What has globalization done
- Internet has drastically reduced costs of operating on global scale
- Increases in foreign trade, outsourcing
- Competition for jobs, markets, resources, ideas
- Growing interdependence of global economies
- Requires new understandings of markets and opportunities
In a fully digital firm:
- Core business processes are accomplished through digital networks
- Key corporate assets are managed digitally
Six strategic business objectives
- Operational excellence
- New products, services, and business models
- Customer and supplier intimacy
- Improved decision making
- Competitive advantage
- Survival – competitive necessity
What is operational excellence
- Improvement in efficiency to attain higher profitability
- Information systems and technologies (The most important tools in achieving greater productivity)
Example of operational excellence
Walmart
– Over $524 billion in sales in 2019, $611 billion in 2023
– Retail Link System
– Links suppliers to stores for superior replenishment system
What is new products, services and business models
- How company produces, delivers, and sells product or service to create wealth
Example of new products, services and business models
- Tim Hortons Credit Card
- Apple disrupts the music industry
– Old business model: records, tapes, CDs
– New business model: iPhone, iTunes
What is customer and supplier intimacy
- Serving customers well leads to customers returning
It raises revenues and profits - Intimacy with suppliers result in lower costs
It allows them to provide vital inputs
Examples of customer and supplier intimacy
- Personalized offers and purchase discounts (PC Optimum at Shoppers Drug Mart and Loblaws)
- Accumulate points, use on future purchases
- JCPenney’s Information System
– Enhances relationship with supplier in Hong Kong
What is improved decision making
- Managers do not have the right information at the right time
Results in:
– Misallocation of resources;
– Poor response times
- Real-time data improves ability to make decisions
What is competitive advantage
- Delivering better performance
- Charging less for superior products
- Responding to customers and suppliers in
real time
Competitive advantage often results from achieving ________
previous business objectives
Example of competitive necessity
- Industry leaders (i.e., Apple, Walmart, UPS)
– They know how to use information systems for this purpose
What is survival
- Information technologies as necessity of business - Competitive Necessity
- Governmental regulations requiring record-keeping
Toxic Substances Control Act
Sarbanes-Oxley Act
Dodd-Frank Act
Examples of survival
- Keeping up with competitors (e.g., industry-level changes)
- Citibank’s introduction of ATMs, now all banks offer ATMs
- Blockbuster did not survive internet video streaming (Netflix)
- Kodak did not survive digital cameras (Apple)
- Nokia, Blackberry did not survive smart phones (Apple)
- Sears did not survive e-Commerce (Amazon)
What is an information system (IS)
- Set of interrelated components
- Collect, process, store, and distribute information
- Support decision making, coordination, and control
What is Information technology (IT)
- The hardware and software that a firm needs to achieve business objectives
- Hardware and software are technical foundation and tools, similar to the material and
tools used to build a house.
What is data
Data are streams of raw facts
What is information
Information is data shaped into meaningful form
What are the dimensions of information systems
Organization, Management, Technology
Organization:
Hierarchy of authority, responsibility; Separation of business functions; Unique business
processes; Unique business culture; Organizational politics
Management:
- Managers set organizational strategy
- Managers must act creatively:
Creation of new products and services
Occasionally re-creating the organization
Technology:
- Hardware/software
- Infrastructure
- Data management
What are the levels in a firm
Senior Management, Middle management, Operational management
