What’s Happening?! Comcast to offer Internet telephone service in early 2006. Semiconductor industry is projecting a slowdown in demand this year that should bounce back in 2006. Cisco is going to sell EMC storage devices. MacWorld is in San Francisco today.
Fortune 500 Best Places to Work 4. Genentech 5. Xilinx 13. Adobe Systems 24. Network Appliance 27. Cisco Systems 43. Symantec 64. Intuit 79. Granite Construction 91. Morrison & Foerster 1. Wegmans Food Markets, New York Not on the list: HP and Intel
Key Factors • Industry definition. • “Big Picture” data regarding the industry. • Business and IT leaders. • Porter Competitive Model analysis. • Business Strategy Model. • Identifying strengths and weaknesses of the company. • Figuring out who runs the business on a day-to-day basis and the relationship with the person running the IS organization. • Concluding what the company changed through the use of Information Systems.
The Information Technology Environment Administrative Framework Regulated Monopoly Free Market Regulated Free Market Primary Target Justification/ Purpose ERA I Data Processing ERA II End User Computing ERA III Strategic Systems Productivity/ Efficiency Organizational Individual Effectiveness Business Processes Competitive Advantage Source: Cash, McFarlan, McKenney and Appleton, Corporate Information Systems Management, Richard D. Irwin,1992, 3/E, p. 11, adapted. Figure 1-5
How Fragile is Business Success? How much of the answer to this question is related to business leadership and strategies? How much of the answer to this question is related to information technology leadership and strategies?
IT Significance If your business lives by information technology can it also die by information technology? How much of an IT dependency does a company have? How much change must they deal with in defining their business to be successful in the future?
A Quick IS Assessment 1. How is Business? 2. Is the Information Systems Manager a Member of the Top Management Team? 3. What Percentage of the Operating Budget of the Business is for Information Systems?
Examples of Successful Company Use of I/S to Compete • Boeing Airplane Company • Wal-Mart Stores • Bissett Nursery Corp. • Federal Express • Charles Schwab • USAA • L.L. Bean • Progressive Corp. Your quota is 5 companies!
Best ISTC Industries • Transportation Industry: • American Airlines • American President Co. • British Airways • CSX • Delta Airlines • FedEx • Singapore Airlines • Union Pacific • United Airlines • UPS • Retail Industry: • L. L. Bean • Dillards Dept. Store • The Gap • Home Depot • Kmart • Men’s Wearhouse • Mervyn’s • J C Penney • Toys R Us • Wal-Mart Stores
Worst ISTC Industries Construction Industry Petroleum Industry Federal Government
Can the IS be right if: 1. The business climate is bad. 2. The business strategy is wrong. 3. The business leadership is wrong.
Business Strategy and IS • Concepts. • Relative To (Bigger Picture). • Company Examples.
Conclusions To logically and effectively position information systems within an organization one must begin by understanding the environment and the company itself. Then and only then can you understand the significance of the role of information systems.
Chapter 1 Summary Business and Information Systems Management
Key Messages To logically and effectively position information systems within an organization, one must begin by understanding the environment and the company itself. • Business Success • Business Success Factors • 3 Necessary Perspectives • Simultaneous Revolutions • Business Driver Model • Using IS to Compete • Systematic Approach • Objective of IS • Successful Use of IS
Business Success • Purpose: to create a customer. Goal: satisfaction of customer needs. • Provide value to customers through Marketing and Innovation. • A successful business is responsive, flexible, adaptable, innovative, resilient, talented and financially strong. • Competitiveness and Globalization • Market leader benefits
Three Necessary Perspectives Business Success • Business Environment • Enterprise Environment • IT Environment Figure 1-1
SIMULTANEOUS REVOLUTIONS NEW COMPETITORS NEW RULES OF COMPETITION NEW POLITICAL AGENDAS INDUSTRY STRUCTURE CHANGES THE BUSINESS NEW TECHNOLOGIES NEW REGULATORY ENVIRONMENT NEW EMPLOYEES AND NEW VALUES EVER INCREASING CUSTOMER EXPECTATIONS Figure 1-2
Business Drivers Market Technology Employees/ Work Regulation Organization Business Processes Solutions to Business Requirements Figure 1-3
Using IS to Compete • Goal: Create the Necessary Environment to Use Information Systems to Compete. • Roles of IS: • Efficiency • Effectiveness • Competitive Advantage
Systematic Approach to IS Vision Strategy Tactics Business Plan • Competitive Options • Roles, Roles, and Relationships • Redefine/Define • Telecommunications as the Delivery Vehicle • Success Factor Profile
Possible Exam Questions 1. What is the purpose of a business? What factors contribute to the success of a business? 2. Why are three different perspectives needed to understand the significance of IS within a company? What are they? 3. What factors help determine whether a company should decide to use information systems to compete?
Chapter 2 Introduction Business Competitive Environment
Objective of the Chapter • Define competitiveness. • Understand the role of the host country relative to the global competitiveness of companies based within the country. • Understand the necessary role of businesses and government relative to competitiveness. • Points 2 and 3 will dictate an understanding of the Diamond of National Advantage.
Defining Competitiveness The degree to which a nation can, under free and fair market conditions, produce goods and services that will meet the test of international markets while simultaneously maintaining or expanding the real income of its citizens.
Trade Policy Human Resources New Competition Capital Technology Improved Domestic Performance Improved Competitiveness in World Market Reduced Trade Deficit Decreased Budget Deficit Stronger National Security Increased Standard of Living More and Better Jobs Competitiveness: A Link to National Goals
Who Makes This Happen? • Governments cannot legislate success. • Governments provide the infrastructure and/or the environment for companies to compete. • Fiscal and monetary policy • Education system • Protection of intellectual property rights • Other factors that are prerequisites to compete within a specific industry. • Governments do not compete, companies do.
How is Competitive Advantage Gained? Providing value to the customer. • What is a good strategy for this? • Produce quality products and services through effective leadership of skilled employees using advanced methods through the innovative use of technology. • Boils down to: Work smarter not harder.
Firm Strategy, Structure and Rivalry Chance Demand Conditions Factor Conditions Related and Supporting Industries Government The Diamond of National Advantage
The Diamond of National Advantage Factor Conditions: The prerequisites to compete in a specific industry • Transportation • Communications • Logistics • Personnel training as a product of education system • Etc.
The Diamond of National Advantage Demand Conditions: The sophistication of the customer’s demand. More sophisticated demands means more difficult competition which forces the company to compete more effectively.
The Diamond of National Advantage Related and Supporting Industries: Home-based suppliers who are also successful competitors on the international level.
The Diamond of National Advantage Firm Strategy, Structure and Rivalry: How companies are created, structured and managed and how they compete in the domestic market. Varies from country to country based on a number of different factors.
The Diamond of National Advantage Role of the Government: Serve as an enabler, challenger and catalyst to companies so that they can compete successfully. Role of Companies: Create pressure within the company for innovation and welcome the challenge to compete against the best in the industry.
Chapter 2 Business Competitive Environment
Position Some Important Factors 1. The definition of competitiveness. 2. The role of the nation relative to companies that compete successfully on a global basis. 3. The role of government within a nation. 4. Things that companies need to emphasize. While contemplating the idea that information technology could make a difference.
Global Economy Why the emphasis on globalization and the importance of global competition?
Business Environment The global market will come to you, if you don’t go to it.
An Essential Roadmap? Do nations play a significant role that enable companies and individuals to build wealth in a knowledge-based global economy? How significant in creating wealth are breakthrough technologies in microelectronics, biotechnology, new materials, telecommunications, robotics, and computers? Do these factors explain why relatively new industries are growing explosively and existing industries are being transformed?
US Status • In the 1990s the US was the run away leading performer • in the industrial world. • The US claimed nine of the ten largest companies in the • world by 1998 compared to only two in 1990. • Nine of the fifteen most profitable banks are in the US • compared to none in 1990. • The wealthiest man in the world is an American. • American billionaires measure in the hundreds. • US stock markets remain relatively high. • Interest rates are at a forty year low. • Inflation has been a minor issue.
Some Important Questions • Is the US prosperity sustainable? • Is global integration a boon or a threat to this prosperity? • Should global integration be slowed? • What rules should be applied to the creation and protection • of new ideas. (intellectual property rights) • Can nations create a social system in which entrepreneurial • spirit can flourish without also creating income and wealth • inequities that threaten the system? • What skills are needed to succeed in this new economy? • How serious is the competitive threat of the European Union?
Global (International) Trade The US is not in isolation to the rest of the world! The US has truly become a global economy. 1950 - Global trade represented 10% of the US economy. 2000 - Global trade was nearly 25% of a much bigger US economy.
Foreign Direct Investment Since 1985 foreign direct investment in the US has increased five-fold. Five percent of the total labor force works for companies that are wholly or partially foreign owned. Employees of companies that work for companies that export earn more than those that do not. Forty percent of productivity improvements are in exporting companies.
What Countries “Own”: • Finland • Nokia • Burger King • Chrysler • Airbus • Benetton • Gillette • Shell • UK • Germany • France, Spain, UK, Germany • Italy • US • Netherlands
A Complex Political Environment Three of five American registered voters approve of free trade. Most agree that imports give them a larger selection of goods to choose from and that foreign competition forces US companies to be more competitive. They also feel that imports help lower-income families afford a higher standard of living by lowering prices. They have concerns regarding the environment, human rights, jobs, taxes, societal problems and sovereignty.
Trade Issue Attitudes Attitudes lie along income, education, age and gender divides. Free trade proponents tend to be those that see themselves benefiting from globalization: men, those that are better educated, richer and live in cities. Those who question globalization include women, the elderly, those who are less well educated or poorer and those that live in rural areas.