Management of Information Technology - Dott Mann Group - Assignment Example

Management of Information Technology B0017FKHFKH0415 Module Semester Management of Information Technology Question A Introduction (Industry Profile) Dott Mann Group (DMG Limited) is a medium sized company dealing in consumer goods. The company deals with the production of three brands namely tea, coffee and flavoured yogurts. Initially, DMG grew and manufactured tea but later on realised that diversification would spearhead the initiative of becoming a pacesetter in agribusiness (Doom, 2009, p.64). The company went on to acquire more farms and uncovered its full potential by not only introducing coffee production but also keeping dairy livestock. Guided by the principles of integrity, hard work and positive attitude the company’s missioned at establishing its leadership both in the domestic market and on a global scale (Oz, 2009, p.21). DMG’s goals are to upgrade healthy living by producing high quality products, to preserve the environment and to create sustainable returns for stakeholders. Question B The Competitive Environment Porter’s Five Forces Model The model will focus on five attributes that make up the competitive environment namely supplier power, buyer power, competitive rivalry, the risk of substitution and lastly the risk of new entrants. With regard to the supplier powers, the suppliers play a minor role, if any, at raising the prices of DMG products (Oz, 2009, p.18). This is because the company owns most of the critical factors of production. For tea and Coffee production, DMG own farm estates for production of the crops, suppliers only provide packaging materials (Beynon-Davies, 2013, p. 376). A higher cost of the packaging materials would result in DMG transferring the additional cost to consumers by raising prices. The same applies for yogurt production, as the company owns dairy livestock, suppliers come in to provide flavours and packaging materials. Buyer power is detrimental to affecting the nature of prices within the market. DMG has a fairly larger number of consumers for its products. Essentially, the company cannot, under any circumstance dictate the terms of buying (Beynon-Davies, 2013, p.402). Given the fact that other brands of tea, coffee and yogurt the buyers may easily switch to other supplier of the same. Rivalry from competitors does not really lower the attractiveness of the market (Betz, 2001, p.29). Two firms in agribusiness provide competition to DMG but the major threat is one firm that enjoys a large market share because of an extensive information technology system (Proctor, 2011, p.16). DMG is taking measures to turn the tables in the industry and extend the domestic market share. Substitution seems to be a minor threat for DMG because of the coffee and tea are substitutes. In case the price of tea goes up, customers will opt for coffee and vice versa. The risk of new entrants venturing into the market is accordingly low as DMG enjoys economies of scale attributable to diversification of its operations. Moreover, the company has patent rights attached to the unique traits and quality value of the agribusiness products (Oz, 2009, p.64). The government has also put strains on the number of entrants by heavy taxation in the industry to provide an opportunity for growth. Like any other industry, Government regulation impacts on the agribusiness industry. Taxation and subsidies, the significant of all regulations, determines the cost of production (Reynolds, 2010, p.58). Given the lowering rates of taxation and the high rate of subsidies instituted by the government, DMG is depriving positive benefits of minimizing the cost of production and better chances of innovation (Jawadekar, 2004, p.9). Other environmental aspects fall under two categories. Internal Environment The internal environment comprises of changes in the management, the morale of workers, financial aspects and physical resources. To begin with, the leadership approach adopted by the management of DMG takes into consideration the culture of the business, which is to create value within the organisation (Oz, 2009, p.52). In an administrative capacity, the management ensures that the process of record keeping is accurate. Data regarding the production process is relevant for decision making and forecasting. In addition, the board of directors in the company advocates for a constant review of operations involving supply (Chandra, 2003, p.124). The move aims to ensure that no interruptions interfere with the supply chain as such interference would affect market demand (Reynolds, 2010, p.58). DMG’S management recognizes that motivation of employees goes a long way in increasing productivity and as such has taken steps to encourage the same. Provision of group bonus scheme is an incentive that the management uses to stimulate increased effort. Notably, group bonuses foster better working relationships and makes it easy to get long lasting solutions to challenges due to discussions (Beynon-Davies, 2013, p.412). A couple of investment opportunities are available to provide the company with funds that will enhance agribusiness operations. Some of the options that DMG offers to improve on the financial resource include shares, although the company also takes loans because it is medium in size. The financial resources aid in yet another factor of the internal environment, which is the physical resource (Oz, 2009, p.26). Using the loans and receipts from shares, DMG has increased modern equipment and facilities geared towards improving the mechanization of operations in the various departments. External Environment Top on the list of factors outside the company, that DMG has no control over and which threaten smooth operations is the economic trend. Economical changes that constitute recession, boom, depression and recovery are very challenging to any business (Jawadekar, 2004, p.36). Dott Mann Group being no exception finds it very difficult to attract investors during the periods of recession and depression (Proctor, 2011, p.47). The inevitable nature of the economy makes it hard to predict the outcome of the marketability of a product, a situation that goes against the investor’s desire of getting a guarantee of good returns from investment. Similarly, political instability makes investment a risky venture that many are not willing to take (Reynolds, 2010, p.54). DMG fears that political instability may threaten and drive away the potential market for its products. The turmoil that comes with political instability may make it almost impossible for companies to work smoothly because the cost of production also goes up. Question C Information Systems There is no doubt that information technology is the key drive of success for any sector whatsoever in the current world. Tools of enforcing information systems include computers, equipment meant specifically for recognition of data and technologies regarding communication (Oz, 2009, p.32). Information systems offer a number of ways that will make a business outperform rivals and change the structure in the industry by take over the market share. Automation of all operations of DMG will immensely change the face of product creation (Beynon-Davies, 2013, p. 382). First off, automation will reflect mechanization of activities in the company. Mechanization of processes would mean increased efficiency because unlike human beings, the system reduces errors and wastage of resources. DMG will realise the objective of creating additional value to the customers using the information systems. Value occurs in two senses, one being additional nutrients and the other one being economically. On the nutrients view, research will provide options of additives that will develop high quality products and achieving the goal of promoting healthy living (Beynon-Davies, 2013, p.420). Economically, the value added comes about when consumers are willing to purchase more of a commodity. The company would further its profitability in the event that the value resulting from information technology exceeds the cost involved. Not only would the measure enable DMG to gain a competitive edge in the market but it would also help achieve the goal of gaining returns for stakeholders (Doom, 2009, p. 54). Most importantly is the awareness that information systems will revolutionize the installation, upgrades, adjustment and subsequent repairs of inventory within the company. A comprehensive analysis on the performance of key departments is possible using information systems that will make DMG realise strengths and weaknesses for better performance in the market (Plaggenhoef, 2007, p.40). Forecasting by making production plans will be more systematic using the information systems thereby providing a competitive channel in the long-run (Oz, 2009, p.45). Meeting the objective of competing domestically and globally, information systems ease the development of a well-coordinated means for procurement and marketing. Technology will improve the value system by enhancing the linkages inside and outside the company. For one, proper linkages inside the company will make it easy to make effective decisions (Proctor, 2011, p.50). Furthermore, the management will be able to form long lasting solutions to challenges affecting various departments due to a common pool of conveying information. Linkages from outside incorporate suppliers, where better coordination will make it easy to deliver products to the market on time. Communication between a company and the clients is an instrumental part of success (Tsai, 2002, p.131). Internalizing an information system will facilitate the establishment of online services for sales purposes especially for the global community (Reynolds, 2010, p.49). Through online transactions, the company will create a platform where consumers can provide feedback about the use of the products. The strategy will be counter-productive as DMG will get details of factors of the product that require improvement. Under the same context, the company will foster a base of loyal consumers who subsequently establish its growth (Doom, 2009, p.58). Given the desires of the customers, the firm will be able to solve consumer challenges and met consumer needs. Product design through research and development, an aspect provided by information technology will make the product unique not to mention that the processing of tea, coffee and yogurt will be faster. Questions on proper techniques of warehousing will settle because information technology will provide extensive solutions of storage particularly for the yogurt products (Doom, 2009, p. 47). Advanced warehousing will increase the storage capacity making it possible for DMG to meet large orders by wholesalers as well as retailers. Proper preparation of invoices using the information systems will avoid situations of loss of records for such large funds by increasing the level of accountability (Beynon-Davies, 2013, p.424). Usually, information systems guarantee a proper financial mechanism of a company. For DMG, quality financial reports would bring tremendous positive results. Ideally, if DMG wanted to expand by establishing more agribusinesses in other regions under the parent company, the financial reports would be the channel to encourage investments and borrowing from banks (Tsai, 2002, p.123). After the growth of the branch businesses as part of a diversification strategy, DMG would become the unquestionable leader in agribusiness (Proctor, 2011, p.31). It is worth noting that, in the current era, a firm has to reduce costs in order to survive the cutthroat competition and stand a chance of succeeding in the industry. As a weapon of succeeding, information technology brings into effect a basis known as cost leadership (Reynolds, 2010, p.41). To put the matter to perspective, the framework of cost leadership entails an organisation producing products at the minimum cost possible in the industry. DMG, using information systems will be able to take any cost advantage, which may result in low prices of products. Competitors who are unable to reduce the production cost will be fighting a losing battle. To the delight of the DMG, given the low costs of production, consumers will switch or rather substitute the expensive products provided by other firms for the cheaper ones (Doom, 2009, p. 41). Increased economies of scale that translates to maximum productivity are a result of cost leadership. Based on performance is the dimension of differentiation. DMG will desire to venture into additional products and service that the company deems important in the near future. This will see the constant processing of new innovative commodities that the young generation can relate to (Proctor, 2011, p.23). Singling out the young generation is important because such individuals grow using the product and later on when parents, introduce children to the same product (Plaggenhoef, 2007, p.33). Strategically, such a measure would ensure the continuity of DMG in the foreseeable future. Conclusion In the current era of globalization amidst cutthroat competition across all industries, businesses simply cannot underestimate the capabilities of information, as doing so would be suicidal to business activities. Key factors that characterize the inevitable power of information technology include efficiency that has seen a significant reduction in the cost of production (Reynolds, 2010, p.43). Ideally, firms that are able to lower the cost of production push opponents out of the market and take over the market share. Information technology plays a critical role in facilitating the realisation of organisational goals thereby enabling the firm to grow and gain economies of scale (Oz, 2009, p.12). Furthermore, the information systems provide the mechanization of activities and direction of improving product design, all that provides a competitive superiority within the market (Chandra, 2003, p.115). Most important is the development of a customer relations management using the information system geared towards solving consumer challenges and meeting consumer needs. Recommendation In as much as the economy is appreciating the strengths of information systems in promoting growth, DMG should not forget fundamental core values. It is true that information technology may drive companies into the spell of maximizing profits thus causing negative externalities on the society (Doom, 2009, p.19). With such realization, DMG should remember its social responsibility and make decisions, which foster greater good in the community. For instance, DMG should not mechanize entire operations because doing so will not provide employment opportunities for the members of the society (Betz, 2001, p.22). Technology keeps on evolving while at the same time markets experience rapid changes. Judging on such grounds, DMG should keep up with technological changes by ensuring system updates after a certain duration (Reynolds, 2010, p.35). As the company expands, it may become difficult to control the extent of operations. Some of the workers may be tempted to manipulate records or leadership positions for personal gain. DMG should have records audited regularly to avoid potential losses. Bibliography Betz, F., 2001. Executive strategy strategic management and information technology. New York: J. Wiley. Beynon-Davies, P., 2013. Business Information Systems. Basingstoke: Palgrave Macmillan. Chandra, R., 2003. Information technology in 21st century. New Delhi: Kalpaz Publishers. Doom, C., 2009. An introduction to business information management. Brussels: ASP. Jawadekar, Waman S., 2013. Management Information Systems. New Delhi: McGraw Hill Education. OZ, E., 2009. Management information systems. Boston, Mass: Thomson/Course Technology. Plaggenhoef, W. V., 2007. Integration and self-regulation of quality management in Dutch agri-food supply chains: a cross-chain analysis of the poultry meat, the fruit and vegetable and the flower and potted plant chains. Wageningen, the Netherlands: Wageningen Academic Publishers. Proctor, K. S., 2011. Optimizing and assessing information technology: improving business project execution. Hoboken, N.J:Wiley Reynolds, G. W., 2010. Information technology for managers. Boston, MA, Course Technology: Cengage Learning. Tsai, H.-L., 2002. Information technology and business process reengineering: new perspectives and strategies. Westport, CT: Praeger. Read More