Business Information Systems - Research Paper Example

 BUSINESS INFROMATION SYSTEM TABLE OF CONTENTS Introduction ……………………………………………………………. 3 Research Context ………………………………………………. 3 Strategic Analysis ………………………………………………. 4 Porter’s Five Forces Analysis ………………………..………… 4 SWOT analysis ………………………………………………. 5 PEST analysis ……………………………………………….` 5 Political environment…………………………………. 5 Economic environment ……………………………… 6 Social environment …………………………………. 6 Technological environment ……………………….. 6 Results of Strategic Analysis ………………………………. 7 Information Requirement and Information Strategy……………. 8 Enterprise System …………………………………………………. 8 Knowledge Management System and Chevron Model ……… 9 Supply Chain Management …………………………………….. 11 Customer Relationship Management ………………………… 13 Methodology for Developing New Information System……….. 14 Prototyping ……………………………………………………… 14 Total Quality Management and Six-Sigma ………………….. 15 End-user Development …………………………………………. 16 Impact and Effectiveness …………………………………………… 16 Impacts and effectiveness on Organization ………………… 16 Impact and Effectiveness on Management …………………. 17 Impact and Effectiveness on Employees ……………………. 17 Evaluative Conclusion ………………………………………………….. 18 References ………………………………………………………………. 19 Introduction The continuing stream of information technology advances and innovations are transforming the way the business is carried out. The influence of information technology from internet to wireless networks to digital phone and cable systems permeates everything related to business. The information technology brought tremendous changes and this change is the challenge that entrepreneurs and managers are to create, design and develop new products and services, develop new business models and embrace effective business strategies in order to adjust to the changes. A number of strategic business models are emerging and are being widely accepted by business and corporate professionals so as to make their attempt successful and achieve competitive advantages. Knowledge Management, Supply Chain Management, Customer Relationship Management are some of the recent managerial strategies that are widely accepted by firms in order to compete in the market and also find solutions for the difficulties that arise of out changes. Research Context This piece of research work is a case study about Aalsmeer Flower Auction, a global grower, wholesaler and exporter of flowers and plants based in Netherlands (Khosrowpour. 2006, p. 323). This research is a report prepared by IT consultant to address how the use of information system and technology can ensure ongoing business success as well as to resolve the issues that are faced by Aalsmeer Flower Auction due to certain changes in the market. Aalsmeer Flower Auction (AFA) has been successfully operating its business through a successful supply chain system in which auction plays mediating role among wholesalers, retailers, exporters and importers but recently, emergence of electronically driven flower markets and e-commerce, changing consumer and retailer tastes regarding fresher goods and recent trends of merger and acquisition among retailers are some of the changes in the market and challenges faced by Aalsmeer (Khosrowpour. 2006, p. 323- 324). This report illustrates most powerful business strategies that can be used by Aalsmeer to face challenges and illustrates how these strategies may impact the business. Strategic analysis tools like SWOT and Porter’s five forces are included in the report to enable better analysis of the strategies being discussed. Strategic Analysis Porter’s Five Forces Analysis Porter’s five force analysis can help Aalsmeer Flower Auction determine the levels of competitions, internal and external environments of the business and also to analyze the strategies implemented by the business. Stahl and Grigsby (1995) stated that Porter’s Five forces analysis is most useful to assess the forces driving to competition and evaluate its environment as well (p. 145). Below is Porter’s Five force analysis for Aalsmeer Flower Auction SWOT analysis SWOT (Strengths, Weaknesses, Opportunities and Threats) can be used by Aalsmeer Flower Auction to understand environmental trends and evaluate both internal and external environment of the business (Stahl and Grigsby, 1995, p. 30). The SWOT analysis of Aalsmeer will help identify what are the potential; strengths, weaknesses, opportunities and threats that the company faces from internal and external environments. Strengths Weaknesses High performance employees due to KM Efficiency of business operation due to SCM Profitability due to CRM Huge expenses for implementing the strategies Difficulty in managing the strategies Lack of efficient people for implementing strategies Opportunities Threats Effective marketing due to SCM Most valuable resources (customers) due to CRM New marketing areas High competition from electronically driven marketers Difficulty in dealing with various channels of transportation and warehousing PEST analysis PEST analysis is an immensely valuable technique for analyzing the external environment of a business entity. It divides the overall environment in to four namely political, economic, social and technological (Gregory, 2000, p. 49). The political, economic, social and technological environments of Aalsmeer Flower Auction are given below: Political Environment Netherland and its Aalsmeer Flower Auction are famous for its unique Flower markets. Around two-thirds of the world’s flowers pass through Netherland. Approximately, 17 million flowers are handed over daily (Martha Stewart Living Television, 2002). It has been long influenced the local and municipal governments and thus gained considerable political influences. Until 2007, it has been celebrating events that gave much political attention to the markets (Absoluteastronomy.com, 2010). Even though Aalsmeer has gained such considerable attention of politics and publics, any changes in the municipal or local governments, or changes in Christian Democratic Appeal can make significant changes in the flowers markets as well. Economic Environment With large floor space, the Aalsmeer auction building is the largest in the world (Absoluteastronomy.com, 2010). The auction building has been expanded to 846,000 square meters in 1968. Aalsmeer flower auction is a growers’ cooperative with over 3500 member companies. Even though most flowers come from Netherland, some come from other countries Israel, Kenya, Zimbabwe, Zambia and other countries (plantsgalore.com, 2010). Aalsmeer Flower Auction is economically strong, but, as it brings flowers from various countries and sells to other countries like USA, any economic changes and market variations like changes in exchange rates can have greater impacts on Aalsmeer’s business. Social Environment Aalsmeer consists of towns, cities and villages. Apart from the local populations, marketers from various parts Netherland as well as from other countries visit Aalsmeer large auction area. Various social events, ceremonies and programs increase the demand for flowers and flower products. Around 80 to 90% of buyers will ship flowers within 24 hours. Refrigerate trucks are carrying flowers to Europe and same time flowers for America and Asian countries are sent by air freight (Martha Stewart Living Television, 2002). It shows the demand for flowers from all over the world. Technological Environment Very large selling area, equal to 9 football grounds, under the same roof, advanced refrigerated trucks and transportation facilities, bidding facility led by giant clocklike screens marked in hundreds, tenths or fifths of Dutch guilder and so on are the innovation and technological advances that make Aalsmeer business more competitive (Martha Stewart Living Television, 2002). Same time, Aalsmeer faces competition from electronically driven flower markets. It also experienced that customers’ habits are changing towards flowers. Results of Strategic Analysis The results of both SWOT and Porter’s Five Force Analysis are given below:- Competition Due to electronically driven Flower sellers and auctions, competition rivalry still will be high, but Aalsmeer can maintain competitive advantages with the strategies of KM, SCM and CRM. Competition remains to be a threat for Aalsmeer Strategies The KM strategy helps Aalsmeer enhance employee knowledge, motivation, retention of older employees and reward and recognition and as a result organization will become high performance working, It remains to be a Strength The SCM strategy can help Aalsmeer reduce expenses in distribution and increase profitability- another Strength The SCM strategy helps Aalsmeer deal with its suppliers in a virtual partnership way so that Supplier’s bargaining power will be relatively less The CRM strategy attracts valued customers – Strength The CRM strategy helps Aalsmeer maintain a better relation with customers and hence, customers’ bargaining power will be relatively low Managing these strategies, implementing and finding efficient personnel for these will be a very difficult and expensive tasks for Aalsmeer- Weaknesses Due to SCM, dealing with suppliers and others in a cooperative will be a Threat Information Requirement and Information Strategy Aalsmeer Flower Auctions face challenges of electronically driven flower markets, changing attitudes and tastes of consumers as well as retailers and Merger and acquisition of retailers that enabled them become more powerful in the markets. As shown in the figure below, this research report recommends that the business challenges of Aalsmeer Flower Auction can be overcome with strategic approaches of Knowledge Management, Supply Chain Management and Customer relationship management system that will enable the company formulate and enhance an effective information system within the business. This paper finds out Enterprise System as an information strategy to find solutions for the challenges. Enterprise System According to Laudon and Laudon (2006), enterprise system is s strategic information System that integrates internal business processes of a firm into single information architecture. This business process integration can have a very large payback if organizations can apply the efficiently (p. 383). The enterprise system is designed to produce value by increasing organizational efficiency as well as by providing wide information to managers to help them take better decisions. Knowledge management, Customer relationship management and Supply chain management systems are considered as major internal business processes that AFA can implement to face its business challenges. Knowledge Management System and Chevron Model As far as Chevron’s Knowledge Management is concerned, KM has not always been just a buzzword, but a culture. The Chevron’s model of KM provides an integrated system by which company’s general goals and objectives are achieved by encouraging the internal information transfer (Dalkir, 2005, p. 270). AFA will be able to increase its productivity and gain competitive advantages because, Chevron’s KM model resulted in gaining increased efficiency and productivity due to KM and it proved that safety measures have been improved by 50% through facilitating knowledge share as part of it KM (Dalkir, 2005, p. 271). AFA must have clear view of data, information, knowledge and wisdom. Laudon and Laudon (2006) emphasized that data, information, knowledge and wisdom are to be recognized differently. Data is flow of events or transactions of an organization, and some resources are to be expended to convert data in to information. Information can be converted in to knowledge by adding more resources again (p. 416). The figure- 3 shows how data becomes information, information to knowledge and knowledge to wisdom. As part of its KM strategy, AFA should identify both tacit and explicit knowledge differently and find how it can improve knowledge transfer and utilization in a better way. Lehaney (2004) argued that pure data have little effect for an information manager where as structured data are more useful and effective tool to analyze and find solutions for challenges (p. 16). As for this view, KM is a process of obtaining and applying expertise in the business throughout papers, documents and databases, described as explicit knowledge and sharing and making use of information throughout people’s brains, described as implicit knowledge. Nonaka and Takeuchi argued that there are four basic models of knowledge conversion as shown in the figure -2. These four models are: 1) from tacit to tacit, which is known as socialization, 2) from tacit to explicit, known as externalization, 3) from explicit to tacit, which is called internalization and 4) from explicit to explicit that is called Combination (Magalhaes, 2004, p. 79, Rao, 2005, p. 37). An effective KM system can enhance productivity, profitability, employee performance, effective information system and ultimately to gain competitive advantages. It will be a highly successful tool for Aalsmeer Flower Auction to create, share and apply useful knowledge regarding the market trends and changing attitudes and requirements of both retailers and consumers. Aalsmeer Flower Auction (AFA) needs to plan necessary steps and processes to create, store, transfer and use the knowledge for the overall benefits of the business. KM is set of business processes that are developed to create, store, transfer and apply knowledge in an organization (Laudon and Laudon, 2006, p. 418). Rao (2005) stated that Knowledge Management is a systematic discipline and approaches that are designed to enable information and knowledge to grow, flow and create value in an organization. The Process of KM involves people, information, workflows, tools, practices and community practices (p. 3). Supply Chain Management Supply Chain Management (SCM) system can help Aalsmeer Flower Auction take decisions of ‘who, what, when, and where’ regarding purchasing and transportation of flowers, growing and then distributing it to customers. SCM uses data about inventory, supplier performance, production schedules and logistics etc. and helps managers choose among a number of alternatives for a best combination that is cost effective as well as productive for the firm (Laudon and Laudon, 2006, p. 471). As for Aalsmeer Flower Auction, it operates through a number of distribution channels like exporters, wholesalers, cash and carry wholesalers and retailers. In its chain, growers play initial role of suppliers and auctions play a mediation role in bringing suppliers and buyers together. Emergence of alternative and electronically driven flower markets have become another challenge that those alternatives may gain better share of the flower markets and it has turned to be a competitive challenge as well. In order to gain a reasonable market share and gain competitive advantages, AFA must enhance its supply chain management with effective strategies and better cost control systems. With SCM, Aalsmeer Flower Auction will be able to maintain power ful market channels tailored with better customer relation. Gattorna (1998) emphasized that a superb supply and demand management system will help maintain an intimate relationship with customers. The most effective way to build customer relationship is by understanding customer’s buying behavior and by designing a better supply chain system (p. 41). Supply Chain starts from collecting raw materials and then selling it to manufacturers. These manufacturers then convert raw materials in to those semi finished goods that are usable by their customers for specific needs. The final product manufacturers assemble/ manufacture finished goods and then sell it to wholesalers, cash and carry businesses, and retailers and then to final customers (Chopra, 2007, p. 5). This process has been detailed in the depiction above (Fig- 4). The evolution of information technology has generated growing attention for searching the ways to improve product quality, customer service, operational efficiency and remaining competitive by supply chain strategy (Wang, Heng and Chau, 2007, p. 2). In order to meet the challenges of AFA from electronically driven marketers, Supply Chain Management will be a better information strategy. Customer Relationship Management Customer Relationship Management (CRM) will be an effective and powerful tool of information strategy for Aalsmeer Flower Auction to help it maximize the benefits of their customer assets. It can be both business and technology discipline for Aalsmeer to manage its relation with its customers to optimize the revenue (Laudon and Laudon, 2006, p.393). As far as AFA is concerned, CRM will be an effective tool, because it is now facing a challenge that auction only met the needs of growers and not of retailers.. Knox, Maklan and Payne (2003) stated that the relationship marketing is intuitively appealing and its widespread application has been facilitated by new information technology permitting the organization to manage its customer assets (p. 6). AFA can take measures like customer loyalty programs, customer retention and providing outstanding services as part of strategic CRM. The system of Customer Relationship Management helps an organization gain insights in to the changing needs, wants and behaviours of the customers in order to serve them better. Aalsmeer Flower Auction needs to establish a customer centric culture by which it can expect resources to be allocated where they would best enhance customer value, reward to motivate employees and customer information to be collected and shared (Buttle, 2004, p. 4). The CRM strategy would be able to help AFA to recognize customers’ specific requirements and will enhance the firm to design and develop products accordingly. As part of its CRM strategy, AFA will have to focus and give emphasis on 1) Customer Knowledge, 2) Relationship Strategy, 3) Effective Communication, and 4) Individual Value Proposition (Ed, 2006, p. 7). Foss (2001) found that a large number of companies worldwide have increased their database including customers’ profile, demographics, products they purchased, feedbacks, responds towards certain goods and o on(P. 3). AFA needs to create such customer profiles so that managers, strategic decision makers and marketers can determine market trends, customer preferences and services required by the customers. Methodology for Developing New Information System This part of the research work finds three methodologies that can be used by Aalsmeer Flower Auction to design and develop new information systems within the company. The major methodologies being discussed are prototyping, Total Quality Management and End-user development. Prototyping Aalsmeer Flower Auction can build an experimental system that demonstrates how new information system brings organizational change. The users (Managers) of AFA would be able to get a better idea about their information requirements (Laudon and Laudon, 2006, p. 517). The Prototyping methodology will help AFA to probe reactions and suggestions by individual and group discussions (Heeks, 2001, p. 96). Prototyping is useful for both users and developers of AFA, because of the following: There can be better communication between developer and users, The developers can do a better job of realizing users’ need Both developers and users spend less time and put fewer efforts in developing the system Implementation of the system will be easier because users already know what to be expected (Mcleod, 2004, 188). Developing prototype consists of four steps that are identifying basic requirements, developing an initial prototype, using the prototype and revising and enhancing it. These four steps are depicted in Fig- 6. This method is more useful in designing the end user interface of information system and particularly when there are uncertainties about the requirements and designs. Total Quality Management and Six-Sigma Total Quality Management will be an effective methodology for Aalsmeer as it is an area of continuous process improvement. Organizations are to structure and form their business activities in a way that they can improve the quality of products or services being offered to the customers (Laudon and Laudon, 2006, 506). Total Quality Management will help Aalsmeer’s management assess, evaluate and control quality of goods, services and overall operation. Quality planning, quality assessment and quality control are the major elements in total quality management. TQM can be used by the IT management of Aalsmeer Flower Auction in order to find, identify and develop new information system. Hakes (1991) suggested that an organization seeking to implement TQM must consider six significant factors in order to develop the TQM in to a management framework (p. 11). Aalsmeer Flower Auction needs to consider 1) internal and external customers values, 2) Never ending improvement, 3) Control of business process, 4) Upstream preventive management, 5) Ongoing preventive actions and 6) Leadership in the organization (Hakes, 1991, p. 11). Besterfield (2003) stated that the benefits of TQM for are, as proved by a survey conducted among manufacturing firms in Georgia, improved quality, employee participation, teamwork, working relationship, customer satisfaction, employee satisfaction, increased productivity, communication and better marketing share etc (p. 25). End-user Development Aalsmeer Flower Auction can use end user development methodology in order to develop and support Information Strategies. The information system also can be developed by end-user system in which there is little or no formal assistance from technical specialists. A series of software language tools can be used to enable end users to create reports or develop software applications with little technical assistance (Laudon and Laudon, 2006, 518). As part of End user Development methodology, Aalsmeer flower Auction needs to use computers and software assisted systems to identify and develop what they need and what tools are appropriate to them (Alter, 2009, p. 527). Impact and Effectiveness This part of the research work considers the impacts and effectiveness of the new information system for the organization, its management and employees. The impacts and effectiveness and potential results of the new information system of Aalsmeer Flower Auction are detailed and analyzed in this part of the research with the strategic analysis tools of SWOT, Porter’s five forces analysis and PEST analysis. Impacts and effectiveness on Organization The new information strategies like KM, CRM and SCM that are recommended for AFA in this research paper will help the company enhance the business opportunities, maintain better relation with employees and customers and gain profitability through effective supply chain model. Implementation of KM strategy will be expensive for Aalsmeer, due to the increased costs of selective hiring, recruitment and training to the employees. But, it will be a virtual investment because, KM will help Aalsmeer gain information from the employees, create revenue from existing knowledge, build knowledge sharing culture, capture and store tacit knowledge and improve employee performance as well as productivity (Gamble and Blackwell, 2001, p. 21). The CRM and SCM strategies will help Aalsmeer to maintain better relationship with employees and thus to create brand image and brand loyalty among its customers. this will form to be a long term asset for the company. Laudona and Laudon (2006) emphasized that CRM can help an organization identify the customers and retain those who provide greatest revenues to the firm (p. 393) Impact and Effectiveness on Management Managerial activities like planning, strategic decision making, coordinating, directing and controlling are to be aligned with the new information strategies of Aalsmeer Flower Auction. The KM, CRM and SCM strategies will be difficult tasks for the management of Aalsmeer, but same time, these strategies will help them maintain good relationship with their employees, create and share knowledge with employees, increase their performance and productivity, plan well based on customer preferences etc. Chopra (2007) noted that Supply Chain Management will bring a number of positive changes to the management and enhance the management to cope with changes and meet challenges (p. 27). Impact and Effectiveness on Employees The new information strategies of AFA will help its employees enhance their knowledge with KM strategy and thus to achieve high performance working. As part of KM strategy, there will be teamwork, alumni relations, reward and recognition and these will motivate the employees as well as help increase their productivity. The KM strategy within Aalsmeer can help its employees increase their knowledge bases, understanding of the job and consequences, and understanding of the flower market fluctuations and so on. Laudon and Laudon (2006) stated that KM is an enabler of organizational learning and it increases the ability of an organization to learn from its environments (p. 418). Evaluative Conclusion In today’s highly dynamic and changing business contexts due to information technology, businesses need to find and implement appropriate managerial and information strategies in order to meet the challenges of the change. For this paper, the major challenges of Aalsmeer like electronically driven marketers, customers changing attitude and merger and acquisition of others are addressed in so as to find and analyze suitable information system strategies. Knowledge management, Supply Chain Management and Customer Relationship Management are considered as suitable strategies for Aalsmeer in this report. Different methodologies like prototyping, end-user development and Total Quality Management are addressed in this paper so as to find and evaluate appropriate information strategies for Aalsmeer. The strategies like KM, CRM and SCM are analyzed with helps of SWOT and porter’s five force analysis tolls. This report suggests Aalsmeer IT consultants to implement KM, CRM and SCM strategies with helps of methodologies like Prototyping. These strategies will provide Aalsmeer with competitive advantages as well as gaining productivity and profitability in its marketing and auctions. 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