Information Systems, Organizations and Strategy

Which attributes of organizations do managers need to know about to create and use info systems effectively? What is the effect of info systems on organizations? Define an organization and evaluate the technical definition of organizations with the behavioral definition. The technical definition defines an organization as a stable, formal social structure that takes resources from the atmosphere and processes them to create outputs. This definition of an organization focuses on three components: capital, labor, and production and items for consumption. The technical definition also implies that organizations are more steady than an informal group, are formal legal entities, and are social structures. The behavioral definition states that an organization is a collection of rights, privileges, obligations, and responsibilities that are delicately balanced more than a period of time via conflict and conflict resolution. This definition highlights the individuals inside the organization, their approaches of operating, and their relationships.

The technical definition shows us how a firm combines capital, labor, and info technology. The behavioral definition examines how information technology impacts the inner workings of the organization. Determine and describe the features of organizations that help explain variations in organizations’ use of data systems.

Common characteristics for organizations incorporate: Routines and organization processes: Normal operating procedures have been developed that let the organization to become productive and effective thereby decreasing charges more than time. Organizational politics: Divergent viewpoints about how resources, rewards, and punishments should be distributed bring about political resistance to organization adjust. Organizational culture: Assumptions that define the organizational targets and goods create a potent restraint on alter, particularly technological modify.

Organizational environments: Reciprocal relationships exist between an organization and environments info systems provide organizations a way to determine external adjustments that might require an organizational response. Organizational structure: Information systems reflect the type of organizational structure-entrepreneurial, machine bureaucracy, divisionalized bureaucracy, professional bureaucracy, or adhocracy.

Describe the key economic theories that assist clarify how data systems impact organizations. The two financial theories discussed in the book are transaction price theory and agency theory. The transaction price theory is based on the notion that a firm incurs transaction charges when it buys goods in the marketplace rather than creating items for itself. Traditionally, firms sought to minimize transaction costs by receiving bigger, hiring far more personnel, vertical and horizontal integration, and small-organization takeovers. Details technology assists firms reduced the price of market place participation (transaction costs) and assists firms shrink in size even though producing the exact same or greater quantity of output. The agency theory views the firm as a nexus of contracts among interested folks. The owner employs agents (personnel) to execute perform on his or her behalf and delegates some decision-creating authority to the agents. Agents need to have continual supervision and management, which introduces management costs. As firms develop, management charges rise. Details technology reduces agency expenses by offering details much more effortlessly so that managers can supervise a bigger number of individuals with fewer sources.

Describe the key behavioral theories that assist explain how info systems have an effect on organizations. Behavioral theories, from sociology, psychology, and political science, are valuable for describing the behavior of person firms. Behavioral researchers theorize that information technology could change the selection-producing hierarchy by lowering the expenses of information acquisition and distribution. IT could eradicate middle managers and their clerical support by sending details from operating units straight to senior management and by enabling details to be sent straight to reduce-level operating units. It even enables some organizations to act as virtual organizations since they are no longer restricted by geographic areas.

1 behavioral strategy views data systems as the outcome of political competition amongst organizational subgroups. IT becomes very involved with this competitors simply because it controls who has access to what details, and details systems can handle who does what, when, where, and how.

Explain why there is considerable organizational resistance to the introduction of details systems. There is considerable organizational resistance to new details systems because they change a lot of essential organizational dimensions, such as culture, structure, politics, and operate. Leavitt puts forth a model that says that changes in technologies are absorbed, deflected, and defeated by organizational process arrangements, structures, and folks. In this model the only way to bring about change is to change the technologies, tasks, structure, and people simultaneously. In a second model, the authors speak of the need to have to unfreeze organizations just before introducing an innovation, swiftly implementing the new method, and then refreezing or institutionalizing the modify. Describe the influence of the Internet and disruptive technologies on organizations.

The Net increases the accessibility, storage, and distribution of data and understanding for organizations almost any info can be obtainable anywhere at any time. The Net increases the scope, depth, and variety of information and knowledge storage. It lowers the expense and raises the quality of information and information distribution. That is, it lowers transaction fees and info acquisition costs. By using the Net, organizations might minimize a number of levels of management, enabling closer and quicker communication among upper levels of management and the reduce levels. The Web also lowers agency fees. Disruptive technologies caused by technological changes can have distinct effects on diverse firms based on how they manage the changes. Some organizations produce the disruptions and succeed very well. Other firms learn about the disruption and successfully adopt it. Other businesses are obliterated by the changes simply because they are really effective at doing what no longer needs to be done. Some disruptions mostly benefit the firm. Other disruptions largely advantage consumers.

How does Porter’s competitive forces model aid businesses create competitive strategies using details systems? Define Porter’s competitive forces model and clarify how it operates. This model gives a general view of the firm, its competitors, and the firm’s atmosphere. Porter’s model is all about the firm’s common company atmosphere. In this model, 5 competitive forces shape the fate of the firm: Classic competitors New market entrants Substitute merchandise and services Clients Suppliers Describe what the competitive forces model explains about competitive advantage.

Some firms do better than other folks simply because they either have access to particular sources that other people do not, or they are capable to use the frequently accessible resource a lot more efficiently. It could be due to the fact of superior information and info assets. Regardless, they excel in revenue development, profitability, or productivity development, ultimately increasing their stock market valuations compared to their competitors. List and describe 4 competitive techniques enabled by information systems that firms can pursue. The four generic strategies, every of which usually is enabled by utilizing information technology and systems contain Low-expense leadership: Lowest operational expenses and the lowest rates. Item differentiation: Enable new items and services, or significantly alter the buyer comfort in using existing merchandise and solutions. Concentrate on market niche: Enable a particular market concentrate and serve this narrow target market place better than competitors.

Strengthen buyer and suppliers: Tighten linkages with suppliers and develop intimacy with buyers. Describe how data systems can assistance each of these competitive techniques and give examples.

Low-price leadership: Use details systems to enhance inventory management, supply management, and produce efficient client response systems. Instance: Walmart. Solution differentiation: Use information systems to produce merchandise and solutions that are customized and personalized to match the precise specifications of person consumers.

Examples: Google, eBay, Apple, Lands’ End. Focus on industry niche: Use info systems to make and analyze information for finely tuned sales and advertising and marketing tactics.

Analyze buyer purchasing patterns, tastes, and preferences closely in order to effectively pitch advertising and marketing and advertising campaigns to smaller sized target markets. Examples: Hilton Hotels, Harrah’s. Strengthen buyer and supplier intimacies: Use info systems to facilitate direct access from suppliers to details within the business. Boost switching expenses and loyalty to the organization. Examples: IBM, Amazon.com. Explain why aligning IT with business objectives is important for strategic use of systems.

The simple principle of IT technique for a enterprise is to guarantee the technology serves the organization and not the other way around. The a lot more successfully a firm can align its IT with its company goals, the much more profitable it will be. Enterprise folks need to take an active role in shaping IT to the enterprise. They can't ignore IT issues. They can not tolerate failure in the IT region as just a nuisance to function around. They should comprehend what IT can do, how it functions, and measure its effect on revenues and earnings.

How do the value chain and value net models help organizations recognize opportunities for strategic details system applications? Define and describe the value chain model.The worth chain model highlights certain activities in the enterprise exactly where competitive strategies can best be applied and exactly where data systems will most likely have a strategic effect. The model identifies certain, critical leverage points where a firm can use information technology most successfully to boost its competitive position. The value chain model views the firm as a series of standard activities that add a margin of value to a firm’s goods or solutions. The activities are categorized as either primary or help activities. Major activities are most directly associated to production and distribution of the firm’s products and solutions, which produce value for the customer. Assistance activities make the delivery of primary activities achievable and consist of organization infrastructure. A firm’s worth chain can be linked to the value chains of its suppliers, distributors, and buyers.

Explain how the value chain model can be employed to determine opportunities for data systems. Details systems can be utilised at each stage of the worth chain to increase operational efficiency, lower charges, increase profit margins, and forge a closer connection with buyers and suppliers. Organizations can use details systems to help examine how worth-adding activities are performed at every single stage of the value chain. Information systems can boost the connection with buyers (buyer partnership management systems) and with suppliers (provide chain management systems) who could be outside the worth chain but belong to an extended worth chain. Information systems can help companies track benchmarks in the organization and determine greatest practices of their distinct industries. Right after analyzing various stages in the value chain, an organization can devise a list of candidate applications for details systems. Define the value web and show how it is related to the worth chain.

A value internet is a collection of independent firms that use information technologies to coordinate their worth chains to collectively create a product or service. It is much more client driven and operates in a significantly less linear style than the classic worth chain. The value internet is a networked system that can synchronize the company processes of customers, suppliers, and trading partners amongst different companies in an market or in associated industries.

Explain how the value net assists companies determine opportunities for strategic information systems. Info systems allow value webs that are versatile and adaptive to adjustments in supply and demand. Relationships can be bundled or unbundled in response to altering marketplace conditions. Firms can accelerate their time to industry and to consumers by optimizing their worth internet relationships to make rapid choices on who can deliver the needed goods or services at the right price and location. Information systems make it achievable for organizations to establish and operate value webs. Describe how the Net has changed competitive forces and competitive advantage.

The World wide web has practically destroyed some industries and severely threatened other individuals. The Net has also produced totally new markets and formed the basis of thousands of new companies. The Web has enabled new items and solutions, new organization models, and new industries to swiftly develop. Since of the World wide web, the competitive rivalry has grow to be a lot more intense. Internet technologies is primarily based on universal requirements that any company can use, making it straightforward for rivals to compete on price alone and for new competitors to enter the market place. Simply because info is obtainable to absolutely everyone, the World wide web raises the bargaining power of consumers, who can swiftly discover the lowest-cost provider on the Net.

How do info systems assist companies use synergies, core competencies, and network-based methods to accomplish competitive advantage? Explain how data systems market synergies and core competencies. A big corporation is normally a collection of businesses that are organized as a collection of strategic company units. Information systems can improve the all round functionality of these enterprise units by promoting synergies and core competencies.

Describe how promoting synergies and core competencies enhances competitive advantages. The concept of synergy is that when the output of some units can be used as inputs to other units, or two organizations can pool markets and knowledge, these relationships lower fees and produce earnings. In applying synergy to conditions, data systems are used to tie with each other the operations of disparate enterprise units so that they can act as a complete.

A core competency is an activity for which a firm is a planet-class leader. In common, a core competency relies on understanding that is gained over numerous years of expertise and a initial-class study organization or merely essential men and women who remain abreast of new external information. Any details method that encourages the sharing of expertise across organization units enhances competency. Clarify how organizations benefit by using network economics.

In a network, the marginal expenses of adding an additional participant are nearly zero, whereas the marginal acquire is considerably larger. The bigger the quantity of participants in a network, the higher the value to all participants because every user can interact with much more individuals.

The availability of the World wide web and networking technology has inspired techniques that take advantage of the skills of the firm to create networks or network with each and every other. In a network economy, details systems facilitate business models based on huge networks of users or subscribers that take benefit of network economies. Net internet sites can be used by firms to develop communities of customers that can result in constructing consumer loyalty and enjoyment and build unique ties to buyers, suppliers, and company partners.

Define and describe a virtual organization and the advantages of pursuing a virtual business approach. A virtual organization makes use of networks to hyperlink people, assets, and ideas, enabling it to ally with other organizations to develop and distribute goods and solutions with no becoming limited by classic organizational boundaries or physical locations.

1 firm can use the capabilities of one more company with no being physically tied to that organization. The virtual firm model is helpful when a business finds it more affordable to obtain goods, services, or capabilities from an external vendor or when it wants to move swiftly to exploit new market possibilities and lacks the time and resources to respond on its personal.

What are the challenges posed by strategic info systems and how should they be addressed? List and describe the management challenges posed by strategic details systems. Information systems are closely intertwined with an organization’s structure, culture, and enterprise processes. New systems disrupt established patterns of work and power relationships, so there is typically considerable resistance to them when they are introduced.

Implementing strategic systems usually calls for substantial organizational alter and a transition from 1 sociotechnical level to another. Such adjustments are called strategic transitions and are usually tough and painful to accomplish. Furthermore, not all strategic systems are profitable. They are high-priced and tough to construct simply because they entail massive sociotechnical modifications within the organization. Several strategic information systems are very easily copied by other firms so that strategic benefit is not always sustainable. The complex connection between info systems, organizational efficiency, and choice producing need to be meticulously managed. Explain how to carry out a strategic systems evaluation.

Managers ought to ask the following queries to assist them determine the kinds of systems that may possibly give them with a strategic advantage.

What is the structure of the market in which the firm is situated? Analyze the competitive forces at function in the sector establish the basis of competitors figure out the path and nature of adjust within the market and analyze how the business is at the moment using info technology.

What are the enterprise, firm, and sector value chains for this distinct firm? Make a decision how the organization creates value for its buyers establish how the firm uses ideal practices to handle its organization processes analyze how the firm leverages its core competencies confirm how the business supply chain and buyer base are altering establish the benefit of strategic partnerships and worth webs clarify where info systems will offer the greatest worth in the firm’s value chain.

Have we aligned IT with our enterprise approach and targets? Articulate the firm’s company strategy and targets determine if IT is improving the right business processes and activities in accordance with the firm’s method agree on the appropriate metrics to measure progress toward the ambitions.

Discussion Questions

It has been said that there is no such thing as a sustainable competitive benefit. Do you agree? Why or why not? Students will argue each sides, and there is no definite answer to the query. There is tiny that a organization can do that can not be duplicated over time. Citibank and its ATM machines and American Airlines and its reservation systems are excellent examples. Feel about organizations that had strategic advantages in the 1920s or 1940s that no longer exist. In contrast, some organizations, such as Walmart, keep a strategic benefit for a long time. Walmart maintains its lead by striving to advance even further its competitive advantage by way of the efficient use of its IT systems. New economy firms have to master some virtues of the old economy. These businesses are finding out that scale, operational excellence, and international infrastructure are crucial. They can constitute tough-to-duplicate competitive positive aspects that enable them to capture the rents on their innovation. A lot of have been trained to consider that there is no such issue as a sustainable competitive advantage. They have been trained to feel about innovation in items and technologies, not innovation in business models. They assume that becoming radical is risky and getting incremental is secure. We have to rewire men and women with new pondering expertise.

It has been mentioned that the benefit that leading-edge retailers such as Dell and Walmart have over their competitors isn’t technologies it is their management. Do you agree? Why or why not? Student answers will differ but here are some points their answers ought to consist of: How properly has every company, Dell and Walmart, used information systems to decrease transaction charges and agency expenses? How effectively has each company utilized info systems to take benefit of Porter’s Competitive Forces model: o Maintaining new market entrants out o Either preventing substitute goods and services that may possibly compete with their own, or introducing substitute products and solutions that pull buyers away from their competitors o Holding onto clients by competing on rates alone when there is quite small product differentiation o Exercising far more manage over suppliers How nicely has each and every company’s management utilized data systems to improve o Low-expense leadership-Walmart is the king at this Dell sometimes uses this technique o Product differentiation – Dell utilizes this method against Apple and HP (the two major laptop sellers) o Focusing on market niche-neither business makes use of this significantly o Strengthening client and supplier intimacy Walmart wrote the book on this one particular Dell utilizes this approach extensively.

What are some of the troubles to contemplate in determining no matter whether the Web would offer your company with a competitive advantage? The Web increases accessibility and distribution of info and expertise while decreasing storage and transmission charges. Transaction and agency costs are a lot lower because of the World wide web. Key organization processes can be built or rebuilt based on Internet and networking technologies. Competitive rivalries are a lot much more intense even even though classic competitive forces are still in play. Any organization can use the universal requirements built into World wide web technologies. Consumers have significantly far more details obtainable to them since of the Web which increases their bargaining energy. Although the bargaining power of organizations over suppliers increases due to World wide web technologies, suppliers advantage from lowered barriers to entry and from the elimination of intermediaries.