MDIST AY2018/19 Sem 2 | BU Y1 | MASB1043 Business Information Systems | IA Page 1 of 4
BANGOR UNIVERSITY
AND
MANAGEMENT DEVELOPMENT INSTITUTE OF SINGAPORE
IN TASHKENT
Course : Year 1
Module Code and Title : MASB1043 Business Information Systems
Module Leader : Mr John Lee
Assessment : Individual Assignment
Due Date : 18 March 2019
Word Length : 2,000 words
Weighting within Module : 30%
Business Information Systems – Module Assignment
Assignment Question
CASE STUDY – LDirect Co
Introduction
In 2012 Tom Hardy set up a firm LDirect Co that supplied Laser-disk records to individuals
within his local area. Tom had a large collection of Laserdisk movies and audio selections.
He started his business just as he completed a business management degree at a local
university and he was keen to apply his studies to actual business practices and strategy.
He successfully used a recently developed website to advertise his business.
The following 4 years, Tom’s business saw steady growth, and he was surprised at the
number of new clients who were contacting him for requests and information. Tom had
numerous contacts in the record industry and personally knew many of the record suppliers
and record shop owners who specialised in this business area. He expanded his services and
began to supply audiotapes and compact discs (CDs) through the website.
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Business Expansion
In 2015 Tom purchased a commercial outlet, which consisted of a retail shop, small
warehouse and office space. He employed 10 people to help with the business expansion.
Tom invested in info-technology, setting up electronic links with suppliers and maintaining a
comprehensive customer database and stock recording system.
LDirect was seeking further expansion, and Tom needed extra financial support and was
actively sought financial injection. His former university schoolmate, Kevin Costner,
provided the financial support. Kevin, a successful business entrepreneur, had an interest in
music.
Current Position (2018)
LDirect found itself in a market that was starting to face increased threats from many other
companies who were also offering online purchasing facilities and also the challenge of mass
illegal copying/pirating that is now common practice in the music industry.
LDirect is currently supplying CDs, DVDs, audiotapes and LD records throughout the
country. The company, this year, moved to larger premises, and now employs 12 staff. 2 full
time members of the technical team maintains and modifies the website and organises the
product, supplier and customer databases.
There are over two million titles on the product database, in the region of one hundred
thousand customers and over thirty suppliers. LDirect receives supplies from many of the
major music distributors, but due to the size of its operation it cannot achieve the economies
of scale of large retailers such as supermarkets and national music suppliers.
Kevin suggested that they form a consortium with local independent retailers with whom
they currently conduct business, to purchase the latest recordings and thus benefit from bulk
purchasing. LDirect’s 3 purchasing clerks continually scan the supplier’s databases and
websites to ensure that LDirect is purchasing its products at the lowest prices available.
LDirect has developed some excellent working relationships with a small number of
suppliers and receives very competitive prices for certain purchases. Orders with a limited
number of suppliers are handled completely electronically, with deliveries being staggered to
meet customer requirements. In certain cases, LDirect has negotiated a sale or return
agreement with its major suppliers.
Online purchasing
The online ordering system permits customers to place an order and to make payment via
credit card on secure lines. When an order is received, it is normally dispatched within
twenty-four hours. However, older selections and rare movie/audio recordings may take up to
4 weeks before being dispatched.
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LDirect times are communicated to customers upon receipt of order. Tom is aware that
LDirect does not use its customer information to promote sales and analyses customer
purchasing habits.
This is a weakness in LDirect’s strategy and as a result of this, LDirect’s expansion has
slowed down in the last year.
LDirect offers a unique search service to individuals and small record shop retailers.
Customers requesting particularly rare audio/video recordings often do not know the title or
artist. In such cases customers often supply clues such as ‘it was recorded in the eighties and
has 3 men and 1 lady on the sleeve”, or ‘it was on a pink label and it had an amazing
reworking of something or other by Beethoven which went on for a whole side of the LP’,
etc.
To fulfil such queries is both time consuming and requires expert knowledge. There is little
financial payback from this service but it does provide a unique selling point. Queries of this
nature have been increasing during the last few years.
Kevin has suggested that they should employ tele-workers to deal with this side of the
business. He is aware that Tom has several personal contacts worldwide with expert
knowledge, who would welcome the idea of earning extra money while working from home.
Due to the expansion of the business and the lack of space in LDirect’s premises Kevin also
believes that other functions of the business could be adequately served by teleworkers.
Tom is a little apprehensive about employing teleworkers. He has always managed the
business in a personal manner, often employing friends and people with a genuine interest in
the music business. Tom believes that the workers at LDirect are colleagues and friends
rather than just employees. The majority of the employees share Tom’s enthusiasm and
commitment to the business and they often voluntarily extend their working hours to
complete tasks.
Computing facilities
The computing facilities within LDirect are up to date for such a small sized company. Tom
has not lost his enthusiasm for technology. Each department is equipped with the latest
personal computers (PCs) and they are supported by a modern client server based
technology. The software includes the latest versions of standard office systems and a
relational database management system. The systems provide access to company information
as and when required. Tom controls user access rights. Tom is continually developing the
LDirect’s website and wishes to pursue this as a business strategy.
He is currently planning to introduce a monthly magazine that will be posted on the site. The
magazine will provide customers with the latest news and previews of forthcoming releases.
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The electronic magazine will also include a section for customers to publish news items and
comments.
Over ninety per cent of LDirect’s current business is conducted in the home country.
Overseas clients normally make specific requests for recordings that are no longer available
in their home countries. The cost of postage and packaging for overseas clients is often more
than the purchase price of the order. Kevin has suggested they should contemplate entering
the global market place. In a recent meeting with Tom he stated, ‘Our business should take
advantage of the global marketplace. We should expand and rise to the challenge, I am sure
we can provide a global service and reap the benefits.’
Tom responded, ‘It’s not that easy to expand and provide our services in the global market.
To make such a change may involve a complete rethink of our business strategy.’ Kevin
replied, ‘I believe the business strategy should exploit information technology to make as
much profit as possible’.
An analysis applying Michael Porter’s five competitive forces would help organizations
identify opportunities for information systems, to provide a strategic advantage.
Required:
| (a) | Using the five forces analysis technique, demonstrate how IT/IS has been |
| used to manage the threats to LDirect. | (50 marks) |
(b) Discuss why the relationship between business strategies and information
systems strategies has changed during the last few decades.
(20 marks)
(c) Critically evaluate how effective LDirect has been in aligning its business and
information systems strategies. (30 marks)
END OF PAPER