Chapter 2 Quiz: Management Information Systems

framework, or approach, to obtaining an advantageous position/ Plan for success by seasing opportunities and be ahead of your competition

a plan to help an organization outperform its competitors Often done by creating new opportunities, not beating rivals

an information system that helps seize opportunities/ help the organization to out-perform / gain Competitive Advantage

using strategy to maximize a company's strengths/ being one step ahead of competition

having maximized an organization's strengths to beat its rivals/ by using SIS- Strategic information system

is achieved when a for-profit company increases its profits significantly, usually through increased market share

can be used to gain competitive advantage. Strategic moves often combine two or more initiatives

something no one has tried before

-Reduce costs -Raise barriers to market entrants -Establish high switching costs -Create new products or services -Differentiate products or services -Enhance products or services -Establish alliances -Lock in suppliers or buyers

Customers want to pay as little as possible for products or services and more people will buy when you reduce costs & then they will order more (Purchasing Power Improves) & then you will lock in the supplier Reduce / Lower costs TO lower price Automation increases productivity → greatly reduces manufacturing costs

Gain competitive advantage by making it difficult or impossible for others to produce the same product or service/ Things that stop competitors so that you can make more money To lower competition, raise barriers to entrants Obtain legal protection of intellectual property (copyrights and patents on inventions, techniques, and services) Examples: Amazon's one-click, Priceline's online reverse auction

Switching costs: expenses incurred when customer stops buying from one company and starts buying from another/ the penalty that you pay to break a contract, and leave one organization for another. Example: Switching from AT&T to T-Mobile Explicit: charge customer for switching (early termination of contract) Direct/ Example: When you pay to break your contract with AT&T so that you can get the new iPhone Implicit: indirect costs over period of time, such as implementation of new product, staff retraining/ Indirect Example: upgrading your phone

Having a unique product or service gives competitive advantage for a period of time -First mover: organization that is first to offer a new product or service; -Critical mass: body of clients that is large enough to attract other clients (Examples: eBay, Apple's iPhone, Facebook, Twitter, and YouTube)

Product differentiation: persuading customers that your product is better than competitors', Example: When you think of a paper tissue you think of \"Klinex\" and no other brand name Usually achieved through advertising and customer experience Exemplified by brand name success

Enhance existing products or services to increase value to consumer Many products and services have been enhanced by use of the Web Examples: Charles Schwab and Progressive Casualty Insurance Company/ Your car comes with 0% Financing/ When you buy something from the super market and it says \"33% more\" on it (you are getting more out of the product)

-Alliance: two companies combining services/ Example: Vacation packages Makes product more attractive Reduces costs Provides one-stop shopping -Affiliate program: linking to other companies and rewarding the linker for click-throughs

-Lower the cost, lower the price.... Accomplished by achieving bargaining power Bargaining power: leverage to influence buyers and suppliers Achieved by being major competitor or eliminating competitors Uses purchase volume as leverage over suppliers Lock in buyers by making them fear high switching costs Lock in clients by: Giving away a product to create a standard (Microsoft's Internet Explorer, Adobe's Acrobat Reader, Flash player) Creating a physical or software limitation on using technology (Apple Computer's iTunes)

eliminating and rebuilding operations from the ground up/ process of rethinking what you are doing if there is a problem/ Goal: gain efficiency improvements (example: new machinery)

Competitive advantage is often short-lived because competitors copy the ideas or the competitive advantage which is a moving target

airline company that entered a formerly hurting market with great success example; providing

enters the market later than competitors/ you are the last person to go through that process and in this way you will have an advantage

because of: -They offered brand new cars online, and it did not sell -lack of attention to details; and inability to predict customer or business partner response

failure occurring when a company attempts to be on leading edge of new technology/ an organization starts bleeding money into research and development of a product not knowing if the product will work or not