Chapter 2 Decision Making


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Chapter 2 Decision Making

  1. 1. Chapter 2: Strategic Decision-Making Decision-Making Systems
  2. 2. Closing Case # 1: Say “Charge it” with your cell phone! <ul><li>Wireless operators, cc companies, and retailer’s are working on a technology that allows customers to purchase items using their cell phones…. </li></ul><ul><li>Example : A customer could purchase a can of soda by dialing a number on a soda dispensing machine and have the charge show up on the customer’s cell phone! </li></ul>
  3. 3. Question… <ul><li>Is this technology a threat to traditional telephone companies? </li></ul><ul><li>If so, </li></ul><ul><ul><ul><li>What counter strategies could traditional phone companies adopt to prepare for this technology? </li></ul></ul></ul>
  4. 4. Porter’s 5 Forces Analysis <ul><li>Using this model what are the barriers to entry and switching costs for this new technology? </li></ul>
  5. 5. M-Commerce <ul><li>M-commerce or mobile commerce is defined as “the ability to purchase goods and services through a wireless internet-enabled device.” </li></ul><ul><li>in just a few short years, web-enabled mobile devices will outnumber desktop PCs. </li></ul>
  6. 6. SmartPhones <ul><li>Due to this great market potential, mobile device manufacturers such as Nokia, Ericsson, and Motorola are in works with telecommunication carriers to develop what are called smartphones. </li></ul><ul><li>Smart phones will support the mobile worker with fax, email, and phone capabilities all through this one device truly bringing the office to the worker regardless of time and space constraints. </li></ul>
  7. 7. Decision-Making <ul><li>Decision-making and problem solving abilities are now the most sought after traits in up and coming executives </li></ul><ul><li>Decision-making & problem solving in today’s electronic world encompass large-scale, opportunity-orientated, strategically focused solutions </li></ul>
  8. 8. Decision-Making <ul><li>Transactional Information : encompasses all of the information contained within a single business process or unit of work, & its primary purpose is to support performing of daily operational tasks </li></ul><ul><li>Analytical Information: encompasses all information, and its primary purpose is to support the performing of managerial analysis tasks. </li></ul>
  9. 9. Enterprise View of Information & IT Executives Managers Analysts Online Analytical Processing: the manipulation of information to create business intelligence Managers deal with courser information . Make decisions based on meaningful aggregation of information <ul><li>Online Transaction Processing: the capturing of transaction and event information to; </li></ul><ul><ul><li>Process info according to defined business rules </li></ul></ul><ul><ul><li>Store information </li></ul></ul><ul><ul><li>Update existing info to reflect new information. (TPS) systems </li></ul></ul>
  10. 10. Decision Support Systems <ul><li>DSS: </li></ul><ul><li>models information to support managers & business professionals during the decision-making process </li></ul><ul><li>3 Quantitative Models of DSS </li></ul><ul><li>Sensitivity Analysis </li></ul><ul><li>What-If Analysis </li></ul><ul><li>Goal-Seeking Analysis </li></ul>
  11. 11. Example of DDS Demonstrate Sensitivity Analysis: Change Sales Demonstrate What-If Analysis: Change an Assumptions variable Demonstrate Goal-Seek Analysis: Change total profit to a sales goal
  12. 12. Specialized Decision-Support Systems <ul><li>Executive information system </li></ul><ul><li>Digital dashboards </li></ul><ul><ul><li>Artificial Intelligence </li></ul></ul><ul><ul><ul><li>Expert Systems </li></ul></ul></ul><ul><ul><ul><ul><li>Neural Networks </li></ul></ul></ul></ul>
  13. 13. Week 2-Day 2 Decision Support Systems & Business Intelligence Overview
  14. 14. Executive Information Systems (EIS) <ul><li>An EIS is a specialized DSS that supports senior-level executives within the organization. </li></ul><ul><li>An EIS differs from a DSS: EIS typically contain data from external sources as well as internal data sources </li></ul>
  15. 15. Components typical of an EIS
  16. 16. Functions offered by an EIS <ul><li>Consolidation : aggregation of information and features simple rollups to complex grouping of interrelated information </li></ul><ul><li>Drill-down : enables users to view details, details of details of information (viewing monthly, weekly, daily, or even hourly information represents drill down capabilities) </li></ul><ul><li>Slice and Dice : Is the ability to look at information from different perspectives </li></ul>
  17. 17. Digital Dashboards <ul><li>DDs integrate information from multiple components and tailor the information to individual preferences </li></ul><ul><li>Use indicators to help executives quickly identify the status of key information or critical success factors </li></ul><ul><li>DDs whether basic or comprehensive, deliver results quickly </li></ul>
  18. 18. Business Intelligence <ul><li>EIS (like DDs) allow executives to move beyond reporting and use information to directly impact business. </li></ul><ul><li>EIS aggregate data and deliver it in the form of business intelligence </li></ul><ul><li>BI draws as much attention for enterprise level organizations medium & large that they have actual certification for BI Developers! </li></ul><ul><ul><li>MS Information technology Professionals: BI Developer </li></ul></ul>Taking BI to the Next Level
  19. 19. Business Performance Categories <ul><li>Market Pulse : daily sales, market share, & subscriber turnover </li></ul><ul><li>Customer Service : call center wait times, problems solved, on time repair calls </li></ul><ul><li>Cost drivers : examples include a number of repair trucks in field, repair jobs completed per day, and call center activity </li></ul>
  20. 20. Artificial Intelligence (AI) <ul><li>Artificial Intelligence: simulate human intelligence such as the ability to reason and learn. AI systems can learn or understand from experience, make sense of ambiguous or contradictory information, and even use reason to solve problems </li></ul>
  21. 21. AI Systems in Industry <ul><li>AI dramatically increase the speed and consistency of decision making, solve problems with incomplete information, and resolve complicated issues that cannot be solved by conventional computing </li></ul><ul><li>Expert Systems </li></ul><ul><li>Neural Networks </li></ul><ul><li>Genetic algorithms </li></ul><ul><li>Intelligent Agents </li></ul>
  22. 22. Expert Systems <ul><li>human expertise is transferred to the expert system: users access the expert system for specific advise </li></ul><ul><li>Combination from many experts means better performance than any one expert </li></ul>
  23. 23. Neural Networks <ul><li>Neural networks attempt to emulate the way the human brain works </li></ul><ul><li>Works with patterns and image recognition </li></ul><ul><li>Analyze large amounts of data to establish patterns & characteristics where the logic or rules are unknown </li></ul><ul><li>Finance industry uses NN considerably. </li></ul><ul><li>Review loan applications, create patterns or profiles of applications then makes outcome decisions </li></ul>
  24. 24. Intelligent Agents <ul><li>Is a special-purpose knowledge based IS that accomplishes specific tasks on behalf of its users </li></ul><ul><li>For example: a Shopping bot </li></ul><ul><li>Shopping bot is software that will search several retailer websites and provide comparisons of each retailer’s offering including price and availability </li></ul><ul><li>Shopping Bot is really a specialized search engine </li></ul>
  25. 25. Bots have other applications <ul><li>Handle supply chain buying & selling </li></ul>Bot’s are and will continue to populate our homes & businesses!! Top 10 bot sites Unique visitors, December 2001 Bot Shoppers Bot Shoppers 10,771,000 689,000 5,509,000 323,000 MySimon 2,995,000 257,000 948,000 218,000 PriceScan 752,000 216,000
  26. 26. Data Mining <ul><li>The process of analyzing data to extract information not offered by raw data alone </li></ul><ul><li>Data mining systems sift instantly through information to uncover patterns and relationships that would not be found by other systems or groups of people. </li></ul>
  27. 27. How does AI improve Data mining? <ul><li>Data mining software typically includes many form of AI such as neural networks and expert systems </li></ul><ul><li>Data mining tools apply algorithms to information sets to uncover inherent trends & patterns in the information, which analysts use to develop new business strategies </li></ul>
  28. 28. Introduction to Enterprise Systems <ul><li>Supply Chain Management (SCM) </li></ul><ul><li>Customer Relationship Management (CRM) </li></ul><ul><li>Business Process Reengineering (BPR ): the analysis and redesign of workflow within and between enterprises </li></ul><ul><li>Enterprise Resource Planning (ERP): integrates all departments & functions through-out an organization into a single IT system </li></ul>
  29. 29. SCM : involves the management of flows between and among the stages in a supply chain to maximize total supply chain effectiveness & profitability planning for the procurement of materials, assembly of finished products from these materials, and distribution of products to customers.
  30. 30. Distributed Systems <ul><li>Distributed systems : is an application that executes a collection of protocols to coordinate the actions of multiple processes on a network , such that all components cooperate together to perform a single or small set of related tasks. </li></ul><ul><li>a distributed system can be much larger and more powerful given the combined capabilities of the distributed components, than combinations of stand-alone systems. </li></ul>
  31. 31. <ul><li>Decrease power of buyers </li></ul><ul><li>Increase its own supplier power </li></ul><ul><li>Increase switching costs & reduce threat of substitute products </li></ul><ul><li>Increase entry to barriers (reducing threat of new entrants) </li></ul><ul><li>Increase efficiencies </li></ul>Effective SCM Systems Remember Porter’s 5 forces Analysis?
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