Chapter 3 Information Systems, Organizations, and Strategy

Strategic transitions

A movement between levels of sociotechnical systems.

Transaction cost theory

Firms and individuals seek to economize on transaction costs, much as they do on production costs.

Competitive forces model

Framework for analyzing competitiveness by Michael Porter. Based on five competitive forces that shape the fate of the firm--traditional competitors, new market entrants, substitute products and services, customers, and suppliers.

Value chain model

Highlights specific activities in the business where competitive strategies can best be applied and where IS are most likely to have a strategic impact.

Network economics

Model of strategic systems at the industry level based on the concept of a network where adding another participant entails zero marginal costs but can create much larger marginal gains.

Mass customization

This ability to offer individually tailored products or services using the same production resources as mass production is called

Virtual company

Uses networks to link people, resources, and ally with other companies to create and distribute products without traditional organizational boundaries or physical locations

Primary activities

are most directly related to the production and distribution of the firm's products and services, which create value for the customer, includes inbound logistics, operations, outbound logistics, sales and marketing, and service.

Disruptive technologies

are substitute products that perform as well as or better (often much better) than anything currently produced.

Best practices

are usually identified by consulting companies, research organizations, government agencies, and industry associations as the most successful solutions or problem-solving methods for consistently and effectively achieving a business objective.

Benchmarking

involves comparing the efficiency and effectiveness of your business processes against strict standards and then measuring performance against those standards.

Value web

is a collection of independent firms that use information technology to coordinate their value chains to produce a product or service for a market collectively.

Organization

is a stable, formal social structure that takes resources from the environment and processes them to produce outputs.

Core competency

is an activity for which a firm is a world-class leader. Core competencies may involve being the world's best miniature parts designer, the best package delivery service, or the best thin-film manufacturer.

Support activities

make the delivery of the primary activities possible and consist of organization infrastructure (administration and management), human resources (employee recruiting, hiring, and training), technology (improving products and the production process), and procurement (purchasing input).

Product differentiation

real or imagined differences between competing products in the same industry

Routines

sometimes called standard operating procedures—are precise rules, procedures, and practices that have been developed to cope with virtually all expected situations.

Switching costs

the cost of switching from one product to a competing product

Agency theory

the firm is viewed as a "nexus of contracts" among self-interested individuals rather than as a unified, profit-maximizing entity

Efficient customer response system

An efficient customer response system directly links consumer behavior to distribution and production and supply chains.

Business ecosystem

Another term used to describe loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms, and technology manufacturers