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What’s Happening?!. Job creation incentive program seems to have backfired financially on the state of California. Three California congressmen are questioning the sale of IBM’s PC manufacturing to a China company based on national defense concerns.

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what s happening

What’s Happening?!

Job creation incentive program seems to have backfired financially on the state of California.

Three California congressmen are questioning the sale of IBM’s PC manufacturing to a China company based on national defense concerns.

SBC is negotiating to buy AT&T for $16 billion.

what s happening1
What’s Happening?!

Knight-Ridder advertising revenue for 2004 was $648

million. Newspaper revenue was $747 million. Online media

revenue was $31 million.

Oracle expects higher profits. Seeks closer ties with IBM.

New university – Cal State East Bay.

chapter 6 summary

Chapter 6 Summary

Business Vision

chapter objectives
Chapter Objectives
  • Positioning vision as the starting point in directing, posturing and running a business.
  • Understanding the significance of the vision process.
  • Remembering that vision triggers the entire business and information technology management process.
what is a vision
What is a Vision?
  • A photograph of the future
  • It must be realistic and credible -- and most certainly attractive to the organization
  • Concrete and easily understood ideas about the long-range future of the business
what must be accomplished
What Must Be Accomplished
  • Establish a clear vision of the future.
  • Provide a basis for sharing values and views.
  • Send a message regarding the importance of the vision process throughout the entire organization to gain consensus and momentum.
  • Make things happen! Action needs to become a high priority.
slide7

Implementation

(Action)

The Vision to Action

Process

Agreement &

Commitment

Tactics and

Business Plan

Strategy

Feedback

Vision

Sensing

Opportunity

vision uncertainty
Vision Uncertainty
  • The dynamics of the market
  • Rapidly changing technologies
  • The logic and need to address changing employee values and traditional methods
  • The shift from old regulatory practices to new practices in many industries
customer service
Customer Service
  • Frequently Drives the Vision!
  • For USAA, General McDermott’s four step process:
    • Automation
    • Lower employee attrition
    • Improve job training
    • Decentralize decision making by empowering employees
slide10
USAA

Role and significance of IT?

  • An executive partnership
  • Technology experimentation and assimilation
  • Leveraging of information systems
  • Strategic architecture
  • Horizontal integration of applications.
whirlpool
Whirlpool

Decided that it would become the global leader in

the large appliance industry.

Initially identified product technology and

procurement as key factors to realize this goal.

Added information systems as an essential third

factor to achieve this goal.

conclusions
Conclusions

Successful companies are the result of good

leadership.

Talented leadership is demonstrated in the following

forms:

  • Determining the direction of the business.
  • Promoting the need for action.
  • Fostering an environment for well directed information systems.
possible exam questions
Possible Exam Questions
  • What factors influence the creation of a vision?
  • What impact does a vision have on information systems?
chapter 7 introduction

Chapter 7 Introduction

Implementing a Vision:

Strategy, Tactics and Business Plan

chapter objectives1

Chapter Objectives

Provide an understanding of how to transition a vision into reality through strategy, tactics, and business plans.

Better appreciate how strategies should dictate the role and significance of information systems.

Understand challenges that a company faces in formulating appropriate strategies.

slide16

Chapter 7 In Just One Slide!

The Four Components of Possible Business Success

  • Vision: What the company wants to look like in the future.
  • Strategy: Ideas on how to accomplish the vision, by doing an external and internal analysis of the company.
  • Tactics: The specific, time-oriented method of implementing the decided strategies.
  • Business Plan: The plan for allocating company resources. (aka: Operating Plan or Budget)
elements of a business strategy
Elements of a Business Strategy
  • Competitive framework: What market are you in? How big is it? Who are your competitors, and what are their strategies?
  • Market target: What type of customer are you selling to? What are their needs, attitudes, and priorities?
  • Basis for perceived competitive superiority: How do your customers define your product or service as superior?
  • Key profit drivers: What makes your product or service profitable?
  • Product portfolio: Interrelating a product or service with the above four points.
business strategy challenges
Business Strategy Challenges
  • Is the strategy consistent with our vision?
  • Is the scope of strategy right?
  • Is there are logical balance between short term and long term objectives?
  • How does this compare to the industry leader?
  • How aggressive should the strategy be implemented?
  • Do people skills exist and are they availability?
  • Are capital and operating funds available?
slide19

External Analysis

Internal Analysis

example progressive corporation
Example: Progressive Corporation

Vision:

Reduce the economic cost and human trauma of automobile

accidents and provide services that delight consumers.

Plan of Action:

Make major changes to the definition of their business and

financial objectives.

Align core business strategies based on these changes.

business plan
Business Plan

The most straight-forward part of the entire process.

Deals with allocation of funds, people and other

resources.

slide23

IT Based Strategies

MARKET PLACE

OPERATIONS

Federal Express

USA Today

Charles Schwab

Whirlpool

Xerox

SIGNIFICANT

STRUCTURAL

CHANGE

BancOne

Boeing

Frito-Lay

Wal-Mart

USAA

L.L. Bean

McKesson

TRADITIONAL

PRODUCTS

AND PROCESSES

Figure 7-6

plan for action
Plan for Action!

As has been emphasized: the point of all of this is to

make things happen. Key to such an effort:

  • Simple Strategy
  • Aggressive Implementation
conclusions1
Conclusions
  • Business strategies can frequently work without information systems support.
  • IS support can be a key enabler of a successful business strategy.
  • IS implementations won’t contribute to the success of the company unless the right strategies are in place.
  • In the current business environment, identifying and implementing the best possible strategies often faces major challenges.
chapter 7

Chapter 7

Implementing a Vision:

Strategy, Tactics and Business Plan

slide27

If we know where we are and something about how we got there, we might see where we are trending--and if the outcomes which lie naturally in our course are unacceptable,to make timely changes.Abraham Lincoln President of the United States

slide28

Primary Business Challenges

  • Deciding what things are worth doing.
  • Getting things done!
slide29

If the strategy is a hammer, the tactic is a nail. The actual end results are accomplished by the nail. If the nail isn\'t hammered correctly then the battle is lost. Sometimes the hammer also misses the nail.

be careful
Be Careful
  • Do not confuse strategies with vision.
  • It can be relatively easy to come up with a vision.
  • The challenge is to turn it into reality through appropriate strategies and tactics.
global management
Global Management

Managers must be prepared to engage in heightened

international competition and have the ability to:

  • Manage organizations in different cultural settings.
  • Establish a value system within the organization.
  • Market products in different countries.
  • Adapt to changing markets.
  • Develop appropriate strategies dealing with finance, accounting, manufacturing, marketing and management of the organization.
defining the process elements
Defining the Process Elements
  • Vision: Identifies what the organization wants to look like at some logical point in the future.
  • Strategy: How a company will achieve the long-term goal of the vision.
  • Tactics: More specific time-oriented, measurable ways to make a vision a reality.
  • Business Plan: Allocation of funds and other resources.
when in doubt
When in Doubt

Whether dealing with vision, strategies or tactic think customer!

Remember that a major difference between companies is how they treat their customers.

Also the importance of doing necessary homework on competitors.

porter strategy guidelines
Porter Strategy Guidelines
  • Primary Strategies:
  • Differentiation
  • Least Cost
  • Supporting Strategies:
  • Innovation
  • Growth
  • Alliances
slide35

Business Strategy Model Guidelines

1. What products and/or services do we intend to offer?

2. What price range of products do we intend to offer?

2. What customer targets do we intend to pursue?

3. What geographic markets do we intend to address?

4. How will we obtain products to sell to our customers?

5. How will we deal with sales to our customers?

6. What company structure do we intend to create?

7. What information systems approach will we take?

important strategy options
Important Strategy Options

Focus versus breadth:

  • Regional, national and/or selectively global
  • Products
  • Services
  • Markets
  • Business processes
  • Business partners

Innovation

Cost

Speed to market

focus challenges
Focus Challenges
  • The grass is always greener.
  • Failure to see important changes in markets or product areas.
  • The constant need for revenue and profit growth.
  • The difficulty in self-renewal of the base business.
great focused companies
Great Focused Companies
  • Southwest Airlines
  • Wal-Mart Stores
  • Dell
more strategy challenges
More Strategy Challenges
  • One of the most difficult things in developing appropriate

strategies is competitive analysis.

  • Good companies develop strategies that are believable,

executable and achievable.

  • Good strategies spell out multi-year plans: the market segments to be pursued, market share numbers that

must be achieved, expense levels that must be managed and

resources that must be applied.

  • These must be reviewed regularly and become the driving

force behind everything that the company does.

base for execution
Base for Execution
  • Strategic clarity.
  • High performance culture.
  • World-class processes.
strategy clarity
Strategy Clarity
  • Clearly communicated understanding of this is based on the vision for the company.
  • Here are the core business strategies and this is how you should carry out your job.
  • Superb execution is more about values and commitments.
  • Successful execution comes from belief and conviction and not from procedures.
business strategies
Business Strategies!?

How important are they, really?

Do business strategies really make a difference between success and failure of a company?

need to ask the following questions
Need to ask the following questions:
  • What is driving competition in our industry or one that we might enter?
  • What actions are competitors likely to take and what is the best way to respond?
  • How will our industry evolve over time?
  • How can we be best positioned to compete in the long run?
strategy consistency
Strategy Consistency?
  • Internal Factors
  • Resource Factors
  • Environment Factors
  • Communication and Implementation Considerations
strategy consistency1
Strategy Consistency?

Internal Factors:

Are the goals achievable?

Do key operating policies address the goals?

Do key operating policies reinforce each other?

Resource Factors:

Do the goals and policies match the resources available to the company relative to competitors?

Does the timing of the goals and policies reflect the company’s ability to change?

strategy consistency2
Strategy Consistency?

Environment Factors:

Do the goals and policies exploit industry opportunities?

Do the goals and policies deal with industry threats that are possible with available resources?

Does the timing of the goals and policies reflect the ability of the environment to absorb the planned impact.

Are the goals and policies consistent with societal concerns?

strategy consistency3
Strategy Consistency?

Communication and Implementation Considerations:

Are the goals understood by the implementers?

Is there congruence between the goals and policies and the values of the implementers to insure commitment?

Is there sufficient management capability and availability to assure effective implementation?

competitive strategy process
Competitive Strategy Process

A. What is the company doing now?

Current strategy?

Assumptions about the company’s relative position, strengths and weaknesses, competitors and industry trends.

competitive strategy process1
Competitive Strategy Process

B. What is happening in the business environment (industry).

Validity of industry opportunities and significance of threats.

Key factors for competitive success.

Capabilities and limitations of existing and potential competitors.

Company strengths and weaknesses relative to present and future competitors?

competitive strategy process2
Competitive Strategy Process

C. What should the company do?

Test the assumptions and strategy.

Consider alternative strategies.

Chose the strategy that best relates to the company’s situation relative to external opportunities and threats.

slide51
IEA

Internal

External

Action

slide52

Progressive Corporation

  • 1988 Performance
  • Record Revenue
  • Record Earnings
  • Outstanding Company Culture
  • Highly Respected Business Leader
  • Well Regarded Company
  • Could Things Possibly Be Better?
slide53

Progressive Corporation

  • 1989 Impact
  • Voters Passed Proposition 103 in California Resulting in $52 Million Being Put into an Escrow Account.
  • Allstate Gained a Larger Market Share in Progressive’s Niche Market for the First Time.
slide54

Progressive Corp. Business

Progressive decided that it was really

in the business of reducing human

trauma and economic costs of auto

accidents.

slide55

Progressive Corp. Vision

We seek to be an excellent, innovative,

growing and enduring business by reducing

the human trauma and economic costs of

auto accidents in cost-effective and profitable

ways that delight customers.

slide56

Progressive’s New Business Strategies

  • A New Definition of the Business.
  • Establish Lower Profit Margin Objectives.
  • Pursue a Broader Auto Insurance Market.
  • Provide Consumer Access to Policy Rates.
  • Provide Policy Information to Customers.
  • Guarantee Policy Renewal.
  • Utilize Multiple Distribution Channels.
  • Promote Company Identity.
slide57

Progressive’s New Business Strategies

  • Curtail Diversification.
  • Reduce Operating Expenses.
  • Assign Business Process Ownership.
  • Establish a New Employee Compensation System.
slide58

IS Support of New Strategies

  • Express Quote Service.
  • Immediate Response System.
vision customer value proposition core values and objectives
Vision, Customer Value Proposition, Core Values and Objectives

Progressive Vision:

We seek to be an excellent, innovative, growing and enduring business by cost effectively and profitably reducing the human trauma and economic costs of auto accidents and other mishaps, and by building a recognized, trusted, admired, business generating brand.

We seek to earn a superior return on equity and to provide a positive environment which attracts quality people who develop and achieve growth plans.

progressive
Progressive

Customer Value Proposition:

Our customer value proposition provides a litmus test for customer interaction, relationships and innovation.

Fast, Fair, Better

That’s what you can expect from Progressive. Everything we do recognizes the needs of busy customers who are cost-conscious, increasingly savvy about insurance and ready for easy, new ways to quote, buy and manage their policies, including claims service that respects their time and reduces the trauma and inconvenience of loss.

progressive1
Progressive

Core Values:

Progressive’s core values are pragmatic statements of what works best for us in the real world.

They govern our decisions and behavior.

We want them to be understood and embraced by all Progressive people.

Growth and change provide a new perspective, requiring regular refinement of core values.

progressive core values
Progressive Core Values

Integrity We revere honesty. We adhere to high ethical standards, report precisely and completely, encourage disclosing bad news and welcome disagreement.

Golden Rule We respect all people, value the differences among them and cope with them in the way we want to be dealt with. This requires us to know ourselves and to try to understand others.

Objectives We strive to communicate clearly Progressive’s ambitious objectives and our people’s personal and team objectives. We evaluate performance against all these objectives.

progressive core values1
Progressive Core Values

Excellence We strive constantly to improve in order to meet and exceed the highest expectations of our customers, shareholders and people. We teach and encourage our people to improve performance and to reduce the costs of what we do for customers. We base our rewards on results and promote on ability.

Profit The opportunity to earn a profit is how the competitive free-enterprise system motivates investment to enhance human health and happiness. Expanded profits reflects our customers’ and claimants’ increasingly positive view of Progressive.

peter lewis
Peter Lewis

Currently Chairman of the Board

“We sell speed, not insurance.”

Glenn Renwick, President and Chief Executive Officer

Raymond Voelker, Chief Information Officer

is exec identity crisis
IS Exec Identity Crisis

“My world collapsed recently during a strategic planning meeting between the information systems organization and our marketing department.”

“How can we in IS help you to realize your goals?” asked the IS Director. This seemed like a good open-ended question, and I was waiting for the vice-president of marketing to embrace IS in his confidence. We were prepared to act as a full business partner with the marketing department.

“Beyond capacity planning for your computers, I don’t know how you can help. I’m not even sure what your role is in all of this” replied the VP of Marketing.

information technology impact
Information Technology Impact

Information Technology

Information

Work

People

Organization

information technology impact1
Information Technology Impact

Semi-automated batch system (out-dated)

Increased complexity for route salesman and plants

Information Technology

Information

Work

10 day information float

People

Organization

Route Salesman

Regional Competitors

information technology impact2
Information Technology Impact

Communications Network and Hand-held Computer

Increased complexity for route salesman and plants

Information Technology

Information

Work

Reduced information float to 24 hours

People

Organization

Route Salesman

Account Specialist

Merchandiser

Decentralized Marketing Organization

yum brands
Yum! Brands

KFC

Pizza Hut

Taco Bell

Long John Silver

All American Food (A&W)

Created as Tricon Global Restaurants on October 6, 1997 as a spin off from Pepsi.

yum brands1
Yum! Brands

The world’s largest quick service restaurant company with more than 33,000 units in more than 100 countries involving 840,000 employees.

36% are outside the US

long term goals
Long Term Goals
  • To be the premier global restaurant company.
  • Transform the Quick Service Restaurant industry with multi-branding.
  • Become the best restaurant company investment.
business strategies1
Business Strategies
  • Drive International Growth
  • Multi-brand Great Brands
  • Improve Operations of Brand Portfolio with Customer Mania
international growth
International Growth

In 1992 McDonalds had 4,000 international restaurants. Today it has over 16,000 with a $1 billion profit from these operations.

Yum! has 11,800 (6,800 KRC and 4,400 Pizza Hut) with nearly $400 million in international profit.

Burger King is third with a profit of $50 million.

international growth focus
International Growth Focus

Seven countries but China, UK, Mexico and Korea will receive most of the capital investment with an objective of opening 1,000+ new international units.

China currently has 800 KFCs and 100 Pizza Huts with plans to open 200 new units per year.

65% of this growth will be through joint venture partners and franchises.

international challenges
International Challenges
  • Customer food preference and taste.
  • Standard of living—product cost.
  • Currency fluctuations.
  • Brand strength and unit consistency.
  • Distribution system.
  • Building an international team for the company.
multi branding
Multi-branding

McDonalds has been the envy of this industry since its units average $1.6 million a year (almost twice that of Yum!)

Multi-branding gives customers more choices and variety.

Typically, sales rise at least 20% when a second brand is added to another Yum! brand. Has added $100,000 to $400,000 to a unit.

Pasta Bravo will be tested as a multi-brand with Pizza Hut.

40% of multi-branding is being done by franchisees.

slide81

The Three Components of a New Strategy

Vision

Internal

Assessment

External

Assessment

A New Strategy

Figure 7-1

strategy considerations
Strategy Considerations
  • Competitive Environment
  • Market Target
  • Basis for Perceived Competitive Advantage
  • Key Profit Drivers
  • Product and/or Service Portfolio

Hello, Porter Competitive Model!

strategy to tactics implementation
Strategy-to-Tactics Implementation
  • Defining the range of business that the company will pursue.
  • Responding in an appropriate and timely manner.
  • Delegating of responsibilities for formulating specific strategies to people who are closer to the demands of the customer and market.
slide84

Managing for Results

  • Objectives
  • Authority
  • Responsibility
  • Training
  • Motivation
  • Performance
  • Results
  • Reward

Control

Figure 7-4

slide85

Strategy Implementation

Senior Management

Business Uncertainties

Vision

and Macro

Strategies

Empowered Implementers

Company Culture

Micro

Strategies

and

Tactics

Risks to be Avoided

Critical Performance

Factors

Key Enterprise

Business Processes

Figure 7-3

information needs

Information Needs

Senior Management

Emerging Opportunities and Threats

External Impact of Strategies and Tactics

Internal Impact of Strategies and Tactics

Performance Measurements

Empowered

Implementers

Figure 7-5

slide88

SWOT Analysis

  • Strength: A collective organizational competency, asset or capability that enables it to achieve a high level of success.
  • Weakness: A collective organizational competence, asset or capability that is competitively inferior and provides a vulnerability that can be exploited.
  • Opportunity: A trend or event that could lead to a positive change in position if addressed by a strategic response.
  • Threat: A trend or event that could lead to a negative change in position if not addressed by a strategic response.

Source: The Art of Strategic Planning

for Information Technologies

swot analysis
SWOT Analysis

Vision

Goals

Company Values

Financial Status

Cash Position

ROI Position

Societal Demands

Competition

Core Competencies

People Skills

Overall Resources

Strengths

Weaknesses

Opportunities

Threats

Suggest strategies that should be tested against

slide90

A Logical Approach

  • Find a tactic that will work.
  • Build it into a strategy.
slide91

Employee downsizing, right-sizing or

dumb-sizing (take your choice)

should not be based solely on cost

cutting.

slide92

Smart Sizing

  • Consistent with the vision and strategies of the organization.
  • Help build future strengths of the company while streamlining or eliminating unnecessary processes and functions.
  • A big of a price to pay for anything less than this.
slide93

Company Infrastructure

  • Data Management
  • User Applications
  • Voice Management
  • Network Management
  • Plan Process
  • Financial Strategy
  • Organization

Figure 7-7

slide94

Essential to Run a Business

  • Vision
  • Strategy
  • Tactics

The Importance of these

Factors as Key Priorities

Continues When People

Are Empowered with

More Authority

and Responsibility

slide95

IT Based Strategies

MARKET PLACE

OPERATIONS

Federal Express

USA Today

Charles Schwab

Whirlpool

Xerox

SIGNIFICANT

STRUCTURAL

CHANGE

BancOne

Boeing

Frito-Lay

Wal-Mart

USAA

L.L. Bean

McKesson

TRADITIONAL

PRODUCTS

AND PROCESSES

Figure 7-6

slide96

Which Way Should the Arrows Go?

Business Vision

and Strategies

Right Sizing

Total Quality

Management

Re-engineering

conclusions2
Conclusions
  • A strategy should often be kept relatively simple.
  • Success relies on gaining understanding, acceptance, and support by people within the company.
  • The strategy must accomplish its objectives by providing direct or indirect value to customers.
  • Information Systems can only be successful if it supports the right business strategies.
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