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Information Systems Case Study Analysis

Written by Londy Bracale

Colorado Technical University

IT600-0803A-01: Information Technology Management

Professor Russell P. Mickler

Phase 1 Discussion Board 1

July 7, 2008


Change is part of organizational growth and survival in our modern global economy. If an organization is going to grow and survive, it needs more than traditional strategic business plans. One of the principal drivers of competition is technological advancements. Company’s can develop a strong competitive advantage through the strategic use of information technology. This white paper will discuss information technology (IT) concepts that have successfully been utilized by other organizations. The purpose is to benchmark how other companies have successfully implemented information technology and how SaveWithUS can conceptualize these strategies. The focus of IT is not just on the internal applications or computer systems that reside on the network; rather the focus is the strategic approach that information systems can have to support the business plans, goals, and objectives of the organization. Ultimately, a strategic approach to information technology should improve a company’s competitive advantage, business intelligence, reduce costs, increase margin, streamline business processes speed, accuracy, and reliability, communication, data based decision making, and increase overall customer value (Mickler, 2008).

Many start-up companies develop a business plan but rely heavily on their own experience when it comes to business decision making rather than facts that an existing company would use. As the company grows, mistakes become more costly, they will rely more and more in information to base sound decisions. SaveWithUS is at the juncture where business decisions need to be based on facts not guesses. To remain competitive and profitable, SaveWithUS needs to reduce costs of merchandise manufactured and products purchased for resale. Technology has changed the way information is captured, stored, processed, analyzed, distributed, communicated; and the organizational infrastructure which is used to reduce costs, increase profits, and gain a competitive advantage. The effective use of information technology requires an organization and cultural change. The most important component in the change equation is making the decision to change. If resistance to change permeates, this will lead to the breakdown and irrelevancy of what was once a strong organization (CTU Online, 2008). Change is forever part of business sustainability.

Understanding the external business environment can improve the strategic approach that an organization should adopt in a competitive market. A highly competitive environment includes multiple firms targeting the same market to win the same business. The external environment has forces which business must contend with for survival. Michal Porter has devised a five forces model that focus on these external pressures. The five pressures are 1) rivalry among existing competition, 2) threats of substitute products, 3) bargaining power of suppliers, 4) bargaining power of channels and end users, 5) barriers to entry. This model can be very helpful to think of competition in its broadest sense which suggests areas for competitive posture. Porter’s five-force’s model provides the framework to judge an organizations position and analyze a business level strategy which will describe how an organization competes in the marketplace (Frenzel & Frenzel, 2004). These are just a few reasons why information technology is the critical infrastructure of any organization.

The case study referenced herein is Electronic Arts (EA), the leading independent video game publishing company, producing popular titles such as The Sims, Madden NFL, and Medal of Honor. They also publish games based on Hollywood franchises such as the Lord of the Rings, Harry Potter, and The Godfather. Nestled in Silicon Valley, Electronic Arts is a very successful organization with more than 50 best-sellers that sold more than a million copies each. Many people would believe that Electronic Art’s is a video game development company which base its success from the rich talent pool of creative people, artists, animators, programmers, and technicians. This is a highly competitive industry and getting more competitive every year with a fickle customer base. EA has competitors such as Activision, Take-Two, and Vivendi Games which all sell strong in the marketplace. It would be reasonable to assume they also have a highly talented staff of developers and creative artists. EA is successful because they are the model of a stellar management company. According to EA president and COO John Riccitiello, “EA pulls it off by honing the way that it develops and markets games: by thinking of its products as emotional, cinematic experiences, not toys.” Electronic Arts is in the business of delivering a total entertainment experience. The company built its creativity on a foundation of management discipline (Salter, 2007).

EA understands the completive landscape and performs extensive due diligence. Riccitiello has stated, “We often know more about the feature set of our competition's products than our competition does.” Electronic Arts recognizes that gaining a competitive advantage will not materialize because of slicker graphics, audio, or better storylines than the competition; consumers expect these features to improve over time and that is part of the gaming industry. EA knows that the high-tech imagery features they develop today will only be copied tomorrow which will not provide long-term advantage. EA has strong competitive intelligence, forecasting, budgeting, timing, and methodical project management disciplines. EA uses information technology to store financial data, sales data, important customer data, competitive data, and offer access to share this information across business units. EA has the discipline of sharing best practices and technologies using intranet libraries. This enables data to become more accurate and to be shared or broadcast faster through a more reliable means (Mickler, 2008). An e-business strategy can be defined as the electronic means of internal and external communications for an organization. Internally, employees can use a private intranet to share information, facilitate knowledge dissemination, management reporting, collaborate with business partners, sales promotions, and competitive intelligence, all of these features and more can be used with the development of an intranet.

EA is diligent to understand their customers. They know that what is real to their consumers is what is on TV. Electronic Arts believes in gaining better understanding of their audience through the use of focus groups. These are non-EA groups of gamers and EA takes their recommendations seriously to the point they will do a complete rewrite.  Traditionally, the gaming industry is male dominated. Industry demographics suggest the target audience is male between the ages of 16 and 24. EA wants to expand their market beyond the typical gaming demographics. However, EA proceeds with caution not to lose current customers that do not want to see dumbed down products. When making complex decisions on marketing strategies and tactics, it is important look at hard data to in decision making. Information technology can provide the means of using marketing intelligence, trends, economic data, competitive market data, technological, demographics, government sources, and cultural and social information to provide a solid foundation upon from which to draw (Salter, 2007).

 Using e-business strategies such as customer relationship management (CRM) tools can identify important customer data to develop products and service specific to their needs, wants, and desires. The result of their data was a game titled the SIMS which attracts customers of all ages, thus developing new markets with different set of wants, needs, and desires. In addition, e-business is a means to reduce customer and supplier expenses, meet customer and supplier needs in a defect-free manner, and improve the speed in which these functions can take place. Knowledge management tools are processes the organization will employ to collect, store, analyze, and distribute information. Information technology offers data mining technique which are the convergence of technologies that provide computations to make sense of all the information stored (Frenzel & Frenzel, 2004).

The maturity of an information system in an organization can have a direct effect on the speed, accuracy, and reliability of its data processing. Information technology can eliminate the manual logging of paperwork, eradicate human error and increase speed, accuracy and reliability of the information stored (Mickler, 2008). Some of the mundane tasks can become completely automated through bar code scanners and other technology which will reduce labor costs, increase accuracy of data, and induce inventory cost controls (Mickler, 2008). I addition, information technology can improve the manufacturing process while meeting customer demands and reduce costs. In an effort to accurately control inventory costs, SaveWithUS should consider Just-In-Time (JIT) manufacturing and including technology to help reduce costs. JIT does not use the conventional ways of producing products with large batch sizes at high volumes. The JIT philosophy is where machine operators produce only the items needed, when it is requested, and on time. Information technology also plays a vital role in measuring the return on investment for these new processes (Frenzel & Frenzel, 2004).

 Computer inventory management systems can control and coordinate delivery of raw materials or components from suppliers with production schedule, thereby minimizing inventory carrying costs. It is absurd to realize management can not track the percentage of repeat business, the accuracy of the expense of manufacturing costs, and sales goods of sold (CTU Online, 2008).

The objective of SaveWithUS needs to be the development of a realistic business strategy that has full support of top management, established clear goals, development of long-term customer relationships, and provides maximum value. Bringing quality value to the customer is vital in the competitive and global business world. A competitive advantage is achieved when an organization has integrated information technology in the business activities with the value chain more cost-effectively than the competition. The goal of a business is to sell their products and services and keep customers buying in the future by means of adding value. Customers exchange something of value, such as money, for the products and services an organization produces. Strategic planning allows an organization to recognize how the customer sees the value of a company’s product or service and helps better position their goods in the market to make a profit (Frenzel & Frenzel, 2004). Strategic plans will use resources of people, money, facilities, and technical capabilities that are required in order to achieve the goals and objectives. The goal of information technology is to support these efforts and add value of speed, accuracy, and reliability (Mickler, 2008).

 

References:

CTU Online. (Ed.). (ca. 2008). Course Materials: IT600-0803A-01: Information Technology Management. [Printable version]. Colorado Springs, CO: CTU Online. Retrieved July 9, 2008, from CTU Online, Virtual Campus website: https://campus.ctuonline.edu/classroom/MultimediaCourseMaterials.aspx?Class=204548&tid=44

Frenzel, C, & Frenzel, J. (2004). Management of information technology, forth edition. Boston, Massachusetts: Thomson course technology.

Mickler, R. (2008). Chat posting.  Colorado Springs, CO: CTU Online. Retrieved July 8, 2008, from CTU Online, Virtual Campus, IT600-0803A-01: Information Technology Management website: https://campus.ctuonline.edu/mainfrme.aspx

Mickler, R (2006). Information systems. Retrieved July 8, 2008, from http://micklerandassociates.com/_presentations/information_systems/information_systems_files/frame.htm

Salter, C. (2007). Playing to win. Retrieved July 7, 2008, from Fast company Web site: http://www.fastcompany.com/magazine/65/ea.html

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