How important are the organizational characteristics managers should know to help build and maintain information systems that work? What are the effects of information systems on organisations? It is important to define an organization and to compare it with its behavioral definition.
A stable, formal structure of social organization that uses resources to produce outputs is what the technical definition describes. This definition of organization includes three elements: capital, labor and production and consumption. Organizations are also more stable than informal groups and can be considered formal legal entities. They are also social structures. An organization is defined as a collection rights, privileges and obligations that are balanced over time. This definition includes the relationships and working styles of the employees. The technical description shows how capital, labor, or information technology are combined in a company. The behavioral definition examines the impact of information technology on the internal workings and functionings of an organization. Identify and describe common features that organizations have in common when it comes to information system use.
Routines & business processes: The organization has developed standard operating procedures to increase productivity and efficiency, and reduce costs.
Organizational politics. Divergent perspectives on how rewards, punishments and resources should go are a source of political resistance when it comes to organisational change.
Organizational culture is a key factor in preventing technological change.
Organisational environments: There are reciprocal relationships between organizations and their environments. Information systems allow organizations to recognize external changes that may require an organizational response.
Organizational structure. Information Systems reflect the type organization structure, namely entrepreneurial, machine, divisionalized, professional, or adhocracy.
Define the main economic theories that explain how information systems impact organizations.
The book covers both transaction cost theory as well as agency theory. The transaction cost theory posits that firms incur transaction fees when they buy goods on the marketplace, instead of manufacturing products.
Traditional firms have sought to reduce transaction cost by increasing their size, integrating vertically and horizontally, and taking over smaller companies. Information technology allows firms to lower their market participation costs (transaction cost) and help them shrink while producing the same amount or more output. According to the agency theory, the firm is a nexus between individuals who are interested in contracts. Agents (employees), who are employed by the owner, perform work for him or her and delegate some decision-making authority to them. Agents require constant supervision. Management costs go up as businesses grow. Information technology helps reduce agency costs. It makes it easier for managers to monitor a greater number of people using fewer resources.
Define the main behavioral theories that explain how information systems impact organizations.
For describing individual firm behavior, behavioral theories can be used from psychology, sociology, and politics. According to behavioral scientists, information technology could improve decision-making through reducing the cost of information acquisition or distribution. IT could eliminate middle-managers and their clerical support. IT could transmit information directly from operating units to senior executives and allow information to flow directly to lower-level operational units. Because they don’t have to be restricted by geographical locations, some organizations can even act as virtual ones.
According to one behavioral approach, information systems are the result of political competition among organizational subgroups. IT gets involved in this race because it determines who has access to which information. Information systems can also control who, what, where, and when. Explain why organizations are resistant to information system introduction. Because information systems can have a significant impact on many aspects of an organization’s culture, structure and politics, there is a lot of resistance. According to Leave it, technology changes can be absorbed and deflected by organizational tasks, structures, people, and then defeated. Change is possible only if technology, tasks and structure are changed simultaneously. The authors also discuss the importance of releasing organizations before introducing innovation and quickly implementing it. Finally, it is important to refreeze or institutionalize the change.
Describe how the Internet and disruptive technology have affected organizations.
The Internet allows organizations to store and share information, knowledge, and information easily from anywhere. The Internet allows for greater information storage, both in terms of its depth and breadth. It improves information distribution and quality, while lowering the costs. It reduces transaction costs, as well as the cost of information acquisition. Internet may allow organizations to decrease the number of managers, which allows them to communicate more effectively with lower management. Internet can also reduce agency costs. Different companies can experience different impacts from disruptive technologies based on their response to them. Some companies cause disruptions, and they succeed. Some companies are able to learn from the disruptions and implement them. The changes can be devastating for other companies because they make it very easy to do the right thing. Most disruptions are good for the company. Some disruptions are mostly beneficial to the firm. 2. How can Porter’s competitive force model help companies create competitive strategies through information systems? Porter’s competitive force model is described and explained. This model gives a broad view of the firm and its competitors as well as the environment.
Porter’s model focuses on the firm’s overall business environment. Five competitive forces are the key to the firm’s fate in this model.
Traditional competitors
new market entrants
Services and products that can be substituted
patrons
suppliers
Discuss the implications of the Competitive Forces Model on competitive advantage.
Certain firms perform better than others due to having access to more resources or being able to make use of the resources available to them more efficiently. It could also be due to their superior information and knowledge. They are able to grow their revenue, profitability, and productivity, which ultimately leads to higher stock market valuations than their competition. Describe four strategies that information systems can help firms pursue.
These four strategies are often made possible by information technology systems.
Leadership with low costs: Lowest operational cost and lowest prices
Product differentiation: Allow customers to choose between new products or services.
Market niche: Focus your efforts on a narrow market and help it succeed over its competitors.
Enhance customer and supplier relationships. Give examples and explain how information technology can help with these competitive strategies.
Low-cost leadership is possible by using information systems to improve inventory, supply, and customer response. Example: Wal-Mart.
Product differentiation: Make products and services more personalized and customized to meet individual customer needs using information systems. Example: Google, eBay, Apple, Lands’ End.
Focus on niche markets: Use information systems for precise sales and marketing techniques. For marketing campaigns that target smaller markets, it’s important to analyze the buying habits and preferences of customers. Example: Hilton Hotels and Harrah’s.
Strengthen customer-supplier relationships: Use information systems for direct supplier access. Increase customer loyalty and switch costs.
Exemple: IBM, Amazon.com Describe why it is important to align IT with business goals in order for systems to be strategic.
IT strategy for businesses is based on the principle that technology should serve the business, not vice versa. A firm will be more successful if it can align its IT goals with their business goals. IT must be shaped by business leaders. They can’t ignore IT problems. They are not willing to accept IT failure as a mere nuisance. They need to understand the capabilities of IT, its workings, and how they can impact revenues and profits.
How can value web and the value chain help businesses to identify strategic information system opportunities? Define and describe the value-chain model.
The value chain model identifies specific business activities where competitive strategies are most effective and information systems can have the greatest strategic impact. This model pinpoints the most important leverage points that a company can use to improve its competitive position. The value-chain model defines a firm as a set of activities that add value or value to its products and/or services. These activities can be classified either as primary or secondary. Primary activities directly relate to the production and distribution services of the company’s products and/or services. These activities create value for customers. Primary activities require support activities, which include organization infrastructure. A company’s value can be linked directly to its suppliers, distributors, or customers.
Explain how you can use the value chain model to identify information system opportunities.
Each stage of a value chain can use information systems to improve operational efficiency, lower costs and improve profit margins. Information systems can be used to analyze the value-adding activities of organizations at every stage of their value chain. Information systems can improve customer relationships (customer relations management systems) or with suppliers (supply-chain management systems), which may be outside the value chains but make up a significant part of an extended value system. Information systems allow businesses to track their benchmarks and find the best practices for their industries. An organization can develop a list to help them select the right candidates for information system applications after analyzing different stages of the value-chain.
Define and demonstrate the value web.
A value Web is a collection independent companies that use technology to coordinate their value chain to create a product. It is customer-driven and works in a more fluid way than traditional value chains. The value Web is a networked platform that allows companies to sync their business processes with suppliers, customers, and trading partners. It can also be used to link businesses within the same industry or between related industries. The value web is a network that allows businesses to find strategic information opportunities. Information systems make it possible to create value webs which are adaptable and flexible to changing supply and demand. Market conditions change and relationships can be combined or unbundled. By optimizing value web relationships, companies can speed up time to market. Companies can establish and maintain value webs through information systems. Define how the Internet has impacted competitive forces and enhanced competitive advantages. Some industries are being threatened and destroyed by the Internet.
Internet has created new markets and helped to create thousands of businesses. New products, services, and business models have all been possible thanks to the Internet. This has made it possible for new industries and industries to quickly develop. The Internet has made it easier for competitors to be fierce. Internet technology can be used by all companies. It allows rivals to compete on price only and also opens up new markets for their products. Internet information makes it easier for customers to bargain. They can quickly find the best provider at a lower price online.
How can information systems be used to help businesses leverage core competencies, synergies and network-based strategies for competitive advantage? Explain how information system promotes synergies as well as core competencies.
Large corporations are typically made up of a group of businesses organized in a series of strategic business units. Information systems can enhance the performance of these business units through the promotion of synergies as well as core competencies. Explain how core competencies and synergies can increase competitive advantage.
Synergy is when one unit’s output can be used to generate inputs for another. Two organizations can also pool expertise and markets, which can reduce costs and lead to higher profits. Information systems can be used to bring together disparate business units and make them work as one. Core competency refers to an activity that a company is a leader in. A core competency is a set of knowledge that has been acquired over years and by a top-quality research organization, or key individuals who keep abreast with new knowledge. Competence is enhanced by any information system that promotes knowledge sharing across business units.
Define how network economies can help businesses.
The marginal cost of adding another person to a network is almost negligible, while the marginal gains are much greater. Because users can interact more with each other, the network’s value is greater if it has many participants. It is possible to use the Internet and network technology to create networks. Information systems enable businesses to be built on large networks of subscribers and users. Companies can create user communities on the Internet that will help them build loyalty and enjoy their customers. They can also build unique relationships with suppliers, customers, and business partners. A virtual company is a strategy that allows you to create and manage virtual companies.
Virtual companies make use of networks to link people and assets. This allows them to work with other companies in order to create and distribute products without having to be restricted by geographical boundaries. A company does not have to be physically associated with another company in order to access the capabilities of another company. Virtual companies are useful for when a company finds it more cost-effective to buy products, services, and capabilities from another vendor, or when it has to act quickly in order to take advantage of new market opportunities.
What are the strategic information system challenges and how can they be overcome? Give a description of the management challenges that strategic information systems pose.
Information systems are intricately linked to the structure, culture, business processes, and organizational structures.
New systems often disrupt power and work relationships so they face considerable resistance. Implementing strategic system requires significant organizational change and a transition between sociotechnical levels. These types of changes are known to be strategic transitions. They can often be painful and difficult. Some strategic systems may not be financially profitable. Because they require large sociotechnical changes within an organization, they are costly and time-consuming to create. Other firms can copy many of the strategic information systems, which makes it difficult to sustain a strategic advantage. It is important to understand the complex relationship between information systems and organizational performance. How to conduct a strategic system analysis.
These questions can help managers identify strategic advantages by asking the right questions.
What is industry structure? Analyze competitive forces within the industry. Determine the basis of competition. Determine direction and the nature of industry-wide change. Finally, analyze how the industry uses information technology.
What are the firm’s business, industry, and sector value chains? Determine how the company creates customer value; examine how the firm uses its core competencies to grow; assess how industry supply chains and customer bases are changing; identify the value of strategic partnerships; define where information systems can add the most value to the firm’s value-chain.
Are we aligning IT with our goals and business strategy? Discuss the firm’s business strategy, goals, and agree on the appropriate metrics to measure progress towards these goals.
