1. 3.1 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy 3 3 INFORMATION SYSTEMS, ORGANIZATIONS, MANAGEMENT, AND STRATEGY Chapter

2. 3.2 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy What do managers need to know about organizations in order to build and use information systems successfully?What do managers need to know about organizations in order to build and use information systems successfully? What impact do information systems have on organizations?What impact do information systems have on organizations? How do information systems support the activities of managers in organizations?How do information systems support the activities of managers in organizations? Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy OBJECTIVES

3. 3.3 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy How can businesses use information systems for competitive advantage?How can businesses use information systems for competitive advantage? Why is it so difficult to build successful information systems, including systems that promote competitive advantage?Why is it so difficult to build successful information systems, including systems that promote competitive advantage? OBJECTIVES Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy

4. 3.4 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy 1.Sustainability of competitive advantage 2. Fitting technology to the organization (or vice-versa) MANAGEMENT CHALLENGES Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy

5. 3.5 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy ORGANIZATIONS AND INFORMATION SYSTEMS Figure 3-1 Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy MEDIATING FACTORS: Environment Culture Structure Standard Procedures Politics Management Decisions Chance ORGANIZATIONS INFORMATION TECHNOLOGY The Two-Way Relationship Between Organizations and Information Technology

6. 3.6 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Organization: Stable, formal structureStable, formal structure Takes resources from environment and processes them to produce outputsTakes resources from environment and processes them to produce outputs Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy ORGANIZATIONS AND INFORMATION SYSTEMS

7. 3.7 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Technical Microeconomic Definition of the Organization Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy ORGANIZATIONS AND INFORMATION SYSTEMS Figure 3-2

8. 3.8 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Behavioral definition of Organization: Collection of rights, privileges, obligations, responsibilitiesCollection of rights, privileges, obligations, responsibilities Delicately balancedDelicately balanced Conflict resolutionConflict resolution Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy ORGANIZATIONS AND INFORMATION SYSTEMS

9. 3.9 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy COMMON FEATURES OF ORGANIZATIONS The Behavioral View of Organizations Figure 3-3

10. 3.10 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizations are bureaucracies that have certain structural featuresOrganizations are bureaucracies that have certain structural features ORGANIZATIONS AND INFORMATION SYSTEMS Common Features of Organizations

11. 3.11 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Structural Characteristics of Organizations: Clear division of laborClear division of labor HierarchyHierarchy Explicit rules and proceduresExplicit rules and procedures Impartial judgmentsImpartial judgments ORGANIZATIONS AND INFORMATION SYSTEMS Common Features of Organizations

12. 3.12 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Structural Characteristics of Organizations (cont.): Technical qualificationsTechnical qualifications Maximum organizational efficiencyMaximum organizational efficiency ORGANIZATIONS AND INFORMATION SYSTEMS Common Features of Organizations

13. 3.13 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Standard Operating Procedures: Precise rules, procedures, and practicesPrecise rules, procedures, and practices Enable organizations to cope with all expected situationsEnable organizations to cope with all expected situations ORGANIZATIONS AND INFORMATION SYSTEMS Common Features of Organizations

14. 3.14 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizational Politics: Divergent viewpoints leads to political struggle, competition, and conflictDivergent viewpoints leads to political struggle, competition, and conflict Hamper organizational changeHamper organizational change ORGANIZATIONS AND INFORMATION SYSTEMS Common Features of Organizations

15. 3.15 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizational Culture: a set of fundamental assumptions about: What products the organization should produceWhat products the organization should produce How and where it should produce themHow and where it should produce them For whom they should be producedFor whom they should be produced ORGANIZATIONS AND INFORMATION SYSTEMS Common Features of Organizations

16. 3.16 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy All organizations have different: Structures/Organizational typesStructures/Organizational types GoalsGoals ConstituenciesConstituencies Leadership Styles, TasksLeadership Styles, Tasks Surrounding EnvironmentSurrounding Environment Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy ORGANIZATIONS & INFORMATION SYSTEMS Unique Features of Organizations

17. 3.17 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Entrepreneurial: Start up businessEntrepreneurial: Start up business Machine bureaucracy: Midsize manufacturing firmMachine bureaucracy: Midsize manufacturing firm Divisionalized bureaucracy: Fortune 500Divisionalized bureaucracy: Fortune 500 Professional bureaucracy: Law firms, hospitals, school systemsProfessional bureaucracy: Law firms, hospitals, school systems Adhocracy: Consulting firmAdhocracy: Consulting firm ORGANIZATIONS & INFORMATION SYSTEMS Organizational Structures

18. 3.18 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Figure 3-4 Organization and Its Environment ORGANIZATIONS & INFORMATION SYSTEMS

19. 3.19 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Ultimate goalUltimate goal Different groups and constituenciesDifferent groups and constituencies Nature of leadershipNature of leadership Tasks and technologyTasks and technology ORGANIZATIONS AND INFORMATION SYSTEMS Other Differences Among Organizations

20. 3.20 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Information systems department: Formal organizational unitFormal organizational unit Responsible for information systems in the organizationResponsible for information systems in the organization Information Technology Infrastructure and Information Technology Services

21. 3.21 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Figure 3-5 THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Information Technology Services

22. 3.22 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Includes specialists: Programmers: Highly trained, write softwareProgrammers: Highly trained, write software Systems analysts: Translate business problems into solutions, act as liaisons between the information systems department and rest of the organizationSystems analysts: Translate business problems into solutions, act as liaisons between the information systems department and rest of the organization Information Technology Infrastructure and Information Technology Services

23. 3.23 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Specialists (cont.): Information system managers: Leaders of various specialistsInformation system managers: Leaders of various specialists Chief information officer (CIO): Senior manager in charge of information systems function in the firmChief information officer (CIO): Senior manager in charge of information systems function in the firm End users: Department representatives outside the information system department for whom applications are developedEnd users: Department representatives outside the information system department for whom applications are developed Information Technology Infrastructure and Information Technology Services

24. 3.24 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Economic theories Information technology is a factor of production, like capital and laborInformation technology is a factor of production, like capital and labor Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations

25. 3.25 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Transaction cost theory: Firms can conduct marketplace transactions internally more cheaply to grow larger Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations

26. 3.26 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Transaction Cost Theory Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Figure 3-6 THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

27. 3.27 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Agency theory: Firm is nexus of contracts among self-interested parties requiring supervisionAgency theory: Firm is nexus of contracts among self-interested parties requiring supervision Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations

28. 3.28 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Agency Cost Theory Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Figure 3-7 THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

29. 3.29 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Behavioral theories: Information technology could change hierarchy of decision makingInformation technology could change hierarchy of decision making Lower cost of information acquisitionLower cost of information acquisition Broadens the distribution of informationBroadens the distribution of information Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations

30. 3.30 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Virtual organization: Task force networked organizationsTask force networked organizations Uses networks to link people, assets, and ideas to create and distribute products and services without being limited to physical locationsUses networks to link people, assets, and ideas to create and distribute products and services without being limited to physical locations Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations

31. 3.31 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Figure 3-8 Implementing Change and Organizational Resistance THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

32. 3.32 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Classical model of management: Traditional description of managementTraditional description of management Focuses on formal functions: plan, organize, coordinate, decide, controlFocuses on formal functions: plan, organize, coordinate, decide, control Behavioral model of management: Describes management based on observations of managers on the jobDescribes management based on observations of managers on the job MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS The Role of Managers in Organizations

33. 3.33 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Managerial roles Expectation of activities that managers should perform in an organizationExpectation of activities that managers should perform in an organization MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS The Role of Managers in Organizations

34. 3.34 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Categories Interpersonal: Managers act as figureheads and leadersInterpersonal: Managers act as figureheads and leaders Informational: Managers receive and disseminate critical information, nerve centersInformational: Managers receive and disseminate critical information, nerve centers Decisional: Managers initiate activities, allocate resources, and negotiate conflictsDecisional: Managers initiate activities, allocate resources, and negotiate conflicts MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS The Role of Managers in Organizations

35. 3.35 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Process of Decision Making Strategic Decision Making: Determines long-term objectives, resources, and policiesStrategic Decision Making: Determines long-term objectives, resources, and policies Management Control: Monitors effective or efficient usage of resources and performance of operational unitsManagement Control: Monitors effective or efficient usage of resources and performance of operational units MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Managers and Decision Making

36. 3.36 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Operational control: Determines how to perform specific tasks set by strategic and middle-management decision makersOperational control: Determines how to perform specific tasks set by strategic and middle-management decision makers Knowledge-level decision making: Evaluates new ideas for products, services, ways to communicate new knowledge, ways to distribute informationKnowledge-level decision making: Evaluates new ideas for products, services, ways to communicate new knowledge, ways to distribute information MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Managers and Decision Making

37. 3.37 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Decisions are classified as: Unstructured: Non routine, decision maker provides judgment, evaluation, and insights into problem definition, no agreed-upon procedure for decision makingUnstructured: Non routine, decision maker provides judgment, evaluation, and insights into problem definition, no agreed-upon procedure for decision making Structured: Repetitive, routine, handled using a definite procedureStructured: Repetitive, routine, handled using a definite procedure MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Managers and Decision Making

38. 3.38 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy TPS Organizational Level OAS MIS KWS DSS ESS TYPE OF DECISIONOPERATIONALKNOWLEDGEMANAGEMENTSTRATEGIC STRUCTURED ACCOUNTS RECEIVABLE ELECTRONIC PRODUCTION SCHEDULING COST OVERRUNS SEMI- BUDGET STRUCTURED PREPARATION PROJECT SCHEDULING FACILITY LOCATION UNSTRUCTUREDPRODUCT DESIGN NEW PRODUCTS NEW MARKETS Figure 3-9 MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Different Kinds of Information Systems

39. 3.39 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Intelligence: Collect information, identify problemIntelligence: Collect information, identify problem Design: Conceive alternative solution to a problemDesign: Conceive alternative solution to a problem Choice: Select among the alternative solutionsChoice: Select among the alternative solutions Implementation: Put decision into effect and provide report on the progress of solutionImplementation: Put decision into effect and provide report on the progress of solution MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Stages of Decision Making

40. 3.40 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Figure 3-10 MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Decision-Making Process

41. 3.41 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Rational: People, organizations, and nations engage in consistent, value- maximizing calculations or adaptations within certain constraintsRational: People, organizations, and nations engage in consistent, value- maximizing calculations or adaptations within certain constraints Cognitive style: Underlying personality dispositions toward the treatment of information, selection of alternatives, and evaluation of consequencesCognitive style: Underlying personality dispositions toward the treatment of information, selection of alternatives, and evaluation of consequences Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Models of Decision Making

42. 3.42 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Systematic decision makers: Cognitive style,describes people who approach a problem by structuring it in terms of some formal methodSystematic decision makers: Cognitive style, describes people who approach a problem by structuring it in terms of some formal method Intuitive: Cognitive style, describes people approaching a problem with multiple methods in an unstructured mannerIntuitive: Cognitive style, describes people approaching a problem with multiple methods in an unstructured manner Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Models of Decision Making

43. 3.43 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizational models of decision making: Consider structural and political characteristics of an organizationOrganizational models of decision making: Consider structural and political characteristics of an organization Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Models of Decision Making

44. 3.44 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Factors to consider while planning a new system: Organizational environmentOrganizational environment Organizational structure, hierarchy, specialization, standard operating proceduresOrganizational structure, hierarchy, specialization, standard operating procedures Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Implications for the Design and Understanding of Information Systems

45. 3.45 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Culture and politics of the organizationCulture and politics of the organization Type of organization and its style of leadershipType of organization and its style of leadership Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Implications for the Design and Understanding of Information Systems

46. 3.46 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Groups affected by the system and the attitudes of workers who will be using the systemGroups affected by the system and the attitudes of workers who will be using the system Kinds of tasks, decisions, and business processes, information system is designed to assistKinds of tasks, decisions, and business processes, information system is designed to assist Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Implications for the Design and Understanding of Information Systems

47. 3.47 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Characteristics to be kept in mind while designing systems: Flexibility and multiple options for handling data and evaluating informationFlexibility and multiple options for handling data and evaluating information Capability to support a variety of styles, skills, and knowledgeCapability to support a variety of styles, skills, and knowledge Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Implications for the Design and Understanding of Information Systems

48. 3.48 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Capability to keep track of many alternatives and consequencesCapability to keep track of many alternatives and consequences Sensitivity to the organization’s bureaucratic and political requirementsSensitivity to the organization’s bureaucratic and political requirements Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Implications for the Design and Understanding of Information Systems

49. 3.49 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Computer system at any level of an organizationComputer system at any level of an organization Changes goals, operations, products, services, or environmental relationshipsChanges goals, operations, products, services, or environmental relationships Helps organization gain a competitive advantageHelps organization gain a competitive advantage Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy What is Strategic Information System?

50. 3.50 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Digital firms Manage the supply chain by building efficient customer “sense and response” systemsManage the supply chain by building efficient customer “sense and response” systems Participate in “value webs” to deliver new products and servicesParticipate in “value webs” to deliver new products and services Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Business Level Strategy and the Value Chain Model

51. 3.51 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Value Chain Model: Highlights the primary or support activities adding a margin of value to products or servicesHighlights the primary or support activities adding a margin of value to products or services Helps achieve a competitive advantageHelps achieve a competitive advantage Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Business Level Strategy and the Value Chain Model

52. 3.52 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Primary Activities: Directly related to the production and distribution of a firm’s products or servicesDirectly related to the production and distribution of a firm’s products or services Support Activities: Make the delivery of primary activities possibleMake the delivery of primary activities possible Consist of the organization’s infrastructure, human resources, technology, and procurementConsist of the organization’s infrastructure, human resources, technology, and procurement Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Business Level Strategy and the Value Chain Model

53. 3.53 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Firm Value Chain Figure 3-11

54. 3.54 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Value Web: Customer-driven network of independent firmsCustomer-driven network of independent firms Uses information technology to coordinate value chains for collectively producing a product or serviceUses information technology to coordinate value chains for collectively producing a product or service Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Business Level Strategy and the Value Chain Model

55. 3.55 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY The Value Web Figure 3-12

56. 3.56 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Product Differentiation: Competitive strategyCompetitive strategy Creates brand loyalty by developing new and unique products and servicesCreates brand loyalty by developing new and unique products and services Products and services not easily duplicated by competitorsProducts and services not easily duplicated by competitors Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Business Level Strategy and the Value Chain Model

57. 3.57 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Focused Differentiation: Competitive strategyCompetitive strategy Enables development of new market niches for specialized products or servicesEnables development of new market niches for specialized products or services Helps businesses compete better than competitors in the target areasHelps businesses compete better than competitors in the target areas Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Business Level Strategy and the Value Chain Model

58. 3.58 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Efficient Customer Response System: Directly links consumer behavior back to distribution, production, and supply chainsDirectly links consumer behavior back to distribution, production, and supply chains Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Supply Chain Management and Efficient Customer Response System

59. 3.59 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Switching costs: Expense incurred by a customer or company in terms of time and expenditure of resources when changing from one supplier or system to anotherExpense incurred by a customer or company in terms of time and expenditure of resources when changing from one supplier or system to another Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Supply Chain Management and Efficient Customer Response System

60. 3.60 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Figure 3-13 INFORMATION SYSTEMS AND BUSINESS STRATEGY Stockless Inventory Compared to Traditional and Just-in-time Supply Methods

61. 3.61 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Figure 3-14 INFORMATION SYSTEMS AND BUSINESS STRATEGY Business-Level Strategy

62. 3.62 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Core Competency: Activity at which a firm excels as a world- class leaderActivity at which a firm excels as a world- class leader Information system encouraging the sharing of knowledge across business units enhances competencyInformation system encouraging the sharing of knowledge across business units enhances competency Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Firm-Level Strategy and Information Technology

63. 3.63 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Information partnership: Cooperative alliance formed between two or more corporations for sharing information to gain strategic advantageCooperative alliance formed between two or more corporations for sharing information to gain strategic advantage Help firms gain access to new customers, creating new opportunities for cross- selling and targeting productsHelp firms gain access to new customers, creating new opportunities for cross- selling and targeting products Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Industry-Level Strategy and Information Systems

64. 3.64 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY The competitive forces model: Describes the interaction of external influences, specifically threats and opportunities, affecting an organization’s strategy and ability to competeDescribes the interaction of external influences, specifically threats and opportunities, affecting an organization’s strategy and ability to compete Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Industry-Level Strategy and Information Systems

65. 3.65 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Figure 3-15 INFORMATION SYSTEMS AND BUSINESS STRATEGY Porter’s Competitive Forces Model

66. 3.66 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Figure 3-16 INFORMATION SYSTEMS AND BUSINESS STRATEGY New Competitive Forces Model

67. 3.67 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Network Economics: Model of strategic systems at the industry levelModel of strategic systems at the industry level Based on the concept of a networkBased on the concept of a network Adding another participant entails zero marginal costs but can create much larger marginal gainAdding another participant entails zero marginal costs but can create much larger marginal gain Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Industry-Level Strategy and Information Systems

68. 3.68 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Managing strategic transitions: Movement from one level of sociotechnical system to anotherMovement from one level of sociotechnical system to another Required when adopting strategic systems demanding changes in the social and technical elements of an organizationRequired when adopting strategic systems demanding changes in the social and technical elements of an organization Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy Using Systems for Competitive Advantage: Management Issues

69. 3.69 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 3 Information Systems, Organizations, Management, and Strategy 3 3 INFORMATION SYSTEMS, ORGANIZATIONS, MANAGEMENT, AND STRATEGY Chapter