Management Information System Analysis - Case Study Example

Management Information Systems ABC Company and XYZ Company Name Professor’s Name Course Name and Code Date Company profile ABC Company is a speculative American multinational retail company that operates chains of large warehouses stores and discount department stores. This company is considered to be one of the world’s largest corporations in the public domain and thus is rated among the biggest private employers across the globe with approximately over 2.5 million employees. It is ultimately one of the biggest and largest retailers in the world. ABC has more than 15,000 stores in 30 countries operating under the same name. This company always works to provide its customers with quality products including vast selection of household goods by offering value packs and a combination of discount offers aimed at offering these products at low costs and above all keeping household essentials at competitive prices. XYZ is a speculative UAE banking company corporation that offers banking and related financial services and products. For instance, XYZ bank offers smart deposit, savings, deposit accounts, fixed deposit, offshore deposit, consumer loans and brokerage services. The company along with its subsidiaries also offers retail, corporate, investment, and Islamic banking services to individuals as well as corporate customers. The company has more than 50 subsidiaries in 20 countries across the world. The bank is considered the largest UAE global banking network offering 24 hour internet banking to its customers. This paper, discusses management information system of ABC Company and XYY Company; for instance, the paper will discuss the company’s products and services using the Porter’s three generic strategies; the company’s main divisions and find out how MIS aid the company in acquiring intelligent business information to achieve competitive advantage. More importantly, the companies will be analyzed using the Porter’s Value Chain and Porter’s Five Forces model. Porter’s Three Generic Strategies These strategies are essential in describing how a company pursues competitive advantage within a given market. The strategies that are mainly used here are lower cost, differentiated, and/or focus. The company may either choose to use one or two competitive strategies. The aforementioned competitive strategies are discussed below Lower cost/Cost Leadership Strategy Here the company wins a large market share by attracting a wide base of price-sensitive or cost-conscious customers (Botten 23). For instance, the company offers products at the lowest price in the target market. For this to work out, the company must have the capacity to operate at lower prices than its competitors in order to achieve profitability and high return on investment. A company can manage to use this strategy through the following three main ways (Sehgal 21). Achieve high market turnover; the fixed costs are spread across many units of products or services, which on the other hand culminates into low cost per unit (Tan 67). The higher output levels demands for and results into increased market share thus creating a barrier to entry of potential rivals. Achieve low direct and indirect operating costs; this achieved through provision of standardized products in high volumes, inhibiting service customization and personalization (Peng 43). This ensures that production costs are kept to the minimal through usage of fewer standard components as well as reducing the number of models produced thus ensuring larger production runs. Control over procurement/supply chain; this is mainly achieved through bulk buying that result into quantity discounts, reduced supplier prices, bidding competitively for contracts, and working closely with vendors to ensure low inventories are kept by using vendor-managed inventory or just-in-time purchasing methods (Sehgal 33). Differentiation Strategy A company can differentiate its products or services in order to successfully compete at the marketplace. This strategy is mainly used in markets where customers are not price sensitive; the market is either saturated or competitive and hence customers have specific needs, which in one way or another are not being served to the customers’ expectations (Botten 71). In this regard, the company’s unique resources are then dedicated towards meeting the customers’ specific needs in a manner that is extremely difficult for the competitor to copy. Differentiation strategy is successfully used or displayed particularly when a firm accomplishes a premium price for a service or product, or through increased revenue per unit, and/or consumer loyalty to the brand. This strategy is profitable in instances where the added price on a product or service is far more than the added expense to acquire that service or product (Sousa and Oz 32). This advantage is compromised when the uniqueness of the product or service is easily copied or replicated by the competitor. Focus or Leadership Strategy This strategy is essential in describing the level at which the company should or must compete at the marketplace with regard to either low cost strategy or differentiation strategy. For instance, a company can decide to compete in a global market thus having a broad scope or in a specific or defined market; focus on a specific market segment with a narrow scope (Peng 77). Using or adopting a narrow scope dictates that the company focuses on a few market segments or target markets. These may be distinct markets with specialized needs; the decision to use differentiated products/services or low prices strategies largely depends on the selected market segment, resources and the company’s capabilities (Botten 88). A narrow focus dictates that the company directs its marketing efforts to the selected market segments and tailoring its marketing mix to these selected markets in order to meet the market needs. Competitiveness here is mainly achieved through brand marketing and/or product innovation and not efficiency. By using broad focus scope, the company must recognize the needs of the mass market and use cost leadership or differentiation strategies with respect to its capabilities and resources at its disposal. ABC Company uses a broad focus scope using the cost leadership strategy to meet the needs of the mass market (Sehgal 54). The company has a marketing strategy that ensures product provision at low prices. This has been achieved efficiently by the company because the company has high market turnover, low direct and indirect operating costs, and the company has massive control over supply and procurements activities. XYZ Company like ABC Company has a broad focus scope that uses differentiation strategies to meet the needs of its wider market. For example, the Islamic banking services are marketed to the believers of the Islamic religion within the markets that the bank operates, and internet banking service are directed towards internet users across the world. Divisions in ABC Company The divisions include: Suppliers Distribution centres ABC stores ABC shopper Divisions in XYZ Company The divisions include: External Factors (Federal Reserves, Funding Capital) Operations Delivery Channels Marketing and Sales Revenue streams Management Information system ABC Company has management information systems that help the company to collect intelligent information essential for smooth running of the company’s operations. For instance, Point-of-sale system helps in collecting customer data in real time, this information is directly transmitted to the warehouse inventory management system and to the supplier. The inventory management system helps in the generation of orders from the previous day sales (Botten 51). The supplier on the other hand compel manufacturers to manufacture the merchandise based on both historical and real-time data, the merchandise is then shipped to the warehouse where it is then loaded onto truck using cross docking. Accordingly, the merchandise is delivered to the company stores; thus, the stores will be restocked. Like ABC Company, XYZ Company has a management information system that aids the company in collecting intelligent information to help in its banking operations. The company uses the BT IP connect global network, which is a global wide area network that serves the company’s day-to-day banking operations (Peng 75). The BT hybrid private virtual network service that is vital in internet based access to the WAN by the company subsidiaries using either DSL, Ethernet, 3G mobile, and/or Wi-Fi connections. This technology helps customers to connect to the bank in a myriad of way. Internet banking is one of the main channels that customers interact with the bank, enabling them access services such as money transfer and bill payment both within and outside the UAE (Sehgal 34). Mobile banking is another segment that the company has initiated and is vastly growing especially for foreign workers who send money back to their home countries. ABC Company Value Chain XYZ Company Value Chain Porter’s Five Forces Porter’s five forces mainly deal with factors outside the industry that affect the nature of competition within that industry. It is imperative for a business organization to have knowledge of the dynamics within the industry they operate together with its markets in order to compete effectively. The five forces are defined as those external forces that drive competition within the industry; for instance, it is said that a competitive environment is usually created by the interaction of the five forces. Porter’s five forces include: Rivalry between existing firms This is the intensity of rivalry or competition within the industry; this is essential in determining the level to which value is created within the industry and is usually dissipated through stiff competition or head-to-head competition. ABC Company given the fact it uses cost leadership strategy in the industry within it operates, experiences less competition; there is minimal rivalry since many companies do not have the resources and capabilities to sell their products and services at low prices (Botten 83). XYZ Company on the other hand uses differentiation strategy in marketing their banking products and services; the company operates in a saturated market and hence experiences stiff competition from other players in the market. In this regard, the company always strives to differentiate its products from those of competitors in order to gain competitive advantage in the industry (Peng 34). Threat of new entrants It has been established that both existing competitors and potential companies influence the level of industry’s profitability. Threat of entry is largely based on the entry barriers into a given market. These includes economies of scale such as bulk purchase benefits, cost of entry like investment into technology, distribution channels such as easy access of competitors, government legislations, and differentiation (Sehgal 52). ABC Company operates within an industry that is hard to attract new entrants; this is particularly due to the fact that, the new entrants will require a huge capital base to enter, the company has an established distribution channel that is difficult for competitors to access, and the company enjoys a large capital base (Botten 71). XYZ Company like ABC Company operates within an industry that is very hard for new entrants to enter. For instance, the capital required for entry is high, its distribution channels are not accessible by the competitors, and also the technology required to run such a business is hard and expensive to develop. Buyer bargaining power This is one of the two horizontal forces influencing the appropriation of value created within the industry. This factor is largely determined by the size and concentration of customers, how informed the customer is, and differentiation of competitors (Peng 32). Buyer power is high in a market where customers are few together with the existence of larger players in that market. Accordingly, when there are low switching costs between suppliers. The buyer bargaining power of ABC Company is very low since the company offers its products at low prices. Similarly, buyer bargaining power of XYZ Company is also low. Supplier bargaining power This is said to be the mirror image of the consumer purchasing power; it is determined by the relative size and concentration of suppliers relative to the participants in the industry, it is also influenced by the degree of concentration of the supplied inputs. Supplier power of ABC Company suppliers is low given the fact that the company purchase products in large quantities and thus can press for discounts. The Supplier power of XYZ Company suppliers is high given the fact that there are few suppliers within the industry (Peng 32). The threat of substitutes This is mainly the danger associated with having substitute products in the industry and it is determined by the relative price-to-performance ratio of the different types of services of products to which buyers can turn to satisfy the same basic need (Sehgal 66). This is also affected by switching costs and may include product-for-product substitution, generic substitution, and substitutes that relate to things that people can do without (Botten 102). The threat of substitutes to ABC Company is extremely low since the company offers high value products at very low prices; similarly, there are a few players in the industry and hence high switching costs. On the other hand, the threat of substitutes to XYZ Company is very high because there are many players in the industry and thus low switch costs. Conclusion The discussion above has extensively given different insights with regard to how ABC and XYZ companies’ management information systems help these companies to attain competitive advantage in the market place. For this reason, the paper has given or defined the various products and services that each company offers by focusing on the Porter’s three generic forces. Similarly, the main divisions within each company have been discussed and the extent to which MISs is used by these companies to acquire intelligent information in order to achieve competitive advantage. Similarly, the value chain and Porter’s five forces have been used to analyse and compare the two companies. Works Cited Botten, Neil. CIMA Official Learning System Enterprise Strategy. London: Elsevier, 2009. Print. Clarke Steve. Information Systems Strategic Management: An Integrated Approach. London: Routledge, 2012. Print. Peng, Mike. Global Strategy, 2nd Ed. London: Cengage Learning, 2008. Print. Sehgal, Vivek. Supply Chain as Strategic Asset: The Key to Reaching Business Goals. New York: John Wiley & Sons, 2010. Print. Sousa Ken, and Oz Effy. Management Information Systems, 7th Ed. London: Cengage Learning, 2014. Print. Tan, Joseph. Adaptive Health Management Information Systems: Concepts, Cases, & Practical Applications. London: Jones & Bartlett Publishers, 2010. Print. 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