Baltzan Chapter 1: Management Information Systems

Fact

The confirmation or validation of an event or object

Information age

The present time, during which infinite quantities of facts are widely available to anyone who can use a computer

Examples of the power of business and technology

• Amazon – Not a technology company; primary business focus is selling books

• Netflix – Not a technology company; primary business focus is renting videos

• Zappos – Not a technology company; primary business focus is selling shoes

Internet of Things (IoT)

A world where interconnected Internet-enabled devices or “things” have the ability to collect and share data without human intervention

Machine-to-Machine (M2M)

Refers to devices that connect directly to other devices

The core drivers of the information age

• Data

• Information

• Business intelligence

• Knowledge

Data

Raw facts that describe the characteristics of an event or object

Structured data

Stored in a traditional system such as a relational database or spreadsheet

The 2 types of data

1.) Machine-generated data

2.) Human-generated data

Machine-generated data

Created by a machine without human intervention

Human-generated data

Data that humans, in interaction with computers, generate

Example of Unstructured Data

Not defined and does not follow a specified format

Big data

A collection of large, complex data sets, including structured and unstructured data, which cannot be analyzed using traditional database methods and tools.

Snapshot

A view of data at a particular point in time.

Information

Data converted into a meaningful and useful context

Report

A document containing data organized in a table, matrix, or graphical format allowing users to easily comprehend and understand information

2 types of Report

1.) Static report

2.) Dynamic report

Static report

Created once based on data that does not change

Dynamic report

Changes automatically during creation

Business intelligence

Information collected from multiple sources such as suppliers, customers, competitors, partners, and industries that analyzes patterns, trends, and relationships for strategic decision making

Analytics

The science of fact-based decision making

The types of Analytics

• Descriptive Analytics

• Predictive Analytics

• Prescriptive Analytics

Descriptive Analytics

Techniques that describes past performance and history.

Example: Creating a report that includes charts and graphs that explains the data

Predictive Analytics

Techniques that extract informon from data and uses it to predict future trends and identify behavioral patterns.

Example: Using past sales data to predict future sales

Prescriptive Analytics

Techniques that create models indicating the best decision to make or course of action to take.

Example: Airline using past purchasing data as inputs into a model that recommends the best pricing strategy across all flights allowing the company to maximize revenue

Knowledge

Skills, experience, and expertise coupled with information and intelligence that creates a person’s intellectual resources

Knowledge worker

Individual valued for their ability to interpret and analyze information

Common Departments in a business

• Accounting

• Finance

• Human Resources

• Operations

• Sales

What does Accounting Department do?

Records, Measures, and Reports monetary Transactions

What does Finance Department do?

Tracks strategic financial issue including money, banking, credit, investments, and asset.

What does Human Resources Department do?

Maintain policies, plans, and procedures for the effective management of employees.

What does Marketing Department do?

Supports sales by planning, pricing, and promoting goods or services.

What does Operations Department do?

Manages the process of converting or transforming resources into goods or services.

What does Sales Department do?

Performs the function of selling goods or services.

Data of Accounting Department (Business Decisions)

• Transactional Data

• Purchasing Data

• Payroll Data

• Tax Data

Data of Finance Department (Business Decisions)

• Investment Data

• Monetary Data

• Reporting Data

Data of Human Resource Department (Business Decisions)

• Employee Data

• Promotion Data

• Vacation Data

Data of Marketing Department (Business Decisions)

• Promotion Data

• Sales Data

• Advertising Data

Data of Operations Department (Business Decisions)

• Manufacturing Data

• Distribution Data

• Production Data

Data of Sales Department (Business Decisions)

• Potential Customer Data

• Sales report Data

• Commission Data

• Customer Support Data

What are “Goods” in a business?

Material items or products that customers will buy to satisfy a want or need.

Example:

• Cars

• Groceries

• Clothing

What are “Services” in a business?

Tasks people perform that customers will buy to satisfy a want or need.

Example:

• Teaching

• Waiting Tables

• Cutting Hair

Systems Thinking Layout

Input → Process → Output

Systems Thinking with feedback

A way of monitoring the entire system by viewing multiple inputs being processed or transformed to produce outputs while continuously gathering feedback on each part.

Management Information Systems (MIS)

A business function, like accounting and human resources, which moves information about people, products, and processes across the company to facilitate decision-making and problem-solving

Management Information Systems Departments

• Chief information officer (CIO)

• Chief knowledge officer (CKO)

• Chief privacy officer (CPO)

• Chief security officer (CSO)

• Chief technology officer (CTO)

Chief information officer (CIO)

Oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives

Chief knowledge officer (CKO)

Responsible for collecting, maintaining, and distributing the organization’s knowledge

Chief privacy officer (CPO)

Responsible for ensuring the ethical and legal use of information

Chief security officer (CSO)

Responsible for ensuring the security of IT systems

Chief technology officer (CTO)

Responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT

• Types of Technology Officer

  • Chief intellectual property officer

  • Chief automation officer

  • Chief user experience officer

Business strategy

A leadership plan that achieves a specific set of goals or objectives such as

• Developing new products or services

• Entering new markets

• Increasing customer loyalty

• Attracting new customers

• Increasing sales

Competitive Advantage

A product or service that an organization's customers place a greater value on than similar offerings from a competitor.

First-mover advantage

Occurs when an organization can significantly impact its market share by being first to market with a competitive advantage.

Tools for identifying competitive advantages

• SWOT Analysis

  • Evaluates project osition

• The 5 Forces Model

  • Evaluates industry attractiveness

• The 3 Generic Strategies

  • Chooses Business Focus

• Value Chain Analysis

  • Executes Business Strategy

SWOT Analysis

Evaluates an organization's strengths, weaknesses, opportunities, and threats to identify significant influences that work for or against business strategies

The 5 Forces Model

Evaluates industry attractiveness

Buyer Power

• The power of customers to drive down the prices

• The ability of buyers to affect the price of an item

  • Switching Cost

  • Loyalty Program

Switching Cost (Buyer Power)

Manipulating costs that make customers reluctant to switch to another product

Loyalty Program (Buyer Power)

Reward customers based on the amount of business they do with a particular organization

Supplier Power

The supplier’s ability to influence the price they charge for supplies

• Supply chain - Consists of all parties involved in the procurement of a product or raw material.

Suppliers → Company → Customers

Rivalry among existing competitors

High when competition is fierce in a market and low when competitors are more complacent

• Product differentiation – Occurs when a company develops unique differences in its products or services with the intent to influence demand

Threat of substitute products or services

High when there are many alternatives to a product or service and low when there are few alternatives.

Threat of new entrants

High when it is easy for new competitors to enter a market and low when there are significant entry barriers

• Entry barrier - A feature of a product or service that customers have come to expect and entering competitors must offer the same for survival

Porter’s Three Generic Strategies

1.) Cost Leadership

2.) Differentiation

3.) Focus Strategy

Business process

A standardized set of activities that accomplish a specific task, such as a specific process

Value chain analysis

Views a firm as a series of business processes that each add value to the product or service

Porters Value Chain

Inbound logistics (VALUE CHAIN ANALYSIS)

Acquires raw materials and resources, and distributes

Operations (VALUE CHAIN ANALYSIS)

Transforms raw materials or inputs into goods and services

Outbound logistics (VALUE CHAIN ANALYSIS)

Distributes goods and services to customers

Marketing and sales (VALUE CHAIN ANALYSIS)

Promotes, prices, and sells products to customers

Service (VALUE CHAIN ANALYSIS)

Provides customer support

Firm infrastructure (VALUE CHAIN ANALYSIS)

Includes the company format or departmental structures, environment, and systems

Human resource management (VALUE CHAIN ANALYSIS)

Provides employee training, hiring, and compensation

Technology development (VALUE CHAIN ANALYSIS)

Applies MIS to processes to add value

Procurement (VALUE CHAIN ANALYSIS)

Purchases inputs such as raw materials, resources, equipment, and supplies

Generic Competitive Advantages

• Cost Advantage

• Product Differentiation

• First-Mover Advantage

• Niche Market Focus

• Brand Loyalty

• Access to Intellectual Property

• Economies of Scale

Cost Advantage (Generic Competitive Advantages)

Producing goods or services at a lower cost than competitors, allowing for higher margins or lower consumer prices.

Product Differentiation (Generic Competitive Advantages)

Offering unique features, superior quality, or innovative designs that customers value more than competing offerings.

First-Mover Advantage (Generic Competitive Advantages)

Being the first to enter a market with a new product, capturing significant market share and brand recognition.

Niche Market Focus (Generic Competitive Advantages)

Concentrating resources on a specific, narrow segment of the market to serve its unique needs better than broad-market competitors.

Brand Loyalty (Generic Competitive Advantages)

Developing a strong reputation and emotional connection with customers, leading to repeat purchases and reduced price sensitivity.

Access to Intellectual Property (Generic Competitive Advantages)

Holding patents, trademarks, or proprietary technology that prevents competitors from replicating key product features.

Economies of Scale (Generic Competitive Advantages)

Achieving lower per-unit costs through large-scale production and efficient resource utilization.