MANAGEMENT INFORMATION SYSTEMS 8/E
Raymond McLeod, Jr. and George Schell

Chapter 2
Using Information Technology
for Compe...
Importance of Environment
Very reason for a firm’s existence
Firm takes resources from environment,
transforms them, and r...
The Firm Is Connected to Its
Environment by Resource Flows
Physical and conceptual
Some flows are major
Some should not oc...
A Value Chain
Firm Infrastructure
Ma

Human resource management

n
rgi

Support
Activities

Technology development

Inboun...
The Information Resources
Two views of information management
1. Manage data by implementing computerbased database manage...
The Information Resource
Manager -- the CIO
Chief Information Officer (CIO) is not
simply a title, but role
Manager of inf...
Strategic Planning
Long-range planning
– Intends to give firm most favorable position in
its environment
– Specifies strat...
Strategy Set Transformation
Organizational
strategy set

MIS
strategy set

Mission

System
objectives

Objectives
System
c...
SPIR
Strategy set transformation; support the
firm’s objectives
Strategic planning for information resources
(SPIR) develo...
Strategic Plan Framework for
Information Resources
Strategic Plan
for Information
Resources

AIS
Objectives

MIS
Objective...
EUC Risks
Poorly aimed systems
Poorly designed/ documented systems
Inefficient use of information resources
Loss of data i...
IRM - Required Elements
A recognition that competitive advantage
can be achieved by means of superior
information resource...
The IRM Model

The environment of the firm
ENVIRONMENTAL INFLUENCES

The firm’s executives
Other executives

CIO
Internal ...
IRM Model: Firm’s Executives
Includes CIO
Guides firm toward objectives
Key activity is strategic planning

2-27

IRM Mode...
IRM Model: Information
Resources
Strategic plan for information resources
details acquisition and management
Information r...
Summary
Environment of a firm consists of eight
elements
Firms attempt to achieve competitive
advantage
– Margin - value o...
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Chap02

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Chap02

  1. 1. MANAGEMENT INFORMATION SYSTEMS 8/E Raymond McLeod, Jr. and George Schell Chapter 2 Using Information Technology for Competitive Advantage 2-1 Copyright 2001, Prentice-Hall, Inc. What is a Firm? Physical System – Closed-loop – Controlled by management – Uses feedback to ensure objectives met – Open because of environmental interaction Managed through use of a conceptual system 2-2
  2. 2. Importance of Environment Very reason for a firm’s existence Firm takes resources from environment, transforms them, and returns goods and services to environment 2-3 The Firm’s Environment Society Financial Community Suppliers Government The Firm Labor unions Global Community Customers Competitors Stockholders or owners 2-4
  3. 3. The Firm Is Connected to Its Environment by Resource Flows Physical and conceptual Some flows are major Some should not occur at all All resources that enter the firm from the environment eventually return to the environment 2-5 Competitive Advantage Computer field perspective – Use of information to gain leverage in marketplace – Relies on more than physical resources Addressed with strategic objectives 2-6
  4. 4. A Value Chain Firm Infrastructure Ma Human resource management n rgi Support Activities Technology development Inbound Operations Outbound Marketing and logistics logistics sales Service Primary Activities Ma rgin Procurement 2-7 Source : Michael E. Porter A Value System Supplier value chains Firm value chain Channel value chains Buyer value chains 2-8 Source : Michael E. Porter
  5. 5. The Information Resources Two views of information management 1. Manage data by implementing computerbased database management systems (DBMS) 2. Manage resources that produce the information 2-9 The Information Resources Software Hardware Information Specialists Database Information Users Facilities 2-10
  6. 6. The Information Resource Manager -- the CIO Chief Information Officer (CIO) is not simply a title, but role Manager of information services Contributes managerial skills – Solves information resources problems – Solves problems in other areas of firm’s operations 2-11 The CIO Attitude Spend time the business and in business training. Learn the business, not just the technology Build partnerships/ties with the rest of the firm Improve basic business processes Communicate in business terms, not IS jargon Provide reliable IS services Be positive, not defensive 2-12
  7. 7. Strategic Planning Long-range planning – Intends to give firm most favorable position in its environment – Specifies strategies for achieving objectives Need for each functional area to create its own strategic plan 2-13 The Functional Areas Should Cooperate in Developing Their Strategic Plans Strategic planning for information resources Strategic planning for marketing resources Strategic planning for financial resources Strategic planning for manufacturing resources Strategic planning for human resources 2-14
  8. 8. Strategy Set Transformation Organizational strategy set MIS strategy set Mission System objectives Objectives System constraints Strategy Other strategic organizational attributes MIS strategic planning process System design strategies 2-15 Strategy Set Transformation: Basic Flaw Business areas do not always have the resources to ensure accomplishment of strategic objectives 2-16
  9. 9. SPIR Strategy set transformation; support the firm’s objectives Strategic planning for information resources (SPIR) develops firm and IS strategic plans concurrently – SPIR content » 1. What is to be achieved » 2. What will be required 2-17 Strategic Planning for Information Resources Influence on Information Resources Business strategy Influence on Business Strategy Information resources and IS strategy 2-18
  10. 10. Strategic Plan Framework for Information Resources Strategic Plan for Information Resources AIS Objectives MIS Objectives DSS Objectives Virtual Office Objectives Knowledgebased systems Objectives Required Information Resources Required Information Resources Required Information Resources Required Information Resources Required Information Resources 2-19 The Strategic Implications of End-User Computing (EUC) Levels of end users in terms of capabilities – menu-level end users – command-level end users – end-user programmers – functional support personnel Benefits of EUC – shifts workload so that end-users and information specialists’ talents are better used – reduces communications gap 2-20
  11. 11. EUC Risks Poorly aimed systems Poorly designed/ documented systems Inefficient use of information resources Loss of data integrity Loss of security Loss of control 2-21 Information Resources Management (IRM) Concept Realization that firm’s information resources go far beyond the information itself Activity pursued by managers at all levels Identifying, acquiring, and managing information resources needed to satisfy information needs 2-22
  12. 12. IRM - Required Elements A recognition that competitive advantage can be achieved by means of superior information resources A recognition that information services is a major functional area A recognition that the CIO is a top-level executive 2-23 IRM-Required Elements (cont.) A consideration of the firm’s information resources when engaging in strategic planning A formal strategic plan for information resources A strategy for stimulating and managing end-user computing 2-24
  13. 13. The IRM Model The environment of the firm ENVIRONMENTAL INFLUENCES The firm’s executives Other executives CIO Internal influences Firm’s strategic plan FUNCTIONAL AREAS Information services Finance Human resources Manufacturing Marketing INFORMATION RESOURCES Central computing resources Disbursed computing resources DATA AND INFORMATION Users engaged in end-user computing Other users 2-25 IRM Model: Firm Environment Provides setting for achieving competitive advantage Executives are aware of need to manage resource flows to meet needs of environmental elements 2-26
  14. 14. IRM Model: Firm’s Executives Includes CIO Guides firm toward objectives Key activity is strategic planning 2-27 IRM Model: Functional Areas Information services is a major functional area Each area develops own strategic plans One functional area strategic plan is for information resources 2-28
  15. 15. IRM Model: Information Resources Strategic plan for information resources details acquisition and management Information resources – Centralized – Dispersed throughout firm 2-29 IRM Model: Users Details data and information flows between resources and users Some users engage in end-user computing 2-30
  16. 16. Summary Environment of a firm consists of eight elements Firms attempt to achieve competitive advantage – Margin - value of products and services over cost – Value chain Information resources – Hardware, software, facilities, database, information specialists, information, and users 2-31 Summary [cont.] Executives perform strategic planning – SPIR All firm’s managers need to engage in IRM 2-32

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