Information Systems, Organizations, Management, and Strategy Chapter 3 Information Systems, Organizations, Management, and Strategy

E.&J. Gallo Winery（嘉露葡萄酒公司 ）

Three Systems a product accountability system (SCM) a system called Gallo Edge helps retail customers manage wine placement and profitability in their stores (make money) a production control system called Gallo Wine Manager （test vs. cost）

Organizations and Information Systems The two-way relationship between organizations and information technology Figure 3-1

Organizations and Information Systems What Is an Organization? Technical Definition Stable, formal social structure that takes resources from the environment and processes them to produce outputs Behavioral Definition A collection of rights, privileges, obligations, and responsibilities that are delicately balanced over a period of time through conflict and conflict resolution 从环境中获得资源，然后处理并输出成果的稳定而正式的社会结构 是权利、权限、责任和义务的集合，是经过了一定时间的磨合而达到的一种微妙的平衡

Organizations and Information Systems The technical microeconomic definition of the organization Figure 3-2

Organizations and Information Systems The behavioral view of organizations Figure 3-3

Organizations and Information Systems Common Features of Organizations Structural Characteristics of All Organizations（P74） Clear division of labor Hierarchy Explicit rules and procedures Impartial judgments Technical qualifications for positions Maximum organizational efficiency Clear division of labor 清晰的劳动分工 Hierarchy 层次性 Explicit rules and procedures 清晰的规则和过程 Impartial judgments 公正的决断 Technical qualifications for positions 职位的技术资质要求 Maximum organizational efficiency 最大化组织效益

Organizations and Information Systems Unique Features of Organizations Organizational Types（P77） Entrepreneurial: Start up business Machine bureaucracy: Midsize manufacturing firm Divisionalized bureaucracy: Fortune 500 firms Professional bureaucracy: Law firms, hospitals, school systems Adhocracy: Consulting firm Entrepreneurial: Start up business 创业者式：新兴商业 Machine bureaucracy: Midsize manufacturing firm 机械官僚式：中型制造公司 Divisionalized bureaucracy: Fortune 500 firms 分部官僚式、事业部官僚式：财富500强公司 Professional bureaucracy: Law firms, hospitals, school systems 专业官僚式：法律公司、医院、学校系统 Adhocracy: Consulting firm 特别任务式：咨询公司

Words from the Book() How do these definitions of organizations relate to IS technology? Some ISs change the organizational balance of rights, privileges, obligations, responsibilities, and feelings that have been established over a long period of time.

Words of the Book Changing these elements can take a long time, be very disruptive, and require more resources to support training and learning For instance, the length of time required to implement effectively a new information system is much longer than usually anticipated simply because there is a lag between implementing a technical system and teaching employees and managers how to use the system.

Organizations and Information Systems Environments and organizations have a reciprocal relationship Figure 3-4

Organizations and Information Systems Unique Features of Organizations All organizations have different: Organizational type Environments（P77） Goals Power Constituencies Function Leadership Tasks Technology Business processes

Organizations and Information Systems Window on Organizations(P79) E-Commerce Canada and Mexico Style What organizational factors explain why Canada and Mexico have had such different experiences adopting e-commerce? How about China?

The Changing Role of Information Systems in Organizations Information Technology Infrastructure and Information Technology Services Information Services Department(P80) Past: Consisted primarily of programmers, building own software and managing own computing facilities Today: A growing proportion of specialists, with department acting as powerful change agent in the organization

The Changing Role of Information Systems in Organizations Information technology services Figure 3-5

The Changing Role of Information Systems in Organizations How Information Systems Affect Organizations Economic Theories Information system technology is a factor of production, freely substituted for capital and labor Transaction cost theory: Information technology can help lower the cost of market participation

The Changing Role of Information Systems in Organizations The transaction cost theory of the impact of information technology on the organization Figure 3-6

The Changing Role of Information Systems in Organizations How Information Systems Affect Organizations Economic Theories – The Agency Theory Agents (employees) need supervision As firm grows, agency and coordination costs rise Information technology reduces agency costs because it becomes easier for managers to oversee more employees

The Changing Role of Information Systems in Organizations The agency cost theory of the impact of information technology on the organization Figure 3-7

The Changing Role of Information Systems in Organizations How Information Systems Affect Organizations Behavioral Theories(P82) IT could change hierarchy of decision making by lowering costs of information acquisition and distribution Organization shape could “flatten” as decision making becomes more decentralized Growth of “virtual organizations” Information systems seen as outcome of political competition between subgroups

The Changing Role of Information Systems in Organizations Organizational resistance and the mutually adjusting relationship between technology and the organization(P85) Figure 3-10

The Changing Role of Information Systems in Organizations The Internet and Organizations The Internet is capable of dramatically reducing transaction and agency costs Businesses are rapidly rebuilding some key business processes based on Internet technology Internet technology becoming a key component of IT infrastructure

Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Value Chain Model(P90) Firm seen as series or “chain” of activities that add a margin of value to firm’s products or services Highlights activities in business where competitive strategies are best applied Primary or support activities Firm’s value chain linked to value chains of other partners

Information Systems and Business Strategy The firm value chain and the industry value chain Figure 3-11

Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Value Web（P91） Value chain extended by Internet technology that connects all the firm’s suppliers, partners, and customers Collection of independent firms using IT to coordinate value chains to collectively produce a product or service More customer-driven, less linear than value chain Flexible, adaptive to changes in supply and demand Value Web 价值网 P91 Value chain extended by Internet technology that connects all the firm’s suppliers, partners, and customers 因特网技术拓宽了价值链，从而将所有的企业供应商、合作伙伴和客户联系起来 Collection of independent firms using IT to coordinate value chains to collectively produce a product or service 多家企业的集合，使用IT协调价值链，协同生产产品或服务 More customer-driven, less linear than value chain 更趋向客户驱动，更偏离线形结构 Flexible, adaptive to changes in supply and demand 对供应和需求富有弹性和可适性

Information Systems and Business Strategy The value web(92) Figure 3-12

Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Product Differentiation Strategy for creating brand loyalty by developing new and unique products and services not easily duplicated by competitors Information systems used to create new information technology-based products and services Examples: ATMs, computerized reservation services

Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Focused Differentiation Strategy for developing new market niches for specialized products and services Information systems used to produce data for sales and marketing; analyze customer behavior Examples: One-to-one and customized marketing

Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Efficient Customer Response Systems Links consumer behavior back to distribution, production, and supply chains Information systems used to link customer’s value chain to firm’s value chain Reduce inventory costs; deliver product or service more quickly to customer

Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Switching Costs Cost of switching to competitive product; higher switching costs discourage customers going to competitors Information systems offer convenience, ease of use, raise switching costs Stockless inventory systems

Information Systems and Business Strategy Stockless inventory compared to traditional and just-in-time supply methods Figure 3-13

Information Systems and Business Strategy Business-level strategy Figure 3-14

Information Systems and Business Strategy Firm-Level Strategy and Information Technology At firm level, information technology can: Promote synergies between business units, pool resources Tie together operations of disparate business units Improve core competencies

Information Systems and Business Strategy Industry-Level Strategy and Information Technology Industry-Level Strategies: Information partnerships Competitive forces model; e.g., developing industry standards Network economics: cost of adding new participant negligible, but adds great marginal gain

Information Systems and Business Strategy Porter’s competitive forces model Figure 3-15

Information Systems and Business Strategy Industry-Level Strategy and Information Technology Impact of Internet on Competitive Forces Reduces barriers to entry Enables new substitute products and services Shifts bargaining power to customer Raises firm’s bargaining power over suppliers Suppliers benefit from reduced barriers to entry and from elimination of intermediaries Widens geographic market, increases number of competitors, reduces differentiation among competitors

Information Systems and Business Strategy The new competitive forces model Figure 3-16

Information Systems and Business Strategy Using Systems for Competitive Advantage: Management Issues Strategic Transitions A movement from one level of sociotechnical system to another Often required when adopting strategic systems that demand changes in the social and technical elements of an organization

How Much Can New Information Systems Help GM? Chapter 3 Case Study How Much Can New Information Systems Help GM? Analyze GM by using the value chain and competitive forces models. Describe the relationship between GM’s organization and its information technology infrastructure. What management, organization, and technology factors influenced this relationship?

How Much Can New Information Systems Help GM? Chapter 3 Case Study How Much Can New Information Systems Help GM? Evaluate the current business strategy of GM in response to its competitive environment. What is the role of information systems in that strategy? How do they provide value for GM? How successful have GM’s strategy and use of information systems been in addressing the company’s problems? What kind of problems can they solve? What are some of the problems that they cannot address?

What impact do information systems have on organizations? Objectives 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? How do information systems support the activities of managers in organizations?

How can businesses use information systems for competitive advantage? Objectives 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?

Management Challenges Sustainability of competitive advantages Fitting technology to the organization (or vice versa).