MANAGEMENT INFORMATION SYSTEMS

Course Manual

PGP (2009-2011)

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 MANAGEMENT INFORMATION SYSTEMS

Course Code: CIS 602

Credit Unit: 1
Term: III Trimester
Area: Information Technology

Facilitator: E-mail Meeting Time

Ms. Vandana Srivastava vandana.srivastava@iilm.edu 04:00 - 05:00 P.M
Ms. Ritu Khanna ritu.khanna@iilm.edu 04:00 - 05:00 P.M
Mr. Nalin Jha nalin.jha@iilm.edu 04:00 - 05:00 P.M
Ms. Priyanka Kapoor priyanka.kapoor@iilm.edu 04:00 - 05:00 P.M
Mr. Yavar Ehsan yavar.ehsan@iilm.edu 04:00 - 05:00 P.M
Ms. Abdul Khan abdul.khan@iilm.edu 04:00 - 05:00 P.M

Course Objectives:

The objective of this course is to expose the students to the managerial issues relating to information
systems and help them identify and evaluate various options in this regard. The course aims to ensure that
students have an appreciation of management issues and the role played by IT in the overall strategy of the
business.

Syllabus Outline:

1. Unit – I (Foundation Concepts)

• Foundations of Information Systems in Business

• Competing with Information Technology

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 2. Unit – II (Information Technologies)

• Telecommunications and Networks

• The Networked Enterprise
• Telecommunications Network Alternatives

3. Unit – III (Business Applications)

• Enterprise Business Systems

• Case study: Wal-Mart and Mattel: SCM Best Practices
• Enterprise Business Systems
• Case Study: eBay Inc.: Managing Success in a Dynamic Online Marketplace

4. Unit- IV (Development Processes)

• Developing Business / IT Solutions

• Planning for Information Systems , SDLC

5. Unit – V (Management Challenges)

• Security and Ethical Challenges

• Enterprise and Global Management of IT

Learning Outcomes:

1. Knowledge of MIS, and its applications

2. Learn the application of MIS knowledge to the selection and design of systems appropriate to
management requirements.
3. Develop an awareness of how MIS may make a contribution to the strategic management of an
organization.
4. Knowledge of the management of IT and how the contribution of IT might be maximised.

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 5. The aim of this course is to ensure that students have an appreciation of management issues and
the role played by IT in the overall strategy of the business. The course takes a broader look at IT
than the technical perspective. It is also intended to explore the issues surrounding the management
of IT development projects and also the provision of an IT infrastructure to an organization.

Main Course Book:

O’Brien James A., Management Information Systems, Tata McGraw Hill Edition, New Delhi, 7th Edition

References:

1. MIS by WS Javadekar Tata McGraw Hill 1999.

2. Laudon, Kenneth C and Laudon, Jane Price, Management Information Systems, Pearson India.
3. MIS by Gorden B. Davis, Margrethe Holson.
4. Information Systems for Managers by Ashok Arora / Akshaya Bhatia – Excel Publishers 1999.
5. Sadagopan, S.., “Management Information Systems”, 2003, PHI.
6. Kumar Muneesh, Business Information Systems, Vikas Publishing House, New Delhi, 1999.
7. Jaiswal & Mittal, MIS.
8. E-Commerce – Cutting Edge of Business – Kamlesh K Bajaj, Debjani Nag – Tata McGraw Hill,
1/e,2003,
9. Global Electronic Commerce – Theory and class studies J Christopher Westland, Theodre, H K
Clark – University Press
10. E-Commerce concepts, models Strategies – C S V Moorthy – Himalaya Publications.
11. E-Commerce – an Indian Perspective – P T Joseph – Prentice Hall, 2/e, 2005.
12. Strategic Management of e-Business – Stephen Chen, John Wiley & Co.

Session Plan:

Cases/ Additional
Session Topic References
Assignment Readings

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 Unit 1: Foundation Concepts

Foundations of Information
Systems in Business
MIS, by EFFY OZ,
IS in Business O’Brien - Thomson
Session 1 - Introduction Chapter 1 publications,
- Information technologies (Page: 3-10) 5th edition, Business
- IS framework Information Systems
- Roles of IS
-Trends in IS
- Role of e-business in IS

- Types of IS
O’Brien -
- Developing IS solutions
Session 2 Chapter 1
- Challenges of ethics & IT-
(Page: 11-20)
- Challenges of IT career
- IS Functions

Components of IS

-System concepts O’Brien - Aviall Inc.: From

Session 3
- define system Chapter 1 Failure to Success
- components of an IS (Page: 20-30) with IT (Pg: 36)
- IS resources
- IS activities

Competing with Information

Technology

Fundamentals of Strategic GE, Dell, Intel and

Advantage Others: The MIS, Laudon &
O’Brien - competitive Laudon, 10th Edition,
Session 4 - Strategic IT Chapter 2 advantage of Information Systems,
- Competitive strategy concepts & (Page: 39-50) Information Organizations &
forces Technology (Pg: Strategy
- Competitive Strategies 41)
- Building a customer focused
business
- The value chain & Strategic IS
Session 5 O’Brien -
Using IT for Strategic Advantage Chapter 2
(Page: 51-59)
- Strategic uses of IT

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 -The role of IT
- Becoming an agile company
- creating a virtual company
- Building a knowledge creating
company
Session 6 Guest Lecture
Unit 2: Information Technologies

Telecommunications and
Networks:
The Networked Enterprise
Principles of
O’Brien - Boeing Company
- Networking the enterprise Information Systems,
Chapter 6 and Others:
Session 7 - trends in telecommunication Ralph Stair & George
(Page: 169- Converging Voice
- business value of Reynolds, 8th edition,
182) & Data using Voice
telecommunication network Telecommunication &
Over IP (Pg: 209)
- The internet revolution Networks
- Business value of internet
- Intranet & it’s business value
- Extranets & it’s business value

Telecommunications Network
Alternatives
- network model
- types of telecomm network
O’Brien -
- Telecomm media
Chapter 6
Session 8 - Wireless technologies
(Page: 183-
- Telecomm processors
202)
- Telecomm software’s
- Network Topologies
- N/w Architecture & Protocols
- convergence of devices and
services
Unit 3 : Business Applications
Session 9 O’Brien - Agilent
Enterprise Business Systems Chapter 8 Technologies and IT Support for supply
Enterprise Architecture Principles (Page: 243- Russ Berrie: chain management,
CRM: The Business Focus 252) Challenges of (Page: 81), MIS for
implementing ERP the information age-
- Introduction Systems (Pg: 255) 6th edition-by
- What is CRM Stephen Haag,
− The three phases of CRM Maeve Cummings &
− customer’s profile, Amy Phillips
personalization and

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 correlation
- Benefits & Challenges of CRM
- Trends in CRM

Enterprise Resource Planning:

The Business Backbone O’Brien - Whirlpool Corp:
Chapter 8 Rush to ERP
Session 10
- Introduction (Page: 253- Leads to Shipping
- What is ERP 259) Snafus (pg: 259)
- Benefits & Challenges of ERP

Enterprise Resource Planning:

The Business Backbone
Session 11
- The cost of ERP
- Causes of ERP failures
- Trends
in ERP

Supply Chain Management: The MIS, by EFFY OZ,

Business Network O’Brien - Thomson
Session 12 Chapter 8 publications, 5th
- Introduction (Page: 260- edition, Business
- What is SCM 269) Functions & Supply
- EDI Chains

Supply Chain Management

CVS, McKesson,
O’Brien -
and MPT: Web-
- The Role of SCM Chapter 8
Session 13 based SCM
- Benefits & Challenges of SCM (Page: 260-
Integration (Pg:
- Trends in SCM 269)
269)

Case study: Wal-Mart and Mattel: Case study attached

Session 14
SCM Best Practices with manual
Session 15 Guest Lecture
MID TERM

Session 16 Electronic Commerce Systems O’Brien - Information systems,

Chapter 9 The foundation of E-
- Introduction to e-Commerce (Page: 277- Business, Steven
- The Scope of e-commerce 305) Alter, 4th edition,
- e-Commerce Technologies Customer, Product &
- Categories of e-Commerce E-Commerce
- Essential ecommerce processes

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 Electronic Commerce
Fundamentals

- Electronic payment processes O’Brien -

Chapter 9
Session 17
E-commerce Applications and (Page: 277-
Issues 305)

-E-Commerce application trends

- B2C E-Commerce

E-commerce Applications and

Issues
O’Brien -
Chapter 9
Session 18 - E-Commerce success factors
(Page: 277-
- Web store requirements
305)
- B2B E-Commerce
- E-Commerce Market Places
- Clicks & Bricks in E-Commerce
Case Study: eBay Inc.: Managing
Success in a Dynamic Online Case study attached
Session 19
Marketplace with the manual
Unit 4 : Development Processes

Developing Business / IT
Solutions
Information systems,
The foundation of E-
Developing Business Systems O’Brien -
Business, Steven
Chapter 12
Session 20 Alter, 4th edition,
-IS Development (Page: 391-
Building &
- The Systems Approach 414)
Maintaining
- Systems Thinking
Information Systems
- The systems development cycle
- Feasibility Study

The ROWE Cos.

Developing Business Systems
O’Brien - And Merrill Lynch:
Chapter 12 The ROI Process in
- System Analysis
Session 21 (Page: 391- Business/IT
- System Design
414) Planning (Pg:
- End-User Development
365)
- Prototyping Approach

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 Implementing Business Systems

-Implementation O’Brien -
- Implementing New systems Chapter 12
Session 22
- Evaluating hardware, software and (Page: 391-
services. 414)
- Other implementation activities
- IS maintenance
Unit 5 : Management Challenges

Security and Ethical Challenges

F-Secure,
Security, Ethical, and Societal
Microsoft, GM and MIS, Laudon &
Challenges of IT
O’Brien - Verizon: The Laudon, 10th Edition,
Chapter 13 Business Ethical & Social
Session 23 - IT Security, ethics & Society
(Page: 423- Challenge of Issues in Information
- Ethical responsibility of
445) Computer Viruses Systems, Securing
professionals
(Pg: 425) Information Systems
- Computer Crime
- Privacy issues
- Health Issues
- Societal Issues
Session 24 Guest Lecture

Security Management of IT
O’Brien - Assignment:
-Tools of security management
Chapter 13 Analyzing Business
- Security Measures
Session 25 (Page: 446- Processes for a
- System controls and audits
458) given Enterprise
IT standards like ITIL, COBIT,
System
BS7799

Enterprise and Global

Global Exchange
Management of IT
Services & Allstate:
O’Brien - MIS, Laudon &
Challenges &
- Business & IT Chapter 14 Laudon, 10th Edition,
Session 26 Solutions in
- Managing IT (Page: 463- Managing Global
Offshore Systems
- Business / IT Planning 476) Systems.
Development (Pg:
- Managing the IS function
478)
- Failures in IT Management

Session 27 Managing Global IT O’Brien -

Chapter 14
- Global IT Management (Page: 463-

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 - Global business / IT strategies
- Global Business / IT Applications
476)
- Global IT Platforms
- Global Data access issues

Session 1: IS in Business
In this session, concepts of Information systems will be discussed and its fundamental roles in business.
This session will provide an overview of the five basic areas of information systems knowledge needed by
business professionals. Discussion on the trends in Information system will be done. The student will be
able to explain knowledge of IS, its importance for business professionals.

Chapter: Foundations of Information Systems in Business, Ch-1 (Pg-3)

Session 2: Types of IS
This session will differentiate among the major types of information systems. The session focuses on the
challenges of Ethics and IT faced by professionals and businesses. Overview of the challenges of IT career
is provided along with various Information system functions. You will be able to differentiate major types of
IS, their application in business & how it supports its business processes, decision making & strategies for
competitive advantage.

Chapter: Foundations of Information Systems in Business, Ch-1 (Pg-11)

Session 3: Components of Information system

At the end of the session the student will be able to identify the components of real world Information
System. In this session system concepts will be discussed along with its characteristics. Explanation on
Information system Resources and Information system Activities will be given.

Chapter: Foundations of Information Systems in Business, Ch-1 (Pg-20)

Session 4: Fundamentals of Strategic Advantage

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By the end of the session, the student will be able to identify basic competitive strategies using Information
technology to confer competitive forces faced by a business. Competitive strategy concepts & forces will be
covered. Details of the value chain & Strategic Information System will be explained in this session.

Chapter: Competing with Information Technology, Ch-2 Section-I (Pg-40)

Session 5: Using IT for Strategic Advantage

This session will guide the student to classify the business value of using Internet Technologies to become
an agile competitor. The concepts like: becoming an agile company and creation of a virtual company will
be briefly discussed. The student will be explained about Knowledge Management Firms.

Chapter: Competing with Information Technology, Ch-2 Section-II (Pg-51)

Session 7: The Networked Enterprise

This session will help you learn major trends in the industries, technologies and business applications of
telecommunications & internet technologies. The importance of networking an enterprise and its related
topics will be discussed. The student will be able to identify the business value of Internet, Intranet and
Extranet applications.

Chapter: Telecommunications and Networks, Ch-6 Section-I (Pg-169)

Session 8:
Also, you will learn about the basic components, functions & types of telecommunications network used in
business. The student will be able to identify the functions of major types of telecommunications network,
software, media and services.

Chapter: Telecommunications and Networks, Ch-6 Section-II (Pg-183)

Session 9: Customer Relationship Management

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This unit will explain you about the various aspects like Business processes supported, Customer &
business value provided, Potential challenges and trends of the areas: Customer Relationship Management
This session will lay its focus on defining CRM, The phases of CRM and the benefits and challenges of
Customer Relationship management.

Chapter: Enterprise Business Systems, Ch-8 Section-I (Pg-245)

Session 10: Enterprise Resource Planning

This unit will explain you about the various aspects like Business processes supported, Customer &
business value provided, Potential challenges and trends of the areas: Enterprise Resource Management.
This session will lay its focus on defining ERP, its benefits and Challenges.

Chapter: Enterprise Business Systems, Ch-8 Section-II (Pg-253)

Session 11: Enterprise Resource Planning

This unit will explain you about the various aspects like Business processes supported, Customer &
business value provided, Potential challenges and trends of the areas: Enterprise Resource Management.
The cost of implementing an ERP is a major point that will be discussed in this session. The major causes
of ERP Failures and the trends in enterprise Resource Planning are also covered under the session.

Chapter: Enterprise Business Systems, Ch-8 Section-II (Pg-253)

Session 12: Supply Chain Management

This unit will explain you about the various aspects like Business processes supported, Customer &
business value provided, Potential challenges and trends of the areas: Supply chain Management Systems.
In this session SCM will be explained and defined along with concepts like Electronic Data Interchange.

Chapter: Enterprise Business Systems, Ch-8 Section-III (Pg-260)

Session 13: Supply Chain Management

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This unit will explain you about the various aspects like Business processes supported, Customer &
business value provided, Potential challenges and trends of the areas: Supply chain Management Systems.
Concepts like the Role of SCM and its benefits & challenges of SCM will be covered. Trends in SCM will be
discussed in detailed.

Chapter: Enterprise Business Systems, Ch-8 Section-III (Pg-260)

Session 14:
Case study: Wal-Mart and Mattel: SCM Best Practices. (case study attached)

Session 16: Electronic Commerce Systems

After reading this unit you should be able to identify major categories & trends of e-commerce applications.
Identify the essential processes of an e-commerce system and business value of several types of e-
commerce market places. The scope of E-commerce will be discussed along with the technologies of E-
commerce.

Chapter: Enterprise Business Systems, Ch-9 Section-I (Pg-277)

Session 17: Electronic Commerce Fundamentals

After reading this unit you should be able to identify major categories & trends of e-commerce applications.
Identify the essential processes of an e-commerce system and business value of several types of e-
commerce market places.

Chapter: Enterprise Business Systems, Ch-9 Section-I (Pg-277)

Session 18: E-commerce Applications and Issues

After reading this unit you should be able to identify major categories & trends of e-commerce applications.
Identify the essential processes of an e-commerce system and business value of several types of e-
commerce market places. E-Commerce categories B2B and B2C will be defined and discussed in detail.

Chapter: Enterprise Business Systems, Ch-9 Section-II (Pg-290)

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Session 19:
Case Study: eBay Inc.: Managing Success in a Dynamic Online Marketplace

Session 20: Developing Business Systems

By the end of the session you will be able to learn and classify the approach applied for the development of
information system & e-business systems solutions which meets the business needs of a company. This
session explains in details the steps and issue of Information system Development. The systems thinking
approach is discussed. Focus is put on the systems development lifecycle.

Chapter: Developing Business / IT Solutions, Ch-12 Section-I (Pg-391)

Session 21: Developing Business Systems

By the end of the session you will be able to learn and classify the approach applied for the development of
information system & e-business systems solutions which meets the business needs of a company. All the
phases of the systems development lifecycle are explained in detail.

Chapter: Developing Business / IT Solutions, Ch-12 Section-I (Pg-400)

Session 22: Implementing Business Systems

By the end of the session you will be able to learn and classify the approach applied for the development of
information system & e-business systems solutions which meets the business needs of a company. The
student will be able to identify Implementation of new systems also evaluation of the hardware, software
and the services.

Chapter: Developing Business / IT Solutions, Ch-12 Section-II (Pg-406)

Session 23: Security, Ethical, and Societal Challenges of IT

In this unit you will identify several ethical issues, several types of security management strategies and
defenses and how they can ensure the security of business applications of IT. All the concepts like: IT

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Security, ethics & Society and Ethical responsibility of professionals will be discussed in this session. Also,
the student will be able discuss details on Computer Crime, Privacy issues, Health Issues, Societal Issues.

Chapter: Security and Ethical Challenges, Ch-13 Section-I (Pg-423)

Session 25: Security Management of IT

You will be able to propose ways that business managers & professionals can help to lesson the harmful
effects. The student will be able to identify Tools of security management and various Security Measures.
System controls and audits is another area that will be covered in this session.

Chapter: Security and Ethical Challenges, Ch-13 Section-II (Pg-445)

Session 26: Enterprise and Global Management of IT

After reading & studying this chapter you should be able to identify the three components of IT
management. Explain how failures in IT management can be reduced by the involvement of business
managers in planning & management. The student will be able to understand the management of
Information system functions.

Chapter: Enterprise and Global Management of IT, Ch-14 Section-I (Pg-463)

Session 27: Managing Global IT

Explain the effect on global business/IT strategy of the trend toward a transnational business strategy by
international business organizations. The session will lay its focus on global business and IT strategies. The
session will also discuss IT applications in Global business. Issues of global data access are also covered
in this session.
Chapter: Enterprise and Global Management of IT, Ch-14 Section-II (Pg-477)

Brief:

The course introduces students to the organizational and managerial foundations of systems, their strategic
role, and the organizational and management changes driving electronic business and the emerging digital
firm. It provides an extensive introduction to real-world systems, focusing on their relationships to

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organizations, management, business processes, and important ethical and social issues. The student is
provided with the technical foundation for understanding information systems and for making wise
information technology choices. Also tools are provided to explain how companies use new information
systems to redesign their organizations and business processes and the role of new technologies such as
web services for rapid application development and digital integration.

Assessment Criteria

S.NO PARAMETER WEIGHT AGE

1 Midterm 20%
2 Group project 20%
3 End Term 60%

Explanation of Assessment Parameter

Group Project and Presentation

The project will include a report and presentation about any contemporary topic relating to Information
Systems and their implementations in an organization. This will be a group project. The information can be
drawn from sources on the internet, magazines, journals, etc. or from a person in the industry. The report
should have 10-12 pages in total.

Final Project Report & Viva: 20%

The final report must be a professional document, no longer than 30, Arial (11) 1.5-spaced, typed pages.
Cite all references used throughout the paper. This reference section will not count against the page limit.
Any charts and tables can be included as appendices and do not count against the page limit. List your
sources of information, including articles, interviews, etc. attach your filled in questionnaire and data
tabulated sheets.

Midterm & End Term Examinations

The midterm and end term examinations carry 20% and 60% weightage respectively and will consist of a
subjective paper based on the concepts discussed in class.

Case Analysis:

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Case analysis is the key to the development of your abilities to select, evaluate and apply concepts, models
and theories of Information systems. Each case opens with the story of a business including the businesses
Information Systems challenges, the characters involved and the issues. Everyone in business knows that
almost every business problem has a human element; this aspect of managing IT related challenges is
realistically represented in each case. In discussing a case (both in class and in your written submission),
do not merely restate facts. The business situations presented in the cases are complex and frequently
involve a series of interrelated problems. Develop your insight into the key problem.

In preparing for a case discussion prior to class, you must address the following issues:
• Categorize the key problems associated with the business organization;
• Identify the problem in terms of Information Technology.
• Classify the various processes and information changes that could be proposed to formulate more
efficient enterprise wide Information Systems.
• Propose your solution to the problem.

In proposing a solution, keep the following points in mind:

• Use the information given in the case. Do not extrapolate or use your information in present
scenario.
• Clearly state your assumptions.
• Give a sensible solution.
• Consider both the pros and cons of your solution;
• Choose a specific course of action. Does it follow from your analysis?

The format of this write-up reflects the logical steps you need to follow in analyzing the case:
• Statement of problem,
• Alternative solutions
• Your chosen solution (including tactical details) and
• Supporting logic and analyses.

Wal-Mart and Mattel: Supply Chain Management Best Practices

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Being a supplier to Wal-Mart is a two-edged sword,” says Joseph R.Eckroth Jr., CIO at Mattel Inc.
(www.mattel.com). “They’re a phenomenal channel but a tough customer. They demand excellence.”
It’s a lesson that the El Segundo, California-based toy manufacturer and thousands of other
suppliers learned as the world’s largest retailer, Wal-Mart Stores (www.walmart.com), built an inventory and
supply chain management system that changed the face of the business. By investing early and heavily in
cutting-edge technology to identify and track sales on the individual item level, the Bentonville Arkansas-
based retail giant made its IT infrastructure a key competitive advantage that has been studied and copied
by companies around the world.
“We view Wal-Mart as the best supply chain operator of all time,” says Pete Abell, retail research
director at high-tech consultancy AMR Research in Boston. Abell says he expects the company to remain in
the vanguard. “Wal-Mart is evolving; they’re not standing still,” he says. The company is still pushing the
limits of supply chain management, he says, searching for and supporting better technology that promises
to make its IT infrastructure more efficient. Radio frequency identification (RFID) microchips, for example,
may replace bar codes and security tags with a combination technology that costs less money.

Early on, Wal-Mart saw the value of sharing that data with suppliers, and it eventually moved that
information online on its Retail Link website. Opening its sales and inventory databases to suppliers is what
made Wal-Mart the powerhouse it is today, says Rena Granofsky, a senior partner at J.C.Williams Group, a
Toronto-based retail consulting firm. While its competition guarded sales information, Wal-Mart approached
its suppliers as if they-were partners, not adversaries, says Granofsky. By implementing a collaborative
planning, forecasting, and replenishment (CPFR) program, Wal-Mart began a just-in-time inventory program
that reduced carrying costs for both the retailer and its suppliers. “There’s a lot less excess inventory in the
supply chain because of it,” says Granofsky.
That efficiency is the key factor in maintaining Wal-Mart’s low-price leadership among retailers, says
Abell. “Their margins can be far lower than other retailers’ because they have such an efficient supply
chain,” he says. The company’s cost of goods is 5 to 10 percent less than that of most of its competitors,
Abell estimates.
Wal-Mart’s success with supply chain management has inspired other retail companies, which are
now playing catch-up, says Abell. “Others are now just starting. They’ve all had inventory systems, but
sharing the data with their partners hasn’t been easy,” he says. Wal-Mart’s influence has extended beyond
the retail sector. Mattel’s Eckroth says that he studied Wal-Mart’s supply chain best practices when he
worked at a manufacturing division of General Electric Co. “They’re a benchmark company,” he says.
One reason Wal-Mart is studied so closely is that it gets buy-in from its suppliers to an incredible
degree. That’s because its programs and practices benefit not just the retailer but its partners as well, says
Eckroth. CPFR, he says has “blurred the lines between supplier and customer. You’re both working to the

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same end: To sell as much product as possible without either of us having too much inventory. We’ve
learned that if we listen to Wal-Mart, take their initiatives seriously, and align our strategies with making
them successful, we both can succeed.”

Mattel has learned a lot from working with Wal-Mart and is bringing those lessons to bear in its
relationship with other channels, says Eckroth. “Getting the supply chain optimized inside of Mattel is only
50 percent of the equation,” he says. “The other 50 percent is getting tightly linked with every one of our
customers so that we’re reacting as quickly as they’re giving us data.” Tight links, Eckroth says, will enable
Mattel to tackle the next big business problem: increasing manufacturing efficiency.

“My ability to get information about the sales pace of a toy and either ramping up or shutting down
manufacturing depends on my having data,” he says. Having sales data on a daily or hourly basis is
necessary to figure out on a micro level what is selling best where and tailor manufacturing accordingly. The
greatest efficiencies will appear when the kind of trusting mutually beneficial relationship Mattel has with
Wal-Mart is duplicated with the rest of the manufacturer’s retail outlets.

“Having that data on a global basis from every one of my customers allows me to optimize the sales
of my products and the fill rates of my customers,”Eckroth says. “The theme for the future is that at the end
of the day, there can be symbiotic relationship between companies.”

Case Study Questions:

1. Do you agree that Wal-Mart is “the best supply chain operator of all time”? Why or why not?
2. What has Mattel learned from Wal-Mart? How well are they applying it to their own business?
Explain your evaluation.
3. What can other businesses learn from the experiences of Wal-Mart and Mattel that could improve
their supply chain performance? Use an example to illustrate your answer.

eBay Inc.: Managing Success in a Dynamic Online Marketplace

It began as a trading site for nerds, the newly jobless, home-bound housewives, and bored retirees to sell
sub prime goods: collectibles and attic trash. But eBay (www.ebay.com) quickly grew into a teeming
marketplace of 30 million, with its own laws and norms, such as a feedback system in which buyers and

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sellers rate each other on each transaction. When that wasn’t quite enough, eBay formed its own police
force to patrol the listings for fraud and kick out offenders. The company even had something akin to a
bank: Its PayPal payment-processing unit allows buyers to make electronic payments to eBay sellers who
can’t afford a merchant credit card account. “eBay is creating a second, virtual economy,” says W.Brian
Arthur, an economist at think tank Santa Fe Institute. ‘It’s opening up a whole new medium of exchange.”
eBay’s powerful vortex is drawing diverse products and players into its profitable economy, driving its
sellers into the heart of traditional retailing, a $2 trillion market. Among eBay’s 12 million daily listings are
products from giants such as Sears Roebuck, Home Depot, Walt Disney, and even IBM. More than a
quarter of the offerings are listed at fixed prices. The result, says Bernard H.Tenenbaum, president of a
retail buyout firm, is “They’re coming right from the mainstream of the retail business.”

So what started out as a pure consumer auction market-place is now also becoming a big time business-to-
consumer and even business-to-business bazaar that is earning record profits for eBay’s stockholders. And
as the eBay economy expands, CEO Meg Whitman and her team may find that managing it could get a lot
tougher, especially because eBay’s millions of passionate and clamorous users demand a voice in all major
decisions. This process is clear in one of eBay’s most cherished institutions: the Voice of the Customer
program. Every couple of months, the executives of eBay bring in as many as a dozen sellers and buyers,
especially its high-selling “Power Sellers,” to ask them questions about how they work and what else eBay
needs to do. And at least twice a week, it holds hour-long teleconferences to poll users on almost every new
feature or policy, no matter how small.
The result is that users feel like owners, and they take the initiative to expand the eBay economy –
often beyond management’s wildest dreams. Stung by an aerospace downturn, for instance, machine-tool
shop Reliable Tools Inc., tried listing a few items on eBay in late 1998. Some were huge, hulking chunks of
metal, such as a $7,000 2,300-pound milling machine. Yet they sold like ice cream in August. Since then,
says Reliable’s auction manger, Richard Smith, the company’s eBay business has “turned into a monster.”
Now the Irwin dale (California) shop’s $1 million in monthly eBay sales constitutes 75 percent of its overall
business. Pioneers such as Reliable prompted eBay to set up an industrial products marketplace in January
that’s on track to top $500 million in gross sales this year.

Then there is eBay Motors. When eBay manager Simon Rothman first recognized a market for cars on
eBay in early 1999, he quickly realized that such high-ticket items would require a different strategy than
simply opening a new category. To jump-start its supply of cars and customers, eBay immediately bought a
collector-car auction company, Kruse International for $150 million in stock, an later did a deal to include
listings from online classifieds site, AutoTrader.com, Rothman also arranged insurance and warranty plans,
an escrow service, and shipping and inspection services.

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 This approach worked wonders. Sales of cars and car parts at a $5 billion-plus annual clip are
eBay’s single largest market. That has catapulted eBay in from of no.1 U.S. auto dealer AutoNation in
number of used cars sold. “eBay is by far one of my better sources for buyers,” says Bradley Bonifacius,
Internet sales director at Dean Stallings Ford in Oak ridge, Tennessee.
And for now, the big corporations, which still account for fewer than 5 percent of eBay’s gross sales,
seem to be bringing in more customers than they steal. Motorola Inc., for example, helped kick off a new
wholesale business for eBay last year, selling excess and returned cell phones in large lots. Thanks to the
initiative of established companies such as Motorola, eBay’s wholesale business jumped nine fold, to $23
million, in the first quarter.
As businesses on eBay grow larger, they spur the creation of even more businesses. A new army of
merchants, for example, is making a business out of selling on eBay for other people. From almost none a
couple of years ago, these so-called Trading Assistants now number nearly 23,000. This kind of organic
growth makes it exceedingly tough to predict how far the eBay economy can go. Whitman professes not to
know. “We don’t actually control this,” she admits. “We have a unique partner – millions of people.”

Case Study Questions

1. Why has eBay become such a successful and diverse online marketplace? Visit the eBay website to
help you answer, and check out their many trading categories, specially sites, international sites, and
other features.

2. Why do you think eBay has become the largest online/off-line seller of used cars, and the largest
online seller of certain other products, like computers and photographic equipment?

3. Is eBay’s move from a pure consumer-to-consumer auction marketplace to inviting large and small
businesses to sell to consumers and other businesses, sometimes at fixed prices, a good long-term
strategy? Why or why not?

CASE STUDY- DAILEY’S RESTAURANT

The installation of a computer-based information system has enabled Dailey’s restaurant in Atlanta to
streamline their operations and promote tighter internal controls over their business.
A waiter takes an order at a table and then enters it online via one of the six terminals located in the dining
room. The order is routed to a printer in the appropriate preparation area: the cold item-printer if it is a salad,

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the hot-item printer if it is a hot sandwich; or a bar-printer if it is a drink. A customer’s meal check listing the
items ordered and the respective prices is automatically generated. This ordering system eliminates the old
three-carbon copy guest check system as well as any problems caused by the waiter’s handwriting. When
the kitchen runs out of a food item, the cook sends an “out of stock” message, which will be displayed on
the dining room terminal when waiters try to order that item. This gives the waiter faster feedback, enabling
them to give better service to the customers.
Other system features aid management in the planning and control of their restaurant business. The system
provides up-to-the minute information on the food items ordered and breaks out percentage showing sales
of each item versus total sales. This helps management plan menus according to customer’s tastes. The
system also compares the weekly sales total versus food cost, allowing planning for tighter cost controls. In
addition, whenever an order is voided, the reason for the void is keyed in. This may help later in
management decisions, especially if the voids are consistently related to food or service. Acceptance of the
system by the users is exceptionally high since the waiters and waitresses were involved in the selection
and design process.

a. In managing the business of a restaurant, what are some decisions that must be made in the
area of:
i. Strategic planning
ii. Managerial control
iii. Operational control

b. What would make this system a more complete management information system rather than just
doing transaction processing?

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