Businesses Continually Seek To Establish Competitive Advantage in The Marketplace. There Are Eight Principles

Information Systems for Competitive Advantage
Businesses continually seek to establish

competitive advantage in the marketplace.
There are eight principles:
The first three principles concern products.
The second three principles concern the creation
of barriers.
The last two principles concern establishing
alliances and reducing costs.
2007 Prentice Hall,
Figure 2-1 Principles of Competitive Advantage
2007 Prentice Hall,
Information System that Creates a Competitive

Advantage
ABC invested heavily in information

technology.
ABC led the shipping industry in the
application of information systems for
competitive advantage.
2007 Prentice Hall,
How this System Creates a ABC, Inc Competitive

Advantage
ABC information system provides the

following:
Enhances an existing product
Differentiates the ABC package delivery product
from competitors
Locks customers into the ABC system
Raises the barrier to market entry
Reduces costs
2007 Prentice Hall,
Information Systems for Problem Solving
Information systems can be used to solve

problems.
Problem definition
A problem is a perceived difference between what
is and what is not.
A problem is a perception.
A good problem definition defines the differences
between what is and what ought to be by
describing both the current and desired situations.
2007 Prentice Hall,
Information Systems for Problem Solving
Problem definition (continued)
Different problem definitions require the

development of different information systems.
All personnel in the organization must have a clear

understanding of which definition of the problem
the information system will address.
2007 Prentice Hall,
A Customer Relationship Management System
A Customer Relationship Management (CRM)

system is an information system that
maintains data about customers and all of
their interactions with the system.
CRM systems vary in their size and
complexity.
2007 Prentice Hall,
Knowledge Management System
A knowledge management system (KMS) is

an information system for storing and
retrieving organizational knowledge.
This knowledge can be in the form of data,
documents, or employee know-how.
KMS goal is to make the organization
knowledge available to
Employees
Vendors
Customers
Investors
Press and who else who needs the knowledge
2007 Prentice Hall,
Figure 2-8 Example Customer Relationship

Management (CRM) System
2007 Prentice Hall,
Figure 2-9 Customer Support Knowledge

Management System
2007 Prentice Hall,
10
A Manufacturing Quality-Control Information System
Many organizations believe that the optimal

way to provide customer service is to eliminate
the need for it.
One way to improve customer service is to
improve manufacturing quality.
The type of system to develop depends on the
way the organization defines the problem.
Before developing the system, the organization
must have a complete, accurate, and agreedupon problem definition.
2007 Prentice Hall,
11
Information Systems for Decision Making
Developing an information system is to

facilitate decision making.
Decision making in organizations is varied
and complex.
2007 Prentice Hall,
12
Decision Level
Decisions occur at three levels in

organizations.
Operational decisions concern day-to-day
activities.
Information systems that support operational

decision making are called transaction processing
systems (TPS).
2007 Prentice Hall,
13
Decision Level (Continued)
Managerial decisions concern the allocation

and utilization of resources.
Information systems that support managerial

decision making are called management
information systems (MIS).
Strategic decision making concern broaderscope organizational issues.
Information systems that support strategic

decision making are called executive information
systems (EIS).
2007 Prentice Hall,
14
Decision-Making Dimensions
Figure 2-10
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15
The Decision Process
Two decision processes (method by which a

decision is to be made) are structured and
unstructured.
Structured decision process is one for which there
is an understood and accepted method for making
the decision.
Unstructured process is one for which there is no
agreed on decision making process.
The terms structured and unstructured refers

to the decision process-not the underlying
subject.
2007 Prentice Hall,
16
Figure 2-11 Relationship of Decision Level and

Decision Type Figure
2007 Prentice Hall,
17
Different Types of Information Systems for

Different Types of Decisions
Automated information systems are those by

which the computer hardware and program
components do most of the work.
Humans start the programs and use the results.
Augmentation information systems are those

in which humans do the bulk of the work.
These systems augment, support, or supplement

the work done by People (email, instant
messaging, video-conferencing, etc) to aid in
decision making.
2007 Prentice Hall,
18
Figure 2-12 Automated vs. Augmentation IS
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Figure 2-13 How Decision Level, Decision Type

and IS Type Are Related
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20
Information Systems and Decision Steps
A way to examine the relationship between

information systems and decision making is
to consider how an information system is
used during the steps of the decision making
process.
There are five steps
Intelligence gathering
Alternative formulation
Choice
Implementation
Review
2007 Prentice Hall,
21
Figure 2-14 Decision-Making Steps
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22
Summary
Organizations develop and use information

systems to gain competitive advantage, to
solve problems, and to assist in decision
making
Figure 2-1 lists eight principles of competitive
advantage.
A problem is a perceived difference between
what is and what ought to be.
2007 Prentice Hall,
23
Summary (Continued)
Decisions can be made at the operational

(TPS), managerial (MIS), and strategic (EIS)
levels.
Decisions vary according to whether a
structured or unstructured process is used to
make them.
Automated information systems are those in
which the computer and program side of the
five components do most of the work.
2007 Prentice Hall,
24
Summary (Continued)
Augmentation information systems are those

in which humans do most of the work.
Another way to consider information systems
and decision making is to consider the steps
of the decision process.
Different types of information systems are
used for different steps of the decision
process as summarized in Figure 2-14.
2007 Prentice Hall,
25
Key Terms and Concepts

Augmentation information
systems
Automated information systems
Customer relationship
management (CRM)
Executive information systems
(EIS)
Knowledge management
systems (KMS)
Management information
systems (MIS)
Managerial decision
Manufacturing information
systems
Operational decision
Principles of competitive
advantage
Problem
Strategic decision
Structured decision
Switching costs
Transaction processing
systems (TPS)
Unstructured decision
2007 Prentice Hall,
26
Key Terms and Concepts (Continued)

Structured decision
Switching costs
Transaction processing systems
(TPS)
Unstructured decision
2007 Prentice Hall,
27

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Information Systems for Competitive Advantage

Businesses continually seek to establish

2007 Prentice Hall,

Figure 2-1 Principles of Competitive Advantage

2007 Prentice Hall,

Information System that Creates a Competitive

ABC invested heavily in information

2007 Prentice Hall,

How this System Creates a ABC, Inc Competitive

ABC information system provides the

2007 Prentice Hall,

Information Systems for Problem Solving

Information systems can be used to solve

2007 Prentice Hall,

Information Systems for Problem Solving

Problem definition (continued)

Different problem definitions require the

All personnel in the organization must have a clear

2007 Prentice Hall,

A Customer Relationship Management System

A Customer Relationship Management (CRM)

2007 Prentice Hall,

Knowledge Management System

A knowledge management system (KMS) is

2007 Prentice Hall,

Figure 2-8 Example Customer Relationship

2007 Prentice Hall,

Figure 2-9 Customer Support Knowledge

2007 Prentice Hall,

A Manufacturing Quality-Control Information System

Many organizations believe that the optimal

Information Systems for Decision Making

Developing an information system is to

2007 Prentice Hall,

Decisions occur at three levels in

Information systems that support operational

2007 Prentice Hall,

Decision Level (Continued)

Managerial decisions concern the allocation

Information systems that support managerial

Strategic decision making concern broaderscope organizational issues.

Information systems that support strategic

2007 Prentice Hall,

2007 Prentice Hall,

The Decision Process

Two decision processes (method by which a

The terms structured and unstructured refers

Figure 2-11 Relationship of Decision Level and

2007 Prentice Hall,

Different Types of Information Systems for

Automated information systems are those by

Humans start the programs and use the results.

Augmentation information systems are those

These systems augment, support, or supplement

Figure 2-12 Automated vs. Augmentation IS

2007 Prentice Hall,

Figure 2-13 How Decision Level, Decision Type

2007 Prentice Hall,