Because learning changes everything.

CHAPTER ONE

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 SECTION 1.1 – BUSINESS DRIVEN MIS.
• Competing in the Information Age.
• The Challenge of Departmental Companies and the
MIS Solution.

SECTION 1.2 – BUSINESS STRATEGY.

• Identifying Competitive Advantages. CHAPTER ONE
• The Five Forces Model – Evaluating Industry OVERVIEW
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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 1. Describe the information age and the
differences between data, information,
business intelligence, and knowledge.
LEARNING
2. Explain systems thinking and how OUTCOMES 1
management information systems enable
business communications.

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 COMPETING IN THE INFORMATION AGE 1
Did you know . . .

• Avatar, the movie, took over 4 years to

make and cost $450 million.

• Lady Gaga’s real name is Joanne Angelina

Germanotta.

• It costs $3.7 million for a 30-second

advertising time slot during the Super
Bowl.

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 COMPETING IN THE INFORMATION AGE 2
• Fact – The confirmation or
validation of an event or object.

• Information age – A time infinite

quantities of facts are widely
available to anyone who can use a
computer.

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 COMPETING IN THE INFORMATION AGE 3
Examples of the power of business and
technology.

• Amazon – Original business focus was to

sell books.

• Netflix – Original business focus weas to

rent videos via mailboxes.

• Zappos – Original business focus was to

sell shoes.

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 COMPETING IN THE INFORMATION AGE 4
• Internet of Things (IoT) – A world where
interconnected internet-enabled devices or
“things” have the ability to collect and
share data without human intervention.

• Machine-to-Machine (M2M) – Refers to

devices that connect directly to other
devices.

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 COMPETING IN THE INFORMATION AGE 5
The core drivers of the information age.

• Data.

• Information.

• Business intelligence.

• Knowledge.

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 DATA 1
Data – Raw facts that describe the characteristics of an
event or object.

Big data – A collection of large, complex data sets, which

cannot be analyzed using traditional database methods and
tools.

• Variety – Different forms of structured and

unstructured data.
• Veracity – The uncertainty of data, including biases,
noise, and abnormalities
• Volume – The scale of data.
• Velocity – The analysis of streaming data as it travels
around the internet.

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 DATA 2
Structured data – Has a defined length, type, and
format and includes numbers, dates, or strings such
as Customer Address format.

• Machine-generated data – Created by a

machine without human intervention.

• Human-generated data – Data that humans, in

interaction with computers, generate.

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 DATA 3
Unstructured data – Not defined, does not follow a
specified format, and is typically free-form text such as
emails, Twitter tweets, and text messages does not
follow a specified format.

• Machine-generated unstructured data – Such as

satellite images, scientific atmosphere data, and
radar data.

• Human-generated unstructured data – Such as

text messages, social media data, and emails.

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 DATA 4

STRUCTURED DATA UNSTRUCTURED DATA

Sensor data Satellite images
Weblog data Photographic data
Financial data Video data
Click-stream data Social media data
Point of sale data Text message
Accounting data Voice mail data

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 DATA 5
• A fundamental role of all business managers is to be able to take the data and analyze it to find
information to make great business decisions.
Order Sales
Date Customer Representative Product Qty Unit Price Total Sales Unit Cost Total Cost Profit
4-Jan Walmart PJ Helgoth Doritos 41 $24 $ 984 $18 $738 $246
4-Jan Walmart Roberta Cross Ruffles 90 $15 $1,350 $10 $900 $450
5-Jan Safeway Craig Schultz Ruffles 27 $15 $ 405 $10 $270 $135
6-Jan Walmart Roberta Cross Ruffles 67 $15 $1,005 $10 $670 $335
7-Jan 7-Eleven Craig Schultz Pringles 79 $12 $ 948 $ 6 $474 $474
7-Jan Walmart Roberta Cross Ruffles 52 $15 $ 780 $10 $520 $260
8-Jan Kroger Craig Schultz Ruffles 39 $15 $ 585 $10 $390 $195
9-Jan Walmart Craig Schultz Ruffles 66 $15 $ 990 $10 $660 $330
10-Jan Target Craig Schultz Ruffles 40 $15 $ 600 $10 $400 $200
11-Jan Walmart Craig Schultz Ruffles 71 $15 $1,065 $10 $710 $355

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 INFORMATION 1

• Information – Data converted into a Tony’s Business Information Name Total Profit
meaningful and useful context. Who is Tony’s best customer by total sales? Walmart $ 560,789

• Variable – A data characteristic that Who is Tony’s least-valuable customer by total sales? Walgreens $ 45,673
stands for a value that changes or Who is Tony’s best customer by profit? 7-Eleven $ 324,550
varies over time.
Who is Tony’s least-valuable customer by profit? King Soopers $ 23,908

What is Tony’s best-selling product by total sales? Ruffles $ 232,500

What is Tony’s weakest-selling product by total sales? Pringles $ 54,890

What is Tony’s best-selling product by profit? Tostitos $ 13,050

What is Tony’s weakest-selling product by profit? Pringles $ 23,000

Who is Tony’s best sales representative by profit? R. Cross $1,230,980

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 INFORMATION 2
Report – A document containing data organized in a
table, matrix, or graphical format allowing users to
easily comprehend and understand information.

• Dynamic report – Changes automatically

during creation.

• Static report – Created once based on data that

does not change.

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 BUSINESS INTELLIGENCE 1
• 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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 BUSINESS INTELLIGENCE 2
• Data analyst – Collects, queries, and consumers
organizational data to uncover patterns and provide
insights for strategic business decision making.

• Analytics – The science of fact-based decision

making.

• Business analytics – The scientific process of

transforming data into insight for making better
decisions.

• Data scientist – Extracts knowledge from data by

performing statistical analysis, data mining, and
advanced analytics on big data to identify trends,
market changes, and other relevant information.

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 BUSINESS INTELLIGENCE 3
• Three Key Skills for
a Data Analyst.

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 BUSINESS INTELLIGENCE 4
• Descriptive analytics – Describes part performance and
history.

• Diagnostic analytics – Examines data or content to answer

the questions, “Why did it happen?”

• Predictive analytics – Extracts information from data and

uses it to predict future trends and identify behavioral
patterns.

• Prescriptive analytics – Creates models including the best

decision to make or course of action to take.

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 BUSINESS
INTELLIGENCE 5

• Four Categories
of Analytics.

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 KNOWLEDGE 1
• Knowledge – Skills, experience, and expertise
coupled with information and intelligence that
creates a person’s intellectual resources.

• Knowledge assets – The human, structural, and

recorded resources available to the organization.

• Knowledge facilitators – Help harness the wealth

of knowledge in the organization.

• Knowledge worker – Individual valued for their

ability to interpret and analyze information.

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 KNOWLEDGE 2

• The Transformation
From Data to
Knowledge.

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 SYSTEMS THINKING AND MANAGEMENT
INFORMATION SYSTEMS
• Common departments working
independently.

• Data silo – Occurs when one business

unit is unable to freely communicate
with other business units, making it
difficult or impossible for
organizations to work cross-
functionally.

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 THE MIS SOLUTION
• Common departments working
interdependently.

• Data democratization – The ability for data to

be collected, analyzed, and accessible to all
users.

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 SYSTEMS THINKING 1
Goods – Material items or products that Services – Tasks performed by people that
customers will buy to satisfy a want or need. customers will buy to satisfy a want or need.

• Cars. • Teaching.

• Groceries. • Waiting Tables.

• Clothing. • Cutting Hair.

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 SYSTEMS THINKING 2
• Production – The process
where a business takes raw
materials and processes them or
converts them into a finished
product for its goods or services.

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 SYSTEMS THINKING 3
• 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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 SYSTEMS THINKING 4
• 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
1

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 MIS DEPARTMENT: ROLES AND RESPONSIBILITIES
2

Chief information officer (CIO) – information and

ensures the strategic alignment of MIS with
business goals and objectives.

Chief data officer (CDO) – Responsible for

determining the types of information the enterprise
will capture, retain, analyze, and share.

Chief technology officer (CTO) – Responsible for

ensuring the throughput, speed, accuracy,
availability, and reliability of information.

• Chief security officer (CSO).

• Chief privacy officer (CPO).
• Chief knowledge officer (CKO).

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 SECTION 1.2: BUSINESS
STRATEGY

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 3. Explain why competitive advantages are temporary.

4. Identify the four key areas of a SWOT analysis.

5. Describe Porter’s Five Forces Model and explain each

of the five forces. LEARNING
6. Compare Porter’s three generic strategies. OUTCOMES 2
7. Demonstrate how a company can add value by using
Porter’s value chain analysis.

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 IDENTIFYING COMPETITIVE ADVANTAGES 1
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 2
• Stakeholder’s
Interests.

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 IDENTIFYING COMPETITIVE ADVANTAGES 3
• 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 4

• Business Tools for Analyzing

Business Strategies.

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 SWOT ANALYSIS
• A SWOT analysis evaluates
an organization’s Strengths,
Weaknesses, Opportunities,
and Threats to identify
significant influences that
work for or against business
strategies.

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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 1
• Porter’s Three
Generic Strategies.

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 THE THREE GENERIC STRATEGIES CHOOSING
A BUSINESS FOCUS 2
• Porter’s Three
Generic Strategies.

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 VALUE CHAIN ANALYSIS – EXECUTING
BUSINESS STRATEGIES 1
• 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 2
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 3
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 4
• Porter’s Value
Chain.

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 VALUE CHAIN ANALYSIS – EXECUTING
BUSINESS STRATEGIES 5
• Value Chain and
Porter’s Five
Forces Model.

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