Seminole's information system modernization and competitive strategy

Seminole Case Study

This case study examines the situation of Seminole, a company that produces made to order parts for construction equipment. Its business has succeeded in the latter half of the 20th century primarily as a result of personalized service and autonomous leadership of branch managers. With the arrival of the digital age, many competitors have been able to develop a web presence that Seminole does not have, which marginalizes the company and reduces its market share. At the same time, the global recession of 2008 has severely impacted the world\'s economies and recovery is still uncertain. Many factors have to be considered in terms of external threats and opportunities before assessing the company\'s viability going forward and even here it is impossible to know for certain how the global community will emerge growth-wise. In terms of IS solutions, there are clear steps that the company can take to update and streamline its business to enable more centralized command and better sense of progress.

Introduction

In the second half of the 20th century, growth and development was seen around the world in terms of industrializing nations working with other countries to expand infrastructure and provide updated services. Construction and economic growth were evident in many parts of the world. Seminole played a respectable role in providing construction machines with made to order parts that would support the overall operations of development. However, as the world became more digitalized, Seminole still trudged forward relying upon old technology (faxes, emails, phones) in order to provide person-to-person service. There was no considerable oversight from above for regional branches; their managers worked independently of one another focusing on the needs of their own clients. Yet, while clients updated their technology, Seminole continued to lag -- in some cases putting a burden on the clients to \"dumb down\" their tech so as to place an order with Seminole. With the economic crash in 2008 and the onset of global recession, Seminole had to ask itself some real questions in terms of how it should see itself in the coming decades. This paper will examine the company\'s history, its growth, its strengths, weaknesses, opportunities and threats, and discuss its prospects for growth and what it should do to address its information system needs in order to be competitive in the Internet Age.

Seminole\'s History and Growth

The company procures complex fittings that are made to order for construction machins, such as diggers, trucks, loaders, etc. The parts are mainly made domestically but 20% of business is outsourced or supplied through vendor contracts where government regulations are less impactful. The business has been well-respected in the industry and has operated successfully for decades prior to the crash of 2008. Its reputation was based on personalized service, and branch managers had autonomous control over their operations. There was virtually no centralization. The director made visits to the regional branches semi-annually in the US, and every quarter the branch manager reported to Maryland for meetings where managers exchanged information on the company\'s trajectory, interests, strengths, weaknesses, as they saw it and so on. While the firm\'s outsourcing partners were well advanced in terms of using computer technology they enabled Seminole to continue into the digital age without updating their IT infrastructure by providing the firm with Excel spreadsheet information and using email. Records were kept manually by individual account officers in each of the branch. There was no central service for storing data. The company did not utilize cloud technology. The branches, since the beginning, had been isolated islands catering to their own region and performing well based on the fact that countries were developing, parts were in demand, and personalized service was desired.

By the 1990s, competing businesses began turning to the Internet to secure a footprint in the digital age and provide customers with a more easily accessible, interactive communications framework that could be accessed remotely. Facebook pages and other social media were used to create content, market the brand, and expand exposure. The personalized service that was crucial to Seminole\'s growth no longer offset its weakness in terms of technological advancements. Seminole was being left behind in the digital age as it had no Web presence. Seminole had not embraced information technology but had relied upon the old way of doing business -- person to person. The Internet had changed that: service was now provided through mouse clicks, updated web pages, and digital order forms. Seminole\'s growth had slowed but following 2008 it had essentially crashed.

External Environment

The external environment in which Seminole finds itself is one that is riddled with recession. Global growth is at a stand-still and Caterpillar sales, which reflect the overall state of the construction industry worldwide are now in a record-setting 50-month long decline (Durden, 2017). The recession has hit industry hard and countries are scaling back development as debt burdens increase and credit shrinks. The positive growth factors such as sound monetary and fiscal policy of the decades prior (which impact and drive business growth and development as well as investment and construction) have been replaced by experiments in monetary and fiscal policy spearheaded by the Federal Reserve and the world\'s central banks -- from the European Central Bank to the Bank of Japan. Negative yield bonds, of which there are more than 8 trillion dollars\' worth around the world (Kuntz, 2016), are indicative of the downward pressure on investment funds seeking to sustain capital in the face of increasingly risky markets.

With the changing political winds manifesting themselves virtually everywhere (Britain\'s vote to leave the EU, Italy\'s no vote on a referendum to centralize powers, France leaning towards Le Pen, Wilders leading in Holland, the Philippines now under the control of Duterte, Putin changing the landscape in the Middle East through work with Syria and Iran, and China pushing a new Silk Road), new trade agreements are likely to shift the way that business is conducted in the coming decade and the way in which partnerships are formed. Offshoring may come to an end if Trump\'s policies are effected and mirrored around the world, and thus development could increase -- but this too depends upon central banking interventions and the prospect of keeping interest rates low (Dorfman, 2015; Reeves, 2016).

The opportunity for growth is evident in the fact that computer technology is still available and can be utilized to turn Seminole\'s orientation around to meet the mark set by competitors. Additionally, there remains a new economic incentive seen in Trump\'s discourse, in China\'s expansionism, in Russia\'s promotion of a multi-polar world and in a reorganization and rebalancing of power in Europe -- but threats continue to exist in the form of apocalyptic debt structures, welfare state collapses (already municipalities are depleting pensions), currency devaluation, and a surge in nationalism that could diminish international prospects of the company if border taxes are implemented. Global instability is the major threat facing Seminole and a global recession still appears evident if Caterpillar sales are any indication. The big question for Seminole, therefore, is whether growth at the international level is even possible in the foreseeable future or if constricted sales are now the new normal -- not just for Seminole but for companies in the industry. Apparently they are for Caterpillar.

Strengths/Weaknesses

The main branch data processing department had up until six months prior compiled and presented data by country every month. At the time, the informative reports were not considered of interest to upper management so the process was not retained -- but clearly there has been a process in place and considering that it has only been out of operation for less than a year, it could reasonably be expected to be regenerated. These reports would help to give management a better idea of how their international operations are progressing -- whereas now they are currently flying blind without any data to digest. Thus, while their main integrated information systems are essentially nil, Seminole does have a strong network that can be vitalized to produce accurate, informative reports of monthly site activity. This coupled with the now urgent need to know exactly how each branch across the world is performing should provide significant motivation on the part of regional managers to ensure that these reports are supported and reflective of the overall situation.

The weakness at the heart of Seminole\'s operations is that the company has relied upon old technology, which has been effective to a point -- but now there is more demand from management to have a centralized database that can provide instant access on any client at any time from any computer. The company has no link up with cloud services technology, has no integrated infrastructure, is still using mostly faxes and personal communications in order to conduct business transactions, and is looking at significant and substantial costs to implement the kind of integrated information systems infrastructure envisioned by corporate.

Value assessment places the company\'s main strengths as the following: personal communications with client, strong individual leadership among branches, strong production in the U.S. with only 20% of sales outsourced. The company\'s main weaknesses consist of: no integrated information systems infrastructure, no centralized management overseeing individual branches, and declining sales as a result of a constricting economy -- i.e., the business is dependent upon continual global growth and global recession could seriously diminish bottom lines.

Analysis

The strengths of the company (its strong regional/branch leadership and personalized service) and its weaknesses (its lack of IS infrastructure and the deplorable condition of the global economy, offset only by the possibility of a renewed development that depends on credit expansion and interest rates remaining low) can be compared to the external threats and opportunities (recession/development) to show that Seminole can still grow -- but it depends upon a number of factors: the company must bolster its relationships with clients by updating its IT and IS infrastructure. Clients in the 21st century will demand easy access to web services and centralization of the company\'s information services can help the firm have a better overall picture of developments, where to focus for growth, and where problem areas are occurring.

Recommendations

Within the context of organizational change, levels of hierarchy, employee rewards, conflicts, and other issues that are important to Seminole, the four types of information systems that it is recommended the firm utilize in order to address its lack of centralized IS infrastructure and the demand from clients for updated digital services are the following: 1) information systems in organizations, 2) management information systems, 3) transaction processing systems, and 4) decision support systems.

Information systems allow users to collect, store and process data so that all those within the network can share and have access to information -- and in the case of Seminole that access would include client profiles and histories, which would enable managers and corporate to project views of where growth possibilities lie and where concentrated efforts to expand should be focused. The key is to have that data compiled so that big decisions at the corporate level can be based on solid evidence instead of guesswork. This is the first step to ensuring viability. The second is to utilized management information systems -- which would include taking the data collected by the transaction processing network and enabling reports to be constructed that provide an assessment of how business is progressing. Without such a system, managers are literally flying in the dark. This system is essential to forward-looking guidance. The third system, just referenced, must coincide with the management information system and in fact supports it -- the transaction processing system. This streamlines transactions and makes it easier for both clients and suppliers to transact business -- and it also gives management a database in which it can find all the information it desires about client transactions, billing, manufacturing, schedules, etc. Finally, a decision support system would be needed in order to help management and corporate process data and create statistical models that can provide projected outlooks based on factors that can be input into the framework. This type of system helps management to see how critical variables, such as sales, economic growth, rates, etc. factor into the company\'s outlook over time and what steps need be taken to address conflicts.