Stratigic decision making:

Chapter 2

 1.   Define TPS & DSS, and explain how an organisation can use these
systems to make decisions and gain competitive advantages

TPS stands for Transaction processing system and is the analyst in an organisation. The most common example of this type of system is a pay roll or order-entry system. This is essential within a business as it is able to store transactional data and is able to assist in analysis of, for example daily sales.

DSS stands for Decision support system and is also successful with analysis of data. A common example of the use of this system in a business is the Wellington taxi company ‘combined taxis’. They used this system to compete with other rival taxi companies by allowing it to use GPS systems to allow taxis closest to a call to attend a pick up. This use of the system shortened the waiting time for customers and ‘In 2009, as a result of such technology upgrades, the company was still the largest of 27 taxi companies servicing the greater Wellington region’ (http://www.taxi.co.nz). These types of advantages can be gained by the technology used in systems such as DSS.

     2. Describe the three quantitative models typically used by decision support systems.

Sensitivity analysis: studies the impact that changes in one (or more) of a model will have on the rest of the model. The general test when using this style of analysis is to change one value and monitor its effect on the other variables.

What-if analysis: analysis of the impact of an assumption of a change on a model.

Goal-seek Analysis: aims to find a value or piece of data, which is necessary to input so as to obtain a goal solution. Unlike what-if analysis, which inputs data in, to test what the outcome will be on a situation goal-seek analysis inputs a target value and then alters the other variable until the goal value is achieved. 

     3. Describe a business processes and their importance to an organisation.

The business process refers to the way in which the business runs internally to create success within the market in which it is set. By creating a business process there is a physically determined process or set of steps in which the business must take so as there tasks are successful. This means that if the business process is not precise and focused directly on what will benefit the business then the business is going to be less profitable or thriving that its competitors. In general is said that the better the business process the more successful the business will become.

     4. Compare business process improvement and business process re-engineering.

Business process improvement is a continual assessment and improvement of the workings within a business. There is a continual mapping out of the steps within the company’s business process and revaluating what is being done, what can be done better and what can be added to the process to make the business more successful. Business re-engineering does not assess the success of the business process buy adding or re-vamping what is already being done. This actually refers to the total reconstruction of the business process when it is seen to be unsuccessful. In reality business process should be more successful and more cost effective.

     5. Describe the importance of business process modeling (or mapping) and business process models.

Business process models are graphic description of how the business runs and the business process modeling (or mapping) is the physical activity of creating a graphic form of the business process in the form of a flow chart or process map. These types of stages in a business allows for images of how the company runs to be seen and then for steps of analysis such as the goal-seek or what-if analysis to be used to improve and determine the best and most successful steps within the business process and the ones which are not necessary for the business to run successfully. 

Information systems in business:

Chapter 1

     1. Explain information technology’s role in business and describe how you measure success?

Technology has enhanced the workings of businesses all around the world. It works with efficiency of how the company runs so as they are able to reduce costs, improving productivity and generating growth within the company. The Growths of technology has not only improved efficiency but has improved effectiveness of things such as communication. Within companies the use of wireless Internet connections, smart phones and instant messaging communication has become simpler and the ability for work to be taken out of the office and begin before they arrive at the office.

     2. List and describe each of the forces in Porter’s Five Forces Model?



Figure 1: Porters 5 forces model.



Buyer power: Refers to the ability to impact the price that a product will cost. Loyalty programs are one way in which businesses can reduce the power the buyers have. They do this so as to encourage interaction between the buyer and the company by rewarding their ‘loyalty’ to the company.

Supplier power: Supplier power is highest when there is one main supplier has total power over a particular industry. For example when the supplier raises the price on a product the final price is generally risen so as the smaller business makes a profit. This also means that the suppliers have power over how much buyers will spend if they want to purchase a product.

 Threat of substitutes: Highest when there are many different aspects of a product or service and low when there are alternatives to choose  from.                                                                                                                                                                  
Threat of mobility: becomes more possible when it is easy for new companies and products to enter a market. Different aspects of a company are added to create difficulty for new business. For example a company entering a particular market must be able to supply the same or better products and additional advantages to successfully enter the market area.

Rivalry among existing competitors: This is high when there is an area, which is largely competitive and low when the need or want a particular product is low.

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     3. Describe the relationship between business processes and value chains?

Business process: by definition is a set of activities, which accomplish a specific task, e.g. processing a customers order.

Value chains: This approach attempts to enable the “organization to provide unique value to its customers.” To create a value chain the company must assess their organization within a series of process and identifying which facet of their business is of best value to the success of the company.

Value chains tend to be more focused on how to better the company where the business process is how a specific task is taken out. The value chain is often aligned with porter’s five forces model.

     4. Compare Porter’s three generic strategies?

Each of these generic strategies are used by businesses that are beginning to break through in a specific industry. The three things porter specifies are cost leadership, differentiation or focus strategies when formulating a business focus. Broad strategies focus on a large market segment while focused strategies on smaller ‘niche’ markets. Focus strategies also focus on either cost leadership of differentiation.



Figure 2:Model of porters Generic stratagies!



Cost leadership: attempting to be the lowest price on the market so as to make the highest profit from sales. This refers back to the value chain, but focuses on cost reduction so as to lower pricing of products. Though this may benefit the company’s incoming funds the focus on cost leadership can diminish other areas of the business.

Differentiation: differentiation is an analysis and focus on one company’s service level to customers in comparison with other competitors. This type of focus though is effective in creating more successful processing compared to other business but it may lead to extra costs placed on the business, for example advertising the differentiated product.

Focus strategies: porter identified focus as a ‘mediator’ between cost leadership and differentiation. This section of the model focuses on a particular niche’ of society and aims to produce products that that particular area wants or needs. The use of the other strategies enhances the advantages of the focus strategy. 

Each strategies works on their own and would probably not work when put together though each focuses on different aspects of the business that is using the strategy.

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