Page 9 - DCAP208_Management Support Systems

Management Support Systems

Notes
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Caution A firm must monitor changes in its environment and share information with key
entities in that environment in order to stay in business.

External business environmental forces include: technology and science; economy, international
change, and politics. Internal business environmental forces include: customers, suppliers,
stockholders, regulations and competitors.
At least three major developments have occurred that have changed dramatically the business
environment. First, technology has been developed that has made information preparation and
dissemination inexpensive. This technology has taken the form of low cost, high-speed digital
and cable video and data transmission, hardware that produces information quickly and easily,
and the development of software that makes preparation, data, and communication tools
available to individuals who previously did not have access to needed information. With these
technology developments, time, space, and other temporal constraints to information have
been reduced and, in many cases, eliminated.

A second major development that has significantly impacted business has been globalization.
Faster methods of transportation, together with instantaneous information, have allowed the
world to become one giant marketplace. Consumers can now buy products from foreign firms
as easily as they can from a local store. Organizations such as General Motors have to worry not
only about what Chrysler and Ford are doing, but also what Toyota, Volkswagen, and BMW are
doing as well. In fact, Chrysler is not just “Chrysler” anymore. It is now a conglomeration of
European, North American, and Asian manufacturers known as Daimler Chrysler. Instead of
having only two major American competitors, General Motors and all other business
organizations now have to compete with similar companies throughout the world. In addition,
with the increased availability of inexpensive information, more is known about these competitors
and about General Motors than ever before.

Example: If a General Motors product has deficiencies, the world knows about and can
act on those problems instantly.
A third major change is the concentration of power in certain market investors, primarily large
mutual and pension funds. Mutual funds such as Fidelity and Vanguard, and pensions funds
such as CALPERS, for example, now hold major stock positions in many companies. The influence
of these major market players is so significant that, if they are displeased, corporate executives
will find that their positions within the company are in jeopardy. Armed with easily available
and inexpensive information about investees and their competitors, large institutional investors
raise the competitive bar very high and shorten the periods over which success is measured.

1.1.1 Results of the Changes

While these change drivers have significantly impacted everything we do, including the way
we live, they have had two dramatic impacts on business. First, they have eliminated the old
model that assumed information is expensive. Today anyone, armed with the right software,
can be an “accountant” and produce financial information. Second, they have dramatically
increased the level of competition among organizations. Institutional investors want the best
performance and they want it now. Global competitors often have different cost structures that
can be exploited to render historically successful business models obsolete; and since information
about all organizations is widely available, only organizations that are truly the best survive
and remain successful.

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