CMIS 351 Lesson 3 Study Questions
What is a core competency? Explain IS/IT's role in promoting core competences.
A core competency is an activity that is directly associated with firm success. Information systems can be used to share knowledge across business units to enhance competencies.
Explain the concept of value web. What made value webs possible?
A value web is a collection of independent firms that use information technology to coordinate their value chains to produce products or services collectively. Value webs were made possible through the rise of Internet technology.
Describe the major behavioural theories that help explain how information systems affect organizations.
Behavioural theories from sociology, psychology, and political science are useful for describing the behaviour of individual firms. Behavioural researchers theorize that information technology changes the decision-making hierarchy by lowering the costs of information acquisition and distribution. IT could eliminate middle managers and their clerical support by sending information from operating units directly to senior management and by enabling information to be sent directly to lower-level operating units. This flattening may also be accentuated by changes in authority in our post-industrial world, which sees authority increasingly related to knowledge rather than formal position. Because IS/IT move knowledge into lower levels of the organization, organizations will flatten as a result. IS/IT may also encourage a move toward project-based (or task-force-networked) organizations in which groups of workers come together for short periods to accomplish specific tasks.
What features do all organizations have in common?
Common features include the existence of 1) a formal structure 2) a standard operating procedures 3) organizational politics 4) an organizational culture 5)an organizational environment.
Describe Porter's competitive forces model.
Porter's model establishes the importance of a firm's environment, arguing that five forces shape the firm's outcomes: 1) traditional competitors 2) new market entrants 3) substitute products and services 4) customers 5) suppliers
Explain the impact of the Internet on Porter's competitive forces.
Porter's traditional forces remain. However, the Internet has increased competitive rivalry, through an increase in number of competitors, the lowering of costs into an industry (increasing new market entrants), and creating increased substitute products and services.
What is synergy, in terms of business strategy? Explain IS/IT's role in promoting synergies.
Synergies are created when the output of some units can be used as inputs into other units or when organizations pool markets and expertise. IS/IT can be used to tie together the operations of different business units to that they can work together.
What is an organization? Compare the technical definition of organization with the behavioural definition.
Technically, an organization can be defined as a stable, formal social structure that takes resources from the environment and processes them to produce outputs. This definition focuses on three elements: capital and labour, production, and products for consumption. It also implies that organizations are more stable than an informal group, are formal legal entities, and are social structures. The behavioural definition states that an organization is a collection of rights, privileges, obligations, and responsibilities that are delicately balanced over a period of time through conflict and conflict resolution. This definition highlights the people within the organization, their ways of working, and their relationships. The technical definition shows us how a firm combines capital, labour, and information technology. The behavioural definition examines how information technology impacts the inner workings of the organization. The behavioural definition is the more realistic of the two.
Identify, define, and describe three network-based organizational strategies. Explain the use of IS/IT in these network-based strategies.
Three network-based organizational strategies are:Network economics. Network economics is an economic condition that occurs when the cost of adding another participant is almost zero but the benefit of adding that participant is larger. For instance, social networking sites become more valuable as more users subscribe to the site. Virtual company model. A virtual company uses network to link people, assets and ideas in order to work together to create and distribute products and services together. Business ecosystem. A business ecosystem is a loosely coupled but interdependent networks of organizational partners, like a value web but occurring across several industries. In all of these cases, IS/IT are used to connect people, resources and firms together to create and support the network.
Describe appropriate information systems strategies for dealing with competitive forces.
Low-cost leadership, product differentiation, focus on market niche, and strengthening customer and supplier intimacy are generic strategies available at the business level. If a business pursues the low-cost producer strategy, it can evaluate its value chain to identify primary and secondary activities where information technology can effectively help the business obtain a competitive advantage. Strategic information systems help a company offer its products and services at a lower cost than its competitors, or strategic information systems enable the company to provide more value at the same cost as its competitors. Strategic information systems enable the company to improve its internal value chain, as well as establish tight, efficient linkages with its suppliers, customers, and business partners. Additionally, a company can participate in a value web. Firms pursuing a product differentiation strategy use information systems to create new products and services. These products and services are not easily duplicated by competitors, and therefore, the company does not need to compete on the basis ofcost. A company pursuing a focus on a particular market niche targets a specific market and serves this market more effectively than competitors. A company can use strategic information systems to "mine" for information about a particular market or group of customers. The strategic information systems enable the company to analyze customer buying patterns, tastes, and preferences. Finally, a company can tighten linkages and increase intimacy with both customers and suppliers, which increases switching costs and loyalty to the firm. Information systems are used to facilitate direct access to the organization.
Identify and describe three managerial issues related to organizational strategy.
The textbook identifies three managerial issues related to organizational strategy: Sustaining competitive advantage. A challenge for organizations is to sustain competitive advantage, once a competitive advantage is created. Without the ability to sustain the advantage, organizations may not be able to achieve any long-term profitability. Information systems are not usually sufficient to confer sustained competitive advantage; this is one reason that investment in complementary assets is critical. Aligning IT and business strategy. Research confirms that aligning IT with business strategy is critical in achieving value through IT, yet this is an area that is not yet well executed. Managing strategic transitions. Determining a strategy that takes a firm in a new direction is just a first step in the process. Most strategies will require concomitant changes in relationships with customer and suppliers, relationships with employees, business goals and business process. Working through these transitions is critical in achieving the end-goal.
Describe the major economic theories that help explain how information systems affect organizations.
The transaction cost theory is based on the notion that a firm incurs transaction costs when it buys on the marketplace rather than making products for itself. Traditionally, firms sought to reduce transaction costs by getting bigger, hiring more employees, vertical and horizontal integration, and small-company takeovers. Information technology helps firms lower transaction costs by enabling more efficient and effective searches (for potential vendors) and contract management; IT also helps firms shrink in size while producing the same or greater amount of output. The agency theory views the firm as a nexus of contracts among interested individuals. The owner employs agents (employees) to perform work on his or her behalf and delegates some decision-making authority to the agents. Agents need constant supervision and management, which introduces management costs. As firms grow, management costs rise. Information technology reduces agency costs by providing information more easily so that managers can supervise a larger number of people with fewer resources.
Explain the value chain model and how it can be used in deciding firm strategy.
The value chain model identifies specific activities where strategy can best be applied. It specifies "primary activities," which are directly related to the production and distribution of products and services (i.e., value creating activities) and "support activities," which make these primary activities possible. The value chain also makes it possible to benchmark an organization's processes against competitor's or industry best practices.
Why is there considerable organizational resistance to the introduction of information systems?
There is considerable organizational resistance to new information systems because they change who has information, a resource associated with power, and they change many important organizational dimensions such as culture, structure, politics, and work. Leavitt developed a model that says that changes in technology are absorbed, deflected, and defeated by organizational task arrangements, structures, and people. In this model, the only way to bring about change is to change the technology, tasks, structure, and people simultaneously. In a second model, Lewin and Schein discuss the need to unfreeze organizations before introducing an innovation, quickly implementing the new system, and then refreezing or institutionalizing the change.
