This article relates to chapter 15 regarding global business strategy in that it describes IBM’s move to expand its global strategy. According to the Wall Street Journal, IBM is planning to lay off about 5000 employees and transfer those job opportunities overseas to India. This move will not be viewed favorably in public opinion, but it is a smart move that will cut costs and improve service delivery for the company’s Global Services division; it will allow IBM to become more efficient and to more effectively deliver its services. The cost of labor in India is lower than in North America and the costs associated with building and maintaining facilities is also cheaper. An engineer in the US can be paid $120,000 whereas one in India can be paid $25,000. Besides salary and compensation costs, customers will also ultimately benefit from this decision. The savings in cost can be translated into savings in price, thus making IBM more price-competitive with offshore providers in India. Offshore service providers are growing at a dramatic rate and that is forcing all service providers to be more efficient in their delivery mechanisms. IBM’s move overseas is a good move because it will lower costs, improve efficiencies, and help in lowering prices for customers all the while offering a broader set of services. These days, customers are trying to engage with outsourcers with shorter contract durations, smaller deal sizes, and targeted services. Service providers are trying to leverage the savings and productivity global delivery can offer largely because it translates into better options for clients, who can choose to have their delivery done where they want. This is why IBM, as a service provider, chooses to offer these options and savings to its customers. IBM has made it a point to maintain its geographic presence, however. It plans on expanding its US presence as well. In its 2008 annual report, IBM explained its global intentions as trying to adjust towards emerging geographies to tap into their higher growth, technological infrastructure, and talent pool. This move is justified by the new markets opened by integrated global economies that offer new opportunities and new sources of skill. The internet has allowed for communication and collaboration around the world and has introduced a new model on continuous global connection. The number of employees in the US has dropped somewhat whereas the number of employees in global divisions has increased. IBM operates in over 170 countries and it is trying to refocus its business on the higher value segments. It is trying to rebalance its workforce globally in order to improve its global reach and competitiveness and to emphasize its changing geographic mix. These job losses in the US will not be taken positively, but in terms of IBM’s strategy, globalization is a smart move to help improve its business structure.
Reference:
Dubie, Denise. (2009). After Layoffs, Will IBM Send More Jobs Overseas? Retrieved from PC World on May 27, 2009.
Website: http://www.pcworld.com/article/162049/after_layoffs_will_ibm_send_more_jobs_overseas.html
Tuesday, June 9, 2009
Nestle and Its Global Strategy
2) Nestle decided to transform itself from implementing a multinational strategy to implementing a transnational strategy, so instead of each facility in each nation tending to the needs of the culture around it, all facilities around the world would format and store data identically and use the same set of information systems. There would be no more adhering to local customs, unless legal matters arise. In this way, all the value-adding activities are managed from a global perspective, without reference to national borders. This strategy optimizes the sources of supply and demand, and leaves room to take advantage of any local competitive advantages. Nestle essentially will now take the globe as its management frame of reference, as opposed to the home country or multinational facilities. This strategy is highly appropriate for Nestle’s business model because it desires to eliminate that inconsistency of having its various facilities use the same suppliers at different times for different needs, all of which only serves to increase costs and prevent the electronic side of the firm’s business from emerging. Transnational firms are truly globally managed firms that represent a larger part of international business, and Nestle has made an excellent choice to pursue such a goal.
3) The major technological challenge facing Nestle was the fact that all the global facilities were using the SAP R/2 ERP software, but they each ran it differently and used different schemes for formatting data and managing forms. This resulted in increased maintenance costs and made the compilation of financial reports to gain company-wide views of performance that much more tedious. The management and organizational challenge was that the different global facilities largely ignored this initiative for a unified corporate culture. The Asian market managers developed a common system for managing their supply chains, and the American division had its own system, different from the Asian one. Managers resisted the idea of giving up control over their business processes to participate in this centralized solution. They feared losing decision-making power and felt the initiative was impractical. Standardization would be acceptable to them, but only if their particular practices were the ones being implemented globally. Thus, it was nearly impossible to satisfy these managers, who would pinpoint every problem that would come up in the execution of the GLOBE standards.
4) To improve the technological challenge, Nestle adopted the newer SAP R/3 ERP software for its divisions to help integrate material, distribution, and accounting applications into a single-minded e-business. Nestle initiated its GLOBE team experts to challenge its processes, find its weaknesses, and configure a list of the best practices to use for each process. This information was gathered into a Best Practices Library, which is an online database of step-by-step guidelines for processes and solutions. During meetings to convince the market managers to participate in the centralization process, one of the market managers stated that the system would be implemented regardless, and after several arguments and problems, the system itself proved to show its benefits for the firm. Unfortunately, costs rose as well, so the project was revised to maintain a spending cap to protect the company’s profits. Each country was also asked to appoint a GLOBE manager who would help facilitate the adoption of the new system. A steering committee at the headquarters would schedule and manage rollouts. These strategies were pretty successful in that about 30% of the business had converted to GLOBE, but there still remains a great percentage that has resisted the change. Results have not been up to par with the firm’s expectations, but Nestle is still working towards its goal of operating as a single unit on a global scale. This type of transnational business strategy is the hardest to achieve, but also yields the greatest results. So, Nestle has not been too successful in terms of profits, but it has been tremendously successful in implementing such a tough strategy in even 30%of its facilities.
3) The major technological challenge facing Nestle was the fact that all the global facilities were using the SAP R/2 ERP software, but they each ran it differently and used different schemes for formatting data and managing forms. This resulted in increased maintenance costs and made the compilation of financial reports to gain company-wide views of performance that much more tedious. The management and organizational challenge was that the different global facilities largely ignored this initiative for a unified corporate culture. The Asian market managers developed a common system for managing their supply chains, and the American division had its own system, different from the Asian one. Managers resisted the idea of giving up control over their business processes to participate in this centralized solution. They feared losing decision-making power and felt the initiative was impractical. Standardization would be acceptable to them, but only if their particular practices were the ones being implemented globally. Thus, it was nearly impossible to satisfy these managers, who would pinpoint every problem that would come up in the execution of the GLOBE standards.
4) To improve the technological challenge, Nestle adopted the newer SAP R/3 ERP software for its divisions to help integrate material, distribution, and accounting applications into a single-minded e-business. Nestle initiated its GLOBE team experts to challenge its processes, find its weaknesses, and configure a list of the best practices to use for each process. This information was gathered into a Best Practices Library, which is an online database of step-by-step guidelines for processes and solutions. During meetings to convince the market managers to participate in the centralization process, one of the market managers stated that the system would be implemented regardless, and after several arguments and problems, the system itself proved to show its benefits for the firm. Unfortunately, costs rose as well, so the project was revised to maintain a spending cap to protect the company’s profits. Each country was also asked to appoint a GLOBE manager who would help facilitate the adoption of the new system. A steering committee at the headquarters would schedule and manage rollouts. These strategies were pretty successful in that about 30% of the business had converted to GLOBE, but there still remains a great percentage that has resisted the change. Results have not been up to par with the firm’s expectations, but Nestle is still working towards its goal of operating as a single unit on a global scale. This type of transnational business strategy is the hardest to achieve, but also yields the greatest results. So, Nestle has not been too successful in terms of profits, but it has been tremendously successful in implementing such a tough strategy in even 30%of its facilities.
Tuesday, June 2, 2009
Quality in Transforming GE Completely Into An E-business
This article relates to chapter 13 with respect to six sigma and total quality management in the world of information technology. The CEO of GE turned to the leader of the company’s Six Sigma quality-improvement project when he decided that GE needs to totally become an e-business. There was a tough transition program across 36 GE business units with an overall $7 billion in online transactions in the previous year, and now $1.5 billion was looking to be saved on streamlined internal processes. According to the CEO, GE was frightened after witnessing a dramatic change in the brokerage industry, so it decided to launch a Destroy Your Business initiative to find out how the internet would destroy its business. An e-commerce leader was appointed in each business unit to spend six to eight months studying issues and reporting back to the CEO. After looking closely at its dot-com competitors, it found that mostly websites posed a threat. The business models were not good and people still needed to go to the manufacturer to pick up parts. The tools these other companies were using, however, showed some potential to help out GE. The major tips given for GE’s e-business push were to focus on the sell side, make sure the company grows as much as possible from the online channel, and to add value to the customers so they will have a reason to transact electronically. Internal productivity is also key. Major challenges included migrating customers. GE decided to allow them to have their workflow for purchasing online, which translates to increased productivity. In the firm, it was difficult to shut down parallel processes, or other ways of conducting business not online. GE had a big initiative to get more deflation by asking suppliers to go through auctions online to bid for it. This did not introduce much opposition on behalf of the suppliers, largely because it helps eliminate the need to travel for negotiations for a contract, and communication is considerably faster. GE employees have been forced to work differently due to the elimination of options (travel reservations can only be done through the company’s website for example). The last piece of advice granted to other companies trying to become e-businesses is to achieve complete company commitment towards the goal. One department cannot drive it, top management needs to implement the ideas of quality and six sigma.
Reference:
Q&A: Gary Reiner. (2001). Retrieved from PC Magazine on May 26, 2009.
Website: http://www.pcmag.com/article2/0,2817,33527,00.asp
Reference:
Q&A: Gary Reiner. (2001). Retrieved from PC Magazine on May 26, 2009.
Website: http://www.pcmag.com/article2/0,2817,33527,00.asp
Maine's Medicaid Issue
1)Maine provides medical coverage for over 260,000 people via their Medicaid program. Doctors, hospitals, clinics, and nursing homes all submit claims to Medicaid for payment of their services. Maine had to process thousands of claims per week using an outdated mainframe system, all the while adhering to HIPAA guidelines. With so much information stored in the database and with so many people trying to access that information, it is crucial for a custom-built system to be employed for such a purpose. Information systems are important to help increase the efficiency of the state Medicaid system, but the technology has to work correctly. The claims processing system used by the state was faulty and only served to exacerbate the problem. It was rejecting claims much more frequently than the old system, most of which were being held up as suspended. This suspended file grew quickly and lead to millions of dollars in claims being held back; in a two-month interval, 300,000 claims were frozen. The Bureau of Medical Services could not keep up with the number of phone calls or the processing of suspended claims. Providers who weren’t being paid were forced to turn away Medicaid patients or to shut down their operations, while others sought bank loans. The state’s budget was also negatively impacted. The system software was also prone to errors in overpaying doctors. The claim forms also had 40 fields of information that usually confused the providers and so incorrectly filled out forms were suspended. Furthermore, only 13 people were on staff to deal with customer service calls from 7000 providers. This disaster in the end cost the state an additional $30 million. Obviously, the impact of the faulty Medicaid claims processing system is tremendous.
2)The major risks of the Medicaid claims processing system project include a number of factors, all of which proved to have a negative impact on the entire state system. The system was very error-prone, issuing checks for overpayments and later trying to recover the extra money given out. The claims forms were difficult to fill out so some errors were made and the system would automatically classify those claim forms as suspended. To circumvent such problems, CNSI recommended that all providers re-enroll so their information would be complete according to the new system’s requirements, but the department chose instead to transfer the existing information from the old system to the new one. There is a risk of the new system still recognizing this information as incomplete, which is what happened. Another risk factor was the low number of staff members trying to satisfy thousands of providers at once. Other risk factors include that this was the first time a Medicaid claims system was being designed by CNSI. There were only two proposals for the system and it went ahead with the more problematic one, unknowingly. The president of CNSI even admitted that his company lacked the experience of working Medicaid systems, which is a risk factor for increasing the amount of error. Another major risk factor was the lack of money within the budget to even train any members of the staff to use the system.
3) The major problems faced in implementing the new system include an increase in technological errors that would lead to the system classifying a great number of claim forms as erroneous and thereby suspending them. This left thousands of providers unpaid, which lead to a decrease in the acceptance of Medicaid patients and even the closing down of some providers. After several attempts to alleviate this mess, the suspended claims backlog only grew in size. In terms of management and organization, the project managers were weak and there was no communication between departments, so that multiple departments would work on the same project simultaneously oblivious of the others’ doings. The staff members had no experience with the new system technology, nor were there enough money in the budget to train any of the staff members on how to use the system.
2)The major risks of the Medicaid claims processing system project include a number of factors, all of which proved to have a negative impact on the entire state system. The system was very error-prone, issuing checks for overpayments and later trying to recover the extra money given out. The claims forms were difficult to fill out so some errors were made and the system would automatically classify those claim forms as suspended. To circumvent such problems, CNSI recommended that all providers re-enroll so their information would be complete according to the new system’s requirements, but the department chose instead to transfer the existing information from the old system to the new one. There is a risk of the new system still recognizing this information as incomplete, which is what happened. Another risk factor was the low number of staff members trying to satisfy thousands of providers at once. Other risk factors include that this was the first time a Medicaid claims system was being designed by CNSI. There were only two proposals for the system and it went ahead with the more problematic one, unknowingly. The president of CNSI even admitted that his company lacked the experience of working Medicaid systems, which is a risk factor for increasing the amount of error. Another major risk factor was the lack of money within the budget to even train any members of the staff to use the system.
3) The major problems faced in implementing the new system include an increase in technological errors that would lead to the system classifying a great number of claim forms as erroneous and thereby suspending them. This left thousands of providers unpaid, which lead to a decrease in the acceptance of Medicaid patients and even the closing down of some providers. After several attempts to alleviate this mess, the suspended claims backlog only grew in size. In terms of management and organization, the project managers were weak and there was no communication between departments, so that multiple departments would work on the same project simultaneously oblivious of the others’ doings. The staff members had no experience with the new system technology, nor were there enough money in the budget to train any of the staff members on how to use the system.
Saturday, May 23, 2009
Knowledge Management and Collaborative Communications on Behalf of the Vice President of IBM
This article presents an interview with Mike Zisman, who is the executive vice president for strategy at Lotus Development and vice president of strategy for parent company IBM. He is the IBM groupthink guru and he is leaning towards a new instant messaging and knowledge management system in his firm. He spends most of his time exploring knowledge management and collaborative communications. When asked how he thinks the traditional messaging and groupware market will pick up out of its maturation phase, he answered that messaging is something people need these days and so the market is moving in a new direction. The focus is more on solving problems in the collaborative market and real-time messaging, which yields knowledge management. He then describes knowledge management with a quote, stating that it is best explained as, “HP would be better off if HP knew what HP knew.” He defines it as consisting of a whole set of technologies, the five key ones being business intelligence, collaboration, distributed learning, knowledge discovery and mapping, and expertise location. (Some of these match up with the knowledge management values in chapter 11.) He states that technology plays a major role in knowledge management, but it would be futile without it. Just as we learned in chapter 11, knowledge management requires the recognition that a firm’s core processes need to be changed; throwing out technologies will not solve any problems. The real-time collaboration market that deals with pure messaging has peaked according to Zisman, and customers now want to see messaging-based collaboration. The resulting collaboration products have proven to be successful; he uses it himself in his company and is able to instant message anyone in the company. Using a browser, he can go to a website and click on a meeting and work with the members in the meeting, which eliminates the need for travel. The future holds directly embedding the collaboration tools into applications, and the integration of this into other IBM units is something to look forward to as well.
Reference:
Songini, Mark. (1999). What’s Beyond Groupware? Retrieved from PC World on May 22, 2009.
Website: http://www.pcworld.com/article/13198/whats_beyond_groupware.html
Reference:
Songini, Mark. (1999). What’s Beyond Groupware? Retrieved from PC World on May 22, 2009.
Website: http://www.pcworld.com/article/13198/whats_beyond_groupware.html
Information Systems and your Doctor
1. The major problems faced by hospitals and physicians include drug errors and inappropriate prescriptions. 1.5 million Americans are injured each year due to drug errors in hospitals, nursing homes, and doctor’s offices. Over 7000 Americans are killed each year due to inappropriate prescriptions. These preventable drug errors add over $5800 to a patient’s hospital bill. These errors are typically a result of human factors, such as poor handwriting, memory lapse, fatigue, or distractions. Management and organizational problems include not having a secondary person to check up on the drug order. Technological factors include not having the appropriate information technology system to aid in making these important decisions.
2. A CPOE system is appropriate because it helps doctors and nurses make better prescription decisions using information technology. Errors can be reduced, physicians can be kept updated on drug treatment guidelines, and the ordering of superfluous tests or drugs can be avoided. The DDS system is also appropriate because it tries to reduce misdiagnoses of patients by providing a comprehensive list of possible conditions to the physician regarding the patient. This system also directs physicians to important information that can be found in medical journal articles regarding the latest research. Issues involved with the systems include the fact that physicians must be willing to incorporate the use of the system into their workflow; plenty of doctors are resistant to change in the workplace. The system itself can also cause a new set of problems, such as scattering patient data and drug-ordering forms over different computer windows, which increases the chances that physicians would order the wrong medication. The system may also be rigid by not allowing attempts to enter orders for patients not admitted yet. The systems can be improved and can allow for greater efficiency and communication if implemented correctly.
3) Obstacles that prevent computer systems from improving the medical industry include the lack of participation on behalf of medical staff to train on a new system that may not even do the job correctly, the introduction of new types of errors such as scattering patient information which results in mix-ups, the lack of sensitivity to the specific patient such as his height, weight, and age, and rigidity, in that orders may not be able to be written up unless the patient is admitted. These problems can be circumvented, however, by using improved systems that minimize errors and increase the communication among medical staff. These systems can potentially save the users a great deal of money. It is also important to remember that the systems are not there to replace the physicians; rather, they are there to aid in the efficiency of the physician’s work. In the end, the physician has the final say.
2. A CPOE system is appropriate because it helps doctors and nurses make better prescription decisions using information technology. Errors can be reduced, physicians can be kept updated on drug treatment guidelines, and the ordering of superfluous tests or drugs can be avoided. The DDS system is also appropriate because it tries to reduce misdiagnoses of patients by providing a comprehensive list of possible conditions to the physician regarding the patient. This system also directs physicians to important information that can be found in medical journal articles regarding the latest research. Issues involved with the systems include the fact that physicians must be willing to incorporate the use of the system into their workflow; plenty of doctors are resistant to change in the workplace. The system itself can also cause a new set of problems, such as scattering patient data and drug-ordering forms over different computer windows, which increases the chances that physicians would order the wrong medication. The system may also be rigid by not allowing attempts to enter orders for patients not admitted yet. The systems can be improved and can allow for greater efficiency and communication if implemented correctly.
3) Obstacles that prevent computer systems from improving the medical industry include the lack of participation on behalf of medical staff to train on a new system that may not even do the job correctly, the introduction of new types of errors such as scattering patient information which results in mix-ups, the lack of sensitivity to the specific patient such as his height, weight, and age, and rigidity, in that orders may not be able to be written up unless the patient is admitted. These problems can be circumvented, however, by using improved systems that minimize errors and increase the communication among medical staff. These systems can potentially save the users a great deal of money. It is also important to remember that the systems are not there to replace the physicians; rather, they are there to aid in the efficiency of the physician’s work. In the end, the physician has the final say.
Friday, May 8, 2009
Fully Automated Supply Chains are Difficult to Implement
This article relates to supply chain management mentioned in chapter 9. A key feature to remaining competitive is to adopt a fully automated supply chain in a business in order to make the relevant data available to suppliers, consumers, and distributors. This is, however, a difficult step to take, largely due to the fact that it is expensive to implement and there is no consensus among suppliers in pursuing such a task.
CIOs believe that being able to link business information to the customer is worthwhile, but it is a difficult task. Customers usually enjoy the convenience of being able to check upon the delivery status of the online products they have ordered, but this can only be achieved with the full cooperation of all the links along the supply chain, big and small. This full supply chain connectivity, however, is impossible to achieve because the small links on the supply chain are not interested in the extraneous expenditure of implementing new IT systems, training for those systems, and business plan changes that would result from such changes. Larger companies have no problem investing in such technologies, but small companies simply are not willing to invest what little they have for electronic data interchange (EDI) or web-based transaction links. Some people believe that large companies must do their share in providing the resources or whatever else they can to help out the smaller companies to make this connectivity work. As an example, being able to set up an EDI system in a small office would require a translator to convert data between the different systems used in the companies. Therefore, it would be very difficult for customers to be able to view data from the small mom-and-pop stores because there is no connectivity between the different information systems used in the companies along the supply chain. Even if all companies desired to implement this system, it would be impossible simply due to the heterogeneity of the information systems.
Despite these problems, however, both the CIO of Sport Chalet and the information systems application manager at West Marine plan on using a supply chain integration service to make it easier to provide connections between the small and large companies along their supply chain. I think this is a great idea, especially since I like to track my packages too and half the time the information is not available, so it would be a greater convenience for me to know where my package is, especially in the event that the package gets lost. I can see how this integration would be difficult, though, particularly since small companies cannot afford to participate. Large companies want to satisfy their customers, but if small companies start taking advantage of their help, a lot of problems can ensue too.
Reference:
Songini, Marc L. (2001). Fully Automated Supply Chains Hard to Pull Off. Retrieved
May 8, 2009 from PC World.
Website: http://www.pcworld.com/article/40862 /fully_automated_supply_chains_hard_to_pull_off.html
CIOs believe that being able to link business information to the customer is worthwhile, but it is a difficult task. Customers usually enjoy the convenience of being able to check upon the delivery status of the online products they have ordered, but this can only be achieved with the full cooperation of all the links along the supply chain, big and small. This full supply chain connectivity, however, is impossible to achieve because the small links on the supply chain are not interested in the extraneous expenditure of implementing new IT systems, training for those systems, and business plan changes that would result from such changes. Larger companies have no problem investing in such technologies, but small companies simply are not willing to invest what little they have for electronic data interchange (EDI) or web-based transaction links. Some people believe that large companies must do their share in providing the resources or whatever else they can to help out the smaller companies to make this connectivity work. As an example, being able to set up an EDI system in a small office would require a translator to convert data between the different systems used in the companies. Therefore, it would be very difficult for customers to be able to view data from the small mom-and-pop stores because there is no connectivity between the different information systems used in the companies along the supply chain. Even if all companies desired to implement this system, it would be impossible simply due to the heterogeneity of the information systems.
Despite these problems, however, both the CIO of Sport Chalet and the information systems application manager at West Marine plan on using a supply chain integration service to make it easier to provide connections between the small and large companies along their supply chain. I think this is a great idea, especially since I like to track my packages too and half the time the information is not available, so it would be a greater convenience for me to know where my package is, especially in the event that the package gets lost. I can see how this integration would be difficult, though, particularly since small companies cannot afford to participate. Large companies want to satisfy their customers, but if small companies start taking advantage of their help, a lot of problems can ensue too.
Reference:
Songini, Marc L. (2001). Fully Automated Supply Chains Hard to Pull Off. Retrieved
May 8, 2009 from PC World.
Website: http://www.pcworld.com/article/40862 /fully_automated_supply_chains_hard_to_pull_off.html
Limited Brands and its Supply Chain
2) Since the first Limited store opened back in 1963, the business grew rapidly, yet there were operational problems behind the scenes. The main issues dealt with the supply chain management, which was evident in the logistics disaster of 400 merchandise trailers showing up at a distribution center parking lot designed to hold only 150. This catastrophe was an immediate result of bad planning systems and lack of proper communication between different segments of the enterprise; no one had knowledge of where the inventory came from and where it was headed to. Another crucial incident that lead to problems revolved around the fact that Limited Brands acquired a number of companies to grow in size, and in doing so, it acquired a number of information systems with hundreds of applications running on a variety of platforms. Thus, supply chain information was not easily transferred between applications, which is a crucial step in properly managing the supply chain. These problems all served to negatively impact the business, particularly in slowing down the supply chain process, which inevitably leads to unhappy customers.
3) The main management problems deal with the lack of communication between the various departments in the firm. Not a single person knew of the origin of the inventory nor where it was headed to, and this is a significant issue that must be dealt with in order to run an efficient business. The organizational problems deal with the lack of communication again, in addition to the fact that most of the managers do not agree on the same methods that should be implemented for the good of the company. The technology problems were the various information systems that were used in the variety of companies that were acquired by Limited Brands and the fact that they were not integrated into one centralized system. Instead, they were all kept as separate entities, which only leads to redundancies and the inability to transfer information from one system to another efficiently.
4) To address these problems, Limited Brands decided to upgrade its supply chain and eliminate the numerous information systems that only complicated the infrastructure. The company tried to increase sales, increase flexibility in responding to customers’ needs, and free up employees so they can better address sales issues, as opposed to focusing on the supply chain and logistics. Several cross-functional projects were launched to increase the credibility of the brands’ new mission, such as the building of regional dock centers to direct products to stores at a cheaper cost and in a shorter amount of time. This way, managers had more time to make decisions on what products to reorder. Limited Brands also contracted to Tibco Software the development of a global application integration platform to improve the company’s ability to track and manage the flow of information throughout the global supply chain. The resulting assessment revealed issues with scheduling and processing of delays, which was attributed to the simplistic point-to-point infrastructure. To improve this, different application programming interfaces were needed, so that changing one API would result in a chain reaction that required changes in all APIs in the connected applications. Real-time reporting and communications with delivery agents were also established, in addition to the integration of the outbound supply chain accountability and reporting (OSCAR) application with the logistics application. Thus, real-time communications and enhanced shipment tracking came about. Limited Brands united all its brands’ technology operations under a single central entity, namely Limited Technology Services. Further technological improvements included using a reusable framework for the replication of software solutions and an enterprise resource planning (ERP) deployment. Web-based demand and supply chain management tools were also adopted. In terms of management and organization, supply chain management was brought closer to the boardroom so the corporate level would be aware of the supply chain concerns, which helped in contributing to the overall corporate strategy, in addition to helping in costs, quality, and customer satisfaction.
3) The main management problems deal with the lack of communication between the various departments in the firm. Not a single person knew of the origin of the inventory nor where it was headed to, and this is a significant issue that must be dealt with in order to run an efficient business. The organizational problems deal with the lack of communication again, in addition to the fact that most of the managers do not agree on the same methods that should be implemented for the good of the company. The technology problems were the various information systems that were used in the variety of companies that were acquired by Limited Brands and the fact that they were not integrated into one centralized system. Instead, they were all kept as separate entities, which only leads to redundancies and the inability to transfer information from one system to another efficiently.
4) To address these problems, Limited Brands decided to upgrade its supply chain and eliminate the numerous information systems that only complicated the infrastructure. The company tried to increase sales, increase flexibility in responding to customers’ needs, and free up employees so they can better address sales issues, as opposed to focusing on the supply chain and logistics. Several cross-functional projects were launched to increase the credibility of the brands’ new mission, such as the building of regional dock centers to direct products to stores at a cheaper cost and in a shorter amount of time. This way, managers had more time to make decisions on what products to reorder. Limited Brands also contracted to Tibco Software the development of a global application integration platform to improve the company’s ability to track and manage the flow of information throughout the global supply chain. The resulting assessment revealed issues with scheduling and processing of delays, which was attributed to the simplistic point-to-point infrastructure. To improve this, different application programming interfaces were needed, so that changing one API would result in a chain reaction that required changes in all APIs in the connected applications. Real-time reporting and communications with delivery agents were also established, in addition to the integration of the outbound supply chain accountability and reporting (OSCAR) application with the logistics application. Thus, real-time communications and enhanced shipment tracking came about. Limited Brands united all its brands’ technology operations under a single central entity, namely Limited Technology Services. Further technological improvements included using a reusable framework for the replication of software solutions and an enterprise resource planning (ERP) deployment. Web-based demand and supply chain management tools were also adopted. In terms of management and organization, supply chain management was brought closer to the boardroom so the corporate level would be aware of the supply chain concerns, which helped in contributing to the overall corporate strategy, in addition to helping in costs, quality, and customer satisfaction.
Tuesday, April 21, 2009
Smartphone Security Measures
This article discusses the need for security measures with cell phones nowadays. Not only businesses, but personal aspects of people’s lives are entwined in cell phones. In fact, they are so important, they are not even called cell phones anymore; they are known as smartphones. Either way, this article notes that even the simplest cell phone stores enough information that can potentially be dangerous if stolen or accessed by the wrong people. Several people go ahead and add an internet connection to their smartphones as well, thus mitigating the potential problems that can arise should that phone be lost or taken.
In order to avoid this type of a disaster, this article provides smartphone tips specific for different types of phones. In all cases, if you are getting rid of your cell phone, remove all information within it. For Blackberry owners, it is important to password-protect your start-up screen so that a password must be entered all the time. Locking your phone when not in use is also a good idea. Encrypting the data is also important, and regenerating that encryption every two weeks is a good practice to follow. Do not store usernames and passwords in your phone’s browser; instead, store it in the phone and encrypt it. Another tip is to lock down the Bluetooth. By default Bluetooth is on and this wastes battery life and leaves you open to Bluetooth-based attacks. Clearing the memory on your phone, particularly of unencrypted data, is also crucial.
For Smartphone users (Windows Mobile 6), similar steps should be taken. iPhone users should enable their passcode lock and autolock, use a third-party password manager, require their Bluetooth to have an eight-character PIN (even though Bluetooth is off by default), and clear the memory and cache (cookies and such). The article goes into detail on how to go about taking these steps.
This article relates to both our chapters this week in regards to cell phones and their internet connections, and the potential problems that can occur. I personally own a Blackberry and I must admit that I don’t take any of these precautions. They seem to be a bit much, but if there is important data stored in your phone, then these steps are necessary. The only precaution I have taken is to change all the names in my address book so they don’t read generic terms like “mom” or “home.” But that makes me wonder if when I happen to need assistance, how would the person who is trying to help me know who to call as an emergency contact?
Reference:
Sarrel, Matthew D. (2009). Smartphone Security Measures. Retrieved April 21, 2009,
from PC magazine.
Website: http://www.pcmag.com/article2/0,2817,2339121,00.asp
In order to avoid this type of a disaster, this article provides smartphone tips specific for different types of phones. In all cases, if you are getting rid of your cell phone, remove all information within it. For Blackberry owners, it is important to password-protect your start-up screen so that a password must be entered all the time. Locking your phone when not in use is also a good idea. Encrypting the data is also important, and regenerating that encryption every two weeks is a good practice to follow. Do not store usernames and passwords in your phone’s browser; instead, store it in the phone and encrypt it. Another tip is to lock down the Bluetooth. By default Bluetooth is on and this wastes battery life and leaves you open to Bluetooth-based attacks. Clearing the memory on your phone, particularly of unencrypted data, is also crucial.
For Smartphone users (Windows Mobile 6), similar steps should be taken. iPhone users should enable their passcode lock and autolock, use a third-party password manager, require their Bluetooth to have an eight-character PIN (even though Bluetooth is off by default), and clear the memory and cache (cookies and such). The article goes into detail on how to go about taking these steps.
This article relates to both our chapters this week in regards to cell phones and their internet connections, and the potential problems that can occur. I personally own a Blackberry and I must admit that I don’t take any of these precautions. They seem to be a bit much, but if there is important data stored in your phone, then these steps are necessary. The only precaution I have taken is to change all the names in my address book so they don’t read generic terms like “mom” or “home.” But that makes me wonder if when I happen to need assistance, how would the person who is trying to help me know who to call as an emergency contact?
Reference:
Sarrel, Matthew D. (2009). Smartphone Security Measures. Retrieved April 21, 2009,
from PC magazine.
Website: http://www.pcmag.com/article2/0,2817,2339121,00.asp
Stolen Laptop at the VA
1) The stolen laptop from the Department of Veterans Affairs reveals a number of security weaknesses in the agency’s system. Given that the VA is responsible for dispensing federal benefits like healthcare, pension, and disability to veterans, most of the information this agency deals with is personal, and thus inherently calls for high security. This is not the case, however. One of the major security problems that lead to a laptop that contains private data to be stolen includes poor supervision. The data analyst who took this laptop with him to his house to work from there had not told his supervisor about his actions. Furthermore, this employee had taken laptops home with him several times before, unbeknownst to his supervisor. This points to a significant problem, namely poor supervision. The analyst had reported the burglary incident to his supervisors, but those supervisors failed to tell the inspector general’s office. The inspector general became aware of the issue as a result of office gossip. Furthermore, the agency did not report the incident to law enforcement until two weeks after it found out about it. Even the FBI stated that if it had received the notice earlier, it would have been more efficient in identifying the culprit(s). Thus, there is a clear gap in communication within and among departments and agencies. Another problem deals with the lack of security on the laptop itself. The data is not encrypted and may be easily accessed by people who know what they are doing.
2) The management and organization problems deal with poor supervisors who are not aware of their employees’ actions, and who do not communicate well within their department. This is evident when it was later discovered that the data analyst who took the laptop home with him had actually done so multiple times before, without letting his supervisors know. It was decided that the data analyst did nothing illegal, but just the fact that the supervisors are not aware of what is going on around them shows that something is missing in their authority. Furthermore, after finding out from the employee about the burglary, they failed to notify the inspector general, thus elongating and worsening the process of protecting veterans’ private information. This lack of communication is a major contributor to the problem. Technology factors that contribute to the weakness revolve around the lack of encryption of the data on the laptop. It is potentially easily access to someone who knows what he is doing.
4) In order to prevent these problems, the laptops should not be allowed to be removed from work property. They should, in fact, be stored in a secure area that is not accessible to just anyone. Supervisors should assert their authority and ascertain that employees are not taking these laptops home or off work grounds. They should also make an effort to stay in the loop and remain cognizant of all occurrences around them. Another side to that is the necessity for them to be able to communicate with those above them and within other departments. Without communication, they will not be efficient. Monthly meetings would be a great start to keep the connections going. There should be a rule stating that incidents such as these should be reported immediately to higher authorities. Lastly, (rather firstly, for this is the most basic and important way to hinder any unwanted access in the data) the laptops should all be locked and encrypted so that even if they are stolen, it would be nearly impossible to make sense of what is discovered.
2) The management and organization problems deal with poor supervisors who are not aware of their employees’ actions, and who do not communicate well within their department. This is evident when it was later discovered that the data analyst who took the laptop home with him had actually done so multiple times before, without letting his supervisors know. It was decided that the data analyst did nothing illegal, but just the fact that the supervisors are not aware of what is going on around them shows that something is missing in their authority. Furthermore, after finding out from the employee about the burglary, they failed to notify the inspector general, thus elongating and worsening the process of protecting veterans’ private information. This lack of communication is a major contributor to the problem. Technology factors that contribute to the weakness revolve around the lack of encryption of the data on the laptop. It is potentially easily access to someone who knows what he is doing.
4) In order to prevent these problems, the laptops should not be allowed to be removed from work property. They should, in fact, be stored in a secure area that is not accessible to just anyone. Supervisors should assert their authority and ascertain that employees are not taking these laptops home or off work grounds. They should also make an effort to stay in the loop and remain cognizant of all occurrences around them. Another side to that is the necessity for them to be able to communicate with those above them and within other departments. Without communication, they will not be efficient. Monthly meetings would be a great start to keep the connections going. There should be a rule stating that incidents such as these should be reported immediately to higher authorities. Lastly, (rather firstly, for this is the most basic and important way to hinder any unwanted access in the data) the laptops should all be locked and encrypted so that even if they are stolen, it would be nearly impossible to make sense of what is discovered.
Friday, April 17, 2009
Merrill Lynch IT
1) One of the most crucial aspects to Merrill Lynch’s operational success is its information technology infrastructure. It is this business intelligence that has allowed for Merrill Lynch to become a worldwide leader in financial management and advisory services, consequently climbing to record net earnings of $5.1 billion. This IT infrastructure, however, required modernization in order to keep the firm competitive. Thus, Merrill Lynch had to make a decision about its legacy computers and applications. In order to remain competitive, it desired to maintain internet-based applications to provide its customers access to their portfolios, as well as access to tools to work with those portfolios. Its applications did not use mainframe-based software, so the challenge became to find an application that would leverage the processing power and wealth of data simultaneously in its mainframe. Therefore, it chose to follow different applications to provide its customers with what they require in a more competitive fashion in this ever-changing world of information technology. In essence, Merrill Lynch realized that its IT infrastructure needed to be updated to modern standards.
2) Information technology is one of the most important resources of success for Merrill Lynch. Its strategic asset is its IBM mainframe installation, which is one of the largest in the world. It runs about 23,000 programs to process daily online transactions in the order of 80 million for its customers. This IT infrastructure provides its customers with the data they require in an efficient manner. However, that method was becoming outdated, so the head of database infrastructure for Merrill Lynch decided to try service-oriented architecture. He felt it would be easier to purchase one rather than develop one, but that failed to do well since the programmers had little experience with the technology. After a few more obstacles, Merrill Lynch turned to creating its own set of in-house proprietary tools to allow its mainframe programs and functions to be exposed to web services. XML tags are used to describe the data for the applications. SOAP allows programs running under different operators to communicate. Together, it was made possible for online applications to communicate effectively with the mainframe, thus avoiding the middleware. This service was name X4ML and it established five criteria: 1) no new programming languages to learn, 2) no new software tools; tools are accessible via a web browser, 3) a central storage directory for web services that could easily be reused, 4) web services conforming to mainframe security standards, and 5) inclusion of new web service standards to ensure future viability. These five criteria and the abolishment of the middleware show how Merrill Lynch’s web services initiative satisfied its business strategy to modernize all the while holding on to its legacy mainframe and keeping the process simple and efficient for its customer-base.
4) I think it was a smart move on behalf of Merrill Lynch to sell off its successful business initiatives. Merrill Lynch has already established itself as a highly successful firm, so it already has the attention of a vast group of competitors. Therefore, there is a guarantee demand for its tools. Furthermore, the field of information technology is incessantly changing and evolving, so this new initiative will be obsolete given a few more years. That is why it was smart of Merrill Lynch to sell off its ideas while it is successful and desired by others. This way it can make a profit and direct some of those funds towards developing even more cutting edge information technologies.
2) Information technology is one of the most important resources of success for Merrill Lynch. Its strategic asset is its IBM mainframe installation, which is one of the largest in the world. It runs about 23,000 programs to process daily online transactions in the order of 80 million for its customers. This IT infrastructure provides its customers with the data they require in an efficient manner. However, that method was becoming outdated, so the head of database infrastructure for Merrill Lynch decided to try service-oriented architecture. He felt it would be easier to purchase one rather than develop one, but that failed to do well since the programmers had little experience with the technology. After a few more obstacles, Merrill Lynch turned to creating its own set of in-house proprietary tools to allow its mainframe programs and functions to be exposed to web services. XML tags are used to describe the data for the applications. SOAP allows programs running under different operators to communicate. Together, it was made possible for online applications to communicate effectively with the mainframe, thus avoiding the middleware. This service was name X4ML and it established five criteria: 1) no new programming languages to learn, 2) no new software tools; tools are accessible via a web browser, 3) a central storage directory for web services that could easily be reused, 4) web services conforming to mainframe security standards, and 5) inclusion of new web service standards to ensure future viability. These five criteria and the abolishment of the middleware show how Merrill Lynch’s web services initiative satisfied its business strategy to modernize all the while holding on to its legacy mainframe and keeping the process simple and efficient for its customer-base.
4) I think it was a smart move on behalf of Merrill Lynch to sell off its successful business initiatives. Merrill Lynch has already established itself as a highly successful firm, so it already has the attention of a vast group of competitors. Therefore, there is a guarantee demand for its tools. Furthermore, the field of information technology is incessantly changing and evolving, so this new initiative will be obsolete given a few more years. That is why it was smart of Merrill Lynch to sell off its ideas while it is successful and desired by others. This way it can make a profit and direct some of those funds towards developing even more cutting edge information technologies.
Data Mining: The Xbox Files
This article opens with an observation that most organizations have more data than they think they do, but the users do not know how to effectively connect the dots of that data to efficiently use it. One example includes when snipers had gone on a shooting spree and had driven off afterwards. The police were told by witnesses what the car was, and that car’s license plate had been run through their system multiple times before, yet the police failed to make that connection. If they had pieced together that information, they would have been more efficient in catching those criminals. Similarly, if all organizations make the proper connections among their data, they can prove to be much more efficient.
Government agencies would significantly benefit from such data technologies since they deal with a large amount of data, but it is retailers, such as Microsoft, that utilize them to the greatest extent. In particular, Microsoft’s Xbox uses digiMine to study web activity and to map that against marketing data in order to sell more product tailored to the customers’ tastes. Xbox’s online site manager stated himself that it is important for them to be able to segment the customers to understand their behaviors in order to give them what they want. Web logs of Xbox’s online site visitors are stored in a data warehouse hosted by digiMine, whereas customers’ personal information is stored at Microsoft. Site managers in 27 different countries can initiate a data query from a web browser. digiMine will extract the relevant data (like players of Halo who read the site’s article about Star Wars: The Clone Wars and clicked on one of Xbox’s online retail partners in search of it, thus expressing interest in it) and return that informaton to the inquirer. In this way, Xbox marketers can map the data against its internal database and create email targeted offers.
Some data-mining will offer friendly interfaces for customers who research independently. For example, iPhrase uses data-mining technology to power an online search tool so that when a customer asks a question, data files are mined and only relevant information is presented to the user. This process saves $125,000 a month by letting customers conduct advanced research into companies and investment options without calling a representative for help. In an increasingly data-driven society, data mining is extremely important for helping make sense of all the information that is available. Having all the data in front of you, but not being able to make sense of it is futile. That is why data mining, and business intelligence in general, are crucial for our world, just as we have seen in Chapter 6.
Reference:
Grimes, B. (2003). Data Mining: The Xbox Files. Retrieved April 17, 2009, from PC
Magazine.
Website: http://www.pcmag.com/article2/0,2817,1118791,00.asp
Government agencies would significantly benefit from such data technologies since they deal with a large amount of data, but it is retailers, such as Microsoft, that utilize them to the greatest extent. In particular, Microsoft’s Xbox uses digiMine to study web activity and to map that against marketing data in order to sell more product tailored to the customers’ tastes. Xbox’s online site manager stated himself that it is important for them to be able to segment the customers to understand their behaviors in order to give them what they want. Web logs of Xbox’s online site visitors are stored in a data warehouse hosted by digiMine, whereas customers’ personal information is stored at Microsoft. Site managers in 27 different countries can initiate a data query from a web browser. digiMine will extract the relevant data (like players of Halo who read the site’s article about Star Wars: The Clone Wars and clicked on one of Xbox’s online retail partners in search of it, thus expressing interest in it) and return that informaton to the inquirer. In this way, Xbox marketers can map the data against its internal database and create email targeted offers.
Some data-mining will offer friendly interfaces for customers who research independently. For example, iPhrase uses data-mining technology to power an online search tool so that when a customer asks a question, data files are mined and only relevant information is presented to the user. This process saves $125,000 a month by letting customers conduct advanced research into companies and investment options without calling a representative for help. In an increasingly data-driven society, data mining is extremely important for helping make sense of all the information that is available. Having all the data in front of you, but not being able to make sense of it is futile. That is why data mining, and business intelligence in general, are crucial for our world, just as we have seen in Chapter 6.
Reference:
Grimes, B. (2003). Data Mining: The Xbox Files. Retrieved April 17, 2009, from PC
Magazine.
Website: http://www.pcmag.com/article2/0,2817,1118791,00.asp
Friday, April 10, 2009
Facebook Ethics Article
One of the topics of focus from chapter 4 revolves around ethics in the Information Age. As technology expands over the years, negative aspects directly correlated with it grow as well. For example, the more time people spend online, the more they are subject to potential predators, less socializing, and increased aggravation and depression. Dyszel’s article discusses the nature of a very popular social networking site, namely Facebook, and offers safety tips for adults in creating their personal profiles.
After establishing the prevalent belief that people basically live and breathe via Facebook, Dyszel notes one of the most common side effects of the site: humiliation. A Facebook friend will typically post something embarrassing on your wall, which automatically reaches all your contacts, including business contacts you worked so hard to earn respect from. Granted, you have to be a Facebook member to view others’ profiles, and there do exist numerous other websites that could reveal equally embarrassing information (i.e. Google), but having a Facebook profile poses a risk for one’s professional reputation. Certain points to keep in mind about Facebook include 1) it is a website designed by adolescents for adolescents, 2) it is not designed to be an effective business tool, 3) awkward situations may arise in which your boss tries to “friend” you and you can either refuse and risk a potential social headache or you can accept and risk potential humiliation, and 4) new features arise suddenly and can broadcast details about you to the world. This happened once when Facebook collected information on the shopping transactions of its members and relayed that information to others openly. Several protests and lawsuits later, that feature was taken away, but the potential for this website to collect that information and divulge it openly is worrisome.
Scams on Facebook also exist, in which people can hi-jack one of your Facebook friend’s log-in and pretend to be your friend, and either ask for money or information. The safety tip offered for this type of scenario is to be smart and ask for personal contact, such as over the phone, to verify your friend’s identification, or to just avoid the situation completely. Other scenarios involve “friends” inviting other friends to view certain videos online that require downloading, and that turns out to be infected malware. Facebook creates a comfortable atmosphere in which a person feels he knows all his friends and can trust them, and so people tend to let their guard down. Therefore, precautions must be taken.
Dyszel offers certain safety tips for dealing with Facebook. First, it is imperative to make your profile private so that only select individuals may view it. A feature exists that allows for you to select among these individuals who can view which pictures or information. Secondly, if there is a risk of professional embarrassment, do not put your business contacts in the email address you supply Facebook with when registering. Next, you can choose who is allowed to see the pictures that your friends tag you with. Finally, if a business contact wants to be your friend on Facebook, suggest connecting through another website, such as LinkedIn, to save yourself that professional embarrassment.
I think these safety tips are good, but I think the best way to avoid any problems is to not have a facebook profile at all. I don’t quite understand the need for one since the telephone and email exist for contacting people you know. Also, graduate schools and workplaces are looking into myspace and facebook accounts to get a better feel for the individual. I was certainly asked if I have either account when interviewing for my job. Thus, in my opinion, it is just easier not to have an extra weight to worry about.
Reference:
Dyszel, B.(2009).Online Safety Tips for Facebook Fogeys. Retrieved April 10, 2009,
from PC Magazine.
Website: http://www.pcmag.com/article2/0,2817,2340357,00.asp
After establishing the prevalent belief that people basically live and breathe via Facebook, Dyszel notes one of the most common side effects of the site: humiliation. A Facebook friend will typically post something embarrassing on your wall, which automatically reaches all your contacts, including business contacts you worked so hard to earn respect from. Granted, you have to be a Facebook member to view others’ profiles, and there do exist numerous other websites that could reveal equally embarrassing information (i.e. Google), but having a Facebook profile poses a risk for one’s professional reputation. Certain points to keep in mind about Facebook include 1) it is a website designed by adolescents for adolescents, 2) it is not designed to be an effective business tool, 3) awkward situations may arise in which your boss tries to “friend” you and you can either refuse and risk a potential social headache or you can accept and risk potential humiliation, and 4) new features arise suddenly and can broadcast details about you to the world. This happened once when Facebook collected information on the shopping transactions of its members and relayed that information to others openly. Several protests and lawsuits later, that feature was taken away, but the potential for this website to collect that information and divulge it openly is worrisome.
Scams on Facebook also exist, in which people can hi-jack one of your Facebook friend’s log-in and pretend to be your friend, and either ask for money or information. The safety tip offered for this type of scenario is to be smart and ask for personal contact, such as over the phone, to verify your friend’s identification, or to just avoid the situation completely. Other scenarios involve “friends” inviting other friends to view certain videos online that require downloading, and that turns out to be infected malware. Facebook creates a comfortable atmosphere in which a person feels he knows all his friends and can trust them, and so people tend to let their guard down. Therefore, precautions must be taken.
Dyszel offers certain safety tips for dealing with Facebook. First, it is imperative to make your profile private so that only select individuals may view it. A feature exists that allows for you to select among these individuals who can view which pictures or information. Secondly, if there is a risk of professional embarrassment, do not put your business contacts in the email address you supply Facebook with when registering. Next, you can choose who is allowed to see the pictures that your friends tag you with. Finally, if a business contact wants to be your friend on Facebook, suggest connecting through another website, such as LinkedIn, to save yourself that professional embarrassment.
I think these safety tips are good, but I think the best way to avoid any problems is to not have a facebook profile at all. I don’t quite understand the need for one since the telephone and email exist for contacting people you know. Also, graduate schools and workplaces are looking into myspace and facebook accounts to get a better feel for the individual. I was certainly asked if I have either account when interviewing for my job. Thus, in my opinion, it is just easier not to have an extra weight to worry about.
Reference:
Dyszel, B.(2009).Online Safety Tips for Facebook Fogeys. Retrieved April 10, 2009,
from PC Magazine.
Website: http://www.pcmag.com/article2/0,2817,2340357,00.asp
Thursday, April 9, 2009
BB vs NF - Ch.3
1) Blockbuster entered its industry of rental videos at a time when its competitors consisted largely of small, independent stores with a customer range of a few blocks. Accordingly, its business boomed, leading to the use of a custom software system for each of its 9100 stores. This software was created to simplify the rental/sale transactions utilizing an automated point-of-sale system, in which a laser scanner reads the data off the items being purchased or rented, and from the customers’ Blockbuster ID cards. This data then reaches the Blockbuster corporate computer center, where it is used by management in monitoring sales and in analyzing demographics and rental/sales patterns in each store, which in turn aids in making crucial marketing decisions. Overall, Blockbuster’s business model is based upon an in-store experience in which the customer will physically go to one of the many stores to rent or purchase a video or DVD from a wide variety of genres. This model, which emphasizes product differentiation, has proven to be quite successful for Blockbuster historically. When it was first established, it gained an excellent market share, reaching 40% of the US’ video rental market by 2004 (about $7 billion to $9 billion for rentals, $16 billion for sales). However in the wake of a new business model in its industry, Blockbuster has been taking a hit.
3) Blockbuster’s solution to its fierce competition involves adopting a new business model. It offers an online rental service, Movie Pass (a monthly subscription service for in-store customers), Game Pass (a subscription service for video games), a trading service for movies and games, and it implements a “No More Late Fees” program. It essentially chose to integrate two concepts of adapting to the changing times and providing online service, all the while adhering to its traditional service of providing in-store products. Millions of dollars were poured into developing a new information technology department for its online services, and this department was kept separate from its existing corporate offices. It adopted a strategy of cutting prices and being able to distribute products much more rapidly due to the presence of thousands of stores that Netflix does not have. Online customers are also offered coupons for in-store rentals/purchases, to further emphasize Blockbuster’s desire of melding the online and in-store experiences together. This idea is excellent, however it did not work out so well due to the significant increase in expenditures. The costs of maintaining all the stores already erect, in addition to the costs of providing its online services, all the while offering lower prices than Netflix, has proven to be very heavy of a burden for Blockbuster. Rather than trying to offer the best of both worlds, Blockbuster should narrow its focus on a specific customer niche and offer its products either traditionally for those customers who appreciate it, or it should find an innovative way to make money. Offering similar services to its competitor will not help Blockbuster get very far. It should allocate a portion of its funds for offering the technology capable of supporting the variety of genres available directly online. Perhaps they can find a way to overcome bandwidth and surpass the numerous other competitors present in the industry.
4) In 1998, Netflix Inc. introduced a new business model to the video rental industry by offering online rental services catered to those customers whose main priority is convenience. There exist no physical store locations, so all interactions take place online and via postal service. For a monthly service fee, each customer can be mailed up to three movies at a time, which can be kept for as long as desired with no late fees. The customer can mail his movie back, once finished, in a pre-stamped packaging provided by Netflix. As soon as the company receives the returned movie, the next one is mailed out. Therefore, with this model, customers have access to the same variety of genres Blockbuster offers with the added bonuses of lower costs and never having to leave their homes. This business model has proven to be very successful, reaping revenues of $522 million in 2004, with projected increases to $3 billion in the following years, as well as gains in the market share from 2% to 7%. Its success has proven Netflix to be a significant competitor for Blockbuster.
3) Blockbuster’s solution to its fierce competition involves adopting a new business model. It offers an online rental service, Movie Pass (a monthly subscription service for in-store customers), Game Pass (a subscription service for video games), a trading service for movies and games, and it implements a “No More Late Fees” program. It essentially chose to integrate two concepts of adapting to the changing times and providing online service, all the while adhering to its traditional service of providing in-store products. Millions of dollars were poured into developing a new information technology department for its online services, and this department was kept separate from its existing corporate offices. It adopted a strategy of cutting prices and being able to distribute products much more rapidly due to the presence of thousands of stores that Netflix does not have. Online customers are also offered coupons for in-store rentals/purchases, to further emphasize Blockbuster’s desire of melding the online and in-store experiences together. This idea is excellent, however it did not work out so well due to the significant increase in expenditures. The costs of maintaining all the stores already erect, in addition to the costs of providing its online services, all the while offering lower prices than Netflix, has proven to be very heavy of a burden for Blockbuster. Rather than trying to offer the best of both worlds, Blockbuster should narrow its focus on a specific customer niche and offer its products either traditionally for those customers who appreciate it, or it should find an innovative way to make money. Offering similar services to its competitor will not help Blockbuster get very far. It should allocate a portion of its funds for offering the technology capable of supporting the variety of genres available directly online. Perhaps they can find a way to overcome bandwidth and surpass the numerous other competitors present in the industry.
4) In 1998, Netflix Inc. introduced a new business model to the video rental industry by offering online rental services catered to those customers whose main priority is convenience. There exist no physical store locations, so all interactions take place online and via postal service. For a monthly service fee, each customer can be mailed up to three movies at a time, which can be kept for as long as desired with no late fees. The customer can mail his movie back, once finished, in a pre-stamped packaging provided by Netflix. As soon as the company receives the returned movie, the next one is mailed out. Therefore, with this model, customers have access to the same variety of genres Blockbuster offers with the added bonuses of lower costs and never having to leave their homes. This business model has proven to be very successful, reaping revenues of $522 million in 2004, with projected increases to $3 billion in the following years, as well as gains in the market share from 2% to 7%. Its success has proven Netflix to be a significant competitor for Blockbuster.
Subscribe to:
Posts (Atom)