MIS 200 Wk 2 & 3 notes

how does information technology improve business processes

• inc efficiency of existing processes by automating manual steps

• enables new processes like supporting business models

  • you can’t improve any kind of business process w/o making changing to the information system anymore

swim lane diagrams

• can be horizontal or vertical

• advantages → identifies who does what & in what order

  • logical & chronological

  • indicates hand offs from role to role

• versatile

  • can be used for communication

  • or can be used for training someone

circle

the starting or ending of an event

rectangle

an activity in process (ex: place order)

diamond

a decision that someone must make (ex: credit available?)

arrows

indicate the chronological flow of the process (ex: yes or no)

cylinder

represents stored data (not used in this class)

competitive advantage

attributes that allow firms to provide goods & services w/higher perceived value than their competitors

• do this by either having lower prices, really good quality, or both

  • ex: Apple sells $$ phones b/c of branding & good value

MIS systems allow managers to

build on an organization strengths to create competitive advantages

Porters 5 forces

1. existing competitors (competitor rivalry)

2. new competitors (new entrants into market)

3. suppliers

4. customers

5. substitute products

porter said if these forces are weaker than the firm will have more success

1. Competition - Porters 5 forces

ability of a firm to enjoy significant profit margins decreases as # of competitors increases that offer the same product/service as them

Monopolistic Competition

creating a brand image that customers perceive offer greater value than a competitors comparable products

• MIS systems provide lots of tools to help managers to compete

  • technology used in the product

    • helps improve manufacturing efficiency

2. New Competitors (entrants) - Porters 5 forces

if it’s easy to start a competing firm that has the same product than it’s harder for existing businesses to have long term financial stability

• strong barriers to entry decrease the likelihood of new entrants

  • barriers to entry : factors that make it hard for competitors to enter the market

3. Suppliers - Porters 5 forces

relative strength of suppliers impacts firms ability to become more profitable

• supply of technical components

  • can charge more if everyone needs it (Nvidia creates processes for video games, can charge more b/c everyone needs it )

• supply of labor

  • have to pay a lot to hire & retain workers b/c low unemployment

economies of scale

using large production or purchasing power to proportionally reduce marginal costs while maintaining or even increasing profits

• walmart can buy products in bulk at lower prices, allowing for lower retail prices & more profit

• if a supplier raises its prices Walmart can threaten to change suppliers

4. Customers/buyers- Porters 5 forces

if a single buyer represents a significant percentage of the companies/suppliers sale, the buyer can exert control on the firm

• internet can increased # of suppliers that buyers can buy from

Elasticity of demand

refers to how quickly consumer demand changes w/a change in price

• if an increase in price results in a large decrease in customer demand for the product then the firm can’t easily increase its profit margin

• when lots of buyers want a product the buyers lost the ability to influence price of product

5. Substitutes - Porters 5 forces

product that is diff in nature but fulfills the same goal

• like buying a hoagie instead of a pizza

• ability of buyers to substitute one product for another impacts company’s ability to increase its profit margin

Porters Generic Business Strategies

2 fundamental strategies to gain competitive advantage :

• price leadership

• product differentiation

each strategy can be used in 2 separate market categories:

1. broad markets (broad audience)

2. niche markets (specialized market)

Price leadership

organization seeks to offer a product to a large market at the lowest possible price by maximizing efficiency & using economies of scale

• Walmart has a broad market, with low prices

• Tesla has a niche market & other competitors followed Tesla’s prices

  • niche market w/price leadership → focused price leadership

Product differentiation

firms offer products w/ unique qualities that give it an appeal, allows firm to have higher prices

• Apple has a broad market & their products are different b/c of their look and IOS

• Oat milk is a different product but has a niche market (people who drink oat milk)

  • niche market w/product differentiation → focused differentiation

Blue Ocean Strategy

organizations should focus on differentiation strategy while also seeking price leadership

• differentiation strategy + price leadership

• developing a new product to a whole new market (uber)

• result: no/limited competition b/c no one sells those products yet

Red Ocean Strategy

competitors in the same market fight to gain competitive advantage through price leadership or by making product improvements

• price leadership OR product improvements

• result: blood in the water b/c of competition

disruptive innovation

uses technology to transform a market or create an entirely new market

• disruptive innovation IS a blue ocean strategy

Christensen’s Disruptive Innovation Model: Missed Opportunities

a firm will miss an opportunity sometimes to take advantage of disuptive technology b/c it involves risk & allocating resources

• Ex: Sears didn’t try e commerce while Amazon did

Lieberman & Montgomery’s 1st mover advantage

first firm to enter a product into the market

advantages:

• employee experience

• securing resources

• customer adaptation

employee experience

employees will learn from experience how to use technology & processes to develop the product

securing resources

first firm to enter market has an opportunity to secure important raw materials & develop logistic lines ahead of competitors

customer adaptation

consumers become accustomed to products they adopt, other firms will have to create a product like yours to meet consumers expectations

fast follower strategy

company follows 1st movers really fast & use their business ide a

• makes use of the research of the. 1st mover

• develop similar product at a lower price

• the key is to adopt really fast so consumers have a choice when purchasing the product for the first time

SWOT analysis

strength, weaknesses (internal) & opportunities, threats (external)

5 P’s of an internal scan

used when determining internal strength & weaknesses, should examine:

• personnel (human resources)

• plant (physical resources)

• processes (activities that create value)

• purse (financial strength)

• past experience (reputation & intangible assets)

PESTEL analysis

evaluating external opportunities & threats:

• political

• economic

• socio-cultural

• technological

• environmental

• legal issues facing an org

socio cultural factors

MIS systems allow managers to gain a sense of socio cultural changes in the environment (how people think of the company/business)

Ex: eating healthier now a days is in

environmental factors

business tries to make sure their product has less of an impact on the environment

legal considerations

consumer rights, labor, ads, health regulations surrounding a business