CHAPTER ONE

MANAGEMENT
INFORMATION
SYSTEMS

BUSINESS DRIVEN
MIS

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CHAPTER ONE OVERVIEW

 SECTION 1.1 – BUSINESS DRIVEN MIS

• Competing in the Information Age
• The Challenge of Departmental Companies and the MIS
Solution

 SECTION 1.2 – BUSINESS STRATEGY

• Identifying Competitive Advantages
• The Five Forces Model – Evaluating Industry
Attractiveness
• The Three Generic Strategies – Choosing a Business
Focus
• Value Chain Analysis – Executing Business Strategies
SECTION 1.1

BUSINESS
DRIVEN MIS

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COMPETING IN THE
INFORMATION AGE
Did you know . . .
 Avatar, the movie, took over 4 yrs
to make and cost $450 million
 Lady Gaga’s real name is Joanne
Angelina Germanotta
 It costs $2.6 million for a 30-
second advertising time slot
during the Super Bowl
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COMPETING IN THE
INFORMATION AGE

 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
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COMPETING IN THE
INFORMATION AGE
 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
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COMPETING IN THE
INFORMATION AGE

 The core drivers of the information age

• Data
• Information
• Business intelligence
• Knowledge
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Data
 Data - Raw facts that describe the characteristics
of an event or object
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Information
 Information - Data converted into a meaningful
and useful context
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Business Intelligence

 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
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Knowledge

 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
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THE CHALLENGE:
DEPARTMENTAL COMPANIES

Common Departments Working Independently

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THE MIS SOLUTION

Common Departments Working Interdependently

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THE MIS SOLUTION

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THE MIS SOLUTION

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SYSTEMS THINKING

 Systems thinking – 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
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SYSTEMS THINKING

 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
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MIS Department
Roles and Responsibilities

 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
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MIS Department
Roles and Responsibilities

 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
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MIS Department
Roles and Responsibilities
SECTION 1.2

BUSINESS
STRATEGY

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IDENTIFYING COMPETITIVE
ADVANTAGES
 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
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IDENTIFYING COMPETITIVE ADVANTAGES

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IDENTIFYING COMPETITIVE
ADVANTAGES
 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
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IDENTIFYING COMPETITIVE
ADVANTAGES
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SWOT ANALYSIS
 A SWOT analysis evaluates an organization’s
strengths, weaknesses, opportunities, and
threats to identify significant influences that
work for or against business strategies
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THE FIVE FORCES MODEL –

EVALUATING INDUSTRY ATTRACTIVENESS

Porter’s Five
Forces Model
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Buyer Power

 Buyer power – The ability of

buyers to affect the price of an item
• Switching cost – Manipulating costs
that make customers reluctant to
switch to another product
• Loyalty program – Rewards
customers based on the amount of
business they do with a particular
organization
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Supplier Power
 Supplier power – The suppliers’ ability to
influence the prices they charge for supplies
• Supply chain – Consists of all parties involved in
the procurement of a product or raw material
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Threat of Substitute
Products or Services

 Threat of substitute
products or services – High
when there are many
alternatives to a product or
service and low when there
are few alternatives
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Threat of New Entrants

 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
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Rivalry Among
Existing Competitors
 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
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Analyzing the Airline Industry

 Perform a Porter’s Five Forces analysis of each of

the following for a company entering the
commercial airline industry
• Buyer power
• Supplier power
• Threat of substitute products/services
• Threat of new entrants
• Rivalry among competitors
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THE THREE GENERIC STRATEGIES

CHOOSING A BUSINESS FOCUS

Porter’s Three Generic Strategies

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THE THREE GENERIC STRATEGIES

CHOOSING A BUSINESS FOCUS

Porter’s Three Generic Strategies

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VALUE CHAIN ANALYSIS –

EXECUTING BUSINESS STRATEGIES

 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
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VALUE CHAIN ANALYSIS –

EXECUTING BUSINESS STRATEGIES
 Primary value activities
• Inbound logistics - Acquires raw materials and
resources, and distributes
• Operations - Transforms raw materials or inputs into
goods and services
• Outbound logistics - Distributes goods and services to
customers
• Marketing and sales - Promotes, prices, and sells
products to customers
• Service - Provides customer support
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VALUE CHAIN ANALYSIS –

EXECUTING BUSINESS STRATEGIES
 Support value activities
• Firm infrastructure – Includes the company format or
departmental structures, environment, and systems
• Human resource management – Provides employee
training, hiring, and compensation
• Technology development – Applies MIS to processes
to add value
• Procurement – Purchases inputs such as raw materials,
resources, equipment, and supplies
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VALUE CHAIN ANALYSIS –

EXECUTING BUSINESS STRATEGIES

Porter’s Value Chain

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VALUE CHAIN ANALYSIS –

EXECUTING BUSINESS STRATEGIES

Value Chain and Porter’s Five Forces Model

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REVISION QUESTIONS:

1. Describe the information age and the

differences between data, information,
business intelligence, and knowledge.
2. Explain systems thinking and how
management information systems enable
business communications
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REVISION QUESTIONS
3. Explain why competitive advantages are
temporary
4. Identify the four key areas of a SWOT analysis
5. Describe Porter’s Five Forces Model and
explain each of the five forces
6. Compare Porter’s three generic strategies
7. Demonstrate how a company can add value
by using Porter’s value chain analysis