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[email protected] Test Bank Business Driven Information Systems 4th Canadian Edition Solution
CHAPTER OE I!OR"ATIO S#STE"S AD B$SIESS STRATE%#
Information is everywhere. Information is a strategic asset. Without information, an organization simply could not operate. This chapter introduces students to several core business strategies that focus on using information to gain a competitive advantage, including: Competitive advantages Porters !ive !orces "odel Porters three generic strategies #alue chain $rganizational structures
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"any of these concepts and strategies will be new to your students. %e sure to e&plain to your students that this chapter offers an introduction to these concepts and they will gain a solid understanding of the details of these concepts as they continue reading the te&t. This chapter also gives students an overview of the opportunities in "I' over the ne&t number of years in the Canadian mar(etplace. SECTIO &'& ( I!OR"ATIO S#STE"S I B$SIESS Information 'ystems )ole in %usiness Information 'ystems %asics )oles and )esponsibilities in Information 'ystems
SECTIO &') ( B$SIESS STRATE%# Identifying Competitive *dvantages The !ive !orces "odel + valuating %usiness 'egments The Three -eneric 'trategies + Creating a %usiness !ocus #alue Chain *nalysis + Targeting Targeting %usiness Processes %usiness riven Information 'ystems and %usiness 'trategy
*EARI% O$TCO"ES &'& E+,lain E+,lain the the role infor informat mation ion system systemss have in -usin -usiness' ess' Information technology and information systems are everywhere in business. Information systems are an important enabler of business success and innovation. This is not to say that I' e/uals business success and innovation or that I' represents business success and innovation. Information systems are most useful when they leverage the talents of people. Information systems in and of themselves are not useful unless the right people (now how to use and manage them effectively. &') E+,lain information information system system -asi.s -asi.s and and the res,onsires,onsi-ilities ilities of senior senior IS ,ersonnel' ,ersonnel' Chief Information $fficer 0CI$1 oversees all uses of I' and ensures the strategic •
alignment of I' with business goals and ob2ectives. •
Chief Technology $fficer 0CT$1 is responsible for ensuring the throughput, speed, accuracy, availability, availability, and reliability of I'.
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Chief 'ecurity $fficer 0C'$1 is responsible for ensuring the security of information systems.
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Chief Privacy $fficer 0CP$1 is responsible for ensuring the ethical and legal use of information.
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Chief 3nowledge $ffice 0C3$1 is responsible for collecting, maintaining, and distributing the organizations (nowledge.
&'/ Des.ri-e the 0o- market in Canada over the ne+t five years for "IS and ICT ,rofessionals and identify the o,,ortunities' The 2ob mar(et for "I' and ICT professionals in Canada is strong for the ne&t five years and the opportunities e&ist in all regions of Canada. The areas that will see demand include computer and information systems managers, telecommunications carrier managers, and information systems analysts and consultants. 'tudents should also loo( for co4op and practicum opportunities during their studies as these will ma(e them more attractive to prospective employers. &'4 Des.ri-e ho1 -usiness2driven information systems .an in.rease a .om,any3s .om,any3s .om,etitive -usiness stratey' %usiness personnel possess e&pertise in functional areas such as mar(eting, accounting, and sales. I' personnel have the technological e&pertise. This causes a communications gap between the two. I' personnel have their own vocabularies consisting of acronyms and technical terms. %usiness personnel, including human resources personnel, have their own vocabularies based on their e&perience and e&pertise. !or both sides to have effective communications, the business personnel must see( to achieve an increased level of understanding of I', and the I' personnel must see( to achieve an increased level of understanding of the business.
!unctional areas are anything but independent in a business. In fact, functional areas are interdependent . 'ales must rely on information from operations to understand inventory, place orders, calculate transportation costs, and gain insight into product availability based on production schedules. !or an organization to succeed, every department or functional area must wor( together sharing common information and not be a 5silo.6 Information systems can enable departments to more efficiently and effectively perform their business operations. &'5 E+,lain the various 1ays orani6ations .an assess their .om,etitive advantae 7e''8 the !ive !or.es "odel8 three eneri. strateies8 and value .hain analysis9' Competitive advantages are typically temporary because competitors often see( ways to duplicate the competitive advantage. In turn, organizations must develop a strategy based on a new competitive advantage. %uyer power + high when buyers have many choices of whom to buy from and low when their choices are few 'upplier power + high when buyers have few choices of whom to buy from and low when their choices are many Threat of substitute products or services + high when there are many alternatives to a product or service and low when there are few alternatives from which to choose •
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Threat of new entrants + high when it is easy for new competitors to enter a mar(et and low when there are significant entry barriers to entering a mar(et )ivalry among e&isting competitors + high when competition is fierce in a mar(et and low when competition is more complacent
$rganizations typically follow one of Porters three generic strategies when entering a new mar(et. 071 %road cost leadership, 081 broad differentiation, 091 focused strategy. %road strategies reach a large mar(et segment. !ocused strategies target a niche mar(et. !ocused strategies concentrate on either cost leadership or differentiation. * business process is a standardized set of activities that accomplish a specific tas(, such as processing a customers order. The value chain approach views an organization as a chain, or series, of processes, each of which adds value to the product or service for each customer. The value chain helps an organization determine the 5value6 of its business processes for its customers.
SECTIO &'& I!OR"ATIO S#STE"S I B$SIESS This chapter provides an overview of Business Driven Information Systems (BDIS) along with anticipated learning ob2ectives for students. &plain to your students that the goal of this chapter is to get them e&cited about %I' and all the different business and technology concepts they are going to learn. et your students (now that they are going to be introduced to many new concepts that they might be unfamiliar with; however, these concepts are discussed in detail throughout the te&t. C*ASSROO" OPEER %REAT B$SIESS DECISIOS ( A,,le3s De.ision to Develo, the !irst Salea-le Personal Com,uter 7PC9 i(e all great computer companies, *pple began its life in a garage. In 7<==, 'teve >obs and 'teve Woznia( built the *pple 7, regarded by many as the first real personal computer. This founded the *pple Company and the invention of the *pple 8 and the *pple "acintosh. *pples (ey goal was to ma(e computers accessible to ordinary people. >obs and Woznia( captured an opportunity and changed the world through a combination of good fortune and technical and mar(eting brilliance.
Instead of writing commands in computer code, *pple owners invented a mouse to clic( on easily recognizable icons + for e&le, a trash can and file folders. $ther companies were /uic( to copy *pples competitive advantage, including "icrosoft. The two founders eventually parted, with Woznia( leaving the company to become a teacher and >obs continuing with the launch of the *pple "acintosh. ?nfortunately, "acintosh captured only 8@ percent of the des(top mar(et, while "icrosoft captured A@ percent of the des(top mar(et with its "'4$' operating system.
$ne newspaper described >obs as a 5corporate Buc(leberry !inn6 and said his early business e&ploits had already alre ady made him part of *merican fol( history. >ohn 'culley, former Pepsi chairman, removed >obs from *pple in 7
obs returned to *pple in 7<obs return brought the creation of the i"ac and *pple rediscovered its inventive originality. The i"ac sold 8=A,@@@ units in the first si& wee(s and was described by Fortune as 5one of the hottest computer launches ever.6 The i"ac and >obs return contributed to doubling *pples share prices in less than a year. C*ASSROO" OPEER %REAT B$SIESS DECISIOS ( Sam :alton3s Dis.ountin of Ameri.a Walmart is one of the largest corporations in the ?nited 'tates. Walmart does not produce a single item; the company uses strategic supply chain management to disrupt the retail industry. Walmarts generic strategy as low cost provider is paying4off big time. *ny organization wanting to compete in the 87st century must study Walmart and learn how to compete in new and different ways.
'amuel "oore Walton lived in the same neighbourhood in %entonville, *r(ansas, for forty years. Walton was the sort of man that would rather borrow a newspaper than pay a /uarter for a new one. Be was also the sort of man that would invite a struggling young family out to lunch with his family every 'unday 'unda y. 'am Walton controlled over 8@ percent of Walmarts stoc(, and appeared on !orbes D@@ with a net worth of E8.A billion in 7
%ring in several copies of Report on Business, BusinessWeek, Fortune, Fast ompany, or any popular business magazine. The magazines do not have to be current. Provide a mar(ing tool such as a small set of Post4It Gotes. *s( for a few volunteers and have the students review the magazine and stic( a Post4It Gote on each technology4related article, advertisement, etc. When the student has completed this tas(, the magazine will be covered in Post4it Gotes, clearly demonstrating that technology is everywhere in business, even in the popular business magazines such as BusinessWeek . 'ince this tas( can be time consuming, you can put in the Post4It Gotes prior to class and simply show your students the completed magazine. Hou can have one student sit in the front of the class and begin the e&ercise, placing Post4It Gotes on a copy of BusinessWeek . *fter they have completed several pages on their own, you can produce the same 5completed6 magazine with all of the Post4It Gotes. This saves classroom time and still reinforces the point that technology is everywhere in business. %e sure to reinforce that these are business magazines, not technology magazines. Het they are completely filled with technology + which is clearly demonstrated by the Post4It Gotes. Bow can any business student today possibly argue that they do not need to (now or understand technology when faced with a magazine, such su ch as BusinessWeek , that is filled with technology )ead a few of the articles or advertisements. *s( how many of your students are familiar with 'iebel, $racle, or People'oft and can articulate what they can do for a company The goal of this course is to help your students understand the business side of technology. %eing able to understand all of the technology articles in BusinessWeek is one of the benefits your students will receive upon completion of the course. C*ASSROO" E;ERCISE Reorani6in an Orani6ation The *** "anagement Company specializes in the management of rental properties and generates over E8@ million in revenues each year and has over 8,@@@ employees throughout the ?nited 'tates, Canada, and "e&ico. The company has 2ust hired a new C$, avid Paul. avid is planning to reorganize the company so that it operates more efficiently and effectively. %elow is the new organizational structure that he plans to present to the board of directors on "onday. %rea( your students into groups and as( them to e&plain the advantages and disadvantages of such a reporting structure. *s( them to reorganize the reporting structure in the way they feel will be most beneficial to the operations of the company, being sure to give their 2ustifications for the new structure. 'tudent answers to this e&ercise will vary.
AAA Management’s New Organizational Structure
CIO
CEO
CTO
CPO
Vice Presidents
CSO
CKO
Managers
Analysts
Part T1o Will your proposed structure wor( for a video distribution company or will you need to revamp your structure C*ASSROO" E;ERCISE 2 obs made that you can use for your future What courseJs(illJclass have you ta(en that will have the greatest impact on your future 0similar
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to 'teve >obs Calligraphy Course1 Bow will learning about technology have a direct impact on your future career in business
http:JJwww.youtube.comJwatchvK?!Au)FMF3c
C*ASSROO" E;ERCISE Student E+,e.tations and the "IS Challene Bave each student list three things they (now and three things they want to (now about the content in the course. Hou can collect this and use as a baseline for teaching.
*s( your students to come up with a business that does not need technology to compete. Whatever the business I can demonstrate how technology can help them be more successful + for e&le a hot dog stand or a ta&i cab. %y having a computer I can research what events are happening in the town and ensure my stand or cab is e&actly where the event is occurring for optimum traffic. * lawn service company needs scheduling software to schedule wor( and maintenance on e/uipment, a website for advertising and connecting with customers, the Internet for weather forecasting so the company can /uic(ly reschedule due to thunderstorms, email mar(eting campaigns, payroll processing, and of course Turbo Ta& Ta& for small business. busines s. To To date, my students studen ts have not yet won the "I' challenge. challen ge. C*ASSROO" E;ERCISE "etri.s on Business "aa6ines )unning metrics on current business magazines is an e&cellent way to demonstrate how much technology is everywhere in business. There are so many articles where you can run metrics to see how relevant IT is in the wor(ing world from !ortune 7@@ companies, to Top 7@@ Companies to aunch a Career, to Bot -rowth "ar(ets. >ust pic( a current article and run the metrics comparing IT to mar(eting, B), accounting, etc. and prove how hot IT is in the business environment.
8@79 "ost Innovative Companies http:JJwww.fastcompany.comJsectionJmost4innovative4companies48@79 7@@ %est Companies to Wor( !or http:JJfortune.comJbest4companiesJ %iggest Companies http:JJfortune.comJfortune@@J8@7DJ $r 2ump right into some of the hottest companies in the mar(et today http:JJwww.businessinsider.comJbest4884tech4companies4to4wor(4for48@79478 C*ASSROO" E;ERCISE TED>> http:JJwww.ted.comJ This is the best site for videos. T stands for Technology, Entertainment, Design. It started out 0in 7
I challenge my students to watch one T video each wee( of the course and to report on great videos to fellow students. I create a T Wi(i in %lac(board and allow the students to share their findingsL CORE "ATERIA* The core chapter material is covered in detail in the PowerPoint slides. 'lides contain detailed teaching notes including e&ercises, class activities, /uestions, and e&les. Please review the PowerPoint slides for detailed notes on how to teach and enhance the core chapter material. OPEI% CASE ST$D# ?$ESTIOS Information Te.hnoloy Hel,s *CBO Transform Itself &'
:hat miht have ha,,ened ha,,ened to to the the *CBO *CBO if its to, to, e+e.utive e+e.utivess had not su,,o su,,orted rted the investm investment ent needed in IT@ *s with the principles of pro2ect management, support from top e&ecutives is a re/uirement for all pro2ects to succeed and thus if this support did not e&ist at the C%$ the pro2ect would in all li(elihood have failed.
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Evaluate Evaluate the the effe.ts effe.ts on the the *CBO *CBO if its its inventor inventoryy .ontrol .ontrol and 1arehouse 1arehouse manaement manaement systems systems fail' These systems are essential to the success of the C%$, especially with the addition of new channels li(e #intages.com. !ailure of these systems would result in difficulties in servicing their customers. What effect this would have on its revenues is /uestionable because the C%$ has almost a monopoly position in $ntario. The government has not privatized the industry, though there is the privately owned %eer 'tore and some small specialty wine stores that are privately run, in addition to special rules for wineries. 'ystem failure could lead to demands f or complete privatization as has been done in *lberta.
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Is it unethi.al for the *CBO to share its .ustomer information from
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Is "r' "r' elly elly fulfilli fulfillin n his his role as senio seniorr vi.e ,resi ,residen dentt of informat information ion 7CIO 7CIO99 .orre.t .orre.tly@ ly@ Hes "r. 3elly is fulfilling his role as senior vice president of information correctly. 'tudents will have different 2ustifications for their answers.
SECTIO &') B$SIESS STRATE%# This section discusses how an organization can identify competitive advantages using tools such as Porters !ive !orces, three generic strategies, and value chains. -aining competitive advantages is critical for organizations. $rganizations also must understand that competitive advantages are typically temporary since competitors are /uic( to copy competitive advantages. This is seen in the following e&le in addition to the e&les mentioned in the te&t: ?nited was the first airline to offer a competitive advantage with its fre/uent flyer mileage 0this first4mover advantage was temporary1 •
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'ony had a competitive advantage with its portable stereo systems 0this first4mover advantage was temporary1 "icrosoft had a competitive advantage with its uni/ue Windows operating system *s( your students if "icrosoft still has a competitive advantage with its Windows operating system *ns: Perhaps + primarily due to its first4mover advantage since it is difficult to switch operating systems and users face interoperability issues if they are using different operating systems at the same organization. Bow many students in your class are currently using Windows What are the competitors to Windows *ns: inu& and "acintosh Why are there only three primary competitors 0"icrosoft, "acintosh, and inu&1 in this large operating system mar(et •
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C*ASSROO" OPEER %REAT B$SIESS DECISIOS ( Cyrus ".Cormi.k3s Rea,er $n a hot summer day in 7A97, several dozen farmers and hired labourers gathered in a wheat field in #irginia to watch a horse4drawn wood4and4iron device mow down rows and rows of golden wheat. $n this day, twenty4two4year4old Cyrus "cCormic( demonstrated the reaper that his father invented and changed history as the mechanization of farming began. 'oon the process of industrialization began, which turned the nations economy into the worlds most productive wor(force. *s the historian William Butchinson noted, 5$f all the inve ntions during the first half of the nineteenth century which revolutionized agricultures, the reaper was probably the most important.6
Interestingly, the "cCormic(s were not the only individuals to build and develop a reaper. In fact, many other companies and individuals developed similar technology; however, Cyrus "cCormic( invented the business of ma(ing reapers and selling them to the farmers of *merica and foreign countries. Bis real genius was in the area of gaining and protecting patents for his technology. "cCormic( turned the reaper into a commercially viable product and introduced many new business practices including free trials, money4bac( guarantees, and instalment payment plans. C*ASSROO" OPEER %REAT B$SIESS DECISIOS ( Henry *u.e De.ides to Rank Com,anies in the !ortune 5 Benry uce founded Time magazine in 7<89 and Fortune magazine in 7<8<. uce decided to create a ran(ing of *mericas top @@ companies, called The !ortune @@, which has served as the corporate benchmar( for the twentieth century + as well as being a clever mar(eting tactic for the magazine. The !ortune @@ remains a powerful barometer of whos up and down in the corporate world. It is also a brilliant mar(eting tool since every single time its name is mentioned, so is the name of the magazine. Bowever, being ran(ed on the !ortune @@ does not guarantee that the organization will achieve future success, and its measures of current achievement can also be limited and a bit confusing. BusinessWeek magazine magazine created a similar ran(ing by introducing its biannual ran(ing of business schools. The issue routinely outsells all other issues of the magazine in the year.
C*ASSROO" E;ERCISE Stratey and the Internet *s( your students to visit "ichael Porters Institute for 'trategy and Competitiveness. There are numerous articles, videos, boo( e&cerpts, etc. for the students to dig into Porter. http:JJwww.isc.hbs.eduJ Stratey and the Internet iscuss Porters B%' article 'trategy and the Internet by "ichael Porter at http:JJhbsw(.hbs.eduJitemJ87F.html Bave your students discuss the importance of technology on business strategy. o 'ince this article was written in 8@@7 as( your students the following: o What can be e&trapolated to todayNs competitive environment o What has become obsolete about the Internet and strategy C*ASSROO" E;ERCISE Analy6in Porter3s !ive !or.es PorterNs !ive !orces is an easy framewor( to understand and offers a /uic( way to analyze a mar(et. Porters !ive !orces was introduced in the te&t and you can review the below e&les to ensure you have a solid understanding of each force. !or this assignment, choose a product from the following list and perform a Porters !ive !orces analysis. !eel free to use the below Porters !ive !orces template for your assignment. es(top Computer Polaroid Camera *ddress %oo( Telephone Wal(man Te&tboo( #B' Player
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%e sure to add in e&les of loyalty programs or switching costs you could implement to help retain your mar(et share.
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Sam,le Analysis for Airline Industry
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Sam,le Analysis for "ilk
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C*ASSROO" OR IDI
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In todays wor( world a persons personal competitive advantage is e&tremely important, and a student who understands what they have to offer an employer has a distinct advantage when it comes to loo(ing for a 2ob and starting their career. The purpose of this e&ercise is to allow students to develop their own personal value proposition. !or this e&ercise as( students to loo( at what their own personal competitive advantage is. *s( them to use Porters five forces or the value chain to develop a picture of what value they offer to employers and develop a picture of their own personal value proposition.
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C*ASSROO" E;ERCISE De-ate Carr3s Does IT "atter DOES IT "ATTER DEBATE DEBATE *s( your students to read both of the below articles and debate if IT matters. i.holas Carr 2 IT Doesn3t "atter http:JJwww.nicholasgcarr.comJarticlesJmatter.html * * great way to start off your course is to discuss discu ss Carrs famous article: IT oesnt "atter + which can be read on his blog. http:JJwww.roughtype.comJarchivesJ8@@[email protected] IT Does "atter + by !"Far#an and No#an http:JJhbsw(.hbs.eduJitemJ9F9=.html http:JJhbsw(.hbs.eduJitemJ9F9=.html.. The rebuttal to Carrs article.
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Create a classroom debate by brea(ing your students into groups and have them create an argument for or against Gicholas Carr statement 5IT oesnt "atter.6
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CORE "ATERIA* The core chapter material is covered in detail in the PowerPoint slides. 'lides contain detailed teaching notes including e&ercises, class activities, /uestions, and e&les. Please review the PowerPoint slides for detailed notes on how to teach and enhance the core chapter material.
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OPEI% CASE ST$D# ?$ESTIOS Information Te.hnoloy Hel,s *CBO Transform Itself . •
:hi.h of Porter3s !ive !or.es is the *CBO tryin to use to esta-lish and maintain its .om,etitive advantae@ The answers will be interesting depending on whether the students understand that the C%$ is a government organization with a near monopoly on li/uor sales in $ntario. It does have some private competition in wine sales, which sees it dealing with the bargaining power of buyers such as with the creation of vintages.com. ven as a near monopoly it must also consider the threat of substitutes.
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:hat does does the *CBO3s *CBO3s ,rimary ,rimary value value .hain look look like usin usin s,e.ifi. s,e.ifi. e+am,les e+am,les of its value value .hain to des.ri-e it@
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/' :hi.h of of the three three eneri. eneri. strateie strateiess is the the *CBO usin@ usin@ The C%$ is using a focused strategy with its wine sales because it has the most competition in the wine mar(et, but it is a narrow mar(et. In hard li/uor the C%$ has a monopoly. •
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D. Ho1 does the fa.t that the *CBO is a mono,oly affe.t its use of Porter3s !ive !or.es@ Its use of the Three %eneri. Strateies@ The C%$ no longer is a full monopoly but it does have a monopoly with hard li/uor sales. The new processes and channels being offered by the C%$ mean that the C%$ is loo(ing at Porters !ive !orces and his generic strategies in developing its new mar(eting strategies. •
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APP*# #O$R O:*ED%E PRO=ECTS •
Try one of the following *pply Hour 3nowledge pro2ects to engage students and reinforce chapter material and concepts.
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Pro0e.t ame
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Capitalizing on Hour Career *chieving *lignment 'uccess "ar(et issection
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Porters !ive !orces
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)eorganizing an $rganization
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Pro0e .t Ty,e %usin ess %usin ess %usin ess %usin ess %usin ess
!o.us Area
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Skill Set
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-eneral %usiness 'trategy
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'trategy
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I' "anagement Personnel
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Careers in I' %usinessI' *lignment everaging Is for %usiness 'uccess !ive !orces "odel )oles and )esponsibilities in I'
CHAPTER OE C*OSI% "ATERIA* • •
C*OSI% CASE OE Say Chare ItF 1ith #our "o-ile Devi.e •
&' $sin Porter3s Porter3s !ive !or.es !or.es des.ri-e des.ri-e the the -arriers -arriers to entry entry and s1it.hin s1it.hin .osts for this this ne1 te.hnoloy'
The barriers to entry include the new technology 0special chip for the phone1 re/uired to support associating a cell phone with a credit card, creating partnerships between the credit card company and the cell phone company, minimizing security issues associated with the technology, and gaining consumer trust. $ne of the biggest barriers to entry will be convincing cell phone users that the technology is secure. Bow will lost and stolen cell phone and credit card bills be handled * person with a stolen cell phone could now purchase all (inds of goods on the credit card. Will this be the consumers responsibility Would you be willing to associate your credit card with your cell phone
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)' :hi.h of Porter3s Porter3s three eneri. strateies strateies is is this ne1 te.hnoloy te.hnoloy follo1in@ follo1in@ •
This technology is following a differentiation strategy for a broad mar(et.
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/' Des.ri-e the value value .hain .hain of usin .ell ,hones ,hones as as a ,ayment ,ayment method' method'
The value chain approach views an organization as a series of processes, each of which adds value to the product or service for each customer. ?sing a cell phone as a payment method would add value to the primary value activities because it would become easier for customers to purchase products. When customers simply swipe their phone to pay for a product they are receiving a value4added benefit from this technology.
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4' :hat ty,es ty,es of reulatory reulatory issues issues miht miht o..ur due to this this ty,e ty,e of te.hnoloy te.hnoloy@ @
Typical credit card regulatory issues would most li(ely be enforced to cell phone spending: for e&le, not being allowed to purchase illegal goods, such as gambling 0lottery tic(ets1 on credit, cigarettes under the age of 7A, or alcohol under the age of 87. Punishment for using a stolen cell phone to purchase goods would be enforced by law. There might even be spending limits on cell phone purchases similar to the limit on *T" cards to only ED@@ a day withdrawals.
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C*OSI% CASE T:O Innovative Business "anaers Choose Choose one one of of the the .om,ani .om,anies es liste listed d a-ove a-ove and e+,lain e+,lain ho1 itit .ould .ould use a CIO8 CIO8 CTO8 CTO8 and and CPO to im,rove -usiness' Chief Information $fficer 0CI$1 oversees all uses of I' and ensures the strategic alignment
of I' with business goals and ob2ectives. Chief Technology $fficer 0CT$1 is responsible for ensuring the throughput, speed,
accuracy, availability, availability, and reliability of I'. Chief 'ecurity $fficer 0C'$1 is responsible for ensuring the security of information
systems. Chief Privacy $fficer 0CP$1 is responsible for ensuring the ethical and legal use of
information. Chief 3nowledge $ffice 0C3$1 is responsible for collecting, maintaining, and distributing the organizations (nowledge.
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*nswers to this /uestion will vary. The important part of the answer is the students 2ustification as to why the company co mpany will achieve business success through th rough the use of a CI$, CT$, or CP$. •
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:hy is it im,ort im,ortant ant for for all all of % Advent Adventures ures33 fun.tion fun.tional al -usine -usiness ss areas areas to to 1ork 1ork toeth toether@ er@ Provide an e+am,le of 1hat miht ha,,en if the % Adventures3 marketin de,artment failed to 1ork 1ith its sales de,artment' If the functional business areas of an organization do not wor( together the business will remain siloed and gaining an enterprise4wide view of the organization would be impossible. 'ales must wor( with mar(eting to determine which incentives and discounts should be offered. *ccounting must wor( with finance to ma(e solid strategic decisions. "I' must wor( to support all of the departments across the organization.
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Sales is the function of selling a good or service and focuses on increasing customer sales, which increases company revenues. * salesperson has the main activity of selling a product or service. "any industries re/uire a license before a salesperson can sell the products, such as real estate, insurance, and securities.
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Marketing is the process associated with promoting the sale of goods or services. The mar(eting department supports the sales department by creating promotions that help sell the companys products. "ar(eting communications see( to build product or service awareness and to educate potential consumers on the product or service.
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If sales and mar(eting failed to communicate and wor( together the mar(eting department might develop products and discounts that did not correlate to what was occurring in the field and what the salespersons were actually selling. 'ales might sell products that are not developed or offer discounts that are too low causing the firm to lose money. *t - *dventures,
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the mar(eting department could mar(et a trip that the sales department had not heard about and was unprepared to sell. This could include mar(eting a tour in a remote destination without having negotiated aspects of the tour with local providers li(e hotels and local guides or even the local government. •
:hy is info informa rmatio tion n te.hno te.hnoloy loy im,orta im,ortant nt to to an an oran orani6at i6ation ion like like % Adventur Adventures@ es@very organization needs information to remain successful. Without information the company would have a difficult time understanding its clients, competitors, and business success and failures. - *dventures is a business and 2ust li(e any other business it re/uires information to (eep it running. *s more and more tour operators offer customers a new e&perience, such as new locations and activities, the mar(et share is maturing and possibly beginning to decline. It must find new ways of attracting and (eeping customers. ?pdating customers through "P9 files on various locations or activities is one way it could use a new type of technology to help grow its business.
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:hi. :h i.h h of Por Porter ter33s !ive !ive !or !or.es .es is most most im,or im,ortan tantt to ik ike3 e3ss -usi -usines ness@ s@ *ll of Porters !ive !orces are important to Gi(es business so answers to this /uestion will vary. The important part of the answer is the students 2ustification as to why the force is important to Gi(es business.
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:hi. :h i.h h of of the the thre threee en eneri eri.. str strat atei eies es is Pe,si Pe,siCo Co follo follo1i 1in@ n@ PepsiCo is following a broad differentiation strategy.
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E+,lain E+,lain the value value .hain .hain and ho1 a .om,a .om,any ny like like %E .an .an use use itit to im,rov im,rovee o,erat o,eration ions' s' * business process is a standardized set of activities that accomplish a specific tas(, such as processing a customers order. To evaluate the effectiveness of its business processes, an organization can use "ichael Porters value chain approach. *n organization creates value by performing a series of activities that Porter identified as the value chain. The value chain approach views an organization as a series of processes, each of which adds value to the product or service for each customer. To create a competitive advantage, the value chain must enable the organization to provide uni/ue value to its customers. In addition to the firms own value4creating activities, the firm operates in a value system of vertical activities including those of upstream suppliers and downstream channel members. To achieve a competitive advantage, the firm must perform one or more value4creating activities in a way that creates more overall value than do competitors. *dded value is created through lower costs or superior benefits to the consumer 0differentiation1. - can use the value chain to create best4in4class processes giving it a competitive advantage over its competition.
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C*OSI% CASE THREE Ca,itali6in on the iPod •
&' Do you aree aree or disaree disaree that A,,le3s A,,le3s iTunes8 iTunes8 iPhone iPhone a,,li.ati a,,li.ations8 ons8 and iPad a,,li.ations ive the .om,any a .om,etitive advantae@ Be sure to 0ustify your ans1er@ $ne of the main factors that brought *pple bac( from near oblivion was its ability to produce, mar(et, and sell IT products such as the iPod, iPhone, and customer developed applications. If *pples top e&ecutives did not have the foresight to view the "P9 players as a competitive advantage, then chances are the company would not have made a strong comebac( in the highly competitive electronics mar(et. •
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)' :hy are data8 informat information8 ion8 -usiness -usiness intelli intellien.e8 en.e8 and and kno1lede kno1lede im,ortant im,ortant to A,,le@ A,,le@ %ive an e+am,le of ea.h ty,e in relation to the iPad' ata are raw facts that describe the characteristics of an event or ob2ect. %efore the information age, managers manually collected and analyzed data, a time4consuming and complicated tas( without which they would have little insight into how to run their business. ac(ing data, managers often found themselves ma(ing business decisions about how many products to ma(e, how much material to order, or how many employees to hire based on intuition or gut feelings. In the information age, successful managers compile, analyze, and comprehend massive amounts of data daily, which helps them ma(e more successful business decisions. &les include: 'ales date, Quantity sold, Cost, 'ales price, Total profit, 'hipping address, Customer address, Wireless type, "emory amount, Colour. •
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Information is data converted into a meaningful and useful conte&t. Baving the right information at the right moment in time can be worth a fortune. Baving the wrong information at the right moment; or the right information at the wrong moment can be disastrous. The truth about information is that its value is only as good as the people who use it. People using the same information can ma(e different decisions depending on how they interpret or analyze the information. Thus information has value only insofar as the people using it do as well. Information would include: Bow many iPads did the average customer purchase What day of the wee( are the most iPads sold In what part of the country were the most iPads sold What was the best selling store Bow many applications did the average iPad customer purchase
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%usiness intelligence 0%I1 is information collected from multiple sources such as suppliers, customers, competitors, partners, and industries that analyzes patterns, trends, and relationships for strategic decision ma(ing. %I manipulates multiple variables and in some cases even hundreds of variables including such items as interest rates, weather conditions, and even gas prices. !or instance, %I can predict inventory re/uirements for a business for the wee( before the 'uper %owl if, say, the home team is playing, average temperature is above A@ degrees, and the stoc( mar(et is performing well. This is %I at its finest, incorporating all types of internal and e&ternal variables to anticipate business performance. %I would include: What impact does the stoc( mar(et have on iPad sales What impact does the business /uarter have on iPad sales •
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What industries are purchasing the most iPads What industries are purchasing the fewest iPads
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3nowledge includes the s(ills, e&perience, and e&pertise, coupled with information and intelligence that creates a persons intellectual resources. 3nowledge wor(ers are individuals valued for their ability to interpret and analyze information. Todays wor(ers are commonly referred to as (nowledge wor(ers and they use %I along with personal e&perience to ma(e decisions based on both information and intuition, a valuable resource for any company. &les of (nowledge would include: Who is the best analyst to fi& iPad issues concerning calendar functions Who is the best analyst to fi& iPad issues concerning email issues Which resources are the main points of contact for customer developed application issues •
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/' Analy6e Analy6e A,,le A,,le usin usin Porte Porter3s r3s !ive !ive !or. !or.ee "odel' "odel' *pples buyer power was low when it first introduced the iPod since it was first to mar(et with the product. Gow, there are many competitors to *pples iPod and its buyer power i s increasing since customers can choose from many different manufacturers of "P9 players. *pples supplier power was high and now it is decreasing since buyers have many choices of whom to buy from. *pple can use environmental scanning, or the a c/uisition and analysis of events and trends in the environment e&ternal to an organization, to analyze rivalry. *pple can use environmental scanning to analyze everything from competitor strategies to understanding new and shifting mar(et trends to determining the strategic placement of *pple stores. Without watching its environment and understanding unde rstanding what its competitors are doing and where the mar(et is headed, *pple will have a difficult time setting its strategic direction, as 'teve >obs determined when he thought he had missed the "P9 bandwagon. •
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4' :hi.h :hi.h of the three three eneri. eneri. strat strateie eiess is A,,le A,,le follo1i follo1in@ n@ *pple follows a focused strategy. • •
5' :hi.h of Porter3s Porter3s !ive !or.es !or.es did A,,le address address throuh throuh its introdu.ti introdu.tion on of the iPhone@ iPhone@ *pple decreased the power of its buyers and increased its own supplier power by introducing the iPhone. 'ince the iPhone was the first to mar(et with an internet access, data storage, "P9 player, etc., its buyers had no power and no choice but to purchase the product from *pple. ?nfortunately, *pple could not create an entry barrier and soon many other companies began offering integrated cell phones, which increased buyer power and reduced supplier power. •
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"AI% B$SIESS DECISIOS Instru.tor ote: There are few right or wrong answers in the business world. There are really only efficient and inefficient, and effective and ineffective business decisions. If there were always right answers businesses would never fail. These /uestions were created to challenge your students to apply the materials they have learned to real business situations. !or this reason, the authors cannot provide you with one version of a correct answer. When grading your students answers, be sure to focus on their 2ustification or support for their specific
answers. * good way to grade these /uestions is to compare your students answers against each other. &'
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)' APP*#I% APP*#I% THE THREE THREE %EERIC %EERIC STRATE%I STRATE%IES ES Pro0e.t Pur,ose ?nderstanding Porters three generic strategies Potential Solution $rganizations typically follow one of Porters three generic strategies when entering a new mar(et. 071 %road %r oad cost leadership, 081 broad differentiation, d ifferentiation, 091 focused strategy. %road strategies reach a large mar(et segment. !ocused strategies target a niche mar(et. !ocused strategies concentrate on either cost leadership or differentiation. 'tudent answers will vary depending on which industries they choose to research. • •
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$SI $SI% % E!! E!!IC ICIE IEC C# # AD AD E!! E!!EC ECTI TI
Pro0e.t Pur,ose *pplying efficiency I' metrics and effectiveness I' metrics Potential Solution fficiency implies doing things right and effectiveness implies
doing the right things. fficiency I' metrics focus on technology and include throughput, which is the amount of information that can travel through a system at any point in time. fficiency metrics include speed, availability, accuracy, Web traffic, and response time. ffectiveness I' metrics focus on an organizations goals, strategies, and ob2ectives and include usability, customer satisfaction, conversion rates, and financial metrics. Ideally, an organization wants to operate with significant increases in both efficiency and effectiveness. 4'
B$I* B$I*DI DI% % B$SI B$SIE ESS SS RE*A RE*ATI TIO OSH SHIP IPS S Pro0e.t Pur,ose To understand and bridge the gap between I' personnel and business personnel Potential Solution %usiness personnel possess e&pertise in functional areas such as mar(eting, accounting, and sales. I' personnel have the technological e&pertise. I' personnel have their own vocabularies consisting of acronyms and technical terms. %usiness personnel have their own vocabularies based on their e&perience and e&pertise. This can cause a communications gap between the two. !or both sides to have effective communications, the business personnel must see( to achieve an increased level of understanding of I', and the I' personnel must see( to achieve an increased level of understanding of the business. •
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DETE DETER" R"I II I% % IT IT OR% OR%A AIG IGA ATIO TIOA* A* STR$ STR$CT CT$R $RES ES Pro0e.t Pur,ose To develop an organizations roles and responsibilities reporting structure Potential Solution Chief Information $fficer 0CI$1 oversees all uses of I' and ensures •
the strategic alignment of I' with business goals and ob2ectives. Chief Technology $fficer 0CT$1 is responsible for ensuring the throughput, speed, accuracy, availability, and reliability of I'. Chief 'ecurity $fficer 0C'$1 is responsible for ensuring the security of information systems. Chief Privacy $fficer 0CP$1 is responsible for ensuring the ethical and legal use of information. The reporting structure will vary depending on your students personal e&periences. !or e&le, if your student has e&perienced any type of identity theft, the C'$ might be on the top of their reporting structure. If your student has been the victim of an ethical breech, they might have the CP$ on the top of the reporting structure. The important part of this e&ercise is to have the correct 2ustifications that support their reporting structure. •
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Pro0e.t Pur,ose ?nderstanding the !ive !orces "odel
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Potential Solution *n understanding the !ive !orces "odel is a useful tool in aiding
organizations facing the challenging decision of entering a new mar(et or industry segment. The !ive !orces "odel includes: •
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%uyer power + high when buyers have many choices of whom to buy from and low when their choices are few 'upplier power + high when buyers have few choices of whom to buy from and low when their choices are many Threat of substitute products or services + high when there are many alternatives to a product or service and low when there are few alternatives from which to choose Threat of new entrants + high when it is easy for new competitors to enter a mar(et and low when there are significant entry barriers to entering a mar(et )ivalry among e&isting competitors + high when competition is fierce in a mar(et and low when competition is more complacent
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The analysis should include 2ustification of how each of the five forces effect "icrosoft and show how "icrosoft is going to complete with -eysers new entry into the mar(et with respect to each force. *s this is a ris( analysis the answers should also point out any potential wea(nesses "icrosoft has. •
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CHAPTER OE E;TERA* RESO$RCES
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?se these resources to 2ump4start a case discussion and get your students thin(ing about how they are going to apply the concepts they are learning in real4business and real4world situations.
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B$SIESS DRI
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$S !inan.ier Bernard "adoff Admits 5 Billion Dollar !raud
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$sin Craislist for Illeal A.tivities
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B$SIESS DRI
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"ore Climateate>@ $S %ovt' Aen.ies Involved in Data "ani,ulation !raud> 2
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B$SIESS DRI
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B$SIESS DRIames *ndrew, senior partner and head of the global innovation practice at %oston Consulting -roup, tal(s about the %loomberg %usinessWee(J%C- annual ran(ing of the most innovative companies http:JJwww.businesswee(.comJmagazineJtocJ7@O7=J%D7=innovativeOcompanies.htm
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B$SIESS DRI
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ItNs the biggest ?.'. civilian employer after Walmart, but apparently the ?.'. Postal 'ervice is not too big to fail. In this article, the Postal 'ervice argues that without Congressional action, it could be headed for ban(ruptcy. http:JJwww.businesswee(.comJmagazineJcontentJ77O89JbD897@F@AA@[email protected]
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B$SIESS DRI
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*s( your students to create a ran(ing of the coolest college start4ups in 8@79 or 8@7D using criteria from Chapter 7 including Porters !ive !orces, Three generic strategies, and competitive advantages.
