What is Happening?

1. What is Happening? Steve Case resigned as Chairman of AOL Time Warner. Effective in May. Initially heralded as part of the new Internet era, the deal became a failure when AOL’s business badly stumbled. Cultural clashes between the two companies. Stock value has wiped out nearly $200 billion in two years. A victory for Capital Group—largest institutional investor. Case owns 11 million shares of AOL Time Warner

2. Governor Grey Davis Has proposed a $8.3 billion tax increase. Has also proposed $21 billion in spending cuts. The top tax bracket of 11% kicks in if you make a whopping $________. The $36 billion funding gap was caused by a failure to curtail spending when the economy weakened and was further exacerbated by relying on a series of one-time funding shifts and other gimmicks to make the current year spending plan appear balanced on paper.

3. First ISM Club Meeting Tuesday, January 21 at 4:30 to 5:30.

4. Analysis Term Paper Assignments On the course web page.

5. The Plan!? • Start researching material immediately. • Read syllabus regarding the assignment. • Look at the Boeing paper in the textbook plus the • Wal-Mart paper on the course web page. • Use links on web page for your company.

6. Key Factors • Industry definition. • “Big Picture” data regarding the industry. • Business and IT leaders. • Porter Competitive Model analysis. • Business Strategy Model. • Identifying strengths and weaknesses of the company. • Figuring out who runs the business on a day-to-day basis and the relationship with the person running the IS organization. • Concluding what the company changed through the use of Information Systems.

7. Chapter 1 Summary Business and Information Systems Management Challenges By Jamil Daouk

8. The Chapter Includes • Factors to a become a successful business • Three necessary perspectives • Simultaneous revolutions within the business environment • A business driver model • Three possible roles of Information Systems

9. Business Success Factors • Business Leadership • Ability to Fit the Pieces into the Increasingly Bigger Business Picture • Organization Responsiveness and Resilience • Solving Customer Problems Through a Combined Organizational Effort • A Strong Company Culture • Ability and Willingness to Innovate, Change, and Take Risks • Accomplishing These Factors While Maintaining a Balance • Communication Across the Entire Organization

10. Three Perspectives Necessary for Business (and Course) Success Business Success • Business Environment • Enterprise Environment • I/T Environment Figure 1-1

11. SIMULTANEOUS REVOLUTIONS NEW COMPETITORS NEW RULES OF COMPETITION NEW POLITICAL AGENDAS INDUSTRY STRUCTURE CHANGES NEW TECHNOLOGIES THE BUSINESS NEW REGULATORY ENVIRONMENT NEW EMPLOYEES AND NEW VALUES EVER INCREASING CUSTOMER EXPECTATIONS Figure 1-2

12. Business Driver Model Market Technology Employees/ Work Regulation Organization Business Processes Solutions to Business Requirements

13. Use of Information Systems Requires a Systematic Approach Vision Strategy Tactics Business Plan • Competitive Options • Roles, Roles and Relationships • Redefine and/or Define • Telecommunications as the Delivery Vehicle • Success Factor Profile Figure 1-4 Figure 1-4

14. The Possible Roles of Information Systems within a Company • Efficiency • Effectiveness • Competitive Advantage

15. Chapter 1 Conclusions • Value to customer defines the purpose and success of a business. • The customer defines the business. • The role of information systems is to enhance (enable) realizing the purpose of the business. • Running a successful business in today’s global environment involves many challenges.

16. Possible Example Questions 1. Explain why it is necessary to have three perspectives to understand the role and significance of the use of information systems within a specific company. 2. Identify and explain the three possible roles of information systems within a company. Include a three specific company examples for each of the possible roles.

17. Chapter 2 Introduction Business Competitive Environment By Melissa Chan

18. Section 1: Business Environment Business Success • Business Environment • Enterprise Environment • I/T Environment Figure 1-1

19. Objectives of the Chapter • Define Competitiveness • Competition in a Global Environment • Role of Nation relative to Competitiveness

20. Competitiveness • How do you define competitiveness? • Revenue • Profits • Market share • Customer value Competitiveness: Value to Customer

21. Competitive Model TradePolicy DecreasedBudgetDeficit StrongerNationalSecurity HumanResources IncreasedWorld MarketCompetitiveness ImprovedDomesticPerformance Capital More and Better Jobs Technology IncreasedStandardof Living NewCompetition ReducedTrade Deficit

22. Competitive Model Inhibit Impact Impact Input IncreasedWorld MarketCompetitiveness ImprovedDomesticPerformance Input Impact Input Impact Inhibit Impact

23. Diamond of National Advantage Firm Strategy, Structure and Rivalry Chance Factor Conditions Demand Conditions Related and Supporting Industries Government

24. Competitiveness of Nations • Anticipate future competition from which country • Types of companies that will be primary competitors • Primary competitive strategies

25. Conclusions • Understanding the business environment through competition • Position to better understand role of Information Systems

26. Chapter 2 Business Competitive Environment

27. Position Some Important Factors 1. The definition of competitiveness. 2. The key elements of competitive advantage. 3. The role of the nation relative to companies that compete successfully on a global basis. 4. The role of government within a nation. While contemplating the idea that information technology might make a difference.

28. Competitiveness is the Pivotal Business Issue in the 21st Century

29. Business Environment The global market will come to you, if you don’t go to it.

30. An Essential Roadmap Determining how nations, companies and individuals can and must build wealth in a knowledge-based global economy. Understanding how breakthrough technologies in microelectronics, biotechnology, new materials, telecommunications, robotics, and computers have fundamentally changed the game of creating wealth. Recognizing that relatively new industries are growing explosively and existing industries are being transformed.

31. US Status • In the 1990s the US was the run away leading performer in the industrial world. • The US claimed nine of the ten largest companies in the world by 1998 compared to only two in 1990. • Nine of the fifteen most profitable banks are in the US compared to none in 1990. • The wealthiest man in the world is an American. • American billionaires measure in the hundreds. • US stock markets remain relatively high. • Interest rates are at a forty year low. • Inflation has been a minor issue.

32. Some Important Questions • Is the fairly unique US prosperity sustainable? • Is global integration a boon or a threat to this prosperity? • Will the forces that sparked the Asian meltdown provoke an • era of stagnation or worse? • Should global integration be slowed? • What rules should be applied to the creation and protection • of new ideas. (intellectual property rights) • Can nations create a social system in which entrepreneurial • spirit can flourish without also creating income and wealth • inequities that threaten the system? • What skills are needed to succeed in this new economy?

33. Global (International) Trade The US has truly become a global economy. 1950 - Global trade represented 10% of the US economy. 2000 - Global trade was nearly 25% of a much bigger economy.

34. Foreign Direct Investment Since 1985 foreign direct investment in the US has increased five-fold. Five percent of the total labor force works for companies that are wholly or partially foreign owned. Employees of companies that work for companies that export earn more than those that do not. Forty percent of productivity improvements are in exporting companies.

35. What Countries “Own”: • Finland • UK • Germany • France, Spain, UK, Germany • Italy • US • Netherlands • Nokia • Burger King • Chrysler • Airbus • Benetton • Gillette • Shell

36. A Complex Political Environment Three of five American registered voters approve of free trade. Most agree that imports give them a larger selection of goods to choose from and that foreign competition forces US companies to be more competitive. They also feel that imports help lower income families afford a higher standard of living by lowering prices. They have concerns regarding the environment, human rights, jobs, taxes, societal problems and sovereignty.

37. Trade Issue Attitudes Attitudes lie along income, education, age and gender divides. Free trade proponents tend to be those that see themselves benefiting from globalization: men, those that are better educated, richer and live in cities. Those who question globalization include women, the elderly, those who are less well educated or poorer and those that live in rural areas.

38. How Trade Works General Agreement on Tariffs and Trade (GATT) A loose agreement that had a restricted scope and limited powers based on an agreement that was originally signed in the late 1940s. World Trade Organization (WTO) Created in 1995, the WTO has the job of administering trade agreements, resolving trade disputes and conducting future trade negotiations.

39. WTO WTO members must abide by the group’s rulings. The most important of which is to give every member the same set of low tariffs and other favorable trade rules. The most significant recent development was the admission of China to the WTO in 2000.

40. Michael Porter Contributions • 1985 - Presidential Commission and • Competitiveness Definition • 1987 - Competitive Model and Value Chain • 1990 - Competitiveness of Nations Study • Present - Institute for Strategy and Competitiveness, • Harvard Business School

41. Presidential Commission Letter to President Reagan Mr. President, it has been a great honor to serve you and the Nation. The competitive challenge calls for the leadership only you can provide. We thank you for your vision, interest and initiatives in making competitiveness a priority on our national agenda. John A. Young Chairman President’s Commission on Industrial Competitiveness

42. Competitiveness Definition The degree to which a nation can, under free and fair market conditions, produce goods and services that will meet the test of international markets while simultaneously maintaining or expanding the real income of its citizens. Source: President’s Commission on Industrial Competitiveness

43. Competitiveness: A Link to National Goals Decreased Budget Deficit Stronger National Security Human Resources Trade Policy Improved Domestic Performance Increased World Market Competitiveness More and Better Jobs Capital Reduced Trade Deficit Increased Standard of Living New Competition Technology Figure 2-1

44. Presidential Commission Recommendations: 1. Create, apply and protect technology. 2. Spur new industries and revive old ones. 3. Pursue productivity gains through technology. 4. Reduce the cost of capital to American industry. Increase the supply of capital available for investment, reduce its cost and improve its ability to flow freely to its most productive uses.

45. Who is going to make it happen? • Government cannot legislate competitive success. • Government should highlight the importance of competitiveness. • Everyone must recognize the competitive challenge and its significance.

46. How Does a Company Compete? If the bottom line to a business is profit, then the top line is value to customer.

47. The Best Optional Strategy? To produce quality products and services through effective leadership of skilled employees using advanced methods through the innovative use of technology.

48. A Good Competitor: • Knows its products and services. • Knows its customers. • Knows its competitors.

49. Competitiveness of Nations The striking internationalization of competition in the decades after World War II has been accompanied by major shifts in the economic fortunes of nations and their firms. 1. How did this happen? 2. What can one learn from this? 3. What can companies and countries do about it?

50. Competitiveness of Nations Why (how) are companies in a particular nation able to gain a dominant competitive position in a specific industry against the world’s best competitors?