An Automobile Manufacturer


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Case from McNurlin's Information systems management in practice; 8th Edition

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An Automobile Manufacturer

  1. 1. ITS 510 Information Management Case Study: An Automobile Manufacturer
  2. 2. Introduction <ul><li>This case briefly talks about the benefits of the transition of an automobile manufacturer’s auctioning process using IT (namely the Internet) </li></ul><ul><li>Movement from: </li></ul><ul><li>MARKETPLACE to MARKETSPACE </li></ul>
  3. 3. The Value Chain <ul><li>Porter presented the value chain as a competitive advantage in 1985 for the first time </li></ul><ul><li>It became a popular & important strategic planning tool </li></ul><ul><li>Important activities of value chain: </li></ul><ul><li>Inbound logistics, Operations, Outbound logistics, Marketing & Sales, and Services </li></ul><ul><li>Supporting activities include: </li></ul><ul><li>Organizational infrastructure, HRM, Tech development, and Procurement </li></ul>
  4. 4. The Virtual Value Chain <ul><li>This mainly discusses on: </li></ul><ul><li>Marketplace: Physical place </li></ul><ul><li>Marketspace: Virtual place/space (online) </li></ul><ul><li>Q: How can companies create value in marketspace and marketplace simultaneously leveraging off each other? </li></ul><ul><li>They draw on Porter’s value chain in the answer </li></ul>
  5. 5. The Virtual Value Chain (contd.) <ul><li>To compete in marketspace, companies need to use information to create new value for customers </li></ul><ul><li>Creating value in the marketspace also involves a value chain </li></ul><ul><li>This is a virtual value chain because the steps are performed: </li></ul><ul><li>“ with information and through information” </li></ul><ul><li>Value added via 5 ways: gathering, organizing, selecting, synthesizing, & distributing </li></ul><ul><li>The IS organization hence plays a vital role in marketspace </li></ul>
  6. 6. Mirroring Capabilities <ul><li>Seemingly firms follow an evolution in using information to add value </li></ul><ul><li>Firstly: By making operations visible </li></ul><ul><li>Secondly: Putting in place mirroring capabilities </li></ul><ul><li>Thirdly: By creating space-based customer relationships </li></ul><ul><li>This case focuses on the second step </li></ul><ul><li>Companies begin to substitute virtual activities for physical ones </li></ul>
  7. 7. An Automobile Manufacturer <ul><li>Case from report by Roger Woolfe </li></ul><ul><li>This auto manufacturer has dealerships around the US </li></ul><ul><li>The dealerships & headquarters have satellite dishes </li></ul><ul><li>These dishes are used by the manufacturer’s rental car subsidiary to auction off good, clean vehicles (<10,000 miles) to dealers to sell </li></ul>
  8. 8. The Marketspace Auction <ul><li>An auctioneer is able to use 30 minutes to sell 60 vehicles </li></ul><ul><li>As car comes up for bid, the dealers view it on a monitor at their premises </li></ul><ul><li>They can: </li></ul><ul><li>See it from various directions </li></ul><ul><li>Read its ratings (cleanliness & condition) </li></ul><ul><li>Use a mouse to bid against other dealers online </li></ul>
  9. 9. Monitoring the Auction <ul><li>Headquarters staff monitors the progress </li></ul><ul><li>Advise can be made on, e.g., lowering bids to sell off all the cars </li></ul><ul><li>Auctions held 1 or 2 times a month </li></ul>
  10. 10. Satisfaction of dealers <ul><li>Dealers became extremely satisfied with the technology </li></ul><ul><li>It saves their time to travel to auctions </li></ul><ul><li>They get good quality used cars </li></ul><ul><li>Guarantee of manufacturer to return cars in case of disatisfaction </li></ul>
  11. 11. IT Advantages to the Manufacturer <ul><li>No need to bring the cars to the shops/stores (physical places) </li></ul><ul><li>Less transportation costs </li></ul><ul><li>Deliver all information to dealers/buyers </li></ul><ul><li>Possibility of global expansion (no longer confined within the US) </li></ul>
  12. 12. Recommendations <ul><li>Introduction of online catalogs to get information about new cars </li></ul><ul><li>Access to general customers (expansion of business) </li></ul><ul><li>Ordering of goods at any time </li></ul><ul><li>Offering discounts for buyers who buy directly from the manufacturer (eliminating the middle man) </li></ul><ul><li>These points can create a space-based customer relationship </li></ul>