IT Fundamentals
Tutorial 3
23 / 09 /2011
Tutor’s Name: Simone Leon
1
Outline
1.
Running Case Study 2:
Dirt Bikes – Analyzing Financial Performance
- Questions and Discussion
2.
Review Questions
3.
Discussion Running Case 3
2
Running Case Study 2:
Dirt Bikes – Analyzing Financial
Performance
1. What are Dirt Bikes’s best- and worst-performing products?
Annual Sales
5000
4000
Units sold
1.
Enduro 250
3000
Enduro 550
2000
Moto 300
Moto 450
1000
0
2003
2004
2005
2006
2007
Year
One can see from these graphs that sales dipped slightly during 2007
but that overall, sales have been growing
3
1.
Running Case Study 2:
Dirt Bikes – Analyzing Financial
Performance continue…
2. What is the proportion of domestic to international sales?
The portion of overall sales represented by international sales has
not changed significantly, suggesting that there may be opportunities
for Dirt Bikes to grow its international sales.
1.
Running Case Study 2:
Dirt Bikes – Analyzing Financial
Performance continue…
3. Have international sales grown relative to domestic sales?
Domestic vs. International Sales
12000
Dollars
10000
911
8000
889
762
640
6000
International
528
4000
5723
6843
Domestic
8254
8889
8530
2005
2006
2007
2000
0
2003
2004
Year
1.
Running Case Study 2:
Dirt Bikes – Analyzing Financial
Performance continue…
4. Are sales (revenues) growing steadily, and, if so, at what rate?
Balance sheet extract
The income statement data show a continuing rise in operating expenses
and cost of goods sold and combined with declines in gross and net margins
1.
Running Case Study 2:
Dirt Bikes – Analyzing Financial
Performance continue…
5. Does it have assets to pay for expenses and to finance the
development of new products and information systems?
The balance sheet shows
that Dirt Bikes has
sufficient assets so that it
could afford to invest in
new product development
and new information
systems.
7
2. Review Questions
1. Define and describe the value chain model
The value chain model highlights specific activities in the business where
competitive strategies can best be applied and where information systems will
most likely have a strategic impact. The model identifies specific, critical leverage
points where a firm can use information technology most effectively to enhance its
competitive position. The value chain model views the firm as a series of basic
activities that add a margin of value to a firm’s products or services. The activities
are categorized as either primary or support activities. Primary activities are most
directly related to production and distribution of the firm’s products and services,
which create value for the customer. Support activities make the delivery of
primary activities possible and consist of organization infrastructure. A firm’s value
chain can be linked to the value chains of its suppliers, distributors, and
customers.
2. Review Questions continues…
2. Explain how the value chain model can be used to identify
opportunities for information systems
Information systems can be used at each stage of the value chain to
improve operational efficiency, lower costs, improve profit margins, and
forge a closer relationship with customers and suppliers. Organizations
can use information systems to help examine how value-adding activities
are performed at each stage of the value chain. Information systems can
improve the relationship with customers (customer relationship
management systems) and with suppliers (supply chain management
systems) who may be outside the value chain but belong to an extended
value chain. Information systems can help businesses track benchmarks
in the organization and identify best practices of their particular
industries. After analyzing various stages in the value chain, an
organization can devise a list of candidate applications for information
systems.
2. Review Questions continues…
3. Explain why there is considerable organizational resistance to the
introduction of information systems
There is considerable organizational resistance to new information
systems because they change many important organizational
dimensions, such as culture, structure, politics, and work. Leavitt puts
forth a model that says that changes in technology are absorbed,
deflected, and defeated by organizational task arrangements, structures,
and people. In this model the only way to bring about change is to
change the technology, tasks, structure, and people simultaneously. In a
second model, the authors speak of the need to unfreeze organizations
before introducing an innovation, quickly implementing the new system,
and then refreezing or institutionalizing the change.
3.
Running Case Study 3:
Dirt Bikes –
1. What activities at Dirt Bikes create the most value?
The most valuable activities include:
• inbound activities (primarily supply chain management but also including locating
appropriate, high quality parts anywhere in the world)),
• manufacturing (which is mostly assembling the proper materials that come from
elsewhere, but also include the testing of each product as it comes off the assembly
line),
• marketing (including some advertising, its racing commitment and accompanying
publicity, coverage in appropriate journals, and an attractive and helpful Web site),
• sales (both ordering systems and systems support for its dealers), and service (again,
support for its dealers, plus availability of parts and service information for owners who
are too far away from dealers).
3.
Running Case Study 3:
Dirt Bikes – Analyzing Financial
Performance continue…
2. How does Dirt Bikes provide value to its customers
The value Dirt Bikes’ customers receive comes from the quality of the bikes, their offroad and racing performance, effective and valuable user groups, and available
servicing when needed
3.
Running Case Study 3:
Dirt Bikes –
3. What are the competitive forces that can affect the industry?
The industry could be affected by changing economic conditions and demographics,
which could depress the market for dirt bikes and put more emphasis on competing on
the basis of cost. Young populations in Japan, USA, and Europe who make up most of
the customers for dirt bikes are declining (although many baby-boomers and retirees
are flocking to Harley Davidson and other brands for highway cruising.) The market for
dirt bikes worldwide is not very big and there are already many competitors, so Dirt
Bikes is not likely to see competition from new entrants into the market. The ability to
use the Internet to search worldwide for suppliers could help Dirt Bikes keep its supplier
costs in line.
3.
Running Case Study 3:
Dirt Bikes –
4. What information systems best support that strategy?
Such systems may include:
• computer-aided design systems,
• systems for promoting quality,
• customer relationship management systems,
• and other systems for marketing and customer service would be appropriate