1. 3.1 © 2007 by Prentice Hall Week 03 Chapter 03 Information Systems, Organizations, and Strategy Chapter 03 Information Systems, Organizations, and Strategy

2. 3.2 © 2007 by Prentice Hall LEARNING OBJECTIVES Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy Identify and describe important features of organizations that managers need to know about in order to build and use information systems successfully. Evaluate the impact of information systems on organizations. Demonstrate how Porter’s competitive forces model and the value chain model help businesses use information systems for competitive advantage.

3. 3.3 © 2007 by Prentice Hall Demonstrate how information systems help businesses use synergies, core competencies, and network-based strategies to achieve competitive advantage. Assess the challenges posed by strategic information systems and management solutions. LEARNING OBJECTIVES (Continued) Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

4. 3.4 © 2007 by Prentice Hall Will the New US Airways Be Able to Fly? Problem: Intense competition and environmental changes. Solutions: Revising business processes and integrating them with information systems and culture could increase sales and reduce costs. Selecting appropriate systems and technology eliminates redundant systems. Demonstrates IT’s role in supporting improved business processes. Illustrates the benefits of integrating information systems in the face of interdependence of environment, culture, process, strategy, and systems. Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

5. 3.5 © 2007 by Prentice Hall Organizations and Information Systems What is an organization? Features of organizations Routines and business processes Organizational politics Organizational culture Organizational environments Organizational structure Other organizational features Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

6. 3.6 © 2007 by Prentice Hall Organizations and Information Systems Routines and business processes Routines = standard operating procedures (rules, procedure, and practices) Business processes = collection of business processes Organizational politics Political struggle for resources, competition and conflict within every organization Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

7. 3.7 © 2007 by Prentice Hall Organizations and Information Systems Organizational Culture Encompasses the assumptions about what products the organization should produce, how it should produce them, where and for whom. Organizational environments Organizations reside in environments from which they draw resources and to which they supply goods and services. Organizational structures Organizations have a structure or shape Depends on the size of the organizations Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

8. 3.8 © 2007 by Prentice Hall The Two-Way Relationship Between Organizations and Information Technology Figure 3-1 This complex two-way relationship is mediated by many factors, not the least of which are the decisions made—or not made—by managers. Other factors mediating the relationship include the organizational culture, structure, politics, business processes, and environment. Organizations and Information Systems Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

9. 3.9 © 2007 by Prentice Hall How Information Systems Impact Organizations and Business Firms Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy Economic impacts Organizational and behavioral impacts IT flattens organizations Postindustrial organizations Understanding organizational resistance to change The Internet and organizations Implications for the design and understanding of information systems

10. 3.10 © 2007 by Prentice Hall Flattening Organizations Figure 3-8 Information systems can reduce the number of levels in an organization by providing managers with information to supervise larger numbers of workers and by giving lower- level employees more decision- making authority. Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy How Information Systems Impact Organizations and Business Firms

11. 3.11 © 2007 by Prentice Hall Traditional competitors New market entrants Substitute products and services Customers Suppliers Porter’s Competitive Forces Model Using Information Systems to Achieve Competitive Advantage Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

12. 3.12 © 2007 by Prentice Hall Porter’s Competitive Forces Model Figure 3-10 In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not only by competition with its traditional direct competitors but also by four forces in the industry’s environment: new market entrants, substitute products, customers, and suppliers. Using Information Systems to Achieve Competitive Advantage Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

13. 3.13 © 2007 by Prentice Hall Low-cost leadership Product differentiation Focus on market niche Strengthen customer and supplier intimacy Information systems strategies for dealing with competitive forces Using Information Systems to Achieve Competitive Advantage Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy The Internet’s impact on competitive advantage

14. 3.14 © 2007 by Prentice Hall Using Information Systems to Achieve Competitive Advantage Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy Read the Interactive Session: Technology, and then discuss the following questions: Why is knowing about the customer so important to a company such as 7-Eleven? What are the benefits of 7-Eleven’s Retail Information System? In terms of Porter’s model, what strategic forces does the Retail Information System seek to address? Which of the strategies described in the chapter does the Retail Information System support? 7-Eleven Stores Ask the Customer by Asking the Data

15. 3.15 © 2007 by Prentice Hall Extending the value chain: The value web The business value chain model Using Information Systems to Achieve Competitive Advantage Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy Synergies, core competencies, and network-based strategies Synergies Enhancing core competencies Network-based strategies Network economics Virtual company strategy Business ecosystems: Keystone and niche firms

16. 3.16 © 2007 by Prentice Hall Using Information Systems to Achieve Competitive Advantage Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy Read the Interactive Session: Organizations, and then discuss the following questions: Analyze Amazon.com using the competitive forces and value chain models. How has it responded to pressures from its competitive environment? How does it provide value to its customers? Describe Amazon’s evolving business strategy. Why did the company change its strategy? Do you think Amazon can continue to be successful? Explain your answer. Amazon.com: An Internet Giant Fine-Tunes Its Strategy

17. 3.17 © 2007 by Prentice Hall The Value Web Figure 3-12 The value web is a networked system that can synchronize the value chains of business partners within an industry to respond rapidly to changes in supply and demand. Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy Using Information Systems to Achieve Competitive Advantage

18. 3.18 © 2007 by Prentice Hall Sustaining competitive advantage Performing a strategic systems analysis Managing strategic transitions Using Systems for Competitive Advantage: Management Issues Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

19. 3.19 © 2007 by Prentice Hall Which features of organizations do managers need to know to build and use IS successfully ? The managers should know all the features: structures, cultures, politics, environment, routine & business processes.The managers should know all the features: structures, cultures, politics, environment, routine & business processes. Using Systems for Competitive Advantage: Management Issues Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

20. 3.20 © 2007 by Prentice Hall What is the impact of IS on organizations? The introduction of a new IS will affect organizational structure, goals, work design, values, competition between interest groups, decision making and day- to-day behavior.The introduction of a new IS will affect organizational structure, goals, work design, values, competition between interest groups, decision making and day- to-day behavior. Using Systems for Competitive Advantage: Management Issues Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

21. 3.21 © 2007 by Prentice Hall How does Porter’s competitive forces model help companies develop competitive strategies using IS? IS help companies compete by maintaining low costs, differentiating products or services, focusing on market niche, strengthening ties with customers and suppliers, and increasing barriers to market entry with high levels of operational excellence. Using Systems for Competitive Advantage: Management Issues Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

22. 3.22 © 2007 by Prentice Hall How do the value chain and value web models help businesses identify opportunities for SIS applications? A firm’s value chain can be linked to the value chains of its suppliers, distributors, and customers. A value web consists of IS that enhance competitiveness at the industry level by promoting use of standards and industry-wide consortia, and by enabling businesses to work more efficiently with their value partners. Using Systems for Competitive Advantage: Management Issues Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

23. 3.23 © 2007 by Prentice Hall How do IS help businesses use synergies, core competencies, and network-based strategies to achieve competitive advantage ? By promoting the sharing of knowledge across business units. IS also facilitate business models based on large networks of users or subscribers that take advantage of network economics. IS support a dense network of interactions among the participating firms. Using Systems for Competitive Advantage: Management Issues Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy

24. 3.24 © 2007 by Prentice Hall What are the challenges posed by SIS and how should they be addressed ? Implementing IS requires extensive organizational change and a transition from one sociotechnical level to another. Such changes are called strategic transitions and are often difficult and painful to achieve. Many SIS are easily copied by other firms so that strategic advantage is not always sustainable. Using Systems for Competitive Advantage: Management Issues Management Information Systems Chapter 3 Information Systems, Organizations, and Strategy