Chapter 1

The Information Age

in Which You Live:
Changing the Face of
Business

McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
 INTRODUCTION
Management information
systems (MIS) helping people
perform all tasks related to
information processing and
management. 3 key resources:
1. People
2. Information
3. Technology

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 MIS RESOURCE #1: INFORMATION

Information is
often
aggregated
data that has
meaning such
as average
age, youngest
and oldest
customer, and
a histogram of
customer ages

Data raw
facts

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 MIS RESOURCE #1: INFORMATION

Business intelligence collective information that supports important,

strategic decision making
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 MIS RESOURCE #2: PEOPLE

People are the most important

resource in any organization, with a
focus on
Technology literacy knowing
how/when to apply technology
Information literacy knowing how
to use information
Ethical responsibilities

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MIS RESOURCE #3: INFORMATION
TECHNOLOGY

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 FINANCIAL IMPACT OF
INFORMATION TECHNOLOGY

IT can definitely impact break-even

analysis
Fixed costs costs you incur even if you
dont sell anything
Variable costs costs you incur when
you sell something (COGS)
Revenue how much you sell one unit
for

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 FINANCIAL IMPACT OF
INFORMATION TECHNOLOGY
Reduce Fixed Costs Reduce Variable Costs

Increase Revenue
Recommendation Engines
Long-Tail Economics
Many others
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 INDUSTRY IMPACT OF
INFORMATION TECHNOLOGY
Porters Five Forces Model helps business people understand the relative
attractiveness of an industry and the industrys competitive pressures.

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 Buyer & Supplier Power

Buyer power high when buyers

have many choices and low when their
choices are few
Supplier power high when buyers
have few choices and low when
choices are many
The inverse of each other

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 Threat of Substitute Products
and Services and New Entrants

Threat of substitute products

and services high when there are
many alternatives for buyers
Threat of new entrants high
when it is easy for competitors to
enter the market
Rivalry among existing
competitors high when
competition is fierce
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 STRATEGY IMPACT OF
INFORMATION TECHNOLOGY

Porter identified 3
generic business
strategies for
beating the
competition
1. Overall cost
leadership
2. Differentiation
3. Focus
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 STRATEGY IMPACT OF
INFORMATION TECHNOLOGY
Focus - focusing on offering products or services to a
particular segment or buyer group, within a segment of
a product line, to a specific geographic market, etc

Differentiation - Cost leadership - offering

offering a product or the same or better quality
service that is product or service at a
perceived as being price that is less than what
unique in the any of the competition is
marketplace able to do
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 Run-Grow-Transform (RGT)
Framework

Run-grow-transform (RGT)
framework the allocation in
terms of percentages of IT dollars
on various types of business
strategies

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