BUS381 Management Information Systems

Assignment 3


Topic: Achieving competitive advantage with information systems  
Assignment Date: Monday, 1/24
Due Date: Tuesday, 2/1
Points: 46

Read Chapter 3,  including the cases and appendices in the chapter.

  1. (8 points) Describe the five elements of Porter's Competitive Forces Model and describe four generic strategies a business can use to deal with competitive forces. 

  2. (8 points) How do information systems help businesses use synergies and core competencies to achieve competitive advantages?

  3. (10 points) Apply Porter's competitive forces model to Apple's IPod and Wal-Mart.  Explain which of the four generic strategies the companies are using.

  4. (20 points) Spreadsheet Application: Milford Financial Services

    Milford Financial Services is a financial services company headquartered in Boston Massachusetts. Milford along with many other companies in the industries has gone through substantial changes in recent years. Extensive use of computer systems and the ability of customers to directly order financial services via the web, have caused substantial changes in the way employees do their jobs. There is a feeling that morale and relationships among the employees has suffered due to the rapid pace of change. In addition, employee turnover is at an all time high.

    Cindy Sanders, the Vice President of Human Relations at Milford, feels that programs encouraging employee interaction outside the work environment can help to both reduce turnover and improve employee moral. Such programs can help to strengthen social relationships between employees and help to build those relationships more quickly. The increased camaraderie created should also improve overall morale and reduce employee turnover.

    One program that has come to Cindy's attention is the offering of free or reduced-rate health club memberships to employees. Such a program would be offered through a health club facility very near the Milford office complex. This would make it easy for Milford employees to sue health club facilities before or after work, or even during the lunch hour. By promoting use of health club facilities around the time and place of work, it is felt that employees will schedule activities together or simply "run in to each other" in the health club facility. Another consideration in Cindy's mind is the fact that several competing financial services firms have begun offering this "perk" to their employees. Cindy feels that it is time to investigate the costs of such a program.

    She begins her investigation by examining the types of health club membership options offered by related forms in the area. She discovers that some larger forms have their own "in plant" facilities. Many firms do not offer health club services at all. The remainder offer free or reduced price memberships to a health club with at least one facility within the immediate area of their offices. When memberships are offered, they cover only the employees themselves, although health clubs often offer discounted rates for covered employees who want to establish family memberships.

    Cindy also engages in some informal conversations with a variety of employees. These discussions suggest that free health club memberships would be viewed as a significant benefit by many employees, particularly if the membership included the availability of free aerobics classes. Based on these preliminary discussions, Cindy decides to investigate the cost of fully supporting memberships for all employees. She begins discussions with health clubs. She is able to find three health clubs with nearby facilities that are willing to offer a corporate membership for Milford employees.

    • Firm-It-Up operates a single facility which is located two blacks from the Milford offices. It offers a full range of health club services,  although only very limited aerobics classes are offered. Firm-It-Up's owner is willing to guarantee that additional classes will be added to meet Milford's needs if Milford sings a contract with his club. The owner quotes Cindy a flat rate of $25 per membership per month for a basic membership not including aerobics classes. He would charge $40 for a premium membership including aerobics classes. Firm-It-Up would charge Milford only for those employees who signed up for memberships and would charge the premium rate only for those employees signing up for aerobics classes.
    • The Sweat Shop operates from a single, large-scale, facility which is located approximately 4 blocks from the Milford offices. It offers a full range of services and appears to have sufficient facilities to accommodate the needs of all Milford employees without further expansion. The ownership of the Sweat Shop quotes you a price of $25 for each employee per month. For this fee every employee would receive a membership including access to aerobics classes. This rate is offered with the understanding that memberships will be issued to ALL employees and Milford will pay $25 per month for all employees including those not using the health club.
    • The Fitness Factory operates five health facilities in the greater metropolitan area. The nearest facility is approximately one-quarter mile from the Milford offices. This facility currently offers only a limited number of aerobics classes, but all other facilities and services appear to be more than adequate. The ownership of The Fitness Factory is willing to commit to offering additional aerobics classes as needed if Milford signs a contract with them. The ownership quotes you a price of $35 per membership per month. they would charge Milford only for those employees requesting membership cards from the club and would offer aerobics classes to all members.

    In order to compare this alternative to the others, Cindy sees that she will need to have a reasonable estimate of the proportion of employees who would plan to attend the club and become members. To assess the first plan, Cindy also needs to know how many employees will participate in aerobics classes. She does a quick phone survey to estimate the interest level. Because she feels interest in the health club may vary by age, Cindy randomly select about 25 employees from each of four age categories for the survey. The survey categories and results are shown below.
    Age Number Surveyed Number Who Would Request
    Membership Classes
    Under 30 26 23 19
    30 to 39 22 16 10
    40 to 49 27 15 8
    Over 50 24 16 12

     To generate estimates of the costs of the alternatives the employment levels for these demographic groups are also needed. From personnel records in a database Cindy was able to retrieve the following data about the current level of employment in each demographic group used in the survey:
    Age Number of Employees
    Under 30 262
    30 to 39 307
    40 to 49 214
    Over 50 194

    Cindy asks you, as her employee, to develop a spreadsheet for her that will produce estimates of the total monthly cost of each of the three programs based on the survey and employment data provided above. Cindy indicates to you that she feels that the prices quoted by the health clubs are negotiable. However, she feels that each club will stick with their current rate structures. For instance, Firm-It-Up might drop their rates to $22.50 for base memberships and $35.00 for premium memberships, but they would continue to insist on issuing a premium membership to all employees participating in aerobics classes. Cindy wants you to create a spreadsheet that will allow her to easily enter changes in rates that she might be able to negotiate and immediately see their impact on the costs of a plan.

    To estimate the number of employees in each demographic group who will participate in the health club, calculate the percentage of participation based on the survey and multiply that by the number of employees in the given age. Make sure that every element of the rate structure for each of the health clubs is entered as a parameter that can be modified by changing the value of a single cell.

    To complete this assignment, you must

    1. Develop a spreadsheet to meet Cindy's requirements. Be sure to test your application for accuracy and completeness.
    2. Write a memorandum to Cindy to accompany your spreadsheet application. This memorandum should include the description of your model in the spreadsheet and your recommendation based on the results.

Email your work (one Word file and Excel file) by the midnight of the due date.