Presentation on theme: "Information Systems, Organizations, Management, and Strategy"— Presentation transcript:
1Information Systems, Organizations, Management, and Strategy Chapter 3Information Systems, Organizations, Management, and Strategy
2What impact do information systems have on organizations? ObjectivesWhat do managers need to know about organizations in order to build and use information systems successfully?What impact do information systems have on organizations?How do information systems support the activities of managers in organizations?
3How can businesses use information systems for competitive advantage? ObjectivesHow can businesses use information systems for competitive advantage?Why is it so difficult to build successful information systems, including systems that promote competitive advantage?
4Management Challenges Sustainability of competitive advantagesFitting technology to the organization (or vice versa).
5Organizations and Information Systems The two-way relationship between organizations and information technologyFigure 3-1
6Organizations and Information Systems What Is an Organization?Technical DefinitionStable, formal social structure that takes resources from the environment and processes them to produce outputsBehavioral DefinitionA collection of rights, privileges, obligations, and responsibilities that are delicately balanced over a period of time through conflict and conflict resolution
7Organizations and Information Systems The technical microeconomic definition of the organizationFigure 3-2
8Organizations and Information Systems The behavioral view of organizationsFigure 3-3
9Organizations and Information Systems Common Features of OrganizationsStructural Characteristics of All OrganizationsClear division of laborHierarchyExplicit rules and proceduresImpartial judgmentsTechnical qualifications for positionsMaximum organizational efficiency
10Organizations and Information Systems Common Features of OrganizationsAdditional Features of OrganizationsStandard Operating Procedures (SOPs): Precise procedures to cope with all expected situationsOrganizational Politics: Struggle to resolve divergent viewpoints within the organizationOrganizational Culture: Fundamental assumptions about what products the organization should produce
11Organizations and Information Systems Unique Features of OrganizationsOrganizational TypesEntrepreneurial: Start up businessMachine bureaucracy: Midsize manufacturing firmDivisionalized bureaucracy: Fortune 500 firmsProfessional bureaucracy: Law firms, hospitals, school systemsAdhocracy: Consulting firm
12Organizations and Information Systems Environments and organizations have a reciprocal relationshipFigure 3-4
13Organizations and Information Systems Unique Features of OrganizationsAll organizations have different:Organizational typeEnvironmentsGoalsPowerConstituenciesFunctionLeadershipTasksTechnologyBusiness processes
14Organizations and Information Systems Window on OrganizationsE-Commerce French and German StyleWhat organizational factors explain why France and Germany have had such different experiences adopting e-commerce?
15The Changing Role of Information Systems in Organizations Information Technology Infrastructure and Information Technology ServicesInformation Services DepartmentPast: Consisted primarily of programmers, building own software and managing own computing facilitiesToday: A growing proportion of specialists, with department acting as powerful change agent in the organization
16The Changing Role of Information Systems in Organizations Information technology servicesFigure 3-5
17The Changing Role of Information Systems in Organizations How Information Systems Affect OrganizationsEconomic TheoriesInformation system technology is a factor of production, freely substituted for capital and laborTransaction cost theory: Information technology can help lower the cost of market participation
18The Changing Role of Information Systems in Organizations The transaction cost theory of the impact ofinformation technology on the organizationFigure 3-6
19The Changing Role of Information Systems in Organizations How Information Systems Affect OrganizationsEconomic Theories – The Agency TheoryAgents (employees) need supervisionAs firm grows, agency and coordination costs riseInformation technology reduces agency costs because it becomes easier for managers to oversee more employees
20The Changing Role of Information Systems in Organizations The agency cost theory of the impact ofinformation technology on the organizationFigure 3-7
21The Changing Role of Information Systems in Organizations How Information Systems Affect OrganizationsBehavioral TheoriesIT could change hierarchy of decision making by lowering costs of information acquisition and distributionOrganization shape could “flatten” as decision making becomes more decentralizedGrowth of “virtual organizations”Information systems seen as outcome of political competition between subgroups
22The Changing Role of Information Systems in Organizations Organizational resistance and the mutually adjusting relationshipbetween technology and the organizationFigure 3-8
23The Changing Role of Information Systems in Organizations The Internet and OrganizationsThe Internet is capable of dramatically reducing transaction and agency costsBusinesses are rapidly rebuilding some key business processes based on Internet technologyInternet technology becoming a key component of IT infrastructure
24Managers, Decision Making, and Information Systems The Role of Managers in OrganizationsClassical Model:Five Functions of ManagersPlanningOrganizingCoordinatingDecidingControlling
25Managers, Decision Making, and Information Systems The Role of Managers in OrganizationsBehavioral Models:Five Attributes of ManagersPerform much work at non-stop paceFragmented activitiesPrefer speculation, hearsay, current and ad-hoc informationPrefer oral communicationMaintain diverse web of contacts as informal information system.
26Managers, Decision Making, and Information Systems The Role of Managers in OrganizationsManagerial Role CategoriesInterpersonal: Figurehead, leader, liaisonInformational: Nerve center, disseminator, spokespersonDecisional: Entrepreneur, disturbance handler, resource allocator, negotiator
27Managers, Decision Making, and Information Systems Managers and Decision MakingDecision MakingClassified by Organizational LevelStrategic: determines long-term objectives, resources, policiesManagement control: monitors effective usage of resources, performanceOperational control: determines how to perform tasks and ways to distribute information
28Managers, Decision Making, and Information Systems Managers and Decision MakingDecisions are classified as:Unstructured: Nonroutine, decision maker provides judgment, evaluation, and insights into problem definition, no agreed-upon procedure for decision makingStructured: Repetitive, routine, handled using a definite procedure
29Managers, Decision Making, and Information Systems Information systems and levels of decision makingFigure 3-9
30Managers, Decision Making, and Information Systems Managers and Decision MakingStages of Decision MakingIntelligence: Collect information, identify problemDesign: Conceive alternative solution to a problemChoice: Select among the alternative solutionsImplementation: Put decision into effect and provide report on the progress of solution
31Managers, Decision Making, and Information Systems The decision-making processFigure 3-10
32Managers, Decision Making, and Information Systems Managers and Decision MakingModels of Decision MakingRational model: people engage in consistent, rational decision making. Individuals rank all alternatives and select the one that most contributes to their goalCritics point out that individuals can’t rank all possible alternatives; tend to select first viable alternativeBuilt-in biases, frame of reference, distort decision making
33Managers, Decision Making, and Information Systems Managers and Decision MakingModels of Decision MakingCognitive style: Describes underlying personality dispositions toward decision makingSystematic decision makersIntuitive decision makers
34Managers, Decision Making, and Information Systems Managers and Decision MakingModels of Decision MakingOrganizational modelsBureaucratic modelsPolitical models“Garbage can” model
35Managers, Decision Making, and Information Systems Window on ManagementWhy War Games Can’t AlwaysSimulate the BattlefieldHow useful are war games in simulating combat scenarios and predicting outcomes?How would the models of decision making described here explain how they are designed and performed?
36Managers, Decision Making, and Information Systems Implications for the Design and Understanding of Information SystemsOrganizational Factors in PlanningNew SystemsOrganization’s environmentStructure of organizationOrganization’s culture and politicsType of organization and leadership stylePrinciple interest groups and attitudes of workersKinds of tasks, decisions, processes system will assist
37Managers, Decision Making, and Information Systems Implications for the Design and Understanding of Information SystemsOptimal Information Systems:Flexible; provide many options for handling and evaluating dataSupport a variety of styles, skills, knowledge; keep track of many alternativesSensitive to organization’s bureaucratic and political requirements
38Information Systems and Business Strategy What Is a Strategic Information System?Computer system at any level of an organizationChanges goals, operations, products, services, or environmental relationshipsHelps organization gain a competitive advantage
39Information Systems and Business Strategy Business-Level Strategy and the Value Chain ModelBusiness Competitive StrategiesBecome the low-cost producerDifferentiate product or serviceChange scope of competition by enlarging or narrowing market
40Information Systems and Business Strategy Business-Level Strategy and the Value Chain ModelValue Chain ModelFirm seen as series or “chain” of activities that add a margin of value to firm’s products or servicesHighlights activities in business where competitive strategies are best appliedPrimary or support activitiesFirm’s value chain linked to value chains of other partners
41Information Systems and Business Strategy The firm value chain and the industry value chainFigure 3-11
42Information Systems and Business Strategy Business-Level Strategy and the Value Chain ModelValue WebValue chain extended by Internet technology that connects all the firm’s suppliers, partners, and customersCollection of independent firms using IT to coordinate value chains to collectively produce a product or serviceMore customer-driven, less linear than value chainFlexible, adaptive to changes in supply and demand
43Information Systems and Business Strategy The value webFigure 3-12
44Information Systems and Business Strategy Business-Level Strategy and the Value Chain ModelProduct DifferentiationStrategy for creating brand loyalty by developing new and unique products and services not easily duplicated by competitorsInformation systems used to create new information technology-based products and servicesExamples: ATMs, computerized reservation services
45Information Systems and Business Strategy Business-Level Strategy and the Value Chain ModelFocused DifferentiationStrategy for developing new market niches for specialized products and servicesInformation systems used to produce data for sales and marketing; analyze customer behaviorExamples: One-to-one and customized marketing
46Information Systems and Business Strategy Business-Level Strategy and the Value Chain ModelEfficient Customer Response SystemsLinks consumer behavior back to distribution, production, and supply chainsInformation systems used to link customer’s value chain to firm’s value chainReduce inventory costs; deliver product or service more quickly to customer
47Information Systems and Business Strategy Business-Level Strategy and the Value Chain ModelSwitching CostsCost of switching to competitive product; higher switching costs discourage customers going to competitorsInformation systems offer convenience, ease of use, raise switching costsStockless inventory systems
48Information Systems and Business Strategy Stockless inventory compared to traditional and just-in-time supply methodsFigure 3-13
49Information Systems and Business Strategy Business-level strategyFigure 3-14
50Information Systems and Business Strategy Firm-Level Strategy and Information TechnologyAt firm level, information technology can:Promote synergies between business units, pool resourcesTie together operations of disparate business unitsImprove core competencies
51Information Systems and Business Strategy Industry-Level Strategy and Information TechnologyIndustry-Level Strategies:Information partnershipsCompetitive forces model; e.g., developing industry standardsNetwork economics: cost of adding new participant negligible, but adds great marginal gain
52Information Systems and Business Strategy Porter’s competitive forces modelFigure 3-15
53Information Systems and Business Strategy Industry-Level Strategy and Information TechnologyImpact of Internet on Competitive ForcesReduces barriers to entryEnables new substitute products and servicesShifts bargaining power to customerRaises firm’s bargaining power over suppliersSuppliers benefit from reduced barriers to entry and from elimination of intermediariesWidens geographic market, increases number of competitors, reduces differentiation among competitors
54Information Systems and Business Strategy The new competitive forces modelFigure 3-16
55Information Systems and Business Strategy Using Systems for Competitive Advantage: Management IssuesStrategic TransitionsA movement from one level of sociotechnical system to anotherOften required when adopting strategic systems that demand changes in the social and technical elements of an organization
56How Much Can New Information Systems Help GM? Chapter 3 Case StudyHow Much Can New Information Systems Help GM?Analyze GM by using the value chain and competitive forces models.Describe the relationship between GM’s organization and its information technology infrastructure. What management, organization, and technology factors influenced this relationship?
57How Much Can New Information Systems Help GM? Chapter 3 Case StudyHow Much Can New Information Systems Help GM?Evaluate the current business strategy of GM in response to its competitive environment. What is the role of information systems in that strategy? How do they provide value for GM?How successful have GM’s strategy and use of information systems been in addressing the company’s problems? What kind of problems can they solve? What are some of the problems that they cannot address?