Management Information

System
Information System, Organization, and
strategy

Question

Imagine, building an information

system without having any
knowledge of the organization.
Who would be the people that
would suffer most? What will be
its impact on the organization?

Organization and Information Systems

Organization

Mediating Factors
1. Environment
2. Culture
3. Structure
4. Business Process
5. Politics
6. Managing
Decisions

Information
Technology

Microeconomic definition of Organization

Organization

(Capital, labour)

(Products and services)

Outputs to the
Environment

Inputs from the

Environment

Production Process

What is an organization?

Stable, formal social structure

that takes resources from the
environment and processes them
to product outputs.

Behavioural view of organization

Environmental resources

Emphasises:
Group relationships;
Values and strategies

Structure
Hierarchy
Divison of labour
Rules, procedures
Business Process
Culture
Process
Rights/Obligations
Privileges/responsibilities
Values
Norms
People

Environmental outputs

Features of Organizations
1. Routine and Business Process
2. Organizational Politics
3. Organizational Culture
4. Organizational Environment
5. Organizational structure
6. Other Organization features : goals &
Leaderships

How IS impacts Organizations and Business

Firms
Economic Impact
Transaction Cost Theory
Information Technology (use of network) lowers cost
of market participation (transaction fee)

Agency Theory
Owner (Principal) Employee ( Agent)
Reduces internal management cost

Cont.
Behavioural Impacts
Information Technology will flatten the
organization
Post Industrial Organization (Self Manage
Teams)
Understanding Organizational Resistance to
change

Organizational
structure

People

Resistance
to change

Information
Technology

Job Tasks

Internet and Organizations

What is the impact Information

Technology on Organizations?
Increases accessibility, storage and
distribution of knowledge and information.
Lower cost dramatically
Simpler business process, fewer employees,
much flatter organization than in the past

What are the implications?

In terms of Designs and understanding of IS?
You must have a clear understanding of the
organization
Factors to consider
Environment in which it functions
Structure of the organization
Culture and politics
Styles of leadership
Principle interest groups who are affected
Tasks, decision processes etc

3.3 Using Information Systems to Achieve

Competitive Advantage

How does information Systems

achieve competitive Advantage?
Lets review the strategies used.

Potters 5 Force model plus..

1.Traditional Competitors
2.New Market Entrants
3.Substitute Products and Services
4.Customers (Buyers)
5.Suppliers
6.Complimentary Products

Stragey#1: Dealing with Competitive Forces

1. Low Cost Leadership e.g.. Walmart replenish
system
2. Product Differentiation Google google map;
PayPal
3. Focus on Market Niche Hilton Hotels O & Q
systems
4. Strengthen Customer and Supplier Intimacy
Chrysler Corporation

Disadvantage of Potters Force Model

Helpful for identifying competitive

forces and suggesting generic strategies
only.
Not specific about what exactly to do.
Does not provide a methodology to
follow for achieving competitive
advantage.

Internets impact on competitive Advantage

Increases bargaining power of

customers find low-cost providers
Creates new markets Facebook,
Youtube, iTunes
Threat to most forms of media

Stragey#2 Business Value Chain Model

Highlights specific activities within the

business, where competitive strategies
can be best applied.
What you are looking for is the
LEVERAGE POINT.

INTEACTIVE SESSIONS

PAGE 129:
TECHNOLOGY HELPS
STARBUCKS FIND NEW WAYS
TO COMPETE

Extending the Value Chain : The Value Web

Value Web Collection of independent

firms that use information technology
to coordinate their value chains to
produce product or service for a market
collectively.
Value chain highlights specific
activities in the business where
competitive strategies can be applied

Value Chain and Value Web

Value Chain

Value Web

Value Chain and Value Web

Each independent firms have their own value
chain.
Each independent firms have their own
information technology.
Each independent firm can work together to
coordinate their value chain to produce products
and services for a market collectively. This is
known has Value web.
Eg. e-bay; amazon.com; Telikom and Vodafone

How Information Technology improves overall

performance

1.Promoting Synergy
2.Enhances Core
Competencies.

Synergies(collaboration)

Synergies an output of some units can

be used as inputs of other units.
Eg. Bank of South Pacific acquiring
Papua New Guinea Banking Cooperation
to expand its operations. Using
Information technology lowers cost and
increases profits; new customers etc..

Core Competencies

A Core Competency is an activity for which

a firm is known to be the best in doing that
activity.
Eg. The best package delivery service or
PAU is known for its best staff and student
relationship.

How to Enhance Core Competencies

1.Use Information System to share

knowledge across business units;
schools etc. Eg. Procter and Gamble
Benefits
People become more aware of external
knowledge.
Helps leverage existing competencies to
related market.

Network-Based Strategies

The firms ability to create

network or network with
each other.

Network-Based Strategies

1.Network of economics
2.Virtual company model
3.Business ecosystems

Network Economies

- Economies of Scale: The greater the

number of people or users, the lower the
cost.
- Use information technology to build a large
community eg. Facebook; website etc.
- Online market; online auction; online shop;

Virtual Company Model

Using Networks to link people,

assets and ideas.to create and
distribute products, services
without any limitation to
traditional boundaries.
Eg. Li & Fung

Business Ecosystems:

Interdependent network of
suppliers, distributors,
outsourcing firms, transportation
services etc.. Uses the same idea
as value web.

Using Systems for competitive Advantage:

Management Issues

1.Sustaining Competitive Advantage

The issue of sustaining the market.

2.Aligning with Business Objectives

Most businesses do not Align their IT
with business goals and objectives.

How to Align Information Technology (IT) with

business goals and objectives.
1. Understand the structure of the firm in
which it is located. (Potters Force Model)
2. Understand the business, firm and
industries value chains.
3. Check to see if IT is aligned with the
businesses goals and objectives.

Managing Strategic Transitions

Introduction new Strategic System

changes business goals, relationships
with customers and suppliers and
business processes. These
sociotechnical changes affects both
social and technical aspects of the
business. So care must be taken.

Summary

While Information System has benefits in

placing a business at a competitive
advantage, the introduction of the new
systems affects social and technical aspects
of the organization. In short, there are
advantages and disadvantages of
Information System.

Case study
Read and answer the case study on Page 147: Can this
Bookstore Be Saved?.
I want you to work in your case study groups to answer this
question.
This will give you an idea, how you can work together in
answering your case study.