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8/8/2019 Chapter1 - Foundations of is in Business
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What is needed in managing a business or a process?
• Mc Kinsey defines it using a precise model,
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Why Information Systems –competitive
advantage
• When a firm sustains profits that exceed theaverage for its industry, the firm is said topossess a competitive advantage over its rivals.
• A major goal of business strategy is to achieve
a sustainable competitive advantage
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What’s up with this competitive advantage ?
• Two basic types of competitive advantage
▫ Cost advantage
▫ Differentiation advantage
A competitive advantage exists when the firm is able to
deliver the same benefits as competitors but at a lowercost (cost advantage), or deliver benefits that exceed those of competing products (differentiationadvantage)
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Why Competitive Advantage ?
• Competitive advantage enables the firm to create superior value for its customers and superior profits for itself.
Value for customer
Profits
fort
hebusines
s
Low High
High
Low Useless Charity
Notsustainable
Rational
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Why Information Systems – Value Chain
• To analyze the specific activities through which firms cancreate a competitive advantage, it is modelled as a chain
of value-creating activities. The resulting model is knownas the value chain
• Goal of the following activities is to create value that exceeds the cost of providing the product or service, thusgenerating a profit margin.
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Components of Value chain
• –Inbound logistics
▫ receiving, warehousing, and inventory control of input materials.
• –Operations
▫ value-creating activities that transform the inputs into the final product.
• –Outbound logistics
▫ activities required to get the finished product to the customer, including warehousing, order fulfilment, etc.
• –Marketing & Sales:
▫ activities for getting buyers to purchase the product, including channelselection, advertising, pricing, etc.
• –Service
▫ activities that maintain and enhance the product's value includingcustomer support, repair services, etc.
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So, … what is there in an Information
System (IS) ?• Set of interrelated components: collect, manipulate,
disseminate data and information
• Provide feedback to meet an objective (increasing profit,improving customer service)
▫ Examples: Hotel Information System, AirlineReservation System, Railway Reservation System,
ATMs, Banks
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Concepts: Data Versus Information
• Data
▫ raw facts–Alphanumeric, image, audio, and video
• Information▫ Organized collection of facts–
▫ Have value beyond the facts themselves
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Characteristics of Valuable
Information
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Characteristics of Valuable
Information
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What do you see here ??
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The Concept of a System• A system is a set of elements or components that interact
to accomplish goal(s).
• The elements themselves and the relationships amongthem determine how the system works.
• Systems have inputs, processing mechanisms, outputs,
and (optional) feedback
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Concept of a system
Input Output
Process
Feedback
Source
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Modeling a System
• model= an abstraction / approximation used torepresent reality.
• Models enable us to explore and gain an improvedunderstanding of real-world situations.
• Managers and decision makers use models to help them•▫ understand what is happening in their organizations
▫ make better decisions.
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Business Information SystemsMost common types of information systems used in
business organizations:
• Electronic and mobile commerce systems
• Transaction processing systems
• Management information systems
• Decision support systems• Specialized business information systems
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Management Information System (MIS)
• An 'MIS' is a planned system of the collecting,processing, storing and disseminating data in the form of
information needed to carry out the functions of management.
• In a way it is a documented report of the activities those
were planned and executed. According to Philip Kotler" A marketing information system consists of people,
equipment, and procedures to gather, sort, analyze,evaluate, and distribute needed, timely, and accurateinformation to marketing decision makers."
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Business leader’s Three Roles in IT/IS
Success
Select
Build
Buy
Raw materials
Adopt Exploit Finishedgoods
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Thank You
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• What do you think is a dabbawala’s MIS ?
• Describe the relation between MIS and artificialintelligence
Understanding basic MIS
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Understanding MIS• Classify as data or information
▫ News report about the stock prices
▫ Gossip report about whom Paris Hilton is dating currently
▫ The display on your Caller ID
▫ The Sun rises in the East