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By Carly K. Fleming

Computers have grown in importance within modern organizations from an obscure back-room tool to a dominating feature of the whole organization. In this chapter we consider the ways in which information technology is managed; the central role its use now plays in enabling organizations to compete in the marketplace (or perform a socially useful role in the case of non-profit organizations); and how the planning of information systems has become central to the strategy of the whole organization, often leading to its total reorganization. Business information systems propose unlimited opportunities for companies to expend their businesses and attract wide target audiences, fasten all operations and reduce operational costs.

Company Background and the Problem Identification

Pfizer Inc. is a leading healthcare company operating on the global scale. Pfizer Inc employs resource-based view to gain competitive advantage by developing resources, which add unique value, which can’t be adopted by another company. In spite of stable market position, the company lost its sales because of inadequate customer support services and lack of online communication. Pfizer Inc. is an international company, and many of its buyers (vendors) need online support to solve their current problems and order new products. Traditionally, services were provided via a range of media, including telephone, fax, mail, and face-to-face interaction. The opportunities for reaching and connecting with specifically targeted customers have never been greater – nor have customer expectations been so high (Kleidl 73). The problem faced by Pfizer Inc. is to develop effective online communication and support services, improve customer relations and create a competitive advantage. Information system can help to connect the company’s management and geographically diverse customers, improve data mining, reduce transcription errors and associated costs (www,pfizer.com)

The Plan

The first step is to develop strategic goals and project plan. At this stage, it is important to take into account current needs of the company and its future strategies. Most projects planning software enables resources to be reviewed and scheduled very effectively and, in particular, allows the project manager the opportunity to run a number of “what if” scenarios to determine the most appropriate solution to avoid a failure at the end. For this reason, a special attention should be given to multiple resources, because it is extremely difficult to schedule resources effectively by hand. Resource scheduling in the initial planning stage varies depending on the type of project. The project team may simply consider the type of resources necessary for each activity, equipment or skill groups (Laudon & Laudon 34-35)

It is expected that the information systems will help the company to improve service quality introducing customer relationship management programs and new ways of communication. This model will involve team members from different areas in order to ensure adequate supply of information and cultural knowledge. Also, the solution will require specialists from each of the areas: customer center, customer service, warehouse, returns, shipping and product management.

The second step is project implementation. During this stage, Pfizer should take into account possible project changes and resistance to change. In contrast, low morale and motivation of employees lead to negative outcomes of any project and reduce productivity level. For effective project outcomes, the team needs to very quickly develop an identity and common ground on which they can move forward. Also, this step will involve on-job training of employees and involvement of new management techniques.

The third step is to control efficiency of the new model using employees and customers’ feedbacks, productivity level and financial data. At this stage, it will be important to compare previous results of productivity, profit and customers’ satisfaction with new data. And, Pfizer should compare the level of errors made by managers using the old model of communication and customers support with the new model (Laudon & Laudon 35)

For Pfizer Inc, the new information systems will be a response to the need to meet heightened customer expectations and face intensi­fied market competition. In general, information systems emphasize the use of information technology in managing customer relationships. On the one hand, advances in database technology have made it possible to know and segment customers in ever more creative ways. In addition, data warehouses will be used to store and search vast amounts of data. Data mining and modeling techniques will reveal otherwise ‘invisible’ patterns of customer behavior, which are trans­lated into customer-specific marketing strategies. Pfizer will adopt precisely the right level of communication to handle matters such as: the buyer’s position in the organization, identification of higher-level needs – for example, power, recognition of the company demands – for example, measurement methods, image.

Competitive Advantage of a Digital Firm

Many Digital companies use the Internet and Information Systems as the main platform of all operations and activities. Amazon.com is a fully digital firm operating on market since 1997. The basis of the Amazon strategy was to create a virtual bookshop on its website. The Internet has broken down the linear relationships in the supply chain and replaced it with a value network (www.amazon.com). The characteristics of the network ensure that value is added to Amazon. Value-adding activities include: community building; direct customer ordering and registration of customers; information value added by building up and providing access to cat­alogues and payment and processing across the supply chain; and providing delivery services. Information to authors and customers forms the basis for building up the community within the publishing and book-selling process. The sales interface relies on building up a bank of knowledge from each and every sale whether from readers (through Amazon.com) or resellers (through Amazon Associates). Core information manage­ment builds and provides access to the Amazon catalogue of books and is linked to Amazon Advantage. The customer database also provides added-value information. Core handling and processing maintains payment services between the company and its customers whether they be readers, publishers, resellers or authors. This func­tion also covers shipping and delivery administration. From this con­figuration, the process of publishing and book selling became much more dynamic than the linear model that was the traditional industry model. The Internet has allowed each party in the process to interact with each other with more intensity.

Publishers have traditionally given ‘co-op money’ to retail bookshops for prominent display sites in the shop or for advertising titles. In print advertising such as newspapers, this is deemed a ‘co­operative’ venture since the bookshop and the publishers share the cost of the advertisement. Both are being advertised simultaneously. Amazon, as a virtual bookshop, received ‘co-op money’ from publish­ers for high visibility on the website. Publishers also had their titles placed in prominent book reviews. Also, maintaining inventory and warehousing meant Amazon was incurring a relatively high level of cost in order to guarantee availability of goods. This problem was exacerbated by the expansion of its product portfolio. The business model formulated by Amazon was heavily dependent on the e-com­merce aspect of operations and the benefits that lower transaction costs would bring. The network of publishers, authors, bookshops and customers relied on the Internet for the dissemination of information within their cyber-community. To the extent that publishing and book selling was information-driven, this business model fitted the objec­tives of the company. That Amazon became an internationally known brand-name in such a short period of time was testimony to the success of the community-building exercise. The two major decisions in product design concerned first, the function and styling of the product and second, the range of products or degree of standardization to be offered. All standard operating pro­cedures should be redesigned. As the company examined its value chains for strategic opportunities, looking for the activities that added the most value, it will find many wasted steps and procedures that can be eliminated (Marcus 23-24).

In order to improve its current activities, Amazon.com should introduce automatic reply and better support services for geographically diverse customers. In many cases, amazon.com proposes these services but they do not work. A good example of information systems is an expert system for representatives. This consists of a system installed on a server that diagnoses problems and then suggests remedies. The remedies include solutions to customers and products of other companies, thus increasing its usefulness and credibility. But in the hands of sales representative such a system will be a powerful sales tool. The obvious advantage of the system is quicker work by till operators, reducing labor costs and/or customer waiting times (Laudon & Laudon 41)

Price flexibility is maintained by the till translating a product code into a price, rather than printing a price on the good at the factory or packing station. Although this system yielded an advantage to early innovators in the field it is now so standard that it has to be adopted to merely keep up with the competition. This can be used both to analyze and improve sales performance and strategies and also to organize a daily delivery system. Such a system enables Sainsbury’s to minimize stock levels in shops and regional warehouses and reduce shortages in stores (thus maximizing sales) (Laudon & Laudon 65).

Both models, mentioned above, view the firm as a series or “chain” of basic activities that add a margin of value to a firm’s products or services. These activities are cat­egorized as either primary activities or support activities. The advantage of this system is that software configures all order detail, and allows a manager to review the stock and available amount of goods at the shortest period of time. This solution will lower routine transaction processing costs and turnaround time because there is less need to transfer data from hard copy forms into computer-ready trans­actions. The concept of information systems is also regarded as a philosophy governing how employees should be treated in the interests of customers (Laudon & Laudon 94)

First, the customer may be brought to think that your firm is doing the same thing better in some way than others – either the product or service is better than others, or it is as good as others and produced more cheaply, or perhaps it is delivered more conveniently to the consumer. The obvious way to do this is to deliver a better, cheaper or more convenient product. A higher specification product (e.g. a more durable one) can be produced to higher quality standards (e.g. fewer defective goods sold), with better production methods or cheaper sources of supply than competitors can find. The same product or service can be delivered to the door of consumers on demand rather than forcing them to wait for or collect the product. Thus more sales and/or greater profits can be achieved (Kleidl 39). By setting up a wide area network linking dealers and suppliers communicating through standardized electronic forms – a system known as electronic document interchange (EDI) – both companies can increase productivity and customer satisfaction (Kleidl 43).

To function efficiently such an arrangement requires not only agreement on technical standards for inter-communication but a high degree of commitment and trust between the commercial partners. Every stage in the communication process is rendered a vital one, and a failure to deliver one category of part could bring a plant to a halt (Laudon & Laudon 62). This enables a few basic products to be customized to suit a large number of markets, whilst computer-aided manufacturing systems enable a single production line to produce a wide variety of variations on a single product on one production line.

Effective use of information systems will help both companies to convince customers that they are getting some or all of these advantages without necessarily delivering them. A large sales or marketing effort may, to a degree, be a substitute for superiority in the actual product. It must be said that many excellent products have failed to sell because the consumers did not know about them. Using information systems, sellers can create a sort of monopoly by establishing a difference between their version of the product and other versions. An alternative strategy (used by amazon.com) to achieve competitive advantage is to innovate. In case of Pfizer, if a product really is different in kind to the competition, then a substantial competitive advantage may well result in protected from competition by a time-lag before competitors can invest in the necessary plant or skilled personnel to communicate with customers. For both companies, information systems help to generate a marketing advantage through being first in the field – including free publicity in the media and perhaps identification of the product with brand name. Organizations actually sell products incorporating the new technology, so that it is crucial to such organizations that they keep abreast with the latest developments in that technology or risk losing out to the competition. Moving to a global market strategy involves a transformation in the international business structure of multinational companies.

Works Cited

  1. Kleidl, B.A. Strategic Electronic Marketing: Managing Business, Cincinnati, OH: South-Western College Publishing, 2001.
  1. Laudon, K. C. & Laudon, J. P. Management Information Systems: Managing the Digital Firm, 9th Edition, 2005.
  2. Marcus, J. Amazonia: Five Years at the Epicenter of the Dot.Com Juggernaut. W.W. Norton, 2004.
  3. www.amazon.com
  4. www.pfizer.com