General Motors has several internal and external influences that are challenging them to reduce their operating costs and become more efficient. In doing an analysis of the General Motors using Porter’s Competitive Model these influences become clear and opportunities for the company to reduce costs and increase efficiency using information systems becomes obvious. Porter’s Competitive Model is a model used to describe the interaction of external influences; specifically threats and opportunities that affect an organizations strategy and ability to compete Laudon & Laudon, 2005, p. 103.
Starting at the center of the model is the current industry, which includes General Motors and their typical competitors, such as, Ford, DaimlerChrystler, and the Japanese Laudon & Laudon, 2005. All of these traditional competitors are able to produce cars at a much cheaper cost than General Motors.
Looking at the supplier portion of the competitive forces model, part of the reason General Motors was unable to produce cars inexpensively in comparison to their competitors was that they were producing a lot of their own parts. Their competitors were able to purchase parts from outside vendors at lower prices. General Motors viewed this as an opportunity and has since shed a lot of workers and factories and are currently searching everywhere for the lowest prices on parts. Also General Motors was very slow at producing cars because of old information systems and outdated processes. A lot of General Motor’s systems could not communicate with each other, which was causing a major lag in the production of automobiles. By integrating these systems they were able to become faster and leaner and were able to increase their customer focus Laudon ; Laudon, 2005.
In the competitive forces model, General Motors also has influence from new products and services to reduce costs and increase efficiency. General Motors wants to experiment with new ways to serve their customers, one of which was online shopping, allowing customer to shop for car models and colors online and giving them dealerships in the area that were currently in possession of the car they preferred. By utilizing the Internet, GM was able to provide additional services to their customers and allow them to also purchase vehicles online. General Motors also found an opportunity to build vehicles to order. This allows them to reduce the cost of inventory and sales incentives by finding ways to make cars that customers have actually ordered Laudon ; Laudon, 2005.
Another new technology-based service General Motors has been experimenting with is called OnStar. OnStar is a navigation, Internet, safety, and communications capability that is available on a majority of GM models. Customers have to subscribe to the service but with the service they receive roadside assistance, stolen-vehicle tracking, and concierge support such as making dinner reservations Laudon ; Laudon, 2005, p. 111. OnStar is a comprehensive service, however, has not been successful in gaining interest of a lot of GM customers.
New entrants to the automotive market have been a threat to General Motors. Some of these entrants include Nissan and Hyundai. Although, they have been around for a while, they are increasingly gaining a large portion of the market and have been very efficient in product development and bringing new models to the market quickly. In response to this threat General Motors has attempted to stream line their product development portion of their business. In the past, General Motors would have to go through several departments and systems to take a car from design phase to actual production. The average was typically 48 months for this process.
After some analysis, General Motors has formed a single committee that now handles the entire product development process. They removed all of their former design and engineering systems and replaced them with a single system called EDS’s Unigraphics Laudon & Laudon, 2005, p. 112. Everyone involved in the committee has access to this new system and are able to access from a web-based interface to share three-dimensional designs Laudon & Laudon, 2005. It now takes General Motors approximately 18 months from initial design to production.
Customers also play a part in the competitive forces model. General Motors still struggles in changing potential and actual customers perception of the company from a second rate automobiles compared to their competitors. With the Internet service and new product development technique they hope to change this perception and bring new automobiles and services to these customers.
Information technology has played a large role in the redesign of General Motors. They have been able to successfully reduce operating costs by becoming more efficient and competitive. They have integrated several systems and have stream lined internal processes to reduce costs and have also utilized the Internet to gain new customers and aid in sales of automobiles. General Motors will need to continue using information systems to gain advantages over their competitors and to stay a major competitor in the automotive market.
Within the last few years preventing future terrorism attacks like the one that occurred on September 11th has become a major concern for both citizens and the government of the United States and globally. In response to this concern, governments and their organizations have created massive databases of personal information on citizens and whom they think could be potential terrorists. These databases have brought up questions of social and ethical issues regarding citizens’ privacy and rights in regards to the information being collected.
Ethical issues are a concern on the individual level Laudon ; Laudon, 2005, p. 153. Citizens need to be concerned about the information that is being gathered about them from these systems and how it will be used. As individuals, we need to know if the information being gathered about us by the government is going to improve our quality of life and ultimately protect us or will it hinder our everyday lives. For example, the government is keeping track of travelers that could be a potential terrorist, but some of that information is not current and could cause a person to be wrongly identified. Another major concern is that someone may steal information, such as, a hacker to use for purposes of identity theft or harassment.
On a slightly broader scale there are social issues that surround the collection of personal data. Bringing up questions of how the collection of personal data will affect society and better society as a whole. If the information being collected helps to catch someone that is going to blow up a building and kill people than it is our responsibility to provide the government with this information. We all need to do our part in protecting others from harm. However, the information could once again identify the wrong person and then how will that person’s name be cleared and will society reject them.
Some of the information being gathered also helps with traffic flow by recording the number of cars and license plate numbers that pass through bridges or enter into a city daily. This can greatly help society by reducing congestion, however, is gathering a license plate number relevant to reducing this congestion.
The last issue concerns the government and political issues in collecting personal data. The government’s responsibility is to protect the citizens and they need to evaluate if collecting this information is going to help or create a greater threat. By having all this information integrated could make them an even bigger target for crime or will it allow them the ability to weed through the millions of law-abiding citizens and catch those that are a threat to society. The government needs to find what information is really relevant and what information invades citizen rights. Some of the systems that they discuss in this book seem to linger close to the line of invasion. Especially, Carnivore, the system that watches at what citizens are looking at on the Internet lingers close to that line. People want to feel safe but don’t want to be watched.
Another challenge the government faces is the security of this information. If they put it all together and it gets into the wrong hands and is used wrongfully then they have compromised the safety of the citizens they are trying to protect.
Information Technology is allowing us greater and greater storage of information and some of which is being collected without for sure use. The government needs to make sure that all this information that is being collected and viewed is really useful. They also need to make sure they accurately interpret the information and not flag the wrong person without looking at all the facts. There is a thin line between invasion of privacy and the information already being collected and it needs to be clear that it is for protection and not for alternative uses.
Information systems have greatly changed the way companies do business. They are able to operate more efficiently with the new technology that has become available and provide better service to their customers. Along with reducing operating costs and increasing efficiencies, some companies have saved large amounts of money and have been able to stay afloat in the ever-changing business environment.
One technology that has caused such a rapid change in the business environment is the Internet. The Internet has allowed the face of businesses to change and reach a large, global customer base. By creating a digital market the Internet has linked buyers and sellers Laudon & Laudon, 2005, p. 26. Instead of having physical stores, companies can now provide services and conduct business transactions over the Internet with little expense this is also known as electronic commerce Laudon & Laudon, 2005.
Another way Internet technology has aided business is in the form of intranets and extranets. Intranets are internal networks that companies use to share information inside the company, which extranets are intranets that employees can log into securely from outside the company. This technology allows a company to share information securely without being on the Internet where anyone could just gain access. Allowing employees on the same network makes them more efficient and timely in sharing information as well as saving money by using one system instead of several.
Internet, intranet, and extranet used for electronic commerce is used by businesses to stream line all processes making them more efficient and providing reduced operating costs. In some cases work done without this technology could take several days and people to process a transaction that now is done in a matter of minutes.
However, with this rapid change there are issues in managing this new technology. First of all, this technology is expensive but the return is great. Getting an organization to realize that the initial cost of setup will produce great savings can be difficult. Management must find ways to measure and communicate the savings to upper management to show that this technology is necessary and will provide cost savings Luadon & Laudon, 2005.
Another challenge is to redesign the strategic business process. If they are going to successfully utilize the new technology they will have to eliminate old business processes and retrain employees to use and see value in the new business process. This can be particularly difficult because old habits are hard to drop. If value and benefits are communicated this can become less of a challenge Laudon & Laudon, 2005.
Since this technology reaches customers globally, businesses need to ensure that their new systems are capable of supporting international customers. Language and cultural barriers can create a chaotic environment but with the right system and business processes this challenge can become obsolete Laudon & Laudon, 2005.
When building the information architecture companies must be aware of what they currently need to do business, but also allow the system to be upgraded in the future for changes that may occur. Business is changing rapidly and the system that they create should allow them to adapt to these changes and not hinder them. Hardware and software should be compatible and allow information to flow freely. This is crucial in the design process Laudon & Laudon, 2005.
A final challenge of management is in regards to responsibility and control. They need to find a way to ensure that proper security is stored and sensitive information is only handled by those that need it to do their job. Although they want the information shared they also need to have control of the information Laudon & Laudon, 2005.
Internet technology is crucial to a company’s success in regards to reducing operating costs and increasing efficiency. It can provide the company with new customers and streamline business processes. However, there are some management challenges that need to be addressed when using this technology. If the company is aware of these challenges and addresses them successfully the full potential of this technology will be reached.
Information systems and technology is allowing businesses to reach consumers in ways that they were unable to do before. One such method is direct sales over the web, where manufacturers are now cutting out the intermediary and directly selling to the consumer. This process is called disintermediation Laudon ; Laudon, 2005, p. 123 and is allowing consumers to purchase goods at a cheaper cost by eliminating the middleman who would typically raise the price in order to make a profit.
Web personalization has also made a large impact on consumers. Web personalization is the tailoring of web content directly to a specific user Laudon ; Laudon, 2005, p. 123. Basically when a customer visits a website and either purchases a good or views certain items the web page alters according to each customers preference. For example, at Amazon.com if a certain book is purchased the next time that customer logs on there is a suggested list of books that are similar to the one previously purchased are listed that Amazon.com finds may be of interest to that customer based on there previous purchase. Many websites are using web personalization because it allows them to provide customer service and a sales tactic without having an actual salesperson present. It also makes the customer feel as if they are being catered to and that they are valued Laudon ; Laudon, 2005.
Data is also collected from purchases of customers to find what is the best selling product so that the company can keep plenty of that product in stock. For example, Dillons stores in Wichita uses what is called a Plus Card which keeps the information of the customer contains the customers demographic information. Every time the customer uses their plus card Dillon’s keeps track of what is being purchased. Items that are popular can be put on sell to increase revenue or inventory can be updated to provide for these items.
Besides being used as a marketing tool, businesses also use the Internet to provide customer service. Instead of having a call center where a customer needs to talk to a physical person they can use the Internet and browse frequently asked questions to get information or answers. They also can send emails to the business and expect a response in little time. Using the Internet for customer service allows the customer to be in control and tailors to the customer’s time schedule.
There are many benefits in using technology to gain customer information. The most popular is as a marketing function to provide customers with the products that are most popular. Also, it allows them to provide salesman type services without a physical salesperson or customer service representative. This is saving businesses money by reducing the cost of employing this person and is tailoring to the flexibility needs of the ever-demanding consumer.
Laudon, K.C. ; Laudon, J. P. 2005. Essentials of Management Information Systems:
Managing the Digital Firm. Upper Saddle, NJ: Pearson Education Inc.