INFO EXAM REVIEW- BUSINESS SECTION
CHAPTER 2- Identifying Competitive Advantages
To survive and thrive an organization must create a competitive advantage
– 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
Organizations watch their competition through environmental scanning
– Environmental scanning – the acquisition and analysis of events and trends in the
environment external to an organization
• Three common tools used in industry to analyze and develop competitive advantages include:
– Porter’s Five Forces Model
– Porter’s three generic strategies
– Value chains
Buyer power – assessed by analyzing the ability of buyers to directly impact the price they are
willing to pay for an item
• Ways to reduce buyer power include
– Switching costs – costs that can make customers reluctant to switch to another product or
service
– Loyalty program – rewards customers based on the amount of business they do with a
particular organization
Supplier power – assessed by the suppliers’ ability to directly impact the price they are
charging for supplies (including materials, labor, and services)
– Supply chain – consists of all parties involved in the procurement of a product or raw material
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 market and low
when there are significant entry barriers to entering a market
– Entry barrier – a product or service feature that customers have come to expect from
organizations in a particular industry and must be offered by an entering organization to
compete and survive
Rivalry among existing competitors – high when competition is fierce in a market and low
when competition is more complacent
• Product differentiation – occurs when a company develops unique differences in its products
with the intent to influence demand
• Although competition is always more intense in some industries than in others, the overall
trend is toward increased competition in just about every industry
Buyer power: high as customers have many choices
• Supplier power: high as there are limited plane and engine manufacturers to choose from
and unionized workforces squeeze the airline’s profitability
• Threat of substitute products or services: high as there are numerous transportation
alternatives
Threat of New Entrants: high as new airlines are continuously entering the market
• Rivalry among existing competitors: high –for this reason airlines are forced to compete on
price
Once an organization chooses its strategy, it can use tools such as the value chain to determine
the success or failure of its chosen strategy
– Business process – a standardized set of activities that accomplish a specific task, such as
processing a customer’s order
– Value chain – views an organization as a series of processes, each of which adds value to
the product or service for each customer
CHAPTER 3- Strategic Initiatives for Implementing Competitive Advantages
Organizations can undertake high-profile strategic initiatives including:
– Supply chain management (SCM)
– Customer relationship management (CRM)
– Business process reengineering (BPR)
– Enterprise resource planning (ERP)
Supply Chain Management (SCM) – involves the management of information flows between
and among stages in a supply chain to maximize total supply chain effectiveness and
profitability
Four basic components of supply chain management include:
1. Supply chain strategy – strategy for managing all resources to meet customer demand
2. Supply chain partner – partners throughout the supply chain that deliver finished products,
raw materials, and services.
3. Supply chain operation – schedule for production activities
4. Supply chain logistics – product delivery process
Effective and efficient SCM systems can enable an organization to:
– Decrease the power of its buyers
– Increase its own supplier power
– Increase switching costs to reduce the threat of substitute products or services
– Create entry barriers thereby reducing the threat of new entrants
– Increase efficiencies while seeking a competitive advantage through cost leadership
Customer relationship management
(CRM) – involves managing all aspects of a customer’s relationship with an organization to
increase customer loyalty and retention and an organization's profitability
CRM can enable an organization to:
– Identify types of customers
– Design individual customer marketing campaigns
– Treat each customer as an individual
– Understand customer buying behaviors
Business process – a standardized set of activities that accomplish a specific task, such as
processing a customer’s order
• Business process reengineering (BPR) – the analysis and redesign of workflow within and
between enterprises
– The purpose of BPR is to make all business processes best-in-class
Enterprise resource planning (ERP) – integrates all departments and functions throughout an
organization into a single IT system so that employees can make decisions by viewing
enterprise wide information on all business operations KEY WORD= Enterprise
Chapter 10- Extending the Organization—Supply Chain Management
The supply chain has three main links:
1. Materials flow from suppliers and their “upstream” suppliers at all levels
2. Transformation of materials into semi finished and finished products through the
organization’s own production process
3. Distribution of products to customers and their “downstream” customers at all levels
IT’s primary role is to create integrations or tight process and information linkages between
functions within a firm
Supply chain visibility – the ability to view all areas up and down the supply chain
• Bullwhip effect – occurs when distorted product demand information passes from one entity
to the next throughout the supply chain
Demand planning software – generates demand forecasts using statistical tools forecasting
techniques
Supply chain planning (SCP) software– uses advanced mathematical algorithms to improve
the flow and efficiency of the supply chain
• Supply chain execution (SCE) software – automates the different steps and stages of the
supply chain
SCM industry best practices include:
1. Make the sale to suppliers
2. Wean employees off traditional business practices
3. Ensure the SCM system supports the organizational goals
4. Deploy in incremental phases and measure and communicate success
5. Be future oriented
DSSs allow managers to examine performance and relationships over the supply chain and
among:
– Suppliers
– Manufacturers
– Distributors
– Other factors that optimize supply chain performance
CHAPTER 11- Building a Customer-Centric Organization—Customer Relationship
Management
CRM(Customer Relationship Management) enables an organization to:
– Provide better customer service
– Make call centers more efficient
– Cross sell products more effectively
– Help sales staff close deals faster
– Simplify marketing and sales processes
– Discover new customers
– Increase customer revenues
An organization can find its most valuable customers by using a formula that industry
insiders call RFM (Recency, Frequency, Monetary value)
– How recently a customer purchased items (recency)
– How frequently a customer purchases items (frequency)
– How much a customer spends on each purchase (monetary value)
Operational CRM – supports traditional transactional processing for day-to-day frontoffice operations or systems that deal directly with the customers
Analytical CRM – supports back-office operations and strategic analysis and includes all
systems that do not deal directly with the customers
CRM success factors include:
1. Clearly communicate the CRM strategy
2. Define information needs and flows
3. Build an integrated view of the customer
4. Implement in iterations
5. Scalability for organizational growth
CHAPTER 12- Integrating the Organization from End to End—Enterprise
Resource Planning
At the heart of all ERP systems is a database, when a user enters or updates
information in one module, it is immediately and automatically updated throughout the
entire system
SCM, CRM, and ERP are the backbone of e-business
Middleware – several different types of software which sit in the middle of and provide
connectivity between two or more software applications
Enterprise application integration (EAI) middleware – packages together commonly
used functionality which reduced the time necessary to develop solutions that integrate
applications from multiple vendors
ERP systems must integrate various
organization processes and be:
– Flexible
– Modular and open
– Comprehensive
– Beyond the company
PLUG IN B2- Business Process
Business process improvement will, at a minimum, double the gains of a project by
streamlining outdated practices, enhancing efficiency, promoting compliance and
standardization, and making an organization more agile
• Business process improvement involves three key steps
1. Measure what matters to most customers
2. Monitor the performance of key business processes
3. Assign accountability for process improvement
Business process - a standardized set of activities that accomplish a specific task,
such as processing a customer’s order
Business process characteristics:
– The processes have internal and external users
– A process is cross-departmental
– The processes occur across organizations
– The processes are based on how work is done in the organization
– Every process should be documented and fully understood by everyone participating
in the process
– Processes should be modeled to promote complete understanding
Customer facing process - results in a product or service that is received by an
organization’s external customer
Business facing process - invisible to the external customer but essential to the
effective management of the business
Continuous process improvement model - attempts to understand and measure the
current process, and make performance improvements accordingly
Business process reengineering (BPR) - analysis and redesign of workflow within
and between enterprises
Managerial approach to reengineering
projects
1.Define the scope
2.Analyze
3.Evaluate
4.Plan
5.Approve
6.Execute
Business process modeling (or mapping) – the activity of creating a detailed flow
chart or process map of a work process showing its inputs, tasks, and activities, in a
structured sequence
Business process model - a graphic description of a process, showing the sequence
of process tasks, which is developed for a specific
– As-Is process model
– To-Be process model
Business process management (BPM) - integrates all of an organization’s business
process to make individual processes more efficient
Business process management tool - an application that designs business process
models and simulates, optimizes, monitors, and maintains various processes
SUCCESS FACTORS
1. Understand reengineering
2. Build a business and political case
3. Adopt a process management approach
4. Measure and track performance continuously
5. Practice change management and provide central support
6. Manage reengineering projects for results
CHAPTER 13- Creating Innovative Organizations
How can a company like Polaroid go bankrupt?
• Digital Darwinism – implies that organizations which cannot adapt to the new demands
placed on them for surviving in the information age are doomed to extinction.
What do steamboats, transistor radios, and Intel’s 8088 processor all have in common?
– Disruptive technology – a new way of doing things that initially does not meet the needs of
customers
– Sustaining technology – produces an improved product customers are eager to buy
The Innovator’s Dilemma discusses how established companies can take advantage of
disruptive technologies without hindering existing relationships with customers, partners, and
stakeholders


One of the biggest forces changing business is the Internet
Organizations must be able to transform as markets, economic environments, and
technologies change

Focusing on the unexpected allows an organization to capitalize on the opportunity for
new business growth from a disruptive technology

The Internet began as an emergency military communications system operated by the
Department of Defense

Gradually the Internet moved from a military pipeline to a communication tool for
scientists to businesses
– Internet – computer networks that pass information from one to another using common
computer protocols
– Protocol – standards that specify the format of data as well as the rules to be followed during
transmission
World Wide Web (WWW) – a global hypertext system that uses the Internet as its transport
mechanism
• Hypertext transport protocol (HTTP) – the Internet standard that supports the exchange of
information on the WWW
Digital divide – when those with access to technology have great advantages over those
without access to technology
Web 2.0 – a set of economic, social, and technology trends that collectively form the basis for
the next generation of the Internet
Semantic Web encompasses the following:
1. Transforming the Web into a database
2. An evolutionary path to artificial intelligence
3. The realization of semantic Web and SOA
4. Evolution toward 3D
PLUG IN B6- Information Security
Information security – a broad term encompassing the protection of information from
accidental or intentional misuse by persons inside or outside an organization
The biggest issue surrounding information security is not a technical issue, but a people issue
• 38% of security incidents originate within the organization
– Insiders
– Social engineering
The first line of defense an organization should follow to help combat insider issues is to
develop information security policies and an information security plan
– Information security policies – identify the rules required to maintain information security
– Information security plan – details how an organization will implement the information
security policies
Five steps to creating an information security plan
1. Develop the information security policies
2. Communicate the information security policies
3. Identify critical information assets and risks
4. Test and reevaluate risks
5. Obtain stakeholder support
Three primary information security areas
1. Authentication and authorization
2. Prevention and resistance
3. Detection and response
Authentication – a method for confirming users’ identities
• Authorization – the process of giving someone permission to do or have something
• The most secure type of authentication involves a combination of the following:
1. Something the user knows such as a user ID and password
2. Something the user has such as a smart card or token
3. Something that is part of the user such as a fingerprint or voice signature
User ID and passwords are the most common way to identify individual users, and are the most
ineffective form of authentication
• Identity theft – the forging of someone’s identity for the purpose of fraud
• Phishing – a technique to gain personal information for the purpose of identity theft
Smart cards and tokens are more effective than a user ID and a password
– Token – small electronic devices that change user passwords automatically
– Smart card – a device that is around the same size as a credit card, containing embedded
technologies that can store information and small amounts of software to perform some limited
processing
This is by far the best and most effective way to manage authentication…
– Biometrics – the identification of a user based on a physical characteristic, such as a
fingerprint, iris, face, voice, or handwriting
• Unfortunately, this method can be costly and intrusive
Downtime can cost an organization anywhere from $100 to $1 million per hour
• Technologies available to help prevent and build resistance to attacks include:
1. Content filtering
2. Encryption
3. Firewalls
Organizations can use content filtering technologies to filter email and prevent emails containing
sensitive information from transmitting and stop spam and viruses from spreading
– Content filtering – occurs when organizations use software that filters content to prevent the
transmission of unauthorized information
– Spam – a form of unsolicited email
If there is an information security breach and the information was encrypted, the person stealing
the information would be unable to read it
– Encryption – scrambles information into an alternative form that requires a key or password
to decrypt the information
– Public key encryption – uses two keys: a public key that everyone can have and a private
key for only the recipient
One of the most common defenses for preventing a security breach is a firewall
– Firewall – hardware and/or software that guards a private network by analyzing the
information leaving and entering the network
If prevention and resistance strategies fail and there is a security breach, an organization can
use detection and response technologies to mitigate the damage
• Antivirus software is the most common type of detection and response technology
Hacker - people very knowledgeable about computers who use their knowledge to invade other
people’s computers
– White-hat hacker
– Black-hat hacker
– Hactivist
– Script kiddies or script bunnies
– Cracker
– Cyberterrorist
Virus - software written with malicious intent to cause annoyance or damage
– Worm
– Denial-of-service attack (DoS)
– Distributed denial-of-service attack (DDoS)
– Trojan-horse virus
– Backdoor program
– Polymorphic virus and worm
Security threats to ebusiness include:
– Elevation of privilege
– Hoaxes
– Malicious code
– Spoofing
– Spyware
– Sniffer
– Packet tampering
CHAPTER 8- Accessing Organizational Information—Data Warehouse
Data warehouses extend the transformation of data into information
• In the 1990’s executives became less concerned with the day-to-day business operations and
more concerned with overall business functions
• The data warehouse provided the ability to support decision making without disrupting the dayto-day operations
Data warehouse – a logical collection of information – gathered from many different operational
databases – that supports business analysis activities and decision-making tasks
• The primary purpose of a data warehouse is to aggregate information throughout an
organization into a single repository for decision-making purposes
Extraction, transformation, and loading (ETL) – a process that extracts information from
internal and external databases, transforms the information using a common set of enterprise
definitions, and loads the information into a data warehouse
• Data mart – contains a subset of data warehouse information
Databases contain information in a series of two-dimensional tables
• In a data warehouse and data mart, information is multidimensional; it contains layers of
columns and rows
– Dimension – a particular attribute of information
Cube – common term for the representation of multidimensional information
Data mining – the process of analyzing data to extract information not offered by the raw data
alone
• To perform data mining users need data-mining tools
– Data-mining tool – uses a variety of techniques to find patterns and relationships in large
volumes of information and infers rules that predict future behavior and guide decision making
An organization must maintain high quality data in the data warehouse
• Information cleansing or scrubbing – a process that weeds out and fixes or discards
inconsistent, incorrect, or incomplete information
Business intelligence – information that people use to support their decision making efforts
• Principle BI enablers include:
– Technology
– People
– Culture
PLUG IN B21- Mobile Technology
Cellular telephones (cell phones) work by using radio waves to communicate with radio
antennas (or towers) placed within adjacent geographic areas called cells
• A telephone message is transmitted to the local cell by the cellular telephone and then is
passed from antenna to antenna, or cell to cell
Personal digital assistants (PDA) are small, handheld computers capable of entirely digital
communications transmission
• Smartphone - combines the functions of a cellular phone and a PDA in a single device
Bluetooth – a telecommunications industry specification that describes how mobile phones,
computers, and personal digital assistants (PDAs) can be easily interconnected using a shortrange wireless connection
Satellite - a big microwave repeater in the sky; it contains one or more transponders that listen
to a particular portion of the electromagnetic spectrum, amplifying incoming signals, and
retransmitting them back to Earth
• Microware transmitter - commonly used to transmit network signals over great distances
Location-based services (LBS) – are wireless mobile content services which provide locationspecific information to mobile users moving from location to location
Global Positioning System (GPS) - is a "constellation" of 24 well-spaced satellites that orbit
the Earth and make it possible for people with ground receivers to pinpoint their geographic
location
• The location accuracy is anywhere from 100 to 10 meters for most equipment
Geographic information system (GIS) - is designed to work with information that can be
shown on a map
• Some cell phone providers equip their phones with GPS chips that enable users to be located
to within a geographical location about the size of a tennis court
Common GIS uses:
– Finding what is nearby
– Routing information
– Information alerts
– Mapping densities
– Mapping quantities
Wireless fidelity (wi-fi) – a means of linking computers using infrared or radio signals
• Common examples of wireless devices include:
– Cellular phones and pagers
– Global positioning systems (GPS)
– Cordless computer peripherals
– Home-entertainment-system control boxes
– Two-way radios
– Satellite television
The main problem with wi-fi access is that hot spots are very small, so coverage is sparse
• WiMAX - is a telecommunications technology aimed at providing wireless data over long
distances in a variety of ways, from point-to-point links to full mobile cellular type access
A WiMAX system consists of two parts:
– A WiMAX tower - A single WiMAX tower can provide coverage to a very large area - as big
as 3,000 square miles
– A WiMAX receiver - The receiver and antenna could be built into a laptop the way wi-fi
access is today
Radio frequency identification (RFID) – use active or passive tags in the form of chips or
smart labels that can store unique identifiers and relay this information to electronic readers
• RFID tag - contains a microchip and an antenna, and typically work by transmitting a serial
number via radio waves to an electronic reader, which confirms the identity of a person or object
bearing the tag
Unusual Uses of RFID
– Preventing toilets
– Identifying human remains
– Getting into nightclubs
– Cooking with robots
– Timing athletic events
– Tracking wheels of cheese
– Monitoring casinos
– Tracking razor blades
– Issuing passports
CHAPTER 15- Creating Collaborative Partnerships
Organizations create and use teams, partnerships, and alliances to:
– Undertake new initiatives
– Address both minor and major problems
– Capitalize on significant opportunities
• Organizations create teams, partnerships, and alliances both internally with employees and
externally with other organizations
Collaboration system – supports the work of teams by facilitating the sharing and flow of
information
Organizations form alliances and partnerships with other organizations based on their core
competency
– Core competency – an organization’s key strength, a business function that it does better
than any of its competitors
– Core competency strategy – organization chooses to focus specifically on its core
competency and forms partnerships with other organizations to handle nonstrategic business
processes
Information technology can make a business partnership easier to establish and manage
– Information partnership – occurs when two or more organizations cooperate by integrating
their IT systems, thereby providing customers with the best of what each can offer
• The Internet has dramatically increased the ease and availability for IT-enabled organizational
alliances and partnerships
Collaboration solves specific business tasks such as telecommuting, online meetings, deploying
applications, and remote project and sales management
• Collaboration system – an IT-based set of tools that support the work of teams by facilitating
the sharing and flow of information
Two categories of collaboration
1. Unstructured collaboration (information collaboration) - includes document exchange,
shared whiteboards, discussion forums, and email
2. Structured collaboration (process collaboration) - involves shared participation in
business processes such as workflow in which knowledge is hardcoded as rules
Collaboration systems include:
– Knowledge management systems
– Content management systems
– Workflow management systems
– Groupware systems
Knowledge management (KM) – involves capturing, classifying, evaluating, retrieving, and
sharing information assets in a way that provides context for effective decisions and actions
• Knowledge management system – supports the capturing and use of an organization’s
“know-how”
Intellectual and knowledge-based assets fall into two categories
1. Explicit knowledge – consists of anything that can be documented, archived, and codified,
often with the help of IT
2. Tacit knowledge - knowledge contained in people’s heads
The following are two best practices for transferring or recreating tacit knowledge
– Shadowing – less experienced staff observe more experienced staff to learn how their more
experienced counterparts approach their work
– Joint problem solving – a novice and expert work together on a project
Content management system (CMS) – provides tools to manage the creation, storage,
editing, and publication of information in a collaborative environment
• CMS marketplace includes:
– Document management system (DMS)
– Digital asset management system (DAM)
– Web content management system (WCM)
Wikis - web-based tools that make it easy for users to add, remove, and change online content
• Business wikis - collaborative web pages that allow users to edit documents, share ideas, or
monitor the status of a project
Work activities can be performed in series or in parallel that involves people and automated
computer systems
• Workflow – defines all the steps or business rules, from beginning to end, required for a
business process
• Workflow management system – facilitates the automation and management of business
processes and controls the movement of work through the business process
Messaging-based workflow system – sends work assignments through an email system
• Database-based workflow system – stores documents in a central location and
automatically asks the team members to access the document when it is their turn to edit the
document
Groupware – software that supports team interaction and dynamics including calendaring,
scheduling, and videoconferencing
Videoconference – a set of interactive telecommunication technologies that allow two or more
locations to interact via two-way video and audio transmissions simultaneously
Web conferencing - blends audio, video, and document-sharing technologies to create virtual
meeting rooms where people “gather” at a password protected website
Email is the dominant form of collaboration application, but real-time collaboration tools like
instant messaging are creating a new communication dynamic
• Instant messaging - type of communications service that enables someone to create a kind
of private chat room with another individual to communicate in real-time over the Internet