Management Info Systems - Afkar Ahmed

2MIT4010_ASS1

ASSIGNMENT OF MANAGEMENT INFORMATION SYSTEMS

NAME

AFKAR AHMED

STUDENT NUMBER

28001547

LECTURER NAME

Mr. Cedric Assambo

COURSE

Management Information Systems

MODULE CODE

2MIT4010

DATE OF SUBMISSION

30th APRIL 2009

ASSIGNMENT NO

1

TOPIC Value chain analysis is useful at the business level to highlight specific activities in the business where information systems are most likely to have a strategic impact. Discuss this model; identify the activities, and how the model can be applied to the concept of information technology.

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TABLE OF CONTENTS

1.

Introduction ------------------------------------------------ 3

2.

Value Chain ------------------------------------------------ 3

3.

Primary Activities ----------------------------------------- 5

4.

Support Activities ----------------------------------------- 6

5.

Analysis of Wal-Mart ------------------------------------- 8 - External Environmental Conditions --------------- 8

6.

Internal Value Chain Analysis -------------------------- 10

7.

Conclusion -------------------------------------------------- 12

8.

Bibliography ------------------------------------------------ 13

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Introduction Value chain is the concept of bringing up the activities together that creates the value for the organization and provides a competitive advantage. This idea of bringing value to the organization introduced back in 1980. If this chain of activities is planned and operated well, it could really have a strategic impact. These activities become more productive if they could be backed by the technology. Information systems have helped to improve the businesses a lot. Some of the business with the help of Information technology and value chain re-branded their businesses and captured a huge market share then. Value chain analysis and information systems together can bring a new life to the businesses and organizations as whole. Wal-Mart is the vast chain of retail stores and management of Wal-Mart have really well implemented value chain and information systems, leading it to be the giant in the retail industry.

Value chain M. E. Porter introduced the concept of value chain in 1980, in his book called, competitive advantage. He defined it as, “Every firm is a collection of activities that are performed to design, produce, market, deliver and support its products or services. All these activities can be represented using a value chain. Value chain can only be understood in the context of the business unit.” (Ward & Peppard, 2002, Pg244) Value chain is viewed as a systematic approach towards the development of the competitive advantage for the company. This chain is made up of series of activities that create and construct value. These activities end up being a total value delivered by an organization. It has been found suitable for the organizations to split the business system into a chain of value generating activities that are referred as “value chain”. Value chain is only a single part of the larger set of value-adding activities in industry is called as the industry value chain or value system. The value chain involves all the activities from conception, design, extraction of raw materials, and finally developing the product or services into its market for consumption or sale. In other words we can say that value chain runs from conception till consumption. The organization in terms of value chain, is slit into two kinds of activities: Primary activities and support activities.

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Value chain model by M. E. Porter (1980) Available online at http://images.google.ie/imgres?imgurl=http://pcwin.com/media/images/screen/Value_Cha in_Analysis_Software_69743.gif&imgrefurl=http://pcwin.com/Business___Finance/Appl ications/Value_Chain_Analysis_Software/screen.htm&usg=__GHpryA-ct-NoMdm9yQZVNwv2vk=&h=489&w=802&sz=29&hl=en&start=12&sig2=y2QNZW_X7k2rEFi_ dqq5ng&um=1&tbnid=mezsyTD3tsPyEM:&tbnh=87&tbnw=143&prev=/images%3Fq% 3Dvalue%2Bchain%2Banalysis%26hl%3Den%26sa%3DX%26um%3D1&ei=EgHxSe6s OMW2-Ab2h9CiDw [Accessed on 20th April, 2009]

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Primary activities Following are the primary activities: Inbound Logistics This part includes the activities like receiving raw materials from the company’s suppliers, and kept in the warehouse or stored until needed on the assembly line or on the production. This also includes the activities like moving the goods around manufacturing places.

Operations Here activities like manufacturing and assembling, takes place. Goods are manufactured and assembled, for example: the final tuning of the new car’s engines, room services in the hotels or packaging of the books by an online retailers, etc. Outbound logistics Here goods are successfully manufactured and packed, and are ready to be sent to the wholesalers, retailers and the final consumers, along the supply chain. In simple terms, distribution of the goods takes place. Marketing and sales Activities like the consumers’ needs and their satisfaction is taken into consideration to generate sales. Different offering are made by the organisations to meet the targeted customers’ needs. Here marketers strongly focus on marketing communication and promotional mix. Services In this part, activities like after-sale services take place. Customer satisfaction is the most important for compelling the customers to make another purchase, so services like, installation, after-sales, complaint handling, etc takes place.

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Support activities Support activities includes: Procurement This function includes the purchase of inputs like, material, supplies, equipment, etc. the basic aim is to make purchases of the high possible quality materials on the lowest possible prices. Activities like out sourcing and ePurchasing (use of web-based technologies for procurement aims) also takes place here. Technology development Here technologies are used to support value-creating activities. Technology is the most important source of getting the competitive advantage over the rivals. Innovations needed to reduce the cost by employing production technologies; Internet marketing activities and customer relationship management are the most useful technologies.

HRM (Human Resource Management) Employees are the most vital and expensive resources. Here activities like, recruitment, selection, and training and development takes place. Firm Infrastructure This activity is includes, corporate strategy and planning. It includes the activities like planning and controlling such as accounting department, by management information system and other mechanisms. For any organization to actively increase its revenues with consistency doesn’t only depend on a unique proposition to have. It should be having a set of inter-related activities that fit the strategy, so it can contribute in the unique strategic positioning of the organization. This is a moral of value chain. For example: south west Airlines has a strategy to be low-cost airline, providing many short haul point to point routes with frequent departures. There are so many internal organizational practices that enabled this strategy. See fig below.

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Fig. 1 Available online at http://training.byu.edu/documents/t-strategy.pdf [Accessed on 22nd April, 2009] Along with southwest Airlines, Wall-Mart has also proved itself as one of the most successful retailers around the globe. It is counted in one of the best retailers of all the times, which hasn’t left any margin of hope for their competitors just because of their better and advanced ability to integrate value chain activities. Since ages Wall-Mart has been able to attain and maintain its competitive advantage by applying its key value chain activities, such as, inbound logistics, out bound logistics, advanced technological developments, brand image and reputation with suppliers, customers and would easily be able to maintain its competitive advantage for the future.

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Analysis of Wall-Mart

Available online at http://www.pdfcoke.com/doc/6250191/Wal-Mart-Case-Study-forSupply-Chain-Management [Accessed on 24rth April, 2009] The owner of Wal-Mart, Sam Wilton opened the first Wal-Mart Discount Store in 1962, with a philosophy of “four basic beliefs: excellence in the workplace, respect for the individual, outstanding customer service, and always having the lowest prices.” (Pearce & Robinson, 1996, Pg 317)

External Environmental Conditions External environmental conditions are generally favourable but changing. These are: Socio-cultural Segmentation Retailers are changing their strategies because shoppers these days are decreasing the time spent on shopping. Grocery shopping is considered as a “need to do” now that was previously taken as “want to do.” As a result of it, consumers now ultimately spend lesser time in the stores. AHMED_AFKAR_28001547_8/13

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Technological Segmentation With the rapid change and advancements in the technology have helped the retailers a lot. With the help of technology it has linked several different systems i.e. wireless communications- has provided perfect flow of information and better management resources. Large retailers are relying on the intra and extranets for information sharing within or outside the organization. Other technological developments are smart cards, radio frequency data communications, etc.

Available online at http://www.pdfcoke.com/doc/6250191/Wal-Mart-Case-Study-for-Supply-ChainManagement [Accessed on 24rth April, 2009]

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Internal Value Chain Analysis Internal analysis includes the best use of the value chain activities. Inbound Logistics Inbound logistics are being counted as one of the most important reasons in the success of Wal-Mart. Hub-and-spoke distribution system was introduced by Wal-Mart. Due to its central distribution warehouses and the strategic locations have served a lot of Wal-Mart’s stores, which in result have minimized the shipping time. Operations Wal-Mart has Hand-held scanners, which helps it to monitor its inventory in real-time. With the help of this Wal-Mart have reduced the fears of stock outs or excess inventory. Wal-Mart, with the use of people greeters and ten-foot rule, has significantly differentiated itself from its competitors. Outbound Logistics Another key factor of the Wal-Mart’s success is its excellent inventory control system, i.e. bar scan registers tie into inventory control and ordering. Wal-Mart has been seen in continuous contact with its distribution centres, suppliers and each store, so that orders could easily and quickly be executed. Along with that, it also has a wide communication network, which connects all of the suppliers, stores, and warehouses. Due to its effective shipping process it takes them less time to deliver the orders from its distribution centres to the stores. As a result of Wal-Mart’s efficient plant operations, it’s actually able to minimize its costs. Right distribution network is very critical issue. “You must pick the right distribution network. In our case it is our dealers, they are our first, last, primary, and most critical link to our end customers” (Ross & Perry, 1999, Pg 293) Marketing & Sales Wal-Mart is following an EDLP (Everyday low prices) Strategy, and its no or low promotional budget have proved to be unique in the industry. Due to the Wal-Mart’s EDLP strategy consumers are sure that they will get the low-priced items. Low costs from other value chain activities have helped to make the retailer’s EDLP possible. Just because of this sales and marketing strategy, organization is saving a lot of money and it rarely needs advertisements or promotions.

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2MIT4010_ASS1 HRM (Human Resource Management) Wal-Mart wanted all its employees to follow a hand-on approach to their jobs. “Total customer satisfaction” is the main goal of Wal-Mart, so it want their employee to be totally committed toward the goal. Wal-Mart implemented a strategic control system, to motivate their employees, with that they are giving feedbacks about the performance, to all levels of employees, along with that they also give a feedback about the company’s performance too. Due to its organizational culture, the store and departmental managers as well as employees have the decision-making authority. This culture also has stock ownership and profit sharing plans for its employees as well as associates, which lead to higher employee performance and productivity, low shrinkage and less costs than its rivals. Technology Development Information technology is the key aspect of the firm’s success, keeping this in mind, Sam Walton (the owner of the Wal-Mart) paid so much of attention towards information technology, just because of this Wal-Mart now Operates the biggest private satellite communication system in the world, that is called as Wal-Mart Retail Link-System. Its main functions are to track the sales, stock up the inventory, process the payments due and it even regulates the different stores temperature in the real time. This system also replenishes the stock in its stores quickly, and even minimizes the amount of unproductive space. This results in higher number of sales per square foot and a rapid turnover of inventory. Due to this system, Wal-Mart is able to drive down the costs of its inventory and logistics and have significantly increased the store sales. Wal-Mart’s has a sophisticated information system that differentiates it from its competitors; this could be counted as another advantage. It has a computer based information system that is used to track the sales records and transfer of that data to the suppliers. This information is also used for the purpose of determining the price and stock strategies, which could optimise the inventory management. This advanced information system gives store managers detailed information of the customers’ behaviours and reducing the costs. This system allows Wal-Mart to efficiently meet the customers’ needs and responding quickly to the changing preferences. As a result we can say that Wal-Mart is doing an excellent job combining the value chain activities that creates a competency webs.

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Conclusion Value chain is taken as an altering activity for the businesses. Things were not going good with Southwest airlines, but with their new strategy and implementation of value chain, they became the highest revenue generators of the industry, taking themselves so high from the competition. Wall-Mart has also proved itself as one of the most successful retailers around the globe. It is counted in one of the best retailers of all the times, which hasn’t left any margin of hope for their competitors just because of their better and advanced ability to integrate value chain activities. Wal-Mart not only coupe up well with value but also did its best with the technological changes and now Operates the biggest private satellite communication system in the world, that is called as Wal-Mart Retail Link-System. The best use of information technology has taken Wal-Mart to be the best retailers on the globe. Value chain is used to give organizations competitive edge on their competitors, which is nicely covered by this company. Starting from inbound logistics to Marketing and sales, and touching the support activities really well Wal-Mart has proven itself. Value chains along with the use of information technology have made this organization so good to compete successfully in the global market.

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Bibliography 1. Pearce, A. John. , Robinson, B. Richard. , 1996, Formulation, implementation, and control of competitive strategy, Edition: 6, illustrated, Published by Irwin. 2. Ross, E. Jeol. , Perry, Susan. , 1999, Total Quality Management, 3rd Edition, Published by CRC Press 3. Ward, J., Peppard, J., 2002, Strategic planning for information systems, 3rd Edition 4. http://images.google.ie/imgres?imgurl=http://pcwin.com/media/images/screen/Val ue_Chain_Analysis_Software_69743.gif&imgrefurl=http://pcwin.com/Business_ __Finance/Applications/Value_Chain_Analysis_Software/screen.htm&usg=__GH pryA-ct-NoMdm9yQZVNwv2vk=&h=489&w=802&sz=29&hl=en&start=12&sig2=y2QNZW_X7k 2rEFi_dqq5ng&um=1&tbnid=mezsyTD3tsPyEM:&tbnh=87&tbnw=143&prev=/i mages%3Fq%3Dvalue%2Bchain%2Banalysis%26hl%3Den%26sa%3DX%26um %3D1&ei=EgHxSe6sOMW2-Ab2h9CiDw 5. http://training.byu.edu/documents/t-strategy.pdf 6. http://www.pdfcoke.com/doc/6250191/Wal-Mart-Case-Study-for-Supply-ChainManagement 7. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1017465 8. http://management-case-studies.blogspot.com/2005/10/wal-marts-supply-chainmanagement.html

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