Welcome to BA530

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Welcome to BA530

• John A. Hengeveld
• Karyn Lazarus

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Agenda for Today

• Syllabus 2
• Introduction and Logistics
• A Firm in Competition
• Porter Value Chain
• Dimensions of Competition
• Information Flow in a Firm

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Introduction and Logistics

• Student Introductions
• Class Syllabus Schedule Review
• Case Writeup and Presentation Criteria
• Teams
• Any questions??

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Syllabus Overview pt 1

• This course will be a unique and challenging mix
  of
• introduction to strategy
• introduction to information management systems
• introduction to successful learning in a business
  school environment.

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The Strategy Triangle
Business Strategy
Goal of this class, Introduce studentsTo these
two topics
OrganizationStrategy
InformationStrategy
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Learning Objectives 1

• Understanda firms competitive advantage and the
  generic strategies for achieving competitive
  advantage in todays high paced business world.
• Define and apply concepts of core competency,
  competitive fit, environmental analysis and
  sources of competitive advantage.
• Develop a basic understanding of the concept of
  sustained competitive advantage and the role it
  plays in generating and determining a firms
  strategic choices.

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Learning Objectives

• To understand the essential relationships between
  information, business processes and information
  technology in the work systems of a firm.
• To understand implications of information
  management and competitive strategy and how the
  firms information management options are shaped
  by larger economic and institutional contexts.
• To acquire a basic familiarity with the core
  components in information systems and how they
  support the information needs of the firm.
• Establish norms of working in a team environment,
  and exercise team skills through collaboration on
  case analysis, material review and presentations.

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Case Analysis Method

• A note on Case Learning

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Written Grading standard

• Organization of report 15
• Writing correctness 10
• Goes Beyond the Obvious 10 depth
• Recommendation
• Aptness 20
• Persuasion 15
• Analysis
• Business Situation Analysis 10
• Identification/Justification Criteria for
  decision 10
• Analysis of Alternatives and Rationale for
  recommendation 10

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Case Presentation Criteria

• Clearly demonstrate an understanding of the
  issues of the case and the business situation
  facing the key figures 30
• Make a clear prescription or recommendation which
  addresses the real problems. 30
• Defend your position against questions 30
• Style (professional quality, well presented,
  keeps the class awake) 10

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Competing in a Global EnvironmentInformation,
Management and Systems Segment
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A firm and competition

• We need to gain some alignment on some key
  concepts.
• What is a firm and why does it exist?
• What is a firm competing for?
• Why does it compete?
• What are industries, types of competition.

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What is Profit?
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What is strategy??
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Common Elements of Successful Strategy
Successful Strategy
Effective Implementation
SimpleConsistent Long Term Objectives
ProfoundUnderstandingof the CompetitiveEnvironm
ent
ObjectiveAppraisal of Resources
Grant Figure 1.1
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Grants Definition

• The task of business strategy is to determine
• HOW the firm will deploy its resources within its
  environment to satisfy its long term goals and
• HOW to organization itself to implement that
  strategy.

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Graphically
Industry Environment
The Firm
CompetitorsCustomersSuppliers
Goals andValuesResourcesCapabilitiesStructur
e Systems
Strategy
Grant Figure 1.2
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Strategic Analysis

• The formulation of strategy begins with
• Analysis of the industry and its operating
  environment and dynamics
• Analysis of the firm and is capabilities to
  deploy against the key success factors of an
  industry

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The Porter Value Chain
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Industry Analysis

• Analysis of Industry Structure
• Forecasting Industry Profitability

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Industry Structure
PerfectCompetition
Oligopoly
Duopoly
Monopoly
Many Firms
Few
2 Firms
One Firm
NoBarriers
SignificantBarriers
HighBarriers
HomogeneousProduct
Potential for Product Differentiation
PerfectInformation Flow
Imperfect Availability of Information
Grant Figure 3.2
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Porters 5-forces analysisDeterminants of
industry attractiveness
Threat ofNew Entrants
Rivalry among Existing Competitors
BargainingPower of Suppliers
CustomerBuying Power
Threat ofSubstitutes
2 examples
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Competing in the Age of Information

• Assess information intensity of its products and
  businesses
• Determine the role of information technology in
  industry structure (5 forces analysis)
• Identify and rank ways in which information
  technology might create competitive advantage
  (hint value chain)
• Investigate how information technology might
  spawn new business
• Develop a plan for taking advantage of
  information technology

From Porter Article
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Types of Resources

• Tangible
• Financial
• Physical
• Intangible
• Technology
• Reputation
• Culture
• Human
• Specialized Skills and Knowledge
• Communication and Interactive abilities
• Motivation

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Profit Potential of Resources
The ProfitEarning Potentialof a Resourceor
Capability
From Grant Contemporary Strategy Analysis,
Blackwell, 1998
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Information Systems

• What is data, information, knowledge?
• What are systems?
• How does information get used in a firm?
• How can information be used to generate
  competitive advantage

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DATA VS. INFORMATION Websters Collegiate
Dictionary Data. "... factual information...
used as a basis for reasoning, discussion, or
calculation." Information. "2c
facts, data." "1 the communication or
reception of knowledge or intelligence."
"2a knowledge obtained from investigation,
study, or instruction." Alters textbook
Data. facts, images, or sounds that may or
may not be pertinent or useful for a particular
task." Information. data whose form and
content are appropriate for a particular use."
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(Data vs. information, continued) Data is a kind
of proto-information (or information potential)
that hasnt (yet) made sense to someone and that
hasnt (yet) made a difference.
Okay what about knowledge?
Websters Collegiate Dictionary Information.
"2c facts, data." "1 the
communication or reception of knowledge or
intelligence." "2a knowledge obtained
from investigation, study, or instruction."
Information is created from streams of data
through the application of knowledge.
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SIMPLE MODEL OF AN OPEN SYSTEM
COMMUNICATION
ENVIRONMENT
INFORMATION PROCESSOR AGENT OF CONTROL
TRANS- FORMATION PROCESS
INPUTS
OUTPUTS
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SYSTEM A system is a set of interrelated
COMPONENTS that WORK TOGETHER to achieve some
predetermined OBJECTIVES by drawing on RESOURCES
available from the system's ENVIRONMENT and
producing OUTPUTS that satisfy the objectives in
some way. COMPONENTS people, objects,
subsystems i.e., its differentiated WORK
TOGETHER interdependencies and integration
which implies coordination and control
(management) OBJECTIVES the goals and purposes
of the system they provide the
basis for evaluating system performance
RESOURCES the inputs to the
system ENVIRONMENT defines constraints,
including resource limits and
demand for the output OUTPUTS what the
system produces
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SYSTEM A system is a set of interrelated
COMPONENTS that WORK TOGETHER to achieve some
predetermined OBJECTIVES by drawing on RESOURCES
available from the system's ENVIRONMENT and
producing OUTPUTS that satisfy the objectives in
some way. COMPONENTS people, objects,
subsystems i.e., its differentiated WORK
TOGETHER interdependencies and integration
which implies coordination and control
(management) OBJECTIVES the goals and purposes
of the system they provide the
basis for evaluating system performance
RESOURCES the inputs to the
system ENVIRONMENT defines constraints,
including resource limits and
demand for the output OUTPUTS what the
system produces
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DIFFERENTIATION The establishment and
maintenance of distinctive parts within the
business firm that are specialized for
accomplishing certain kinds of tasks and for
performing certain kinds of functions
effectively and efficiently.
functional
hierarchical
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TASKS IN THE FUNCTIONAL AREAS (in
brief) Manufacturing production o inbound
logistics, production, outbound logistics o
production planning, facilities development,
product engineering, operations scheduling,
materials acquisition, inventories,
manufacture and assembly, order processing,
shipping, ... Finance accounting o financial
assets management, firm capitalization o
financial records management Sales marketing o
product, pricing, promotion, placement
(distribution) o product development, market
research, forecasting, competitor analysis,
distribution networks, differentiation and
promotion, ... Human resources o recruitment,
retention, development o labor needs,
performance appraisal, training, compensation,
legal compliance, ...
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Senior management Strategic planning o
long-term decisions o environmental scanning,
forecasting o capital budgeting o product and
market directions o . . . Middle management
Tactical decision making o short-range
planning o planning for daily operations o
operational monitoring and response o . .
. Operational management Operational control o
standardized procedures o routine work o
clerical tasks o . . .
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INTEGRATION Getting the differentiated elements
of the business firm working together as a whole
so that firm-wide goals can be achieved and
integration depends on coordinating flows of
information.
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Functional Integration
Product
SALES MARKETING SUBSYSTEM
CUSTOMERS
Product
Materials
PRODUCTION SUBSYSTEM
SUPPLIERS
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Money
Money
FINANCE ACCOUNTING SUBSYSTEM
CUSTOMERS OTHER FINANCIAL SOURCES
Functional Integration
Information
Information
Product
SALES MARKETING SUBSYSTEM
CUSTOMERS
CUSTOMERS
Product
Information
Materials
PRODUCTION SUBSYSTEM
SUPPLIERS
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Strategic objectives
Hierarchical Integration
Senior mgmt level
Information
Transformation
Decisions
Tactical objectives
Middle mgmt level
Decisions
Information
Transformation
Information
Decisions
Operational objectives
Operational mgmt level
Decisions
Information
Transformation
Information
Decisions
Production layer/Transaction processing systems
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Summary What information does It supports the
diverse work activities in the differentiated
components of the business firm. It gets the
differentiated components working together as a
whole so that firm-wide goals can be achieved o
integrating production and control o integrating
differentiated functions o integrating
managerial levels
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Setup of the HE Butt case

• HE Butt was 3rd largest grocery retailer in the
  US in 1992 (3.2B)
• Mass merchandisers entered the market and
  represented a serious threat.. Why?
• Implement ECR system which moved buying logistics
  to suppliers!
• Radically increased inventory turns
• Eliminated death by price promotion
• Levered improvements in scanner technology to
  automate inventory management

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Simplified Grocery Value Chain
Manufacturers
Distributors
Stores
Warehouse
Goods
Goods
Factory
Storage
RawMaterials
Customers
Shelves
Info
Info
Warehouse


HE Butt Grocery A Leader in ECR Impl (Abridged)
HBSP
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HE Butt Discussion Questions

• (note.. These things need to be in your writeup,
  but they are only part of what you need to do..)
• What is going on in the industry and what are the
  dynamics of competition? (ie provide an industry
  and competitive analysis)
• What is HE Butts generic strategy?
• What do you think of the plan in Exhibit 1?