Chapter 3 - Chapter 3: Informa0on Systems, Organiza0ons,...

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Unformatted text preview: Chapter 3: Informa0on Systems, Organiza0ons, and Strategy Part 1: Organiza0on Basics Learning Objec0ves •  Iden0fy and describe important features of organiza0ons and their rela0onship with informa0on systems •  Understand how the Value Chain Model helps businesses iden0fy opportuni0es for strategic IS applica0ons •  Demonstrate how Porter’s Compe00ve Forces Model helps companies develop compe00ve strategies using IS •  Demonstrate how IS help businesses use synergies, core competencies, and network‐based strategies to achieve compe00ve advantage Produced by Dr. Brian Janz 1 What Is An Organiza0on? •  Technical defini0on: – Stable, formal social structure that takes resources from environment and processes them to produce outputs – A formal legal en0ty with internal rules and procedures, as well as a social structure •  Behavioral defini0on: – A collec0on of rights, privileges, obliga0ons, and responsibili0es that is delicately balanced over a period of 0me through conflict and conflict resolu0on The Technical Microeconomic Defini0on of the Organiza0on Figure 3-2 Produced by Dr. Brian Janz 2 The Behavioral View of Organiza0ons Figure 3-3 Basic Organiza0onal Structures •  Entrepreneurial: Small start‐up business •  Machine bureaucracy: Midsize manufacturing firm •  Divisionalized bureaucracy: Fortune 500 firms •  Professional bureaucracy: Law firms, school systems, hospitals •  Adhocracy: Consul0ng firms Produced by Dr. Brian Janz 3 The Two‐Way Rela0onship Between Organiza0ons and Informa0on Technology Figure 3-1 Similarly, Environments and Organiza0ons Have a Reciprocal Rela0onship, and Can Be Affected by IS Figure 3-5 Produced by Dr. Brian Janz 4 Chapter 3: Informa0on Systems, Organiza0ons, and Strategy Part 2: The Impact of Informa0on Systems on Organiza0ons Organiza0ons and Informa0on Systems •  Rou0nes and business processes –  Rou0nes (standard opera0ng procedures) –  Processes: Collec0ons of rou0nes –  Organiza0ons: Collec0on of processes •  Organiza0onal poli0cs –  Divergent viewpoints lead to poli0cal compe00on, and conflict –  Poli0cal resistance can hamper organiza0onal change •  Organiza0onal culture –  Encompasses set of assump0ons that define goals, norms, managerial/employee behaviors, etc. –  May be a unifying force and/or a restraint on change Produced by Dr. Brian Janz 5 Organiza0onal Resistance to Change •  Informa0on systems become bound up in organiza0onal poli0cs because they influence access to a key resource – informa0on •  Informa0on systems poten0ally change an organiza0on’s structure, culture, poli0cs, and work •  Most common reason for failure of large projects is due to organiza0onal and poli0cal resistance to change Organiza0onal Resistance to Change (cont.) •  Disrup0ve technologies – Technology that brings about sweeping change to businesses, industries, markets – Examples: personal computers, word processing so`ware, the Internet, the PageRank algorithm – First movers and fast followers •  First movers – inventors of disrup0ve technologies •  Fast followers – firms with the size and resources to capitalize on that technology Produced by Dr. Brian Janz 6 Economic Impact of IS on Organiza0ons •  IT changes rela0ve costs of capital and the costs of informa0on •  Informa0on systems technology is a factor of produc0on, like capital and labor •  IT affects the cost and quality of informa0on and changes economics of informa0on •  IT affects the transac0on costs of a firm •  IT affects the agency costs of a firm –  May provide flexibility in whether to insource (ver0cally integrate) or look to the market (outsource) –  Costs associated with monitoring, supervising, managing various “agents” of the firm IT Fladens Post‐Industrial Organiza0ons •  Decision making pushed to lower levels •  Authority increasingly relies on knowledge and competence rather than formal posi0ons •  Fewer managers needed (IT enables faster decision making and increases span of control) Produced by Dr. Brian Janz 7 Summary: Organiza0onal Factors to Consider When Planning for IS •  Environment •  Structure •  Culture and poli0cs •  Style of leadership •  Main interest groups affected by system, aetudes of end users •  Tasks, decisions, and business processes the system will affect Chapter 3: Informa0on Systems, Organiza0ons, and Strategy Part 3: Fundamentals of Compe00ve Advantage Produced by Dr. Brian Janz 8 Using IS to Achieve Compe00ve Advantage •  The Value Chain Model – Views firm as series of ac0vi0es that add value to products or services •  Primary ac0vi0es vs. support ac0vi0es – At each stage, determine how informa0on systems can improve opera0onal efficiency and improve customer and supplier in0macy – Highlights ac0vi0es where compe00ve strategies can best be applied – U0lize benchmarking, industry best prac0ces The Value Chain Model Figure 3-11 Produced by Dr. Brian Janz 9 Using IS to Achieve Compe00ve Advantage •  Why do some firms become leaders within their industry? •  Michael Porter’s Compe00ve Forces Model (aka, “Five Forces Model”) –  Provides general view of firm, its compe0tors, and environment –  Five compe00ve forces shape fate of firm •  Tradi0onal compe0tors •  Threat of new market entrants •  Subs0tute products and services •  Customers •  Suppliers Using IS to Achieve Compe00ve Advantage •  Tradi0onal compe0tors – All firms share market space with compe0tors who are con0nuously devising new products, services, efficiencies, switching costs •  Threat of new market entrants – Some industries have high barriers to entry, e.g., automo0ve, airlines, semiconductors – New companies have new equipment, younger workers, lidle bureaucracy, but lidle brand recogni0on Produced by Dr. Brian Janz 10 Using IS to Achieve Compe00ve Advantage •  Subs0tute products and services – Subs0tutes customers might use if your prices become too high, e.g. iTunes subs0tutes for CDs •  Customers – Can customers easily switch to compe0tor’s products? Can they force businesses to compete on price alone in transparent marketplace? •  Suppliers – Market power of suppliers when firm cannot raise prices as fast as suppliers Chapter 3: Informa0on Systems, Organiza0ons, and Strategy Part 4: Using Informa0on Systems to Achieve Compe00ve Advantage Produced by Dr. Brian Janz 11 Using IS to Achieve Compe00ve Advantage •  Four generic strategies for dealing with compe00ve forces, enabled by using IT – Low‐cost leadership – Product differen0a0on – Focus on market niche – Strengthen customer and supplier in0macy Using IS to Achieve Compe00ve Advantage •  Low‐cost leadership – produce products and services at a lower price than compe0tors while enhancing quality and level of service – Examples: Wal‐Mart, Dell •  Product differen0a0on – Enable new products or services, greatly change customer convenience and experience – Examples: Google, Lands’ End, Apple iPhone Produced by Dr. Brian Janz 12 Using IS to Achieve Compe00ve Advantage •  Focus on market niche – Use informa0on systems to enable a focused strategy on a single market niche; specialize – Example: Hilton Hotels •  Strengthen customer and supplier in0macy – Use informa0on systems to develop strong 0es and loyalty with customers and suppliers; increase switching costs – Example: Delta Airlines, Amazon The Internet’s Impact On Compe00ve Advantage •  Transforma0on, destruc0on, threat to some industries –  Examples: Travel agency, printed encyclopedia, newspaper •  Compe00ve forces s0ll at work, but rivalry more intense •  Universal standards allow new rivals, entrants to market •  New opportuni0es for building brands and loyal customer bases Produced by Dr. Brian Janz 13 Using IS to Achieve Compe00ve Advantage •  Informa0on systems can improve overall performance of business units by promo0ng synergies and core competencies – Synergies: When output of some units used as inputs to others, or organiza0ons pool markets and exper0se •  Example: Purchase of YouTube by Google – Core competencies: Ac0vity for which firm is world‐class leader •  Example: Procter & Gamble’s intranet and directory of subject mader experts Using IS to Achieve Compe00ve Advantage: Network‐Based Strategies •  Take advantage of firm’s abili0es to network with each other •  Include use of: – Network economics – Virtual company/business ecosystems models Produced by Dr. Brian Janz 14 Using IS to Achieve Compe00ve Advantage: Network Economics •  Tradi0onal economics: Law of Diminishing Returns –  The more any given resource is applied to produc0on, the lower the marginal gain in output, un0l a point is reached where the addi0onal inputs produce no addi0onal outputs •  Network economics: –  Marginal cost of adding new par0cipant almost zero, with much greater marginal gain –  Value of community grows with size –  Value of so`ware grows as installed customer base grows Using IS to Achieve Compe00ve Advantage: Other Strategies •  Virtual company/business ecosystem strategy – Virtual company uses networks to ally with other companies to create and distribute products without being limited by tradi0onal organiza0onal boundaries or physical loca0ons – Example: Li & Fung manages produc0on, shipment of garments for major fashion companies, outsourcing all work to over 7,500 suppliers Produced by Dr. Brian Janz 15 ...
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