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TOPIC 3 : INFORMATION SYSTEMS, ORGANIZATIONS, AND STRATEGY, LEARNING…
TOPIC 3 : INFORMATION SYSTEMS, ORGANIZATIONS, AND STRATEGY
The relationship between organizations and information technology
-they influence each other in terms of :
- structure
- Business Processes
- Politics
- Culture
- Environment
- Management Decisions
which features of organization do managers need to know about to build and use information system succesfully?
-The influence between information technology and organizations is influenced by mediating factors such as
- environment
- culture
- Structure
- Business processes
- Politics
- Management Decisions
What is an organization?
- Technical Definition
-formal social structure that processes resources from environment to produce outputs
- a formal legal entity with internal rules and procedures as well as a social structure
- Behavioral definition
- A collection of rights, privileges, obligations and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution
- The technical microeconomic definition of the organization
The behavioral view of organizations
Features of organizations
- use of hierarchical structure
- Accountability, authority in system of impartical decision making
- Adherence to principle of efficiency
- Routines and business processes
- Organizational politics, culture, environments and structures
- Routines and business processes
- Routines
-Business processes
- Business firms
- Organizational Politics
- Divergent viewpoints lead to political struggle, competition and conflict
- Political resistance greatly hampers organizational change
- Organizational Culture
- Encompasses set of assumptions that define goal and product
- What products the organization should produce
-how and where it should be produced
- For whom the products should be produced
- Organizational Environments
- Organizations and environments have a reciprocal relationship
- Organizations are open to dependent on the social and physical environement
- Environments generally change faster than organizations
- Information systems can be instrument of environmental scanning, act as a lens
Disruptive Technologies
- Substitute products that perform as well as or better than existing product
- Technologies that brings sweeping change to business industries, markets
-Example : personal computers etc
-First movers and fast followers
- Organizational Structure
-Five Kinds
- entrepreneurial
- Machine bureaucracy
- Divisionalized bureaucracy
- Proffessional bureaucracy
- Adhocracy
Other features
- Goals
- Constituencies
- Leadership styles
- Types of tasks
-
The internet and organizations
- The internet increases the accessibility, storage, distribution of information and knowledge for organization
- The internet can greatly lower transaction and agency costs
Implications for design and understanding information systems
- ORGANIZATIONAL FACTORS IN PLANNING A NEW SYSTEM
- Environmental
- structure (hierarchy, specialization etc)
- culture and politics
- type of organization and style of leadership
- Main interest groups affected by system, attitudes of end users
- tasks, decisions and business processes the system will assist
HOW DO PORTERS COMPETITIVE FORCES MODEL, THE VALUE CHAIN MODEL, SYNERGIES, CORE COMPETENCIES, AND NETWORK ECONOMICS HELP COMPANIES DEVELOP COMPETITIVE STRATEGIES USING INFORMATION SYSTEMS?
Porter's Competitive Forces Model
- why do some firms become leaders in their industry
- Michael porter's competitive forces model
- five competitive forces shape fate of firm (traditional competitors, new market entrants, substitute products and services, customers, suppliers)
Porter's competitive forces model
- TRADITIONAL COMPETITORS
- all firms share market space with competitors who are continously devising new products, services, efficiancies and switching costs
- NEW MARKET ENTRANTS
- some industries have high barriers to entry
- New companies have new equipment, youngwe workers, but little brand recognition
Porter's competitive forces model
- SUBSTITUTE PRODUCTS AND SERVICES
- Substitutes customers might use if your prices become too high, for example itunes substitutes for CDs
- CUSTOMERS
- Can customers easily switch to competitor;s products? can they force businesses to compete on price alone in transparent market
- SUPPLIERS
- Market power of suppliers when firm cannot raise prices as fast as suppliers
INFORMATION SYSTEM STRATEGIES FOR DEALING WITH COMPETITIVE FORCES
- low cost leadership
- product differentiation
- focus on market niche
- Strengthen customer and supplier intimacy
INROMATION SYSTEM STRATEGIES FOR DEALING WITH COMPETITIVE FORCESLOW COST LEADERSHIP
- produce products and services at a lower price than competitors
PRODUCT DIFFERENTIATION
- enable new products or services, greatly change customer convenience, and experience
- mass customization
FOCUS ON MARKET NICHE
- use information systems to enable a focues strategy on a single market niche : specialize
- STRENGTHEN CUSTOMER AND SUPPLIER INTIMACY
- use infromation systems to develop strong ties
- increase switching costs
THE BUSINESS CHAIN MODEL
- Firm as a series of activities that add value to products or services
- highlights activities where competitive strategies can best be applied
- primary activities v support activities
- at each stage, determine how information systems can improve operational efficiency and improve customer and supplier intimacy
- utilize benchmarking, industry best practices
EXTENDING THE VALUE CHAIN : THE VALUE WEB
- Firms value chain is linked to value chains of suppliers, distributors, customers
- industry value chain
-value web
- collection of independent firms using highly synchronized IT to coordinate value chains to produce product or service collectively
- More customer driven
SYNERGIES, CORE COMPETENCIES AND NETWORK - BASED STRATEGIES
SYNERGIES
- When output of some units are used as inputs to others or organizations pool markets and expertise
CORE COMPETENCIES
- Activity for which firm is world- class
- Relies on knowledge, experience, and sharing this across business units
NETWORK BASED STRATEGIESNETWORK ECONOMICS
- marginal cost of adding new participant almost zero, with much greater marginal gain
- value of community grows with size
- value of software grows
VIRTUAL COMPANY MODEL
- uses network to ally with other companies
- creates and distributes products without being limited by traditional organization bounderies
BUSINESS ECOSYSTEMS AND PLATFORMS
- industry sets of firms proving related services and products
- platforms such as facebook and microsoft
CHALLENGES POSED BY STRATEGIC INFORMATION SYSTEMS
- sustaining competitive advantage
- Aligning IT with business objectives
- Managing strategic transitions
LEARNING OBJECTIVES
- Which feature of organizations do managers need to know about to build the use information systems successfully?
- What is the impact of information systems on organization?
- How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?
- What are the challenges posed by strategic information systems and how should they be addressed?