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Could you increase your knowledge— and raise your grade—if you… …used an online tutorial that assisted you with Access and Excel skills mapped to this book? …learned to use Microsoft’s SharePoint, the number one organizational tool for file sharing and collaboration? …had flashcards and student PowerPoints to prepare for lectures? Visit , a valuable tool for your student success and your business career. www.myMISlab.com INTEGRATING BUSINESS WITH TECHNOLOGY By completing the projects in this text, students will be able to demonstrate business knowledge, application software proficiency, and Internet skills.These projects can be used by instructors as learning assessment tools and by students as demonstrations of business, software, and problem-solving skills to future employers. Here are some of the skills and competencies students using this text will be able to demonstrate: Business Application skills: Use of both business and software skills in real-world business applications. Demonstrates both business knowledge and proficiency in spreadsheet, database, and Web page/blog creation tools. Internet skills: Ability to use Internet tools to access information, conduct research, or perform online calculations and analysis. Analytical, writing and presentation skills: Ability to research a specific topic, analyze a problem, think creatively, suggest a solution, and prepare a clear written or oral presentation of the solution, working either individually or with others in a group. Business Application Skills BUSINESS SKILLS SOFTWARE SKILLS CHAPTER Spreadsheet charts Chapter Spreadsheet formulas Chapter 10 Finance and Accounting Financial statement analysis 2* Spreadsheet downloading and formatting Pricing hardware anrj software Spreadsheet formulas Chapter 5 Technology rent vs. buy decision Total Cost of Ownership (TCO) analysis Spreadsheet formulas Chapter 5* Analyzing telecommunications services anrj costs Spreadsheet formulas Chapter 7 Risk assessment Spreadsheet charts and formulas Chapter 8 Retirement planning Spreadsheet formulas and logical functions Chapter 11 Capital budgeting Spreadsheet formulas Chapter 14 Chapter 14* Human Resources Employee training and skills tracking Database design Database querying and reporting Chapter 13* Job posting database and Web page Database design Web page design and creation Chapter 15 Analyzing supplier performance and pricing Spreadsheet date functions Database functions Data filtering Chapter Inventory management Importing data into a database Database querying and reporting Chapter 6 Bill of materials cost sensitivity analysis Spreadsheet data tables Spreadsheet formulas Chapter 12* Database querying and reporting Chapter 1 Manufacturing and Production 2 Sales and Marketing Sales trend analysis Customer reservation system Database querying and reporting Chapter 3 Improving marketing decisions Spreadsheet pivot tables Chapter 12 Customer profiling Database design Database querying and reporting Chapter Customer service analysis Database design Database querying and reporting Chapter 9 Sales lead and customer analysis Database design Database querying and reporting Chapter 13 Blog creation and design Blog creation tool Chapter 1IIICI MCI <3IVMI» Using online software tools to calculate shipping costs Chapter 1 Using online interactive mapping software to plan efficient transportation routes Chapter 2 Researching product information and evaluating Web sites for auto sales Chapter 3 Using Internet newsgroups for marketing Chapter 4 Researching travel costs using online travel sites Chapter 5 Searching online databases for products and services Chapter 6 Using Web search engines for business research Chapter 7 Researching and evaluating business outsourcing services Chapter 8 Researching and evaluating supply chain management services Chapter 9 Evaluating e-commerce hosting services Chapter 10 Using shopping bots to compare product price, features, and availability Chapter 11 Using online software tools for retirement planning Chapter 12 Redesigning business processes for Web procurement Chapter 13 Researching real estate prices Chapter 14 Researching international markets and pricing Chapter 15 A n?tlvtif*5il \A/ inn cti a riH i 1o Ic"^ MMcnyniiCH, w pit riniiy lu Pcocontatinn rrociiidiiuii Qlf OI\M BUSINESS PROBLEM CHAPTER Management analysis of a business Chapter 1 Value chain and competitive forces analysis Business strategy formulation Chapter 3 Formulating a corporate privacy policy Chapter 4 Employee productivity analysis Chapter 7 Disaster recovery planning Chapter 8 Locating and evaluating suppliers Chapter 9 Developing an e-commerce strategy Chapter 10 Identifying knowledge management opportunities Chapter 11 Identifying international markets Chapter 15 *Dirt Bikes Running Case on MyMISLab 6* 4 This page intentionally left blank Management Information Systems MANAGING THE DIGITAL FIRM TWELFTH EDITION Kenneth C. Laudon New York University Jane P. Laudon Azimuth Information Systems Prentice Hall Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Library of Congress Cataloging-in-Publication Information is available. Executive Editor: Bob Horan Editorial Director: Sally Yagan Editor in Chief: Eric Svendsen Product Development Manager: Ashley Santora Editorial Assistant: Jason Calcano Editorial Project Manager: Kelly Loftus Senior Marketing Manager: Anne Fahlgren Senior Managing Editor: Judy Leale Senior Production Project Manager: Karalyn Holland Senior Operations Specialist: Arnold Vila Operations Specialist: Cathleen Petersen Senior Art Director: Janet Slowik Cover Designer: Jill Lehan Cover Illustration/Photo: Merve Poray/Shutterstock Images Manager, Rights and Permissions: Hessa Albader Media Editor: Denise Vaughn Media Project Manager: Lisa Rinaldi Composition: Azimuth Interactive, Inc. Full-Service Project Management: Azimuth Interactive, Inc. Printer/Binder: Courier/Kendallville Typeface: 10.5/13 ITC Veljovic Std Book Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within the text (or on page P1). Microsoft® and Windows® are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. Screen shots and icons reprinted with permission from the Microsoft Corporation. This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation. Copyright © 2012, 2010, 2007, 2006 by Pearson Education, Inc., Upper Saddle River, New Jersey, 07458. Pearson Prentice Hall. All rights reserved. Printed in the United States of America. This publication is protected by Copyright and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding permission(s), write to: Rights and Permissions Department. Pearson Prentice Hall™ is a trademark of Pearson Education, Inc. Pearson® is a registered trademark of Pearson plc Prentice Hall® is a registered trademark of Pearson Education, Inc. Pearson Education Ltd., London Pearson Education Singapore, Pte. Ltd Pearson Education, Canada, Ltd Pearson Education-Japan Pearson Education Australia PTY, Limited Pearson Education North Asia, Ltd., Hong Kong Pearson Educación de Mexico, S.A. de C.V. Pearson Education Malaysia, Pte. Ltd. Pearson Education Upper Saddle River, New Jersey 10 9 8 7 6 5 4 3 2 1 ISBN-13: 978-0-13-214285-4 ISBN-10: 0-13-214285-6 About the Authors Kenneth C. Laudon is a Professor of Information Systems at New York University’s Stern School of Business. He holds a B.A. in Economics from Stanford and a Ph.D. from Columbia University. He has authored twelve books dealing with electronic commerce, information systems, organizations, and society. Professor Laudon has also written over forty articles concerned with the social, organizational, and management impacts of information systems, privacy, ethics, and multimedia technology. Professor Laudon’s current research is on the planning and management of large-scale information systems and multimedia information technology. He has received grants from the National Science Foundation to study the evolution of national information systems at the Social Security Administration, the IRS, and the FBI. Ken’s research focuses on enterprise system implementation, computer-related organizational and occupational changes in large organizations, changes in management ideology, changes in public policy, and understanding productivity change in the knowledge sector. Ken Laudon has testified as an expert before the United States Congress. He has been a researcher and consultant to the Office of Technology Assessment (United States Congress), Department of Homeland Security, and to the Office of the President, several executive branch agencies, and Congressional Committees. Professor Laudon also acts as an in-house educator for several consulting firms and as a consultant on systems planning and strategy to several Fortune 500 firms. At NYU’s Stern School of Business, Ken Laudon teaches courses on Managing the Digital Firm, Information Technology and Corporate Strategy, Professional Responsibility (Ethics), and Electronic Commerce and Digital Markets. Ken Laudon’s hobby is sailing. Jane Price Laudon is a management consultant in the information systems area and the author of seven books. Her special interests include systems analysis, data management, MIS auditing, software evaluation, and teaching business professionals how to design and use information systems. Jane received her Ph.D. from Columbia University, her M.A. from Harvard University, and her B.A. from Barnard College. She has taught at Columbia University and the New York University Graduate School of Business. She maintains a lifelong interest in Oriental languages and civilizations. The Laudons have two daughters, Erica and Elisabeth, to whom this book is dedicated. iii Brief Contents Part One Organizations, Management, and the Networked Enterprise 1 Chapter 1 Chapter 2 Chapter 3 Chapter 4 Information Systems in Global Business Today 2 Part Two Information Technology Infrastructure 161 Chapter 5 Chapter 6 IT Infrastructure and Emerging Technologies 162 Chapter 7 Chapter 8 Telecommunications, the Internet, and Wireless Technology 244 Part Three Key System Applications for the Digital Age 333 Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 334 Chapter 10 Chapter 11 Chapter 12 E-Commerce: Digital Markets, Digital Goods 370 Part Four Building and Managing Systems 485 Chapter 13 Chapter 14 Chapter 15 Building Information Systems 486 Global E-Business and Collaboration 40 Information Systems, Organizations, and Strategy 78 Ethical and Social Issues in Information Systems 120 Foundations of Business Intelligence: Databases and Information Management 206 Securing Information Systems 290 Managing Knowledge 414 Enhancing Decision Making 452 Managing Projects 526 Managing Global Systems 558 (available on the Web at www.pearsonhighered.com/laudon) References R 1 Glossary G 1 Photo and Screen Shot Credits P 1 Indexes I 1 iv Complete Contents Part One Organizations, Management, and the Networked Enterprise 1 Chapter 1 Information Systems in Global Business Today 2 ◆Opening Case: The New Yankee Stadium Looks to the Future 3 1.1 The Role of Information Systems in Business Today 5 How Information Systems Are Transforming Business 5 • What’s New In Management Information Systems? 6 • Globalization Challenges and Opportunities: A Flattened World 8 ◆Interactive Session: Management MIS in Your Pocket 10 The Emerging Digital Firm 11 • Strategic Business Objectives of Information Systems 12 1.2 Perspectives on Information Systems 15 What is an Information System? 15 • Dimensions of Information Systems 17 ◆Interactive Session: Technology UPS Competes Globally with Information Technology 22 It Isn’t Just Technology: A Business Perspective on Information Systems 24 • Complementary Assets: Organizational Capital and the Right Business Model 26 1.3 Contemporary Approaches to Information Systems 28 Technical Approach 29 • Behavioral Approach 29 • Approach of This Text: Sociotechnical Systems 29 1.4 Hands-on MIS Projects 31 Management Decision Problems 31 • Improving Decision Making: Using Databases to Analyze Sales Trends 31 • Improving Decision Making: Using the Internet to Locate Jobs Requiring Information Systems Knowledge 32 Learning Track Modules: How Much Does IT Matter?; Information Systems and Your Career, The Emerging Mobile Digital Platform 32 Review Summary 33 • Key Terms 34 • Review Questions 34 • Discussion Questions 35 • Video Cases 35 • Collaboration and Teamwork: Creating a Web Site for Team Collaboration 35 ◆Case Study: What’s the Buzz on Smart Grids? 36 Chapter 2 Global E-Business and Collaboration 40 ◆Opening Case: America’s Cup 2010: USA Wins with Information Technology 41 2.1 Business Processes and Information Systems 43 Business Processes 43 • How Information Technology Enhances Business Processes 44 v