Business Systems and Process/Operations Management - Case Study Example

A) Porter’s five forces model is an effective tool in exploring the competitive forces of the environment in which the organization operates. It allows the business to critically analyze its current business strategy and formulate one which can allow it to achieve a competitive position in the market. With the advancement in Information Technology, it has been prominently observed that the businesses are now focusing more and more on implementing information system in order to make the best use of their resources. In the mentioned case, Michelangelo Pizza (MP) has several functional units carrying out activities related to the manufacturing and delivering of Pizza. By integrating these units using information system, Michelangelo Pizza (MP) can gain competitive advantage in the market which can by analyzed in the light of Porter’s five forces model. The first competitive force according to the model is the entry of new competitors into the market. New entrants might be able to capture some of the market share of MP and will adversely affect the profitability. With the implementation of Information System, MP can repel this threat to its business. The sales department can maintain a database of the orders which can significantly assist in identifying which type of Pizza is most popular among the customers. This information can be utilized in building different promotional activities for capturing market share and building brand loyalty. Information System can aid the accounts department in setting up an EDI (Electronic Information Interchange) with its suppliers through which specification regarding the raw materials to be supplied can be sent via network and thus saving time and cost. Threat of substitutes is another competitive force in the Porter’s model. For MP threat of substitutes in the market could mean fast food items such as burgers, sausages, hotdogs etc. Substitute can also mean any other Pizza making company in the market which can offer better customer satisfaction than MP. Implementation of information system helps in improving the customer service in the organization by linking the functional department together and thus adding value to the business strategy. If the inventory management is computerized with the help of information system, cost of holding excess extra stock can be reduced and thus eventually the cost per pizza is less. When PM is not charging extra money to its customer for a pizza, the cost of switching to for the customer is higher and they will refrain from buying any other substitute. MP can maintain a database containing all the prices of the substitute products in the market. Regular Analysis of the database will keep the company inform about the changes in the prices of these products and how they should respond to it. Development of a website on which customers can place their orders and integrate it with all the other functional departments can also enhance the customer convenience. Bargaining power of suppliers is another factor which the MP must consider in order to operate effectively and profitably in the market. Information System enhances supplier information available. The purchasing unit of MP can maintain a comprehensive database of the suppliers in the industry and can short list the most suitable. Computer Aided Designs (CAD) can be used to design components with the suppliers in order for the transaction to be done more continently. Another important aspect in this regard is the switching cost. In order to tackle the bargaining power of the supplier, suppliers can be integrated with the firm’s administrative operations by a system of Electronic Data Interchange (EDI). It is of prime importance to curtail the bargaining power of the customer for acquiring competitive advantage. Installation of an Information System in the organization will enable the company in identifying the concentration of the buyers and also the major buyers. Targeting the customers through product differentiation will prompt the customers from switching to other suppliers. Since fast food is a flourishing industry thus rivalry from the competitors is another factor to consider. MP can establish a comprehensive network with its Supply Chain and with its customer through information system. B) The value chain describes how all the activities of organization contribute towards creating products and services that customer value. Value Chain Model groups the various activities of an organization. This shows the sequence of business activities by which, in the perspective of the customer or end user, value is offered by the products or services by an organization. MP can apply the value chain model in improving its various business processes which will assist in creating a competitive advantage and value in the market. The value chain is divided into two types of activities primary and support. The primary activities include inbound logistics, Operations, Outbound logistics, Marketing and Sales and After sales service. Support activities comprises of Procurement, Technology development, Human Resource Management and Firm Infrastructure. Inbound logistics, the production control and the store department can make use of information technology to alter their method of operating strategically. The production control department can be linked with the sales department electronically and orders from the sales department can transmitted to them through intranet without any delay. The production department can maintain a list of all the order electronically and make sure that the orders are sorted date wise and completed on the same basis i.e. on FIFO basis. Information system can also assist in reconciling the number of completed orders with the number of orders originally placed. Any difference must be reported and sorted out Storing is another important functional unit for any organization. MP can make effective use of its resources through information system As soon as a completed order arrives in the store department, the manufacturing department sends an electronic intimation which includes the manufacturing date, address of the customer, the date by which order must be delivered and other relevant information. The store department can maintain a database of all of these facts which will help in sorting out the order which are to be delivered on short notices or which are to be delivered to distant places. After sorting the data, the store department can pass on this information to the shipping department for the delivery. Thus this innovation will enable the organization in reducing the number of completed orders which expires in the store department and remains undelivered. The sales department of MP also falls under the criteria of being a primary activity which deals with informing the customer about the product and taking their orders. Innovation can be incorporated into this department through using E-commerce. A B2C (Business to Consumer) model can radically change the operations of this department and thus enhancing the revenue of the business. The sales department can setup a website where customers can place their order directly instead of coming to the take-outs or franchises. Purchasing or Procurement is a support activity providing assistance to the core functioning of the organization. Information System can play a very crucial part in enhancing the operations of the purchasing department of MP. Inventory optimization software such as Optiant can be utilized by MP. The benefits of such implementing such software are that it automatically takes into account stock shortage out and excess stock. [1] When any such situation arises it automatically generates an intimation to the supplier or the company’s own store department. Inventory management software saves the stock from obsolescence and thus improves the allocation of resources. D) Keeping the business environment of MP into consideration, the most suitable system development methodology is the Rapid Action development (RAD). RAD is a development method in which includes iterative development and use of prototype. The primary reason for using RAD as the best methodology for the development of Information System for MP is that RAD takes into accounts the opinions of customers by involving them in the design of the development. The most prime feature of RAD is that it develops the system in short iteration or intervals. This will result in the development of miniature software projects for every functional unit of the organization. For any fast food company, the smartest thing would be develop information software which focuses on accomplishing the business need rather than a program which display technical excellence which further advocates the adoption of RAD. The business owners have the best insight about the industry and market and RAD gives them the opportunity to actively participate in the software development. E) Planning and feasibility is the first step which identifies the problem or opportunity based on which the system is being developed. This step also quantifies the benefits the implementation of the new system will bring into the organization. The feasibility report includes facts such as the time required by the project to be completed, the return on investment (ROI), alternative solutions and whether it is feasible to develop the project in house or is it suitable to outsource the project. After planning and feasibility, Analysis of the project is undertaken which takes into account how the new system will affect the current business and operation environment? In this step the organization assess the capabilities of the employees whether they will be able to adapt to the new interface. The organization also takes into account is the current business environment suitable enough for the new information system and does a SWOT analysis. The next step is the design of the system in which detailed system design and specifications are discussed. This step includes development of program flow chart, screen flows, Test plans and job flows. Apart from these, the design step also includes the file structures and input and output formats. The most important sub step is the test plan which includes facts such as will the system recovers in case of a disaster, the performance of the system in line with other system already operating and how efficiently the system handles stress. Development of the system is the next step which consists of coding and debugging of the system. The development also includes the preparation of conversion of data into the new format and training manuals for employees. The final step is the implementation in which the system is put into operation. The management must make sure to carry out post implementation review in order to ensure that each and every step of the development life cycle was followed. References [1] Logility, 2010, Atlanta, Georgia, viewed 11th November 2010, < http://www.logility.com> [2] Johan Halasz, Porter’s five forces model, article, 10th November 2010, Read More