1 Management Information Systems - Class Note # 4 (Chap-3) Prof. Yuan-Shyi Peter Chiu Feb. 2011

2 Information Systems, Organizations, Management, and Strategy Information Systems, Organizations, Management, and Strategy 3.1 Organizations & Information System 3.2 The Changing Role of Information Systems in Organizations 3.3 Managers, Decision Making, and Information Systems 3.4 Information Systems and Business Strategy Chap. 3

3 3.1 Organizations & Information System 3.1 Organizations & Information System Technical Definition: Stable, Formal, Social Structure Takes Resources From Environment Processes Them To Produce Outputs ORGANIZATION

4 Fig 3-2: The Technical view of Organizations. 3.1 Organizations & Information System 3.1 Organizations & Information System

5 Behavioral Definition : Collection Of Rights, Privileges, Obligations, Responsibilities Delicately Balanced Conflict Resolution 3.1 Organizations & Information System 3.1 Organizations & Information System ORGANIZATION

6 Fig 3-1: The Two-way relationship b/w Organizations and I.S. 3.1 Organizations & Information System 3.1 Organizations & Information System MEDIATING FACTORS: Environment Culture Structure Standard Procedures Business Processes Politics Management Decisions Chance ORGANIZATIONS INFORMATION TECHNOLOGY

7 Structural Characteristics of All Organizations  Clear Division Of Labor  Hierarchy  Explicit Rules & Procedures  Impartial Judgments  Technical Qualifications  Maximum Organizational Efficiency 3.1 Organizations & Information System 3.1 Organizations & Information System

8 Common Features of Organizations  Formal Structure  Standard Operating Procedures  Politics  Culture 3.1 Organizations & Information System 3.1 Organizations & Information System

9 Unique Features of Organizations  Organizational Types  Environments, Goals, Power  Constituencies, Function  Leadership, Tasks  Technology  Business Processes 3.1 Organizations & Information System 3.1 Organizations & Information System

10 Organization & Its Environment 3.1 Organizations & Information System 3.1 Organizations & Information System Figure 3-4

11 Table 3-3: Summary of Salient Features of Organizations. 3.1 Organizations & Information System 3.1 Organizations & Information System

12 Fig 3-5: Information Technology Services. 3.2 The Changing Role of Info Systems In Organizations

13 How Information Systems affect Organizations The Impact of Information Systems on Organization Reduces Operating costs Reduces Organizational size – middle managers – clerical workers 3.2 The Changing Role of Info Systems In Organizations

14 Changes Organizational Structure – decentralize – less reliance on SOPs Increase Information and knowledge workers Self- guided workers – information access: automated, timeliness, and accuracy Shortens Decision Making Process 3.2 The Changing Role of Info Systems In Organizations How Information Systems affect Organizations

15 How Organizations Affect Information Systems ? Decisions about The Role of information systems Decisions about The Computer Package : - Who delivers information technology services ? Decisions about Why information systems are built ? 3.2 The Changing Role of Info Systems In Organizations

16 Fig 3-8: Organizational Resistance and the mutually adjusting relationship between technology and the organization. 3.2 The Changing Role of Info Systems In Organizations

17 Internet & Organizations The internet increase the ■ Accessibility ■ Storage ■ Distribution of Info & Knowledge For organizations ■ Lowering the transaction and agency costs 3.2 The Changing Role of Info Systems In Organizations ◆

18 Role Of Managers Classical Descriptions of Management Describe functions- plan, organize, coordinate, decide, control Behavioral Models Based on observations of managers on the job 3.3 Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

19 Behavioral model of management activities : High-volume, High-speed work Variety, Fragmentation, Brevity Issue preference current, ad hoc, specific Contacts, complex web of interactions Strong preference for verbal media Control of the agenda What Managers Do ? 3.3 Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

20 Managerial Roles: Mintzberg (1971) Interpersonal roles Figurehead Leader Liaison Informational roles Nerve center Disseminator spokesperson 3.3 Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

21 Managerial Roles: Mintzberg (1971) Decisional roles Entrepreneur Disturbance handler Resource allocator Negotiator 3.3 Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

22 How information systems can benefit managers ? What managers do ? What information managers need for decision making ? How decisions are made ? What kinds of decisions can be supported by formal information systems ? ◇ 3.3 Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

24 Levels of Decision Making Operational control Operational control Knowledge- level decision making Knowledge- level decision making Management control Management control Strategic decision making Strategic decision making 3.3 Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

25 Decisions are classified as: Unstructured: Unstructured: Non routine, decision maker provides judgment, evaluation, and insights into problem definition, no agreed-upon procedure for decision making Non routine, decision maker provides judgment, evaluation, and insights into problem definition, no agreed-upon procedure for decision making Structured: Structured: Repetitive, routine, handled using a definite procedure 3.3 Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

26 Fig. 3-9: Different kinds of information systems at the various organization levels support different types of decisions. TPS OAS MIS KWS DSS ESS ORGANIZATIONAL LEVEL TYPE OF DECISIONOPERATIONALKNOWLEDGEMANAGEMENTSTRATEGIC STRUCTURED ACCOUNTS RECEIVABLE ELECTRONIC PRODUCTION SCHEDULING COST OVERRUNS SEMI-BUDGET STRUCTUREDPREPARATION PROJECT SCHEDULING FACILITY LOCATION UNSTRUCTUREDPRODUCT DESIGN NEW PRODUCTS NEW MARKETS 3.3 Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

27 Fig 3-10: The decision making process. 3.3 Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

28 Stages of Decision Making Intelligence : Collect information; identify problem Design : Conceive alternatives; select criteria Choice : Use criteria to evaluate alternatives; select Implementation: Put decision into effect; allocate resources; control 3.3 Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

29 Management Challenges Unstructured nature of important decisions Diversity of managerial roles Complexity of decision making 3.3 Managers, Decision Making, and Information Systems 3.3 Managers, Decision Making, and Information Systems

30 Strategic Information Systems ( S.I.S ) Computer systems at any level of the organization that change The goals, operations, products, services, or environmental relationships, to help the organization gain a competitive advantage. 3.4 Information Systems and Business Strategy 3.4 Information Systems and Business Strategy

31 Fig. 3-15: Porter’s competitive forces model 3.4 Information Systems and Business Strategy 3.4 Information Systems and Business Strategy

32 Competitive forces model Model used to describe the interaction of external influences, specially threats and opportunities, that affect an organization’s strategy and ability to compete. 3.4 Information Systems and Business Strategy 3.4 Information Systems and Business Strategy ◆

33 Four basic Competitive Strategies Product Differentiation Focused Differentiation Tight Linkages to customers & suppliers Low-cost producer New & Unique Products and Services ATM by Citibank C-M-A by Merrill Lynch New Market Niches for specialized Products or Services Sears Roebuck American Express “Lock” customers & Suppliers ; Raises Switching Costs Federal Express Baxter International Wizard by Avis C-R-S by Wal-Mart Yield mgmt by Airlines 3.4 Information Systems and Business Strategy 3.4 Information Systems and Business Strategy

34 Data-mining patterns and rules to predict future behavior Analysis of large pools of data to find patterns and rules that can be used to guide decision making and to predict future behavior. Switching Costs The expense a customer or company incurs when changing fromsupplier The expense a customer or company incurs in lost time and expenditure of resources when changing from one supplier or system to a competing supplier or system. 3.4 Information Systems and Business Strategy 3.4 Information Systems and Business Strategy Competitive forces model

35 Fig. 3-13: Stockless inventory compared to traditional and just- in-time supply methods. 3.4 Information Systems and Business Strategy 3.4 Information Systems and Business Strategy ◆

36 Value Chain model Model that highlights the primary or support activities that add a margin of value to a firm’s products or services where information systems can best be applied to achieve a competitive advantage. 3.4 Information Systems and Business Strategy 3.4 Information Systems and Business Strategy Primary Activities Primary Activities Activities most directly related to the production and distribution of a firm’s products or services. Support Activities Support Activities Activities that make the delivery of a firm’s primary activities possible. Consists of the organization’s infrastructure, human resources, technology, and procurement.

Information Systems and Business Strategy 3.4 Information Systems and Business Strategy Figure 3-11

38 Figure 3-14 Business-Level Strategy 3.4 Information Systems and Business Strategy 3.4 Information Systems and Business Strategy

39 Strategic Information Systems Competitive Forces Model The Value Chain Model 3.4 Information Systems and Business Strategy 3.4 Information Systems and Business Strategy

40 What managers should do ? How is the industry currently using information systems ? Can significant strategic opportunities be gained by introducing new information system technology ? 3.4 Information Systems and Business Strategy 3.4 Information Systems and Business Strategy

41 What is the current business strategic plan, and how does that plan mesh with the current strategy for information services ? Does the firm have the technology and capital required to develop a strategic information systems initiative ? 3.4 Information Systems and Business Strategy 3.4 Information Systems and Business Strategy What managers should do ?

42 HOMEWORK CHAP.3 # 1 What are the Mediating Factors between organizations and Information Technology ? # 2 Describe briefly what common features and unique features of organizations are? # 3 Describe how information systems affect organizations; and how organizations affect information systems. # 8 What specific managerial roles can information systems support ? Where are information systems particularly strong in supporting managers, and where are they weak? # 9 What are the four stages of decision making described by Simon? # 12 What is a strategic information system? # 13 Describe what competitive forces model and value chain model are? Name four basic competitive strategies. # 14 What managers should do after understanding the impact of strategic information system? ~ THE END ~

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