Case Study #1 – Information Technology Helps LCBO Transform Itself Information Technology has helped improve LCBO to become a sophisticated Canadian retailer by helping the organization become more organized (if a bottle is sold, it is deducted from the inventory), it has helped them attract the interest of more customers by introducing Vintages.com where customers could choose from a variety of unique wines and have it delivered to their nearby LCBO store.
LCBO.com helped make the company more interactive with their customers by giving them cocktail recipes etc… LCBO’s app allows customers to be able to search inventory and closest store on the go. Information Systems (IS) – Computer based tools that people use to work with information and that support the information and information-processing needs of an organization. Information systems have helped benefit customer service, finance, sales and marketing, etc…
A type of information systems is: Transaction Processing Systems (TPS) which is a system that performs or records daily routine transactions such as sales order entry, payroll, employee record keeping, and shipping. Information Technology (IT) – is the acquisition, processing, storage, and dissemination of vocal, pictorial, textual, and numerical information by a microelectronics-based combination of computing and telecommunications.
Management Information Systems – it is a business function just like marketing and finance. This function plans for, develops, implements, and maintains IT hardware, software, and applications that people use to support the goals of an organization. It monitors and controls the business and predicts future performance. Information and business success depend on three things: people, processes, information systems. If one fails, they all fail. Information Cultures Found In Organizations
Information-Functional Culture: Employees use information as a means of exercising influence/power over others. For example, a sales manager refuses to share information with marketing which means marketing would need the sales manager’s input every time a new sales strategy is developed. Information-Sharing Culture: Employees across departments trust each other to use information, especially about problems, to improve performance.
Information-Inquiring Culture: Employees across departments search for information to better understand the future and align themselves with current trends and new directions. Information-Discovery Culture: Employees across departments are open to new insights about crisis and radical changes and seek ways to create competitive advantages. Roles And Responsibilities In Information Systems
Chief Information Officer (CIO) – an executive-level position that involves high-lever strategic planning and management of information systems pertaining to the creation, storage, and us of information by a business. Chief Technology Officer (CTO) – responsible for ensuring the throughput, speed, accuracy, availability, and reliability of an organization’s information technology. Chief Security Officer (CSO) – responsible for ensuring the security of information systems, and developing strategies and technical safeguards against attacks from hackers and viruses.
Chief Privacy Officer (CPO) – responsible for ensuring the ethical and legal use of information within an organization. Chief Knowledge Officer (CKO) – responsible for collecting, maintaining, and distributing an organization’s knowledge. The CKO designs processes and information systems that make it easy for people to reuse knowledge. These systems create repositories of organizational documents, methodologies, tools, and practices, and they establish methods for filtering information. 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: when an organization can significantly impact its market share by being first to market with a competitive advantage. Ex. FedEx was the first to create a self-service software, then other companies started doing so after. Now, customer self-service through the internet is standard in the parcel delivery business. Environmental Scanning: the acquisition and analysis of events and trends in the environment external to an organization. Ex. Frito-Lay sends its representatives to grocery stores to record information about competing products to help them gain knowledge on how to increase the sale of their products.
How To Develop A Competitive Advantage:
MICHAEL PORTER’S FIVE FORCES MODEL
Buyer Power: it is high when buyers have many choices of whom to buy from and low when their choices are few. Organizations prefer to reduce the buyer power of customers by making it more attractive for customers to buy from them over the competitor. An IS-based example is loyalty programs where customers are rewarded with the amount of business they do with a particular organization. Supplier Power: is high when buyers have few choices to buy from and low when they have many choices. When it comes to customers, organizations act as suppliers and want supplier power to be high.
When it comes to relationships with suppliers, organizations act as buyers and want the supplier power to be low. When organizations act as buyers, an IS-enabled business-to-business (online marketplace) is used where buyers take place in a private exchange and they post their needs. Suppliers then offer their services in a reverse auction where their bids go lower so that the buyer is more interested in their goods.
Threat of Substitute Products or Services: it is high when there are many alternatives to a product or service and low when there are few alternatives from which to choose. Organizations prefer to be in markets with fewer substitutions so that customers would go for their product.
When there is competition, organizations create a competitive advantage through switching costs which makes it harder for a customer to switch to a competing organization. An example is offering better prices or creating a cost that’ll ensure customers won’t leave the organization. For example cell phone company contracts – if you leave before the contract is over, you pay a “cost”.
Threat of New Entrants: is high when it is easy for new competitors to enter a market and low when there are significant entry barriers to entering a market. An entry barrier is a product or service feature that customers have come to expect from organizations in a particular industry that must be introduced by competing organizations in order to survive.
Ex – new banks must offer a variety of IS related services such as online banking. Rivalry Among Existing Competitors: is high when competitions is fierce in a market and low when there is less competition in a market. The Three Generic Strategies – Creating a business focus
1) Broad cost leadership
2) Broad differentiation
3) Focused strategy
http://www.mindtools.com/pages/article/newSTR_82.htm (explains the three generic strategies) The value chain – views an organization as a series of processes, each of which adds value to the product or service for each customer. CHAPTER 2
Common Company Structure
Operational – employees develop, control, and maintain core business activities required to run day-today operations. Operational decisions are structured decisions which arise in situations where established processes offer potential solutions. These decisions are made frequently and affect short-term business strategies. Ex. Recording and creating employee staffing and weekly production schedules. Structured decisions are situations where established processes offer potential solutions. Managerial – Employees evaluate company operations
Strategic – managers develop overall strategies, goals, and objectives. Metrics – Measurements that evaluate result to determine whether a project is meeting its goals Common types – KPIs (Key performance Indicators), Efficiency and Effectiveness Benchmark – Baseline values the system seeks to attain Benchmarking – A process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system performance.