What’s Happening?!

1. 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.

2. 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.

3. Chapter 6 Summary Business Vision

4. 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.

5. 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

6. 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.

7. Implementation (Action) The Vision to Action Process Agreement & Commitment Tactics and Business Plan Strategy Feedback Vision Sensing Opportunity

8. 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

9. 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

10. USAA Role and significance of IT? • An executive partnership • Technology experimentation and assimilation • Leveraging of information systems • Strategic architecture • Horizontal integration of applications.

11. 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.

12. 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.

13. Possible Exam Questions • What factors influence the creation of a vision? • What impact does a vision have on information systems?

14. Chapter 7 Introduction Implementing a Vision: Strategy, Tactics and Business Plan

15. 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.

16. 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)

17. 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.

18. 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?

19. External Analysis Internal Analysis

20. 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.

22. Business Plan The most straight-forward part of the entire process. Deals with allocation of funds, people and other resources.

23. 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

24. 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

25. 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.

26. Chapter 7 Implementing a Vision: Strategy, Tactics and Business Plan

27. 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

28. Primary Business Challenges • Deciding what things are worth doing. • Getting things done!

29. 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.

30. 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.

31. 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.

32. 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.

33. 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.

34. Porter Strategy Guidelines • Primary Strategies: • Differentiation • Least Cost • Supporting Strategies: • Innovation • Growth • Alliances

35. 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?

36. Important Strategy Options Focus versus breadth: • Regional, national and/or selectively global • Products • Services • Markets • Business processes • Business partners Innovation Cost Speed to market

37. 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.

38. Great Focused Companies • Southwest Airlines • Wal-Mart Stores • Dell

39. 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.

40. Base for Execution • Strategic clarity. • High performance culture. • World-class processes.

41. 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.

42. Business Strategies!? How important are they, really? Do business strategies really make a difference between success and failure of a company?

43. 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?

44. Strategy Consistency? • Internal Factors • Resource Factors • Environment Factors • Communication and Implementation Considerations

45. 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?

46. 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?

47. 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?

48. 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.

49. 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?

50. 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.