptions are rare; support operational and structured managerial decisions and activities  Placing an order, ordering raw materials, accepting a return; payroll o Dynamic- flexible, informal and adaptable processes that involve strategic decisions and activities; usually requires human judgment; support strategic and less structured managerial decisions and activities; often creative  Whether to open new store location; address a problem with excessive returns; social networking Processes Vary By Scope o 3 Levels of Organizational Scope

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o Workgroup process- exists to enable workgroups to fulfill the charter, purpose, and goals of a particular group or department  Largely contained within a given department  10-100 users  May receive inputs from other depts, or produce outputs that are used by other depts.  Ex. Customer Service workgroup would deal with the processes of: order tracking, account tracking, and customer support  Work group IS are called -functional IS o Enterprise Processes- Span an organization and support activities in multiple depts.  100-1,000 users  CRM, ERP and EAI are all enterprise IS  Ex. Hospital patient discharge process: supports activities in housekeeping, pharmacy, kitchen, nurse’s station, and other depts. o Inter-enterprise Processes- span two or more independent organizations  1,000+ users  Ex. Buying healthcare via a healthcare exchange; involves many insurance companies and government agencies all of which are independent  Ex. Supply chain management Improve process quality o Two dimensions of process quality are efficiency and effectiveness o Process efficiency- measure of the ratio of process outputs to inputs  Ex. Produce the same order for less cost or produce more for the same cost o Process effectiveness- measure of how well a process achieves organizational strategy  Ex. An organization differentiating themselves on high quality customer service and then making sure they take less than 24 hours to respond to order requests = effective o Processes can be improved by:  Changing process structure  Ex reorganizing process order to make more efficient and therefor increasing effectiveness  Changing the process resources  Ex changing allocation of resources … ex. Finding source of delays in a process and adding more people to that process to decrease delay or use an information system instead of people  Or changing both structure and resources o Information Systems can improve Process Quality (see page 257)  Perform an activity  Augmenting a human performing activity  Ex. Managing patient appointments; receptionist uses an appointment IS

Controlling data quality and process flow  Ensuring data values are correct and complete  Order approval through an IS system is more effective and efficient than a person doing it Information Silos o The condition that exists when data are isolated in separated information systems o Problems with information silos  Data inconsistency and duplication  Ex. Sales and marketing have separate databases o Sales changes customer info o That change doesn’t get transferred to marketing  Data integrity problem- inconsistent duplicated data  Disjointed processes  Approval process = can be slow and erroneous  Leads to confusion  Limited information and lack of integrated information  Isolated decisions lead to organizational inefficiencies  Increases expenses (sum of all above problems) How do organizations solve the problem of Information Silos o Integrate data into a single database and revise applications and business processes to use that database o Allow for isolation but manage it effectively to avoid problems o Business process reengineering  The activity of altering existing & designing new business processes to take advantage of new information systems Enterprise Application Solutions o Customer Relationship Management (CRM)  A suite of applications, a database, and a set of inherent processes for managing all interactions with customer; from lead generation to customer service  Every contact and transaction with customer is recorded in CRM database  Customer life cycle:  Marketing- attract prospective customers  Customer acquisition- after ordering customers need support  Relationship management- increases value of customers by selling them more product  Loss/churn- organizations inevitably loses customers; cue winback processes which categorize customers according to value in attempt to win back high value customers o Enterprise Resource Planning (ERP)  A suite of applications called modules, a database, and a set of inherent processes for consolidating business operations into a single, consistent, computing platform 

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ERP system- an information system based on ERP technology  Includes CRM functions but also accounting, manufacturing, inventory, and human recourses applications  Primary purpose= integration; allows both sides of an organization to know what the other one is doing o Real time updates globally o Allows businesses to make critical business decisions in a timely basis using latest data  ERP solves information silos problem Enterprise Application Integration (EAI)  A suite of software applications that integrate EXISTING systems by providing layers of software that connect applications together  For companies that find ERP inappropriate but still have problems with information silos  Enables organizations to use existing applications while eliminating isolated system problems  Is not nearly as disruptive as an ERP system  EAI functions  Connects system “islands” using new layer of software/system  Enables existing applications to communicate and share data  Provides integrated information  Leverages existing systems o Leaves functional applications as is, but provides an integration layer over top  Enables a gradual move to ERP Database Component of an ERP solution  ???? Challenges of implementing new enterprise systems  Collaborative management- enterprise systems have no clear boss  Who to consult when disputes arise?  Requirement gaps- gap between and organizations requirements and an applications capabilities  Transitional problems- figure out how to use the new system all while continuing to run the business  Employee resistance due to threats to self-efficacy (a persons belief that they can be successful at their job) – people resist change Responding to employee resistance to change in terms of new systems  Train and coach employees to be successful with new system;  Video demonstrations of employees successfully using new system  Implementing incentives to employees for using the system who do not directly benefit from the new system 

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Chapter 8  Social Media

o The use of information technology to support the sharing of content among networks of users  Enables people to form communities of practice (communities where groups of people are related by common interests) o Social Media Information Systems (SMIS) - an information system that supports the sharing of content among networks of users; contains the same 5 components of all IS; there are 3 SMIS roles  Social media Application providers- (ex. Facebook, LinkedIn, twitter, Instagram, and Pinterest) provide platforms that enable the creation of social networks (social relationships among people with common interest)  Users- both the individuals AND organizations that use social media sites to build social relationships  Communities- groups of users with common interests o 5 Components of SMIS  Hardware  Laptops, phones, monitors  Software  Browsers, apps, DBMS  Data  Content- tweets, posts, comments  Connections- followers, friends, likes (companies and brands pages)  Procedures  How to create a page or profile; how to manage and create content  People  Casual users, developers, Social Media Managers, trolls o Is social media free?  Costs to develop and manage social networking strategy  Labor costs for employees who contribute to and manage social networking sites o Social media is used by companies to recruit  94% use (93% use LinkedIn)  1/3 have rejected a candidate due to something on social profile o Social Media in Sales and Marketing  Social CRM- is a dynamic social media based CRM process  Not structured and controlled like CRM  Customers have as much control as companies  Companies do not have complete control over what the customer reads, sees and hears  Each customer crafts a relationship o Blogs, tweets, reviews etc..  Balance of Power is shifted o “Low value” customer can have major influence

 Writing reviews, posts, comments etc.. Social Media Ambassadors help sell products o Loyal customers giving peer-to-peer recommendations Social Media and Customer Service  Product users are willing to help each other solve problems  Customer relationships form  Businesses cannot control peer-to-peer content  Can be negative Social Media and Inbound/Outbound Logistics  Can be used to dispense news  Allay fears of problematic products  Provide faster feedback for solutions to complex supply chain problems Social Media and Manufacturing and Operations  Operations & manufacturing are structured processes no social media needed  Social media plays role in designing products, developing supplier relationships and improving operations efficiencies  Crowdsourcing – dynamic social media process of employing users to give feedback and participate in product design or redesign  User-guided design – create videogames, shoes and many other products  Business-to-consumer (B2C) – social media builds B2C relationships to market products to final users  Manufacturers are starting to use SM to become industry leaders, promote brand awareness and generate business-to-business (B2B) relationships  Starting a blog to discuss latest industry related news  FB and Twitter accounts promote positive consumer stories and announce new products Social Media and Human Resources  Finding employee prospects  Recruiting candidates  Candidate evaluations  Employee to employee communication through sites like SharePoint to share expertise with fellow employees Risks with Social Media  Negative feedback and reviews  Not having control over everything posted  Loss of privacy in terms of supply chain problem solving  Competitors can see too  Possibility of error when using SM to come to conclusions about employees 

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Capital o Capital- (Karl Marx) the investment of resources of a future profit (machines, factories, manufacturing equipment)

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o Human Capital- the investment in human knowledge and skills for future profit (going to college) o Social Capital- (according to nan Lin) is the investment in social relations with the expectation of returns in the marketplace;  You invest in your social capital by attending business functions to meet people; can use social media like LinkedIn or Facebook to increase your social capital by liking a pic or endorsing someone  Social Capital adds value in four ways:  Information- about opportunities, alternatives, solutions  Influence- ex playing golf with the CEO of your company every weekend raises your chances of being promoted  Social credential- being linked to a network of highly regarded contacts -> others will be more inclined to work with you if they believe the people around you may provide resources to support you or show your character  Personal reinforcement- being linked to a social network reinforces your identity, image, and position; o Ex. Being friends with bankers and investors reinforces your identity as a financial professional  The value of social capital is determined by the number of relationships, strength of the relationships, and power of the people in those relationships Enterprise Social Network (ESN) o A software platform that uses social media to facilitate cooperative work of people within an organization  Ex. Blogs, status updates, image and video sharing  Primary goal is to improve communication, collaboration, knowledge sharing, problem solving, and decision making o Enterprise 2.0  Andrew McAfee 2006  Refers to the USE of ESN  SLATES- 6 characteristics defined by McAfee  Search- workers find searching for content inside the organizations ESN is more effective than navigating content structures like lists and table of contents  Links- access organizations content via links  Authoring- create enterprise content through blogs, discussion groups, presentations, etc..  Tags- content is tagged so its easier to find; o Folksonomy- content structure that emerges from the processing of many user tags  Extensions- rate tagged content and use the tags to predict which content will be of interest to them (like Pandora)

Signals- worker...