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Information
Systems,
Organizations,
and Strategy
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
LEARNING OBJECTIVES
What is an organization?
Technical definition:
Stable, formal social structure that takes resources
from the environment and processes them to produce
outputs
A formal legal entity with internal rules and procedures
they must abide by, as well as a social structure (e.g
people, relationships, groups and teams)
More stable than an informal group in terms of
longevity and routineness
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
What is an organization?
Behavioral definition:
A collection of rights, privileges, obligations, and
responsibilities that is delicately balanced over a
period of time through conflict and conflict resolution
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Features of organizations
Routines and business processes
Organizational politics
Organizational culture
Organizational environments
Organizational structure
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizational Politics
Divergent viewpoints lead to political struggle,
competition, and conflict
Political resistance greatly hampers organizational
change
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizational Culture
Encompasses set of assumptions that define goal and
product
Figure out what the costumer wants and then sell it
What products the organization should produce
How and where it should be produced
For whom the products should be produced
A powerful unifying force as well as restraint on
change, especially technological change
Technology is often stalled while the culture slowly
adjusts
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizational Environments
Organizations and environments have a reciprocal
relationship
Organizations are open to, and dependent on, the social and
physical environment
Organizations can influence their environments
Business firms form alliances with other businesses to
influence the political process; they advertise to influence
customer acceptance of their products
Environments generally change faster than organizations
Information systems can be instrument of environmental
scanning, act as a lens
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Disruptive technologies
Technology that brings about sweeping change to
businesses, industries, markets
Substitute products that perform as well as or better than
anything currently produced
Could simply be an extension of the market
Examples: personal computers, the Internet, Apple iPod
First movers and fast followers
First movers inventors of disruptive technologies
Fast followers firms with the size and resources to
capitalize on that technology
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizational structure
Five basic kinds of organizational structure
The kinds of information systems often reflects the
type of organizational structure
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Economic impacts
IT changes relative costs of capital and the costs of
information
Information systems technology is a factor of
production, like capital and labor
information technology substitutes for labour as
well as buildings
Information technology helps firms contract in
size because it can reduce transaction costs (the
cost of participating in markets)
Outsourcing
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Agency theory
Firm is nexus of contracts among self-
interested individuals rather than as a
unified, profit-maximizing entity
Firms experience agency costs (the cost
of managing and supervising) which rise
as firm grows
Increase the number of managers
IT can reduce agency costs, making it
possible for firms to grow without adding
to the costs of supervising, and without
adding employees
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Traditional competitors
All firms share market space with competitors who are
continuously devising new products, services, efficiencies,
switching costs
Need to always be a head of the game
New market entrants
Some industries have high barriers to entry, e.g. computer chip
business with very high capital cost and significant expertise and
knowledge that is hard to obtain
Example: banks and automotive industry invested so much
on technology
New companies have new equipment, younger workers who are
less expensive and more innovation, with high motivation and
not locked into old plants and equipment
but little brand recognition and outside financing for new
plants and equipment, less experienced workers
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Low-cost leadership
Produce products and services at a lower price than
competitors while enhancing quality and level of
service
Example: Walmarts continuous replenishment
system
Efficient customer response system: directly links
consumer behavior to distribution and production
and supply chain
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Product differentiation
Enable new products or services, greatly change
customer convenience and experience
Examples: Google, Apple iPhone
Network-based Strategies
Take advantage of firms abilities to
network with each other
Include use of:
Network economics
Virtual company model
Business ecosystems
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Network economics
Business economics that benefit from the
network effect
When the value of a good or service increases
when others buy the same good or service.
Example: eBay
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Business ecosystems
Industry sets of firms providing related services and
products
Mobile digital platform ecosystem
Keystone firms: Dominate ecosystem and create platform
used by other firms
Niche firms: Rely on platform developed by keystone firm
Individual firms can
consider how IT will
enable them to become
profitable niche players in
larger ecosystems
Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy