chapter 3 Flashcards
solutions for a business that fails to break even.
- Customer Data Mining to improve customer intimacy
- Design Sales floors
- Customer Programs and Promotions
The relationship between information systems and organizations is influenced
- Structure
- Business processes
- Politics
- Culture
- Environment
- Management decisions
Define an organization Technical definition:
*Formal social structure that processes resources
from environment to produce outputs
*A formal legal entity with internal rules and
procedures, as well as a social structure
Define an organization Behavioral definition:
*A collection of rights, privileges, obligations, and
responsibilities that is delicately balanced over a
period of time through conflict and conflict
resolution
Define the microeconomic definition of organizations and explain how capital and labor are involved in the production process.
Organizations transform capital and labor into products and services, which are consumed by the environment.
How does the firm transform capital and labor into products and services according to the microeconomic definition of organizations?
through the production process
Features of Organizations
1- Routines and Business Process
2- org Politics
3- org Culture
4- org environments
5- org Structures
definition of Routines
*Precise rules, procedures, and practices developed to
cope with virtually all expected situations
definition of Business Process and Business firm
*Collections of routines
*Collection of business processes
why do we need New information system applications require that individual routines and business processes change
to achieve high levels of organizational performance.
Organizational politics consist of
- Divergent viewpoints - lead to political struggle, competition, and conflict.
- Political resistance - greatly hampers organizational change.
Organizational culture definition
Encompasses set of assumptions that define goal and product
-powerful unifying force as well as restraint on change
Organizational environments
Organizations and environments have a reciprocal relationship.
* Organizations are open to, and dependent on, the social and physical
environment.
* Organizations can influence their environments.
* Environments generally change faster than organizations.
* Information systems can be instrument of environmental scanning, act as a
lens.
name Disruptive Technologies
Riding the Wave & winners and losers
what is Riding the Wave technology
Technology that brings about sweeping change to businesses, industries,
markets
examples : personal computers, word processing software, the Internet, the
PageRank algorithm
what are the First movers and fast followers
First movers—inventors of disruptive technologies
Fast followers—firms with the size and resources to capitalize on that
technology
5 basic kinds of organizational structure
Entrepreneurial:
Small start-up business
Machine bureaucracy:
Midsize manufacturing firm
Divisionalized bureaucracy:
Fortune 500 firms
Professional bureaucracy:
Law firms, school systems, hospitals
Adhocracy:
Consulting firms
How Information Systems Impact Organizations and Business Firms?
- Economic Impact
- Organizational and behavioral impacts
- The Internet and organizations
- Implications for the design and understanding of information systems
theories of economic impact
Transaction cost theory
Agency theory
economic impact
IT affects the cost and quality of information, changing the economics of information, and can help firms contract in size by reducing transaction costs.
what does Transaction cost theory states
Firms seek to economize on transaction costs by vertical integration, hiring more employees, and buying suppliers and distributors, but information technology lowers these costs, making it worthwhile to transact with other firms.
what does Agency theory state?
Information technology can reduce agency costs, allowing firms to grow without adding to the costs of supervising and adding employees.
impacts of Organizational and behavioral
- IT flattens organizations
- Postindustrial organizations
- Organizational resistance to change
IT flattens organizations
Information systems reduce organizational levels by providing more decision-making authority.
Postindustrial organizations
Most common reason for the failure of large projects is due to
organizational and political resistance to change.
ORGANIZATIONAL RESISTANCE AND THE MUTUALLY ADJUSTING RELATIONSHIP BETWEEN TECHNOLOGY AND THE ORGANIZATION
To implement change, all four components must be changed simultaneously.
task arrangements
people
structure
technology
The Internet and organizations
Internet increases accessibility, storage, and distribution of information, reducing costs.
Organizational factors in planning a new system:
Environment
Structure
Hierarchy, specialization, routines, business processes
Culture and politics
Type of organization and style of leadership
Main interest groups affected by system; attitudes of end users
Tasks, decisions, and business processes the system will assist
How to use IS to achieve competitive advantage?
Michael Porter’s competitive forces model
Provides a general view of the firm, its competitors, and the environment
Five competitive forces shape the fate of a firm:
Traditional competitor
New market entrants
Substitute products and services
Customers
Suppliers
Michael Porter’s competitive forces model:
- Traditional competitors share market space with traditional competitors
- new market entrants have high barriers to entry due to new equipment, workers, and brand recognition.
- Substitute products and services can help businesses stay competitive when prices are too high.
- customers can easily switch to competitors’ products.
- Suppliers have the power to raise prices as fast as suppliers.
Information System Strategies for dealing with competitive forces
Low-cost leadership
Product differentiation
Focus on market niche
Strengthen customer and supplier intimacy
Value chain model
Views the firm as a series of activities that add value to products or services
Highlights activities where competitive strategies can best be applied
Primary activities vs. support activities
Primary activities
Primary activities include inbound logistics, operations, outbound logistics, sales and marketing, and service to create value for customers.
Support Activities
Organization infrastructure, human resources, technology, and procurement enable primary activities.
what is benchmarking
Benchmarking involves comparing the efficiency and effectiveness of your business processes against strict standards and then measuring performance against those standards.
Industry best practices are
usually identified by consulting companies, research organizations, government agencies, and industry
Value web
Collection of independent firms using highly synchronized IT to coordinate value chains to produce product or service collectively
More customer driven, less linear operation than traditional value chain
Synergies
When output of some units used as inputs to others, or organizations pool markets and expertise
Core competencies
Core competencies are the resources and capabilities that comprise a business’s strategic advantages. To be a core competency, an activity must provide superior value or benefits to the consumer, be difficult for competitors to replicate or imitate, and be rare.
Network-based strategies
Network economics
Virtual company model
Business ecosystems
Traditional economics vs Network economics
Traditional economics is based on the Law of diminishing returns, where more resources are applied, the lower the marginal gain. Network economics has a much greater marginal gain, with the value of community growing with size and software growing with customer base.
Virtual company strategy
uses networks to ally with other companies to create and distribute products without being limited by traditional organizational boundaries or physical locations
Business ecosystems
Individual firms can use IT to become profitable niche players in larger ecosystems by dominating the ecosystem and creating a platform used by other firms.
