MIS - CHAPTER 3

what is organizational environments?

Organizations are open to, and dependent on, the social and physical environment

Traditional economics: Law of diminishing returns

The more any given resource is applied to production, the lower the marginal gain in output, until a point is reached where the additional inputs produce no additional outputs

When switching old goods for a new brand, usually there will be _____________ costs (in addition to the price of the good) associated to this transaction.

Transaction

Information systems can reduce the number of levels (flattening) in an organization by providing managers with information to supervise larger numbers of workers and by giving lower-level employees more decision-making authority. True or False

True

Give an example of an UAE virtual company

Virtual company license

Virtual company strategy

Virtual company uses networks to ally with other companies to create and distribute products without being limited by traditional organizational boundaries or physical locations

Synergies

When output of some units used as inputs to others, or organizations pool markets and expertise

Transaction Cost Theory

firms and individuals seek to economize on transaction costs (Vertical integration, hiring more employees, buying suppliers and distributors), much as they do on production costs.

Define Switching Costs

the cost of switching from one product to a competing product

Five competitive forces shape fate of firm (Porter's model)

traditional competitors, new market entrants, substitute products and services, customers, suppliers

Any formal organization is divided into two major components: ________________ and _____________.

structure and process

What is an organization ?

- A formal legal entity with internal rules and procedures, as well as a social structure - A collection of rights, privileges, obligations, and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution

Features of Organizations

-Use of hierarchical structure -Accountability, authority in system of impartial decision making -Adherence to principle of efficiency -Routines and business processes -Organizational politics, culture, environments, and structures

core competencies

1) Activity for which firm is world-class leader 2) Relies on knowledge, experience, and sharing this across business units

Value web

1) Collection of independent firms using highly synchronized IT to coordinate value chains to produce product or service collectively 2) More customer driven, less linear operation than traditional value chain

what is organizational politics?

1) Divergent viewpoints lead to political struggle, competition, and conflict. 2) Political resistance greatly hampers organizational change.

what are the Five basic kinds of organizational structure?

1) Entrepreneurial: -Small start-up business 2) Machine bureaucracy: -Midsize manufacturing firm 3) Divisionalized bureaucracy: -Fortune 500 firms 4) Professional bureaucracy: -Law firms, school systems, hospitals 5) Adhocracy: -Consulting firms

what is the organizational factors in planning a new system?

1) Environment 2) Structure -Hierarchy, specialization, routines, business processes 3) Culture and politics 4) Type of organization and style of leadership 5) Main interest groups affected by system; attitudes of end users 6) Tasks, decisions, and business processes the system will assist

what are First movers and Fast followers?

1) First movers: inventors of disruptive technologies 2) Fast followers: firms with the size and resources to capitalize on that technology

what are other organizational features?

1) Goals 2) Constituencies 3) Leadership styles 4) Tasks 5) Surrounding environments

Give an example of a product differentiation strategy

1) Google continuously introduces new and unique search services on its Web site, such as Google Maps 2) Apple created the iPod, a uniquely portable digital music player, plus a unique online Web music service where songs can be purchased for $.69 to $1.29 each

Organizational and behavioral impacts

1) IT flattens organizations -Decision making is pushed to lower levels. -Fewer managers are needed (IT enables faster decision making and increases span of control). 2) Postindustrial organizations -Organizations flatten because in postindustrial societies, authority increasingly relies on knowledge and competence rather than formal positions.

Organizational resistance to change

1) Information systems become bound up in organizational politics because they influence access to a key resource—information. 2) Information systems potentially change an organization's structure, culture, politics, and work. 3) Most common reason for failure of large projects is due to organizational and political resistance to change.

what are the Four generic strategies for dealing with competitive forces, enabled by using IT?

1) Low-cost leadership -Produce products and services at a lower price than competitors 2) Product differentiation -Enable new products or services, greatly change customer convenience and experience 3) Focus on market niche -Use information systems to enable a focused strategy on a single market niche; specialize 4) Strengthen customer and supplier intimacy -Use information systems to develop strong ties and loyalty with customers and suppliers

Network economics

1) Marginal cost of adding new participant almost zero, with much greater marginal gain 2) Value of community grows with size 3) Value of software grows as installed customer base grows

New Market Entrants

1) Some industries have high barriers to entry, for example, computer chip business 2) New companies have new equipment, younger workers but little brand recognition

The interaction between IT and organizations is complex and is influenced by many mediating factors, Like?

1) Structure 2) Business processes 3) Politics 4) Culture 5) Environment 6) Management decisions

Network-based strategies

1) Take advantage of firm's abilities to network with each other 2) Include use of: -Network economics -Virtual company model -Business ecosystems

The internet and organizations

1) The Internet increases the accessibility, storage, and distribution of information and knowledge for organizations. 2) The Internet can greatly lower transaction and agency costs. (Example: Large firm delivers internal manuals to employees via a corporate Web site, saving millions of dollars in distribution costs)

Give some examples of disruptive technologies

3D printing GPS robotics medical innovations

Managing strategic transitions

Adopting strategic systems requires changes in business goals, relationships with customers and suppliers, and business processes

___________ theory studies the problems and solutions linked to delegation of tasks from principals to agents in the context of conflicting interests between the parties.

Agency

Traditional competitors

All firms share market space with competitors who are continuously devising new products, services, efficiencies, and switching costs

The ________ model highlights the primary or support activities that add a margin of value to a firm's products or services where information systems can best be applied to achieve a competitive advantage. A) competitive forces B) value chain C) bargaining power D) new entrant E) rivalry

B) value chain

Customers

Can customers easily switch to competitor's products? Can they force businesses to compete on price alone in transparent marketplace?

The ability to offer individually tailored products or services using the same production resources as bulk production is known as A) customized response B) size customization C) magnitude customization D) dimension customization E) mass customization.

E) mass customization

What is organizational culture?

Encompasses set of assumptions that define goal and product

what are the Economic impacts?

IT changes both the relative costs of capital and the costs of information.

what are Business ecosystems and keystone firms and niche firms?

Industry sets of firms providing related services and products -Keystone firms: Dominate the ecosystem and create platform used by other firms -Niche firms: Rely on the platform developed by keystone firm

Suppliers

Market power of suppliers when firm cannot raise prices as fast as suppliers

value chain model

Model that highlights the primary or support activities that add a margin of value to a firm's products or services where information systems can best be applied to achieve a competitive advantage.

Aligning IT with Business Objectives

Performing strategic systems analysis -Structure of industry -Firm value chains

Sustaining Competitive Advantage

RISKS: 1) Competitors can retaliate and copy strategic systems 2) Systems may become tools for survival HOW TO AVOID: 1) Customer Excellence 2) Operational Excellence 3) Product Excellence 4) Locational Excellence

Substitute products and services

Substitutes customers might use if your prices become too high, for example, iTunes substitutes for CDs

disruptive technologies

Technology that brings about sweeping change to businesses, industries, markets like personal computers, word processing software, the Internet

Agency theory

a theory that views the firm as a nexus of legal contracts