MIS 205 , CH - 2

Learning Objectives
► Know the general systems model of the firm.
firm.

Chapter 2 ► Understand the eight

eight--element environmental
model as a framework for understanding the
environment of a business organization.
organization.
► Understand that supply chain management
Information Systems involves the planning and coordination of physical
for resources that flow from the firm’s suppliers,
through the firm, and to the firm’s customers
customers..
Competitive Advantage
► Recognize that competitive advantage can be
achieved with virtual as well as physical resources.
resources.
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Figure 2.1 The General System

Learning Objectives (Cont’d)
Model of the Firm
► Understand Michael E. Porter’s concepts of value
chains and value systems.
systems.
► Know the dimensions of competitive advantage
advantage..
► Recognize the increasing challenges from global
competitors and the importance of information
and coordination in meeting those challenges
challenges..
► Understand the challenges of developing global
information systems.
systems.

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General System Model (Cont’d) General System Model (Cont’d)

► Physical resource flow includes personnel, ► Firm’s control mechanism include
material, machines, and money.
money.
Performance standards to meet if the firm’s
wants to achieve overall objectives.
► Virtual resource flow includes data,

Firm’s management.
information, and information in the form of

Information processor that transform data into
decisions..
decisions
information.
► Feedback loop is composed of the virtual
resources.

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Figure 2.2 Eight-

Eight-Element
The Firm & Its Environment
Environmental Model
► Environmental elements are organizations and
individuals that exist outside the firm and have a
direct or indirect influence on it.

Such as suppliers, customers, labor unions,
financial community, stockholders and owners,
competitors, and governments.
► Global community is the geographic area where
the firm performs its operations.

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Physical Resource Flows – Supply

Environmental Resource Flows
Chain Management
► Information flows from customers. Often. ► Supply chain is the pathway that
► Material flow to customers. Often. facilitates the flow of physical resources
► Money flow to stockholders. Often.
from suppliers to the firm and then to
customers..
customers
► Raw materials flow from suppliers. Often.
► Money flow from government. Less often. ► Supply chain management manages the
resources through the supply chain to
► Material flow to suppliers. Less often.
ensure timely and efficient flow
flow..
► Personnel flow to competitors. Less often.

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Supply Chain Management Supply Chain Management

Activities Activities (Cont’d)
► Forecasting customer demand. ► Managing inventory – raw materials, work-
work-
► Scheduling production. in
in--process, and finished goods.
goods.
► Establishing transportation networks. ► Executing production.
production.
► Ordering replenishment stock from
► Transporting resources to customers
customers..
suppliers.
► Tracking the flow of resources from
► Receiving stock from suppliers.
suppliers, through the firm, and to
customers..
customers
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Supply Chain Management Competitive Advantage

► Firm’s information systems can be used to ► Competitive advantage refers to the use
perform the supply chain activities. of information to gain leverage in the
► Electronic systems provide the ability to marketplace.
track the flow of the resources as it occurs.
Uses virtual as well as physical resources.
► Is a crucial aspect of a firm’s ERP system.
Used to meet the strategic objectives of
the firm.

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Porter’s Value Chains Figure 2.3 A Value Chain

► Value chain is created to achieve
competitive advantage.
► Consists of the primary and support
activities that contribute to margin.
► Margin is the value of the firm’s products &
services minus their costs, as perceived by
the firm’s customers.
► Increased margin is the objective of the
value chain.
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MIS 205 , CH - 2

Expanding the Scope of the Value

Porter’s Value Activities
Chain
► Primary value activities manage the flow ► Interorganizational system (IOS
IOS)) is the
of physical resources through the firm. linking of the firm’s value chain to those of
other organizations.
► Support value activities include the
► Business partners are the participating
firm’s infrastructure.
firms in the IOS.
► Each value activity includes purchased
► Value system is the linking of the firm’s
inputs, human resources, & technology. value chain with those of its distribution
channel members.

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Competitive Advantage Challenges from Global

Dimensions Competitors
► Strategic advantage has a fundamental ► Multinational corporation (MNC
MNC)) is a
effect in shaping the firm’s operations. firm that operates across products, markets,
► Tactical advantage is when the firm nations, and cultures.
implements a strategy better than its ► It consists of a parent company & its
competitors.
subsidiaries.
► Operational advantage deals with
everyday transactions and processes. ► Information processing is crucial to minimize
uncertainty.

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Challenges in Developing Global

Coordination in a MNC
► Coordinationis key to achieving competitive
advantage globally.
► Advantages of coordination include:

Flexibility in responding.

Ability to respond market by market.

Ability to keep abreast of market needs globally.

Reduce overall costs of operation.
Information Systems
► Global information system (GIS GIS))
describes an information system that
consists of networks that cross national
boundaries.
► Challenges

Politically imposed constraints.

Cultural & communications barriers.

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GIS Challenges (Cont’d) GIS Subsidiary Challenges

► Restrictions on ► Technological problems due to level of

hardware purchases and imports technology in subsidiary countries.

Data processing
Telecommunications speed and quality.

Data communications
Software copyrights and licenses.
► Transborder data flow (TDF) is the ► Lack of support from subsidiary managers.
movement of machine-
machine-readable data across
national boundaries.

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Knowledge Management Dimensions of Information

► Information resources consist of hardware, ► Relevancy – pertains to the problem at hand
hand..
software, information specialists, users, ► Accuracy – strive for 100
100%%.
facilities, databases, and information. ► Timeliness – should be available for decision
making before a crisis situations develop or
► Knowledge management (KM) KM) is
opportunities are lost
lost..
acquiring data, processing data into
► Completeness – the correct amount of aggregation
information, using & communicating and supports all areas of the decision being made.
made.
information in the most effective way, and

Information overload is having too much
discarding information at the proper time. information..
information
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Changing Nature of Knowledge Strategic Planning for

Management
► Legacy information systems are earlier
systems software and hardware that are
incompatible or partially incompatible with
current information technology.
technology.

Produce primarily historical information.

Data may not be available in digital format.
► Image management
Information Resources (SPIR)
► Chief Information Officer (CIO)
► Chief Technology Officer (CTO)
► Strategic Planning

Enterprise – executive committee

Business areas – resources for human,
information, financial, marketing,
manufacturing.

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The SPIR Approach Figure 2.7 SPIR

► Concurrent development of strategic plans for
information services & the firm so that the firm’s
plan reflects the support to be provided by
information services.
services.
► The IS plan reflects future demands for systems
support..
support

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Core Content of a SPIR

► The objectives to be achieved by each
category of systems during the time period
period..
► The infomation resources necessary to meet
the objectives
objectives..
► Self
Self--contained report (See example
Figure 2.8 in textbook).
textbook).

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