Published on October 21, 2009
Slide 1: CHAPTER 3 Slide 2: Using Information Technology for Competetive Advantage Slide 3: Importance of Environment in Firms A firm takes resources from its environment, transforms the resources into products and services, and returns the transformed resources back to the environment. The firm’s owners see a need to provide products and services to meet the requirement of a specific environment and they invest money for the purpose. In turn the environment then provides the resources required to produce those products and services. There are eight environmental elements that are important for the firm. These environmental elements are organizations and individuals that exist outside the firm and have direct or indirect effect on the firm. These elements exist in the Society. Slide 4: The Environmental Elements There are basically eight environmental factors that have direct or indirect effect on the firms. Suppliers also known as vendors, supply the Materials, Machines, Services and Information that are used by the firm to produce products and services. Customers are the people to which the products and services are provided by the firm.The customers pay the charges for using those services and products. Labor Unions consist of both skilled and unskilled workers for the firm. Financial Community influence the monitory resources that are available to the firm. Stockholders and Owners are those who invest money on the firm and manage the firm as a whole. Competitors are all the organizations that compete with the firm in the market place. Government is involved with any firm in National, State or Provincial level. They impose restrictions in the form of laws and regulations. They also provide support in the form of purchases, information and funds. The Global Community is where the firm performs its operations and expresses its responsibility by respecting the natural environment providing products and services that enhance the quality of life and performing in an ethical way. Slide 5: A Model of the Environmental Elements The Firm Financial Community Labor Unions Global Community Competitors Suppliers Cutomers Stock holders & Owners Government Society Fig 3.1 Slide 6: Environmetal Resource Flows The firm is connected to the environment by means of resource flows. Resources flow to the firm from the elements of the environment, processed in the firm and return back to the environment. Some resources flow frequently than others. Very common resource flows include information flow from the customers, material flow to the customers, money flow from stock holders, material flow from suppliers and personnel flow from the labor unions. The less frequently flowing resources include money flow from government ( for research etc.), material flow back to the supplier and personnel flow to competitors. Slide 7: Porter's Value Chain & Competitive Advantage According to Prof. Michael E. Porter of Harvard university a value chain is the way through which a firm can provide a greater value to their customers compared to their competitors, having a competitive advantage over the competitors. A firm can have a competitive advantage by not relying on the physical resources alone but by having superior conceptual resources – data and information. A value chain consists of value activities under two categories – Primary value activities and Support value activities. And Margins that represent the value of the firm’s products and services, as perceived by the firm’s customers. Slide 8: Primary value activities consist of following activities :- Inbound logistics :- activities related to obtaining of raw materials and supplies from the suppliers. Operations :- activities that transform the raw materials to finished products. Outbound logistics :- activities that transport the goods to the customers. Marketing & Sales :- operations that identify customer needs and obtain orders. Services :- activities that maintain good customer relations after sales. Primary value activities in a Value Chain Slide 9: Support value activities in a Value Chain The Support value activities consist of following elements :- Firm infrastructure :- the organizational structure that influence the primary value activities. Human resource management :- includes all those activities that control the personnel resources including the functions of a manager. Technology development :- includes the activities related to the effective implementation of the latest technology for the benefit of the firm. Procurement :- includes the activities of acquiring machines and materials for the primary activities. Its performed mainly by the purchase dept. of the firm. Slide 10: Value Chain Model Firm Infrastructure Human Resource Development Technology Development Procurement Inbound Logistics Services Operations OutboundLogistics Marketing& Sales Margins Primary Activities SupportActivities Fig 3.2 Slide 11: Information Resources Types of Information Resources Computer Hardware. Computer Software. Information specialists. Users Facilities Databases Information The Chief Information Officer (CIO) is the manager of information services who contribute their managerial skills for problem solving. Slide 12: Strategic Planning for Enterprise Strategic Planning is long range planning activity. It identifies objectives that are intended to give the firm the most favorable position in its environment and specifies the strategies for achieving those objectives. When a firm organizes its executives into an executive committee, this group invariably assumes strategic planning for the entire firm. The committee consists of president and vice president of the business areas. The committee schedules an annual planning session, where ideas are exchanged concerning the activities of the firm in coming years. The output of this committee is the strategic business plan. The executive committee monitors performance through the year and takes appropriate action. Slide 13: Strategic Planning for Information Resources Strategic planning for information resources is also known as Strategy Set Transformation. It consists of information services plan devised to support the firm’s objectives, constrains and strategies. The strategic plans for information resources and strategic planning for the firm are developed concurrently. It reflects the future demands for the system support. The plan specifies the objectives to be achieved by each CBIS subsystem during the time period covered by the plan. Slide 14: A model of Strategic Plan for Information Resources Strategic plan For information resources AIS objectives MIS objectives DSS objectives Virtual office objectives Knowledge Based system objectives Required Information resources Human resources Hardware Software Information& data Required Information resources Human resources Hardware Software Information& data Required Information resources Human resources Hardware Software Information& data Required Information resources Human resources Hardware Software Information& data Required Information resources Human resources Hardware Software Information& data Fig 3.3 Slide 15: Information Resource Management Elements Information resource management (IRM) is an activity that is pursued by managers on all levels of the firm for the purpose of Identifying, Acquiring and Managing the information resources needed to satisfy information needs. IRM elements A recognition that competitive advantage can be achieved by means of superior information resources A recognition that information services is a major business area. A recognition that the CIO ( Chief Information Officer) is a top-level executive and has to be included in the executive committee. A consideration of the firm’s information resources when engaging in strategic planning. A formal strategic plan for acquiring and managing information resources. A strategy for stimulating and managing end-user computing by making available the information resources to the end users at the same time maintaining the control over the resources. Slide 16: IRM Model The Environment of the Firm Environmental Influences The Firm’s executives CIO Other executives Business Areas Information services Finance Human resources Manufacturing Marketing Internal Influence Firm’s strategic plan Information resources Central computing resources Distributed computing resources Strategic plan for information resources End-users engaged in end-user computing Other users Data and Information Fig 3.4 Slide 17: Assignment #3 Explain the various environmental elements that effect a firm as a whole. Use appropriate diagram. Explain the value chain with diagram. State & explain the types of Information Resources and who manages those information resources ? Explain strategic planning for enterprise Explain strategic planning for Information Resources with diagram of strategy set transformation. Explain the levels of end-user capability and also explain the benefits and risks related to end-user computing. Explain Information Resources Management and its elements. Draw and Explain the IRM model.