Q1: Business strategy and IT Strategy: Market conditions are changing and Unimicron Technology Corporation (UTC) is faced with challenges relating to increasing competition and the fast evolution of electronics technologies in the industry it is in. How might UTC use different forms of information technologies we studied in this course to support alternative business strategies in order to be more competitive? What strategy concepts/frameworks would you use to support the use of these information technologies?
Solution: There was a time when businesses relied on competencies of individual team members for ensuring seamless business processes but increasing market competition and the emergence of internet has resulted in globalization in customer and supplier network. Consumers have more options available to them that were ever there so they are demanding more sophisticated products customized to their needs and high customer service. If companies cannot keep their customers satisfied they don’t hesitate to do business with their competitors. So today companies like UTC need to provide quality customer services and develop products faster and more efficiently to compete in global markets.
Out of the four distinct functional areas important for seamless running of any business organization ie marketing and sales, supply chain management, accounting and finance and human resource management (Valacich and Schneider, 2012) UTC has identified Supply chain management and accounting and finance as critical aspects for future growth in the competitive market.
As of now they are doing strategic sourcing of raw materials by signing long term contracts their sellers after private negotiations. However there are many electronic technologies available in the market which will help improve current situation and gain a competitive advantage. Following systems can be used by UTC:
Enterprise-wide information systems (ES): ES is an integrated suite of business applications for virtually all the departments, processes and industry which allows company to integrate information across operations on a company-wide basis using a large database (anonymous, n.d). Enterprise systems can also be extended to streamline communications with global customers and suppliers. UTC can use this system to effectively streamline its internal business process and external media to ensure strategic edge in the market.
For example: Enterprise system of SAP not only focuses on internal operations but also on business activities that occur outside the business organization. They can help UTC find innovative ways to increase on-time shipment, avoid surprises like shortage of raw material or weather problems, minimize cost and ultimately increase customer satisfaction and overall profitability of company.
Since ES comes in various shapes and sizes, providing unique set of features and functionality it is important for managers to select and implement applications that meet the requirement of business as well as customers and suppliers.
An ES can have various sub-systems coordinating with each other.
For Example: When ERP is used not only inbound logistics and operations have access to current inventory data but also accounting, sales and customer service personnel. So, if a customer calls enquiring about status of an order, customer service representative can access the database and share it with him.
b) Reduce costs.
SCM helps a company in coordinating efforts with supplier/s to ensure stronger and more integrated relationships with them which in turn allows companies to compete more effectively in their markets through cost reductions and responsiveness in market demand. (Valacich and Schneider, 2012)
For leveraging their companies and suppliers strength to the best possible level UTC should look at integrating organization ERP, supply chain and CRM databases to develop and enterprise wide information system which will allow them to streamline internal processes, interaction with suppliers to achieve cost reduction and high responsiveness to customer requirements.
Q2: Enterprise wide Systems & Business Process Management: We spent quite a bit of time studying enterprise wide systems and business process management in the course and this is good foundational knowledge for this case. What electronic environments should UTC create to enhance their current standing in the electronics industry circa 2009 (as described in the case) and going forward in today’s (2017) conditions? What different forms of information technologies should UTC use to enhance their relationships with valuable trading partners? Define, describe, and discuss these technologies and how you might weave them together.
Solution: In order to achieve strategic advantage and enhance its standing in the electronic industry it is important for UTC to look at long term perspective and larger picture instead of focusing on different arms of its business in silos. For any organization to succeed in its chosen business segment, in this case manufacturing, four things are of prime importance( Kaplan and Norton, 1996):
Any organization which excels in these four parameters gains competitive advantage in market. However, for achieving these goals effective utilization of available technologies is of prime importance.
UTC needs to effectively connect the organizational value chain whose core processes include inbound logistics, operation and manufacturing, outbound logistics, marketing and sales and customer services and support processes include HR, Technology development, Procurement, Administration and firm infrastructure using following information technologies to enhance its relationship with valuable trading partners(Valacich and Schneider, 2012):
ERP core components support the internal activities of an organization for producing their products and services. These components support internal operations like financial management, operations management, human resource management etc. Whereas the operations management component (inbound/ outbound logistics, product development, manufacturing and sales and service) enable the core activities of value chain, financial management (accounting, financial reporting, performance management, corporate governance) and human resource management (employee recruitment, assignment tracking, performance reviews, payroll and regulatory requirements) are associated with activities supporting the core activity.
Depending on the way processes are typically performed within an industry ERP vendors typically package various modules that enable industry specific processes and offer such systems as industry solutions. These modules when implemented in an organization work together to enable the business processes needed to run a business efficiently and effectively.
UTC can use following ERP processes to improve its internal workings:
An efficient procure to pay process reduces error rates in purchase order and invoices, help organization develop close relations with suppliers, reduce transactions costs and ultimately creates customer good will.
Effective implementation of ERP will help in ensuring buy-in of internal stakeholders which is of prime importance.
Most of the successful companies like Apple import thousands of components of best quality for their final products like i-phone from various suppliers across globe and get them assembled at a factory and ship it to different countries where there is market for the product for achieving desired sales targets. Coordinating such extensive supply network requires considerable expertise or supply chain management technique.
For Example: Let us take an example of a toy manufacturing company to explain how a typical supply chain is managed.
As we can see that generically any manufacturer has multiple suppliers and sub suppliers. The raw material shared by sub suppliers is processed and share with suppliers as raw material for their processes.
After the processing is done the raw material shared by sub suppliers is done by the suppliers the raw material is shared with the manufacturer. Who the assembles / manufactures and package and share it with its distributors who then depending on the demand sell to their retailers and eventually customers.
Thus as we can see here there are three parts to this process:
In context of a toy manufacturing unit the sub suppliers will be oil refinery, lumber company, sheet metal, Pulp Company. They will provide the raw material for the suppliers which in this case are plastic industry, components manufacturer and Paper Company. The paper company will further send it to box manufactures who will then make boxes and print them as per the requirement.
Then all this raw material that is plastic, components, boxes will go to the toy manufacturing company where toys will be assembled packaged and then delivered to distributors and retailers to sell to final customers. If the supply chain works like well-oiled machinery then the production cost will go down and margins will go up.
(Valacich and Schneider, 2012)
Benefits of effectively managing supply chains are many and include process innovation like Just in time manufacturing and vendor managed inventory. However, inefficiently managed supply chains may lead to excessive inventory, inaccurate manufacturing capacity plans and missed production schedules.
A well-managed supply chain also has necessary information to track back the movement of product so that in case some issue regarding the product quality arises company is quickly able to identify problem link.
The main aim of a good supply chain is to integrate business processes and supply chain partners. SCM contains many modules and applications. Each of these modules support either supply chain planning or supply chain execution or supply chain visibility and analytics. Four key processes that UTC can implement are described below:
UTC can implement information systems like e-procurement to ensure effective supply chain execution. It will help it improve the supply chain efficiency by:
Effective implementation of SCM will ensure good relations with suppliers which will help in creating competitive advantage for organization in long term.
Customer Relationship Management: Customer relationship management (CRM) refers to practices, strategies and technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle, with the goal of improving business relationships with customers, assisting in customer retention and driving sales growth.
CRM systems are designed to compile information on customers across different channels -- or points of contact between the customer and the company -- which could include the company's website, telephone, live chat, direct mail, marketing materials and social media. CRM systems can also give customer-facing staff detailed information on customers' personal information, purchase history, buying preferences and concerns (Margret Rouse).
UTC should adopt collaborative CRM which is a combination of Analytical CRM (this analyses customer behavior and perception and helps in making organizational CRM strategy) and Operational CRM (which helps in executing CRM strategy).
With effective operational CRM organizations are able to provide personalized and highly efficient customer service. It provides all customer information, history, pending sales and service request, to the touch point help the customer better.
Analytical CRM focuses on analyzing customer behavior and perceptions in order to provide business intelligence necessary to identify new opportunities and to provide superior customer services. Its effective utilization can help customize the campaigns from segment level to even individual customers which can lead to cross or up-selling. It also helps identify popular products and services tailored to different markets as well as in retaining customers by having accurate, timely and personalized information.
Now when we combine the two we get collaborative CRM which provide effective and efficient communication with the customer from entire organization. It facilitates sharing the information about customer across various departments to increase customer satisfaction and loyalty.
Thus, we see that though even as standalone these systems will add great value to UTC the real effect can be achieved only by integrating SCM with ERP and CRM modules. This will help in centralization and decision making by using central data base. Eg. SCM can use data about customer orders (from CRM systems), data about payments (from ERP) and ensure timely delivery of the product to ensure maximum customer satisfaction.
Q3: Systems Development Life Cycle(SDLC):
a) Map out the different activities undertaken by UTC against the SDLC roadmap.
Solution: a) After UTC identified supply chain as the critical area of improvement and zeroed down on adoption of e-procurement as a new business initiative to provide it competitive advantage in the long run it conducted following activities:
b) Point out the causes for the problems that occurred subsequently in the pilot project experience. What SDLC phases are involved in this problem? What did they do right and what did they do wrong in these phases?
Solution: b) After deployment two glitches were faced by the company for the following reasons:
If we look at it from e-procurement system development or Supply chain management architecture perspective problem happened during following stages(Chapter 8, SCM Architecture)
c) What are your recommendations about how UTC should proceed going forward? For instance, should they pursue the deployment of this e-procurement extranet with all their suppliers? How should they do this to avoid similar pitfalls as happened in the pilot launch?
Solution C: Since the long term benefits of using e-procurement extranet are many, like significant reduction in maverick spending (buying from unauthorized vendor), better cash management, better adherence to budget, improved inventory management, greater visibility into demand etc, and problems they are facing are related to its proper execution and short term in nature UTC should proceed forward with the deployment.
However, to avoid any further instances of gap in demand and supply (which beats the entire purpose of having the e-procurement system) supply chain optimization needs to be done with due diligence in advance by UTC. It includes following aspects:
Q4: Security and Information Systems: Consider all the electronic environments involved in this case: the ones you will recommend in answer to Question (2) and the EProcurex extranet described in the Appendix.
a) What are the security risks facing UTC considering these environments?
Solution a): When any organization decided to outsource any of its processes, following security risks can be faced by them (Stephanie Overby, 2003)
Eg: By turning over data supply chain operations UTC is sharing critical data regarding procurement with e-procurement team and putting itself in its mercy to manage it effectively and efficiently (Keri E. Pearson, Carol S. Saunders, 2001).
Like in this case, in pilot things ran smoothly but after full implementation critical supplier found it difficult to use and update the system. This shows that the knowledge transfer from e-procurement to critical supplier was not proper. Due to this the critical supplier had to be removed from the SCM system, which beats the entire purpose of implementing SCM in first place.
b) Take the role of an IT consultant approached by UTC. What approach would you recommend to UTC about how they should secure their IT assets considering threats that now play at global digital and physical (i.e. analog) marketplace of 2017 ?
Solution b): Since efficient supply chain management is the key factor to growth in the competitive market, it is important that UTC does the integration of its supply chain with multiple vendors. However, considering the risks that it might involve it is very important that proper due diligence be done before finalizing a vendor and implementing the system. I would give following recommendations to UTC for mitigating threats in both digital and physical environment.
Like in this case, UTC and even the vendors did not consider that manpower will be required for data entry in the new process which lead to miscalculation of total expenditure and misrepresented the total savings to the critical client.
Also, for keeping the system relevant for longer duration business growth projections for coming years, software upgrade cost and new technology implementation buffer needs to be considered while planning the investment.
(n.d.). History of e-commerce. Retrieved April 5, 2017, from http://www.ecommerce-land.com/history_ecommerce.html
Kaplan, R. S., & Norton, D. P. (1996). The Strategy Focused Organization. Retrieved April 6, 2017.
Overby, S. (2003). The hidden cost of offshoring outsourcing. CIO Magzine. Retrieved April 5, 2017.
Pearlson, K. E., & Saunders, C. S. (2001). Managing and using information systems.
Rouse, M. (n.d.). Customer Relationship management. Retrieved April 4, 2017, from http://searchcrm.techtarget.com/definition/CRM
Valacich, J., & Schneider, C. (2012). Enterprise information system. 5. Retrieved April 6, 2017.
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