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Case studies - Why did Morgan Stanley underinvest in information technology? Blockbuster vs. Netflix: Which will win out?

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Morgan Stanley�s return on system noninvestment - Case Study 1 .Why did Morgan Stanley underinvest in information technology? His main focus was on management and organization changes and not information technology, when trying to restore revenue. Also, when the two publicly held companies merged together, their operations were still running as if they were two different entities. Dean Witter's Retail Brokerage which managed close to $616 billion in client assets where never fully integrated into Morgan Stanley's information systems. Some individuals mainly Philip Purcell, thought that the merger could be successful without the heavy investment into technology. Unfortunately, the problem with this is that it caused a lot of headache and tension with employees from Dean Witter. They were not accessible to the same technology as the Morgan Stanley employees by any means. They experienced problems with desktop PCs, which hadn't been upgraded in years that would just completely shutdown. Printers that were being used by more than one individual at the same time would eventually cause paper jams. Eventually, due to the decisions of Philip Purcell when running the company at this time, he would be forced to resign under intense pressure from shareholders, employees, and investors as well. ...read more.


As James Gorman, I would first invest in a Decision Support System, which helps management strategically make decisions by providing information, models, and/or analytical tools. This information system allows the user to control the input and output information. Another system that I would consider using would be the Executive Support System. It provides executive information in a readily accessible, interactive format. An ESS usually allows the summary of an entire organization. It also uses the information of middle-managers data to gain more insight of the organization as whole. This would be a great information tool for the executives of the Global Wealth Management Group so they could get a better understanding of the company's strengths and weaknesses and work towards improving the deficiencies. I think that with the use of these systems effectively and efficiently, they would substantially help their company in many different areas. 5. Aside from new systems, what changes in management and organization are required to restore revenue and profit growth and the Global Wealth Management Group? I think that a change in the culture maybe warranted. When the merger was first initiated, the two companies were still divided but were supposed to be one entity. This caused a lot of animosity between counterparts and led to many altercations. ...read more.


Their business model consists of allowing people to rent DVDs at a set monthly fee; no late fees, no hassle, just movies in the mail at a decent price. I would say that Netflix is successful because they took advantage of new technology and found a way to intertwine it in delivering their product to consumers. Netflix's level of success has been due to their commitment to improving the customer experience. They added different price plans so there would be something for everybody. More and more traditional businesses are seeing market share slip away to e-businesses, and their efforts to hold onto customers are not terribly successful. 5. Do you think Blockbuster or Netflix will succeed in the future? Today Blockbuster competes only with prices without regard to the level of service that consumers want. They undercut their online rivals as well as their services are not financially sustainable. In my opinion, I feel that Netflix will be the one that succeeds in the end because the look at the needs of their customers and proactively utilize a value chain model and use information technology to sustain their competitive advantage. Netflix's strategy will allow them to succeed and come out on top especially because such a strategy utilizes information systems to develop strong ties and loyalty with consumers and suppliers. Sources: Laudon & Laudon - Management information systems - Managing the digital firm, 2007. 10th edition www.blockbuster.com www.netflix.com ...read more.

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