Chapter 1 - Information Systems in Global Business Today

What is a Digital Firm?

A firm in which nearly all of the organization's significant business relationship with customers, suppliers, and employees are digitally enabled and mediated. Core business processes are accomplished through digital networks spanning the entire organization or linking multiple organizations.

What is a network in the context of networking and telecommunications technology?

A network links two or more computers to share data or resources, such as a printer.

Apart from managing existing resources, what additional responsibilities do managers have?

Apart from managing what already exists, managers must also create new products and services and occasionally re-create the organization. They engage in creative work driven by new knowledge and information.

Why are businesses and managers investing in IT?

Because they provide real economic value to the business. The decision to build or maintain an IS assumes that the returns on the investment will be superior to other investments in buildings, machines, or other assets. These superior returns will be expressed as increase in productivity, as increases in revenues (which will increase the firm's stock market value), or perhaps as superior long-term strategic positioning of the firm in certain markets (which produce superior revenues in the future).

How do information systems support an organization's business processes?

Information systems automate many business processes. They incorporate a set of formal business processes, such as determining how a customer receives credit or how a customer is billed.

What are the major business functions performed by business organizations?

The major business functions consist of sales and marketing, manufacturing and production, finance and accounting, and human resources.

How is an organization's structure described in terms of levels?

The organizational structure is structured around distinct levels and specialties, highlighting a clear division of labor. Within a business firm, authority and responsibility are structured hierarchically. At the top, we have senior management, followed by middle management, and finally, at the base, operational management handles day-to-day tasks

What role does IS play today?

The role of information systems today is multifaceted, encompassing mobile digital platforms, customer-centric strategies, AI-driven innovations, e-commerce expansion, and transformative technologies like blockchain and IoT. By leveraging these capabilities, businesses can navigate the complexities of the digital age, drive innovation, and achieve sustainable growth.

Describe the sociotechnical approach to IS.

The study of information systems deals with issues and insights contributed from technical and behavioral disciplines. The disciplines that contribute to the technical approach focusing on formal models and capabilities of systems are computer science, management science, and operations research. The disciplines contributing to the behavioral approach focusing on the design, implementation, management, and business impact of systems are psychology, sociology, and economics. A sociotechnical view of systems considers both technical and social features of systems and solutions that represent the best fit between them.

Define the term "Information technology infrastructure" within a organization.

The term "Information Technology (IT) infrastructure" within an organization refers to the computer hardware and software, data management technology, networking and telecommunications technology, internet technology (including networks, intranets, and extranets), and the World Wide Web. Alongside these technological components, the people required to run and manage them constitute the firm's IT infrastructure. This IT infrastructure provides the foundation or platform upon which the firm can build its specific information systems.

What is the primary purpose of information systems in general?

To facilitate decision-making, coordination, control, and help managers and workers to analyze problems within the organization and its operations.

What is a Business process?

A standardized set of activities that accomplish a specific task or business result, such as processing a customer's order.

What are the key elements that constitute an organization?

An organization is a complex entity characterized by its people, structure, business processes, politics, and culture. Information systems play a critical role in shaping, reflecting, and facilitating these organizational components, ensuring effective operations, decision-making, and alignment with strategic objectives.

What are "time shifting" and "space shifting" in a digital firm?

Certainly! Here are the corrected sentences: Time shifting refers to business being conducted continuously, 24/7, rather than in narrow "workday" time bands of 9 am - 5 pm. Space shifting means that work takes place in a global workshop as well as within national boundaries. Digital firms sense and respond to their environment far more rapidly than traditional firms, giving them more flexibility to survive turbulent times.

What components make up computer hardware in an information system?

Computer hardware consists of the physical equipment used for input, processing, and output activities in an IS. It consists of computers (including mobile devices), various input, output, and storage devices, and telecommunication that link computers together.

What does computer software control and coordinate in an information system?

Computer software consists of detailed, preprogrammed instructions that control and coordinate the computer hardware components in an information system.

What is the basis for organizational politics?

Conflict is the basis for organizational politics, arising from different interests, perspectives, and views within the organization.

What are the globalization opportunities of IS?

Cost Reduction and Efficiency: Information systems enable firms to achieve extraordinary cost reductions by finding low-cost suppliers, managing global production facilities, and optimizing supply chains. Enhanced Collaboration: Advanced IS platforms allow for real-time collaboration and communication across global teams, enhancing efficiency and decision-making. Global Market Access: IS facilitates businesses like Google, Netflix, Alibaba, and eBay to replicate their models across multiple countries without redesigning their infrastructure, thereby accessing global markets more efficiently.

In the context of IS, what does data and information mean?

Data consists of raw facts from the world that aren't understandable to humans. Information is data that has been transformed or organized to be understandable and meaningful for humans.

What does data management technology govern?

Data management technology governs the organization of data on physical storage media.

What is a Business model?

Describes how a company produces, delivers, and sells a products or service to create value.

What is a complementary asset?

Even if it may seem like acquiring IT is the solution for boosting a company's productivity, the reality is more nuanced. Investing in information technology does not by itself guarantee good returns. Consider a car. The value of a car is linked to its abilities to take us from A to B. However, a working road is crucial, it is another asset that enables the car to provide its value. We call the road a complementary asset. Another complementary asset that enables a car to provides its value is gas stations or repair shops. Complementary assets are those assets required to derive value from a primary investment.

What is an information value chain?

From a business perspective, ISs are part of a series of value-adding activities for acquiring, transforming, and distributing information that managers can use to improve decision making, enhance organizational performance, and increase firm profitability.

Define the term "Information Technology".

IT consists of all the hardware and software that a firm needs to use in order to achieve its business objectives. This includes computers, storage and mobile devices, and software computer programs such as Microsoft Office.

What are five changes in management, business processes and technology?

IT innovations Continuous IT innovations like cloud computing, mobile platforms, big data, analytics, and social networks are reshaping the business landscape. These recent changes empower entrepreneurs and firms to innovate, introduce new products, and reshape business models. Consequently, some established businesses are declining, while new ones emerge. New Business Models The emergence of online video services like netflix. E-commerce Expanding Transforming how firms produce, market, and deliver products, enhancing efficiency and reach. Management Changes Permit Managers to no longer operate in a fog of confusion as information is at an instant access when the firm is going mobile (facilitates a better oversight), along with customers and employees which enhance communication and collaboration. Changes in Firms and Organizations Organizations are adopting flatter hierarchies, emphasizing employee roles, and leveraging data for quicker decision-making.

What is the role of information technology in management according to the text?

IT is a tool managers use to cope with change.

What are the globalization challenges of IS?

Increased Competition: The emergence of the Internet as a global communication system has reduced economic and cultural advantages traditionally held by developed countries, necessitating stronger IS strategies for competitive advantage. Complexity in Management: The need to manage information systems across borders, such as between a factory in Shanghai and a distribution center elsewhere, requires sophisticated and integrated IS platforms. Security Concerns: As firms operate on a global scale with interconnected systems, the risks associated with cybersecurity and data breaches intensify.

What is an information system?

Information systems are networks of interrelated components designed to gather, process, store and distribute information.

What is Information Systems Literacy and Computer Literacy and how are they connected?

Information systems literacy refers to the broader understanding of information systems, which encompasses an understanding of the management, organizational, and technical dimensions of systems. Computer Literacy focuses primarily on the knowledge of information technology. However, Information Systems Literacy builds upon this foundational computer knowledge by integrating it into a broader context, emphasizing the intricacies of information system design, functionality, strategic significance, and societal impact.

How can information technology assist managers?

Information technology can play a powerful role in helping managers design and deliver new products and services, as well as in redirecting and redesigning their organizations.

What is capital substitution?

Information technology capital costs have been decreasing exponentially, while machinery and building costs have been rising slightly faster than the inflation rate. Consequently, firms prefer investing in IT over additional machinery or buildings due to the higher returns on these investments.

What are the primary components involved in an information system?

Input - Processing - Output - Feedback The primary components of an IS include inputs that gather raw data from both within the organization and its external environment. This data may include raw numbers collected from sales transactions or website visits, such as 250 units sold, or 500 website visits. Once collected, this raw data undergoes processing to transform it into a comprehensible format. The processed information is then transferred as outputs to the information consumer or relevant operations. This is the processed and organized version of that data, like a monthly sales report detailing 250 units sold generating $25,000 in revenue, or a website analytics summary showing 500 website visits resulting in a 10% conversion rate. An additional output is feedback, which is directed back to the appropriate organizational members, aiding them in assessing and refining the initial input stage.

What are the key corporate assets?

Intellectual property, core competencies, and financial and humans assets.

What are intranets and extranets, and how are they related to the Internet?

Intranets are internal corporate networks based on Internet technology. Extranets are private intranets extended to authorized users outside the organization. Both are networks that use Internet technology for various organizational activities and is both a business necessity and a competitive advantage.

What is the primary responsibilities of management in organizations?

Management's job is to: • make decisions. • locate and solve (formulate an action plan) business problems/challenges. • exercise responsible leadership. • allocate human and financial resources to coordinate work and achieve success. • create new products and services (driven by new knowledge and information).

What is the function of networking and telecommunications technology?

Networking and telecommunications technology, consisting of both physical devices and software, links various hardware pieces and transfer data from one physical location to another. They connect computers and communication equipment in networks for sharing voice, data, images, sound, and video.

Which 3 particular complementary assets are required to optimize returns from IT investments?

Research indicates that firms that support their technology investments with investments in complementary assets receive superior returns, whereas those firms failing to make these complementary investments receive less or no returns on their IT investments. These complementary investments are called organizational and management capital. Complementary Organizational Assets Include a culture emphasizing efficiency, a suitable business model, streamlined processes, decentralized authority, distributed decision-making rights, and a robust information system development team. Complementary Managerial Assets Includes strong senior management support for change, incentive systems for individual innovation, emphasis on teamwork, training programs, and a flexible culture valuing knowledge. Complementary Social Assets Social investments must be present together with IT investments. For instance, technology standards have to be agreed among parties so that the technology can work.

What does the business perspective call attention to?

On the organizational and managerial nature of ISs. An IS creates value to the firm because it represents an organizational and management solution, based on information technology, to a challenge or problem posed by the environment.

What are the 6 strategic business objectives that businesses want to achieve when investing in ISs?

Operational Excellence ISs and technologies are the most important tools available to managers for improving and achieving higher efficiency and productivity of the organization's operations. New Products, Services, and Business Models ISs and technologies are a major enabling tool for firms to create new products, services, and entire new business models. Customer and Supplier Intimacy ISs and technologies enables firms to have closer relationships with its customers and suppliers. For example via a CRM system. Presenting an IS can also lower costs which raises revenues and profits. Improved Decision Making ISs enables managers to use instant access to real-time data and information when making decisions, instead of forecasts and best guesses. Competitive Advantage When achieving one or more of these 6 business objectives when introducing/using ISs chances are they already have achieved a competitive advantage. Doing things better than your competitors. Survival Investing i IS is also a necessity that can be driven by industry-level changes.

What is organizational culture, and how can it be observed?

Organizational culture is a fundamental set of assumptions, values, and ways of doing things accepted by most members of an organization. It can be observed by looking at practices and beliefs within the organization, such as in a university where students attend to learn, and professors are seen as knowledgeable.

How is organizational culture reflected in information systems?

Parts of an organization's culture can be found embedded in its information systems. For example, UPS's priority of customer service is reflected in its package tracking systems.

What are the roles of senior management, middle management, and operational management?

Senior management makes long-term strategic decisions about products, services, and ensures financial performance. Middle management carries out the initiatives and plans of senior management. Knowledge workers, including engineers, scientists, and architects, design products or services and create new knowledge for the firm Operational management monitors the daily activities of the business. Data workers, such as secretaries or clerks, assist with scheduling and communications across all levels of the firm. Production or service workers are directly involved in producing goods or delivering services.

What is the Internet, and how is it described?

The Internet is a global "network of networks" using universal standards to connect millions of networks in over 230 countries worldwide.

What is the World Wide Web, how does it function, and how can it serve as a foundation for new kinds of ISs?

The World Wide Web is a service provided by the Internet using universally accepted standards for storing, retrieving, formatting, and displaying information. Web pages contain text, graphics, animations, sound, and video and are linked to other web pages. By clicking on highlighted words or buttons on a web page, you can link to related pages to find additional information and link to other locations on the web.