CHAPTER ONE
MANAGEMENT
INFORMATION
SYSTEMS
BUSINESS DRIVEN MIS
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CHAPTER ONE OVERVIEW
 SECTION 1.1 – BUSINESS DRIVEN MIS
• Competing in the Information Age
• The Challenge: Departmental Companies
• The Solution: Management Information Systems
 SECTION 1.2 – BUSINESS STRATEGY
• Identifying Competitive Advantages
• The Five Forces Model – Evaluating Industry
Attractiveness
• The Three Generic Strategies – Choosing a Business
Focus
• Value Chain Analysis – Executing Business Strategies
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SECTION 1.1
BUSINESS
DRIVEN MIS
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LEARNING OUTCOMES
1. Describe the information age and the
differences between data, information,
business intelligence, and knowledge
2. Identify the different departments in a
company and why they must work together to
achieve success
3. Explain systems thinking and how
management information systems enable
business communications
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COMPETING IN THE
INFORMATION AGE
Did you know . . .
 Avatar, the movie, took over 4 yrs
to make and cost $450 million
 Lady Gaga’s real name is Joanne
Angelina Germanotta
 It costs $2.6 million for a 30second advertising time slot
during the Super Bowl
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COMPETING IN THE
INFORMATION AGE
 Fact - The confirmation or validation
of an event or object
 Information age - The present time,
during which infinite quantities of facts
are widely available to anyone who
can use a computer
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COMPETING IN THE
INFORMATION AGE
 Examples of the power of business
and technology
• Amazon – Not a technology company;
primary business focus is selling books
• Netflix – Not a technology company;
primary business focus is renting videos
• Zappos – Not a technology company;
primary business focus is selling shoes
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COMPETING IN THE
INFORMATION AGE
 The core drivers of the information age
• Data
• Information
• Business intelligence
• Knowledge
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Data
 Data - Raw facts that describe the characteristics
of an event or object
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Information
 Information - Data converted into a meaningful
and useful context
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Business Intelligence
 Business intelligence Information collected from
multiple sources such as
suppliers, customers,
competitors, partners, and
industries that analyzes
patterns, trends, and
relationships for strategic
decision making
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Knowledge
 Knowledge - Skills, experience, and
expertise coupled with information and
intelligence that creates a person’s
intellectual resources
 Knowledge worker – Individual
valued for their ability to interpret and
analyze information
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THE CHALLENGE:
DEPARTMENTAL COMPANIES
Common Departments Working Independently
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THE SOLUTION: MANAGEMENT
INFORMATION SYSTEMS
Common Departments Working Interdependently
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THE SOLUTION: MANAGEMENT
INFORMATION SYSTEMS
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THE SOLUTION: MANAGEMENT
INFORMATION SYSTEMS
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THE SOLUTION: MANAGEMENT
INFORMATION SYSTEMS
 Systems thinking – A way of monitoring the entire
system by viewing multiple inputs being processed
or transformed to produce outputs while
continuously gathering feedback on each part
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THE SOLUTION: MANAGEMENT
INFORMATION SYSTEMS
 Management Information Systems (MIS) –
A business function, like accounting and human
resources, which moves information about
people, products, and processes across the
company to facilitate decision-making and
problem-solving
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MIS Department
Roles and Responsibilities
 Chief information officer (CIO) – Oversees all
uses of IT and ensures the strategic alignment
of IT with business goals and objectives
 Chief knowledge officer (CKO) - Responsible
for collecting, maintaining, and distributing the
organization’s knowledge
 Chief privacy officer (CPO) – Responsible for
ensuring the ethical and legal use of
information
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MIS Department
Roles and Responsibilities
 Chief security officer (CSO) –
Responsible for ensuring the security of IT
systems
 Chief technology officer (CTO) –
Responsible for ensuring the throughput,
speed, accuracy, availability, and
reliability of IT
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SECTION 1.2
Business
Strategy
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LEARNING OUTCOMES
4. Explain why competitive advantages are
temporary
5. Describe Porter’s Five Forces Model and
explain each of the five forces
6. Compare Porter’s three generic strategies
7. Demonstrate how a company can add value
by using Porter’s value chain analysis
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IDENTIFYING COMPETITIVE
ADVANTAGES
 Business strategy – A leadership plan that
achieves a specific set of goals or objectives
such as

Developing new products or services

Entering new markets

Increasing customer loyalty

Attracting new customers

Increasing sales
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IDENTIFYING COMPETITIVE
ADVANTAGES
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IDENTIFYING COMPETITIVE
ADVANTAGES
 Competitive advantage – A product or service
that an organization’s customers place a greater
value on than similar offerings from a competitor
 First-mover advantage – Occurs when an
organization can significantly impact its market
share by being first to market with a competitive
advantage
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IDENTIFYING COMPETITIVE
ADVANTAGES
 Competitive intelligence –The process of
gathering information about the competitive
environment to improve the company’s ability to
succeed
 Competitive intelligence tools
• Porter’s Five Forces Model
• Porter’s Three Generic Strategies
• Porter’s Value Chain Analysis
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THE FIVE FORCES MODEL –
EVALUATING INDUSTRY ATTRACTIVENESS
Porter’s Five
Forces Model
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Buyer Power
 Buyer power – The ability of buyers
to affect the price of an item
• Switching cost – Manipulating costs
that make customers reluctant to switch
to another product
• Loyalty program – Rewards customers
based on the amount of business they
do with a particular organization
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Supplier Power
 Supplier power – The suppliers’ ability to
influence the prices they charge for supplies
• Supply chain – Consists of all parties involved in
the procurement of a product or raw material
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Threat of Substitute
Products or Services
 Threat of substitute products
or services – High when there
are many alternatives to a
product or service and low when
there are few alternatives
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Threat of New Entrants
 Threat of new entrants – High when it is
easy for new competitors to enter a market
and low when there are significant entry
barriers
• Entry barrier – A feature of a product or service
that customers have come to expect and entering
competitors must offer the same for survival
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Rivalry Among
Existing Competitors
 Rivalry among existing competitors –
High when competition is fierce in a
market and low when competitors are
more complacent
• Product differentiation – Occurs when a
company develops unique differences in its
products or services with the intent to
influence demand
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Analyzing the Airline Industry
 Perform a Porter’s Five Forces analysis of each
of the following for a company entering the
commercial airline industry
• Buyer power
• Supplier power
• Threat of substitute products/services
• Threat of new entrants
• Rivalry among competitors
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THE THREE GENERIC STRATEGIES
CHOOSING A BUSINESS FOCUS
Porter’s Three Generic Strategies
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THE THREE GENERIC STRATEGIES
CHOOSING A BUSINESS FOCUS
Porter’s Three Generic Strategies
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VALUE CHAIN ANALYSIS –
EXECUTING BUSINESS STRATEGIES
 Business process – A
standardized set of activities that
accomplish a specific task, such as
a specific process
 Value chain analysis – Views a
firm as a series of business
processes that each add value to
the product or service
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VALUE CHAIN ANALYSIS –
EXECUTING BUSINESS STRATEGIES
 Primary value activities
• Inbound logistics - Acquires raw materials and
resources, and distributes
• Operations - Transforms raw materials or inputs into
goods and services
• Outbound logistics - Distributes goods and services
to customers
• Marketing and sales - Promotes, prices, and sells
products to customers
• Service - Provides customer support
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VALUE CHAIN ANALYSIS –
EXECUTING BUSINESS STRATEGIES
 Support value activities
• Firm infrastructure – Includes the company format or
departmental structures, environment, and systems
• Human resource management – Provides employee
training, hiring, and compensation
• Technology development – Applies MIS to processes
to add value
• Procurement – Purchases inputs such as raw materials,
resources, equipment, and supplies
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VALUE CHAIN ANALYSIS –
EXECUTING BUSINESS STRATEGIES
Porter’s Value Chain
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VALUE CHAIN ANALYSIS –
EXECUTING BUSINESS STRATEGIES
Value Chain and Porter’s Five Forces Model
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LEARNING OUTCOME REVIEW
 Now that you have finished the chapter
please review the learning outcomes in
your text
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