Chapter-01

Question-01. How are Information Systems transforming business? Why are they so
essential for running and managing a business today?

Answer: Information systems are transforming business by this ways-

i. Emerging mobile digital platform

ii. Growing business use of “big data”
iii. Growth in cloud computing

Information systems are essential for conducting day-to-day business in the U.S. and most other
advanced countries, as well as achieving strategic business objectives. Some firms, such as
Amazon and E-Trade, would be nonexistent without information systems. Some service industries,
such as finance, insurance, and real estate industries, could not operate without information system.
The ability of a firm to use IT is becoming intertwined with the firm's ability to implement
corporate strategy.

Business firms invest heavily in information systems to achieve six strategic business objectives:

i. Operational excellence: Efficiency, productivity, and improved changes in business

practices and management behavior

ii. New products, services, and business models: A business model describes how a
company produces, delivers, and sells a product or service to create wealth. Information
systems and technologies create opportunities for products, services, and new ways to
engage in business.

iii. Customer and supplier intimacy: Improved communication with and service to
customer’s raises revenues, and improved communication with suppliers lowers costs.

iv. Improved decision making: Without accurate and timely information, business managers
must make decisions based on forecasts, best guesses, and luck, a process that results in
over and under-production of goods, raising costs, and the loss of customers.

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 v. Competitive advantage: Implementing effective and efficient information systems can
allow a company to charge less for superior products, adding up to higher sales and profits
than their competitors.

vi. Survival: Information systems can also be a necessity of doing business. A necessity may
be driven by industry-level changes, as in the implementation of ATMs in the retail banking
industry. A necessity may also be driven by governmental regulations, such as federal or
state statutes requiring a business to retain data and report specific information.

Question-02. Describe the changing business impact of MIS in the Technology,

Management and Organization areas.

Answer:

Change Business Impact

Technology
Cloud computing platform emerges as a major  Responsive & low risky
business area of innovation  explore new market segments
 develop new products
 multiple companies can work together
as one value delivery system
More powerful ,energy efficient computer  New technology systems are more
processing and storage devices powerful & efficient from previous
systems
 By this system everyone can use net
any where
Growth in software as a service (SaaS)  Various type of management software
via online & offline
 Vendors deliver on-demand
information processing services to
users
 offer computing utility rather than the
standalone software itself

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Netbooks emerge as a growing presence in the  Easily portable
PC marketplace often using open source  Cheap rate
software.  More storage capacity
 Communication facilities
A mobile digital platform emerges to compete  Once used 2G net
with the PC as a business system.  By using 3G net companies can use
various things of mobile technology
 Video conferencing, long distance
communication is now easier for
business users
Management

Mangers adopt online collaboration and social  Social networking is part of the cloud
networking software to improve coordination, computing
collaboration and knowledge sharing.  Helpful for business users while
making decision
 Online communication within
organization or outside of the
organization
Business intelligence applications accelerate.  Companies can use various types of
online & offline application
 Such as accounting, management
software etc
Managers adopt millions of mobile tools such  New generation applications help
as Smartphone and mobile internet device to managers in making correct decision
accelerate decision making and improve and collaborate with customers
performance.
Virtual meeting proliferate  Helpful for business users in virtual
meeting via social network

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 Organizations

Web 2.0 applications are widely adopted by Before there is 1.0 application system
firms. for net browsing that was used for only
access
 2.0 provides not only access but also
share too
 Employees can interact via social
network
 New opportunities for business to
collaborative
Telework gains momentum in the workplace  New generation technology system
make it possible to work from
anywhere not only in office
Outsourcing production  Firms provide the production to others
 Produce their product at low cost
Co-creation of business value  Business value shifts from internal
sources to network of suppliers
 Customer interactions help firms
define new product &services

Question-03. List the role of information system in business?

Answer: Here we are going to talk about the role of information system in business.

 How information systems are transforming business

i. Emerging mobile digital platform: A mobile digital platform emerges to compete
with the PC as a business system. For example, Android is a Linux based mobile
operating system. It has 450,000 apps in its Android market.
ii. Growth in cloud computing: Cloud computing platform emerges as a major
business area of innovation.
iii. Growing business use of “Big Data”: The telecom and financial services are the
two industries to have adopted big data with the technology. Business has become
more efficient with the help of big data.

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  Globalization opportunities
i. Internet has drastically reduced costs of operating on global scale.
ii. Increases in foreign trade and outsourcing.
iii. Presents both challenges and opportunities.

 Growing interdependence
i. Ability to use information technology: It is a key to business success. Today
many people using information technology for their business.
ii. Ability to implement corporate strategies and achieve corporate goals: It is the
way in which a business strives to create value.

Question-04. Why business firms invest heavily in information systems? Explain by

mentioning proper business objects.

Answer: Firms invest heavily in information systems to achieve six strategic business objectives:

 Operational excellence: Businesses can constantly improve their efficiency in order to

achieve higher profitability. They can do this by constantly having the correct amount of
stock in store.
 New products, services and business models: New business model can be created and
these can describe how a company produce, create and sell products.
 Customer and supplier intimacy: Improved communication with and service to
customer’s raises revenues and improved communication with suppliers lowers costs.
 Improved decision making: Without accurate and timely information, business managers
must make decisions based on forecasts, best guesses, raising costs and the loss of
customers.
 Competitive advantage: Implementing effective and efficient information systems can
allow a company to charge less for superior products.
 Survival: Information systems can also be a necessity of doing business. A necessity may
be driven by industry level changes. It may also be driven by governmental regulations.

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Question-05. Describe the Business Information Value Chain.

Answer:

Every business has an information value chain, in which raw information is systematically
acquired and then transformed through various stages that add value to that information. The value
of an information system to a business, as well as the decision to invest in any new information
system, is, in large part, deter-mined by the extent to which the system will lead to better
management decisions, more efficient business processes, and higher firm profitability. Although
there are other reasons why systems are built, their primary purpose is to contribute to corporate
value.

The business perspective calls attention to the organizational and managerial nature of information
systems. An information system represents an organizational and management solution, based on
information technology, to a challenge posed by the environment. The diagram also illustrates how
management, technology, and organizational elements work together to create the system.

From a business perspective, information systems 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, ultimately, increase firm profitability.

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Question-06. What is an information system? How does it work? Why are
information systems essential for running and managing a business today?

Answer:

Information system: An information system can be defined technically as a set of interrelated

components that collect, process, store, and distribute information to support decision making and
control in an organization.

Information system works by three activities:

Input: Capture raw data from organization or external environment.

Processing: Converts raw data into meaningful form.

Output: Transfers processed information to people or activities that use it.

Information systems are a foundation for conducting business today. In many industries, survival
and the ability to achieve strategic business goal are difficult without extensive use of information
technology. Business today use information system to achieve six major objectives:

o Operational Excellency.
o New products, service, and business models.
o Customer and supplier intimacy.
o Improved decision making.
o Competitive advantage.
o Survival.

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Question-07. Define digital firm. List the Characteristics of digital firms.

Answer:

Digital firm

A digital firm is a company in which almost all significant business relationships with customers,
suppliers, and employees are digitally enabled or mediated. This means that all the procedures
relating to core business processes are completed through the use of digital networks that cover
the organization as a whole. This is done through the shifting of time and place where the business
is conducted to the virtual world where the world is online 24/7.

The Characteristics of digital firms

We have figured out the 6 common traits for those companies that have successfully carried out
their digital transformation and have become effective digital businesses

Customer centric

With digitization, there are constant interactions between customers and companies, and this is
happening more often than ever before. A customer’s relationship with a company - before, during
and after the purchase - is so critical that it has almost become a more decisive factor than the price
when choosing a supplier.

In the digital firm, the possibilities of improving and enhancing the customer experience are
immense. Furthermore, all those touch points between customers and companies (website, blog,
social networks, customer service, etc.) can be used to capture data from their target audience
throughout the entire purchase process, data that will later serve to analyze and improve processes,
as well as to refine the definition of your buyer persona.

Data means power

As we mentioned above, in a digitized world there are multiple touch points between companies
and their customers or potential customers, and this is happening daily across multiple devices.
The good news is that all these interactions - clicks, posts, tweets, comments, web visits, etc. can
be captured, measured, aggregated and analyzed. The power of data analysis is invaluable.
Companies that succeed in establishing processes to systematize the capture and analysis of every

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interaction with a client will be able to have a constant pulse with the market and will know how
their product/ service can be further adjusted to the needs of their target audience. They may
redefine the product/service, refine it or change it, thus always staying ahead of the competition.

Consistency and continuity through all the channels and devices

In line with the first point, it is imperative that the customer experience is as consistent and
continuous as possible, throughout every channel and device, web or mobile. The experience must
be consistent not only in terms of visual design, but also in terms of flow and interactive responses.
The term continuous means that the flow has to facilitate the completion of a purchase without any
problems. For this to happen, it will often be necessary to smoothly integrate third-party services
such as payment systems or electronic signature, without altering the customer experience, but
enhancing it.

Redefinition of operational processes

Understanding the digital transformation as a change that should affect the core of a business
structure, it is essential that this change also occurs in all back-office processes, which a company’s
operational efficiency depends upon. Not only the departments that are in direct contact with
customers must be digitized; but this process should also reduce operating costs, which should be
accomplished through a structural reorganization and a digitization of processes.

Business model monetization

The ways to monetize a digital company have changed many traditional patterns of the design of
revenue streams. In this regard, another characteristic of companies that have successfully
accomplished its digital transformation is that they have dared to redefine their business model,
rethink their value proposition and determine new strategies to generate income.

There are many ways to monetize a business in the digital era. You just need to have strategic
vision to detect which monetization methods are suitable for your business model, know how to
digitally update your old revenue streams and how to combine them with the new sources of
revenue.

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IT leadership and its integration with business management units

To perform a complete digital transformation it makes sense to increase the role of IT departments
and allow them to participate in the strategic decisions alongside management. Technology is
central to the whole process, in addition to being core in redefining the business model of any
company. So, to be an effective digital business, you have to integrate IT departments and enhance
their cooperation with the strategic management and other key business management units, such
as the finance department.

To successfully complete digital transformation is not easy. Each company should be able to
determine its own road map and establish milestones and timelines that make it possible to
optimally execute it. Effort and perseverance is required, although there are usually a few years
needed before any company becomes fully digital.

Question-08. Define complementary assets. Describe their relationship to

information technology.

Answer:

Complementary assets

Complementary assets are those assets required to derive value from a primary investment. Firms
must rely on supportive values, structures, and behavior patterns to obtain a greater value from
their IT investments. Value must be added through complementary assets such as new business
processes, management behavior, organizational culture, and training.

The relationship of complementary assets to information technology

The research has shown that information technology does not by itself guarantee good returns
because company’s social, managerial, and organizational assets play important role on helping
the company to optimize returns from information technology investments. The followings are
some of main aspects that company’s social, managerial and organizational assets help the
company or organization to optimize returns from information technology investments.

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First, favorable organizational assets are supportive business culture that value efficiency and
effectiveness, appropriate business model. Efficient business process, decentralized of authority,
highly distributed rights, and strong information system development team. Organizational assets
are so critical to information sharing across enterprise. In favorable organizational environment,
each part of organization contributes their part of operation chain and then information is ready
available to down-stream operation or up-stream operation. A well implemented and used supply
chain system is a good example.

Second, important managerial complementary assets are strong senior management support for
changes, incentive systems that monitor and reward individual innovation and emphasis on
teamwork and collaboration, training programs, and a management cultural that value flexibility
and knowledge. Managerial asset are key success factors for company to introduce and then
effectively utilize information technology. Let’s take ERP (enterprise resource planning) systems
(such as SAP and PeopleSoft), if we have a strong senior management that supports for changes,
we would have better outcome on introducing new technologies especially enterprise system.

Third, social assets such as the internet and telecommunications infrastructure. There are several
IT-enriched educational programs raising labor force computer literacy to make sure the skilled of
this related tasks. Both government and private sector can work together for this certain area.

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 Chapter-02

Question-01. What are business processes? How are they related to Information
Systems?

Answer:
A business process is a logically related set of activities that define how specific business tasks are
performed. Business processes are the ways in which organizations coordinate and organize work
activities, information, and knowledge to produce their valuable products or services.

How well a business performs depends on how well its business processes are designed and
coordinated. Well-designed business processes can be a source of competitive strength for a
company if it can use the processes to innovate or perform better than its rivals. Conversely, poorly
designed or executed business processes can be a liability if they are based on outdated ways of
working and impede responsiveness or efficiency.

The relationship between information systems and business processes-

 Information systems automate manual business processes and make an organization more
efficient.
 Data and information are available to a wider range of decision-makers more quickly when
information systems are used to change the flow of information.
 Tasks can be performed simultaneously rather than sequentially, speeding up the completion
of business processes. Information systems can also drive new business models that perhaps
wouldn’t be possible without the technology.

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Question-02. How do systems serve the different management groups in a business?

Answer:

Transaction processing systems (TPS) are computerized systems that perform and record daily
routine transactions necessary in conducting business; they serve the organization’s operational
level. The principal purpose of systems at this level is to answer routine questions and to track the
flow of transactions through the organization.

 At the operational level, tasks, resources, and goals are predefined and highly structured.
 Managers need TPS to monitor the status of internal operations and the firm’s relationship with
its external environment.
 TPS are major producers of information for other types of systems.
 Transaction processing systems are often so central to a business that TPS failure for a few
hours can lead to a firm’s demise and perhaps that of other firms linked to it.

Middle management needs systems to help with monitoring, controlling, decision-making, and
administrative activities.

 MIS provide middle managers with reports on the organization’s current performance. This
information is used to monitor and control the business and predict future performance.
 MIS summarize and report the company’s basic operations using data supplied by TPSs.
 MIS serve managers primarily interested in weekly, monthly, and yearly results, although some
MIS enable managers to drill down to see daily or hourly data if required.
 MIS generally provide answers to routine questions that have been specified in advance and
have a predefined procedure for answering them.
 MIS systems generally are not flexible and have little analytical capability.
 Most MIS use simple routines, such as summaries and comparisons, as opposed to
sophisticated mathematical models or statistical techniques.

Decision-support systems (DSS) support no routine decision-making for middle managers.

 DSS provide sophisticated analytical models and data analysis tools to support semi structured
and unstructured decision-making activities.

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 DSS use data from TPS, MIS, and external sources, in condensed form, allowing decision
makers to perform “what-if” analysis.
 DSS focus on problems that are unique and rapidly changing; procedures for arriving at a
solution may not be fully predefined.
 DSS are designed so that users can work with them directly; these systems include interactive,
user-friendly software.

Executive support systems help senior managers address strategic issues and long-term trends,
both in the firm and in the external environment.

 ESS address no routine decisions requiring judgment, evaluation, and insight because there is
no agreed-on procedure for arriving at a solution.
 ESS provide a generalized computing and communications capacity that can be applied to a
changing array of problems.
 ESS are designed to incorporate data about external events, such as new tax laws or
competitors, but they also draw summarized information from internal MIS and DSS.
 ESS are designed for ease-of-use and rely heavily on graphical presentations of data.

Question-03: What are the differences between-?

 TPS v/s MIS

 MIS v/s DSS
 DSS v/s ESS
 Intranet v/s Extranet

Answer:
TPS v/s MIS
TPS MIS
TPS stands for Transaction Processing MIS stands for Management Information
System, which performs all routine System, which aids in middle level
operations for supervisory executives management
Support operation Provide decision-making support for routine
,structured decisions
Management and control Closely linked to and fed by TPS
Structured Structure and substructure

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 MIS v/s DSS
MIS DSS
Provide information on firms performance to DSS support –structured and unstructured
help managers monitor and control the problem analysis
business
Produce answer to routine questions and Helps make decisions that are unique ,rapidly
fixed, regularly scheduled reports changing and not specified in advance
Sometimes MIS reports are only exception Bring information from external sources also
report
Provides input to operational, tactical and Caters more to strategic decision making
strategic levels
Depend on TPS for their data Uses internal information from both MIS and
TPS

DSS v/s ESS

DSS ESS
For middle management For top level management
Support semi structured and unsaturated Support structured problems
problems
Provide detailed information Provide precise information
Use of internal data Use of internal as well as external data

Intranet v/s Extranet

Extranet Intranet
Use publicly Use privately
Any user having dial up of internet access Suppliers, customer and business partner use
line it
Low security. Configured under 0 security Generally uses VPN technology for secured
level in firewall communication over internet .Medium
security level.
Coverage wide area Coverage within an organization
Access large number of users Access limited number of users

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Question-04: Short note –

 Enterprise application
 Business intelligence
 Enterprise system
 Disruptive technology
Enterprise application:

An enterprise application is the phrase used to describe applications (or software) that a business
would use to assist the organization in solving enterprise problems. When the word "enterprise" is
combined with "application," it usually refers to a software platform that is too large and too
complex for individual or use. Enterprise applications are typically designed to interface or
integrate with other enterprise applications used within the organization, and to be deployed across
a variety of networks (Internet, Intranet and corporate networks) while meeting strict requirements
for security and administration management.

Business Intelligence:

Business intelligence (BI) represents the tools and systems that play a key role in the strategic
planning process within a corporation. These BI systems allow a company to gather, store, access
and analyze corporate data to aid in decision-making.

Generally, these systems will illustrate business intelligence in the areas of customer profiling,
customer support, market research, market segmentation, product profitability, statistical analysis,
and inventory and distribution analysis to name a few. Business intelligence software is designed
with the primary goal of extracting important data from an organization's raw data to reveal
insights to help a business make faster and more accurate decisions. The software typically
integrates data from across the enterprise and provides end-users with self-service reporting and
analysis. BI software uses a number of analytics features including statistics, data and text mining
and predictive analytics to reveal patterns and turn information into insights.

Disruptive technology:

A disruptive technology is one that displaces an established technology and shakes up the industry
or a ground-breaking product that creates a completely new industry.

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Here are a few examples of disruptive technologies:

 The personal computer (PC) displaced the typewriter and forever changed the way we work
and communicate.
 Email transformed the way we communicating, largely displacing letter-writing and
disrupting the postal and greeting card industries.
 Cell phones made it possible for people to call us anywhere and disrupted the telecom
industry
Enterprise system:

Enterprise system also known as Enterprise resource planning (ERP) is business process
management software that allows an organization to use a system of integrated applications to
manage the business and automate many back office functions related to technology, services and
human resources.

ERP software typically integrates all facets of an operation- including product planning,
development, manufacturing, sales and marketing- in a single database, application and user
interface.

ERP software is considered to be a type of enterprise application, that is software designed to be

used by larger businesses and often requires dedicated teams to customize and analyze the data
and to handle upgrades and deployment. In contrast, Small business ERP applications are
lightweight business management software solutions, often customized for a specific business
industry or vertical.

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Question-05. Describe Enterprise Application Architecture.

Answer:

Enterprise applications, which are systems that span functional areas, focus on executing business
processes across the business firm, and include all levels of management. Enterprise applications
help businesses become more flexible and productive by coordinating their business processes
more closely and integrating groups of processes so they focus on efficient management of
resources and customer service.

There are four major enterprise applications: enterprise systems, supply chain management
systems, customer relationship management systems, and knowledge management systems. Each
of these enterprise applications integrates a related set of functions and business processes to
enhance the performance of the organization as a whole. Figure shows that the architecture for
these enterprise applications encompasses processes spanning the entire organization and, in some
cases, extending beyond the organization to customers, suppliers, and other key business partners.

Enterprise Systems: Firms use enterprise systems, also known as enterprise resource planning
(ERP) systems, to integrate business processes in manufacturing and production, finance and
accounting, sales and marketing, and human resources into a single software system. Information
that was previously fragmented in many different systems is stored in a single comprehensive data
repository where it can be used by many different parts of the business. For example, when a
customer places an order, the order data flow automatically to other parts of the company that are
affected by them. The order transaction triggers the warehouse to pick the ordered products and
schedule shipment. The warehouse informs the factory to replenish whatever has been depleted.
The accounting department is notified to send the customer an invoice. Customer service
representatives track the progress of the order through every step to inform customers about the
status of their orders. Managers are able to use firm-wide information to make more precise and
timely decisions about daily operations and longer-term planning.

Supply Chain Management Systems: Firms use supply chain management (SCM) systems to
help manage relationships with their suppliers. These systems help suppliers, purchasing firms,
distributors, and logistics companies share information about orders, production, inventory levels,
and delivery of products and services so that they can source, produce, and deliver goods and

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services efficiently. The ultimate objective is to get the right amount of their products from their
source to their point of consumption in the least amount of time and at the lowest cost. These
systems increase firm profitability by lowering the costs of moving and making products and by
enabling managers to make better decisions about how to organize and schedule sourcing,
production, and distribution. Supply chain management systems are one type of inter
organizational system because they automate the flow of information across organizational
boundaries. You will find examples of other types of inter organizational information systems
throughout this text because such systems make it possible for firms to link electronically to
customers and to outsource their work to other companies.

Customer Relationship Management Systems: Firms use customer relationship management

(CRM) systems to help manage their relationships with their customers. CRM systems provide
information to coordinate all of the business processes that deal with customers in sales, marketing,
and service to optimize revenue, customer satisfaction, and customer retention. This information
helps firms identify, attract, and retain the most profitable customers; provide better service to
existing customers; and increase sales.

Knowledge Management Systems: some firms perform better than others because they have
better knowledge about how to create, produce, and deliver products and services. This firm
knowledge is difficult to imitate, unique, and can be leveraged into long-term strategic benefits.
Knowledge management systems (KMS) enable organizations to better manage processes for
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capturing and applying knowledge and expertise. These systems collect all relevant knowledge
and experience in the firm, and make it available wherever and whenever it is needed to improve
business processes and management decisions. They also link the firm to external sources of
knowledge.

Question-06. Define ‘Collaboration’ and ‘Social Business’. Why are they so

important? What technologies do they use?

Answer:

Collaboration is working with others to achieve shared and explicit goals. It focuses on task or
mission accomplishment and usually takes place in a business, or other organizations, and between
businesses. Collaboration can be short-lived or longer term, depending on the nature of the task
and the relationship among participants. It can be one-to-one or many-to-many.

Social business is the use of social networking platforms, including Facebook, twitter, and internal
corporate social tools- to engage their employees, customers, and suppliers. These tools enable
workers to set up profiles, from groups, and “follow” each other’s status updates. The goal of
social business is to deepen interaction with groups inside and outside the firm to expedite and
enhance information sharing, innovation, and decision making.

Collaboration and Social business are important because:

 Changing nature of work. More jobs are becoming “interaction” jobs. These kinds of jobs
require face-to-face interaction with other employees, managers, vendors, and customers.
They require systems that allow the interaction workers to communicate, collaborate and share
ideas.
 Growth of professional work. Professional jobs in the service sector require close coordination
and collaboration.

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 Changing organization of the firm. Work is no longer organized in a hierarchical fashion as
much as it is now organized into groups and teams who are expected to develop their own
methods for accomplishing tasks.
 Changing scope of the firm. Work is more geographically separated than before.
 Emphasis on innovation. Innovation stems more from groups and teams than it does from a
single individual.
 Changing culture of work and business. Diverse teams produce better outputs, faster, than
individuals working on their own.

Some of the more common enterprise-wide information systems that businesses can use to support
interaction jobs include:
 Internet-based collaboration environments like Lotus Notes, Groove, and WebEx provide
online storage space for documents, team communications, calendars, and audio-visual tools
members can use to meet face-to-face.
 Email and Instant Messaging (IM) are reliable methods for communicating whenever and
wherever around the globe.
 Cell phones and wireless handhelds give professionals and other employees an easy way to
talk with one another, with customers and vendors, and with managers.
 Social networking is no longer just “social.” Businesses are realizing the value of providing
easy ways for interaction workers to share ideas and collaborate with each other.
 Wikis are ideal tools for storing and sharing company knowledge and insights. They are often
easier to use and cheaper than more proprietary knowledge management systems.
 Virtual worlds house online meetings, training sessions, and “lounges” where real-world
people meet, interact, and exchange ideas.
 Google Apps/Google sites allow users to quickly create online group-editable Web sites that
include calendars, text, spreadsheets, and videos for private, group, or public viewing and
editing.
 Microsoft SharePoint software makes it possible for employees to share their Office documents
and collaborate on projects using Office documents as the foundation.

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Question-07. List the business benefits of Collaboration and Social Business.

Answer: The business benefits of Collaboration and Social Business:

Investments in collaboration technology can produce organizational improvements returning high

ROI. There are some business benefits of collaboration. These are-

i. Productivity- People interacting and working together can capture expert knowledge and
solve problems more rapidly than the same number of people working in isolation from
one another. There will be fewer errors.

ii. Quality- People working collaboratively can communicate errors, and corrective actions
faster than if they work in isolation. Collaborative and take social technologies help reduce
time delays in design and production.

iii. Innovation- People working collaboratively can come up with more innovative ideas for
products, services, and administration than the same number working in isolation from one
another. Advantages to diversity and the “wisdom of crowds.”

iv. Customer service- People working together using collaboration and social tools can solve
customer complaints and issues faster and more effectively than if they were working in
isolation from one another

v. Financial performance- (Profitability, sales, sales growth.)- As a result of all of the above,
collaborative firms have superior sales, sales growth, and financial performance.

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 Chapter-3

Question-01. Which features of organizations do managers need to know about to

build and use Information Systems successfully?

Answer:

Managers need to understand certain essential features of organizations to build and use
information systems successfully. Information systems and organizations influence one another.
Information systems are built by managers to serve the interests of the business firm. At the same
time, the organization must be aware of and open to the influences of information systems to
benefit from new technologies. The interaction between information technology and organizations
is complex and is influenced by many mediating factors, including the organization’s structure,
business processes, politics, culture, surrounding environment, and management decisions. These
features help explain differences in organizations' use of information systems-

 The technical definition defines an organization as a stable, formal social structure that takes
resources from the environment and processes them to produce outputs. This definition of an
organization focuses on three elements: Capital, labor, and production and products for
consumption. The technical definition also implies that organizations are more stable than an
informal group, are formal legal entities, and are social structures.
 The behavioral 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.
 Routines and business processes state that standard operating procedures have been developed
that allow the organization to become productive and efficient thereby reducing costs over
time.
 Organizational politics means divergent viewpoints about how resources, rewards, and
punishments should be distributed bring about political resistance to organization change.
 Organizational culture defines assumptions that define the organizational goals and products
create a powerful restraint on change, especially technological change.

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 Organizational environments states reciprocal relationships exist between an organization and
environments; information systems provide organizations a way to identify external changes
that might require an organizational response.
 Organizational structure refers that information systems reflect the type of organizational
structure- entrepreneurial, machine bureaucracy, divisional zed bureaucracy, professional
bureaucracy, or adhocracy.

Question-02. Define ‘Routines’ and ‘Business Process’.

Answer:

Routine

In computer programming, routine and subroutine are general and nearly synonymous terms for
any sequence of code that is intended to be called and used repeatedly during the executable of a
program. This makes the program shorter and easier to write and also to read when necessary. The
main sequence of logic in a program can branch off to a common routine when necessary. When
finished, the routine branches back to the next sequential instruction following the instruction that
branched to it. A routine may also be useful in more than one program and save other programmers
from having to write code than can be shared

Business process

A business process is a logically related set of activities that define how specific business tasks are
performed. Business processes are the ways in which organizations coordinate and organize work
activities, information, and knowledge to produce their valuable products or services. Business
process also refer to the unique ways in which organizations coordinate work, information, and
knowledge, and the ways in which management chooses to coordinate work.

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Question-03. Describe the different organizational structure.

Answer:

Organizational structure is a systematic arrangement of people working for the organization in

order to achieve the certain goal.

Mintzberg (1997) identifies five basic kinds of Organizational structure and these are,

 Entrepreneurial Structure: This form of Organizational structure is the most elementary

form of structure and it’s good for the organization that is owned and managed by one person.
Typically these organizations are small start-up business. As example, Sole-proprietorship
business.
 Machine Bureaucracy: This is the workhorse of larger companies, particularly those in
heavy industry, manufacturing and larger government organizations. The prime coordinating
mechanism of machine bureaucracy is the standardization of work progress. Example of
machine bureaucracy are automobile manufacturing, steel companies etc.
 Divisionalzed Bureaucracy: This is the combination of multiple machine bureaucracies.
Decision making is decentralized at the divisional level. The techno structure is located at
corporate headquarters to provide services to all decision. Large Corporations are likely to
adopt the divisionalized form.
 Professional Bureaucracy: Generally it’s a knowledge based Organization where goods and
services depend on the expertise and the standardization of skill. The Organization is relatively
formalized but decentralized to provide autonomy of processional. Example of this form of
Organization including Universities, Hospital, Schools etc.
 Adhocracy: The adhocracy has the support staff as its key part, uses mutual adjustment as a
means of coordination and maintain selective patterns of decentralization. It consists of large
groups of specialists organized into short live multidisciplinary terms and has week central
management. As example, consulting firm, such as the Rand Corporation.

These are the five basic kinds of Organizational Structure.

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Question-04. Explain the four basic competitive strategies? Explain with proper
example.

Answer:

The four generic strategies, each of which is often enabled by using information technology and
systems include:

 Low-cost leadership: Lowest operational costs and the lowest prices. Use information
systems to improve inventory management, supply management, and create efficient customer
response systems. Example: Wal-Mart.
 Product differentiation: Enable new products and services, or greatly change the customer
convenience in using existing products and services. Use information systems to create
products and services that are customized and personalized to fit the precise specifications of
individual customers. Example: Google, eBay, Apple, Lands’ End.
 Focus on market niche: Enable a specific market focus and serve this narrow target market
well than competitors. Use information systems to produce and analyze data for finely tuned
sales and marketing techniques. Analyze customer buying patterns, tastes, and preferences
closely in order to efficiently pitch advertising and marketing campaigns to smaller target
markets. Example: Hilton Hotels, Harrah’s.
 Strengthen customer and suppliers: Tighten linkages with suppliers and develop intimacy
with customers. Use information systems to facilitate direct access from suppliers to
information within the company. Increase switching costs and loyalty to the company.
Example: IBM, Amazon.com

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Question-05. Discuss the impact of Internet on Competitive Forces and Industry
Structure.

Answer:

Competitive Forces Impact on the internet

Substitutes products & services Enables new substitute to emerge with new
approaches to meeting needs & performing functions.

Customers bargaining power Availability of global price & product information

shifts bargaining power to customers.

Suppliers bargaining power Procurement over the internet trends to raise

bargaining power over suppliers. Suppliers can also
benefit from reduced barriers to entry and from to
eliminations of distributors and other intermediaries
standing between them and theirs users.

Threat of new entrants The internet reduces the barriers of entry, such as the
needs for a sales force, access to channels and physical
assets. It provides a technology for driving businesses
process that makes other thing easier to do.

Positioning and rivalry among existing Widens the geographic market, increasing the
competitors. numbers of competitors, and reduces differences
among competitors. Makes it more difficult to sustain
operational advantages. Puts pressure to compete on
price.

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Question-06. Explain the Value Chain Model.

Answer:

The value chain model highlights specific activities in the business where competitive strategies
can best be applied and where information systems will most likely have a strategic impact.

 The model identifies specific, critical leverage points where a firm can use information
technology most effectively to enhance its competitive position.
 The value chain model views the firm as a series of basic activities that add a margin of value
to a firm’s products or services.
 The activities are categorized as either primary or support activities. Primary activities are most
directly related to production and distribution of the firm’s products and services, which create
value for the customer.
 Support activities make the delivery of primary activities possible and consist of organization
infrastructure.
 A firm’s value chain can be linked to the value chains of its suppliers, distributors, and
customers.

Question-07. Explain the value web.

Answer:

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

It is more customer driven and operates in a less linear fashion than the traditional value chain.
The value web is a networked system that can synchronize the business processes of customers,
suppliers, and trading partners among different companies in an industry or in related industries.

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Question-08. Short Note-

Answer:

 Synergy: Synergy is the concept that the value and performance of two companies combined
will be greater than the sum of the separate individual parts. Synergy is a term that is most
commonly used in the context of mergers and acquisitions (M&A). Synergy, or the potential
financial benefit achieved through the combining of companies, is often a driving force behind
a merger.

 Network Economics: A situation in which a business will benefit through the feedback
provided by those who use the product or service. Network economics is a product of the
network effect, whereby an increase in the value of a good or service increases as the number
of buyers or subscribers multiplies. For example, online communities like LinkedIn and
Twitter continually evolve with respect to their service offerings, providing a wider set of
products as their online communities continue to grow.

 Business ecosystem: A business ecosystem is the network of organizations- including

suppliers, distributors, customers, competitors, government agencies, and so on - involved in
the delivery of a specific product or service through both competition and cooperation. The
idea is that each entity in the ecosystem affects and is affected by the others, creating a
constantly evolving relationship in which each entity must be flexible and adaptable in order
to survive, as in a biological ecosystem.

Question-09. List the management challenges posed by strategic information

systems.

Answer:

Information systems are closely intertwined with an organization’s structure, culture, and business
processes. New systems disrupt established patterns of work and power relationships, so there is
often considerable resistance to them when they are introduced.

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Implementing strategic systems often 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. Moreover, not all strategic systems are profitable. They are
expensive and difficult to build because they entail massive sociotechnical changes within the
organization. Many strategic information systems are easily copied by other firms so that strategic
advantage is not always sustainable. The complex relationship between information systems,
organizational performance and decision making must be carefully managed.

Question-10. Explain how to perform a strategic systems analysis.

Answer:

Managers should ask the following questions to help them identify the types of systems that may
provide them with a strategic advantage

(1) What is the structure of the industry in which the firm is located? Analyze the competitive
forces at work in the industry; determine the basis of competition; determine the direction and
nature of change within the industry; and analyze how the industry is currently using information
technology.

(2) What are the business, firm, and industry value chains for this particular firm? Decide how the
company creates value for its customers; determine how the firm uses best practices to manage its
business processes; analyze how the firm leverages its core competencies; verify how the industry
supply chain and customer base are changing; establish the benefit of strategic partnerships and
value webs; clarify where information systems will provide the greatest value in the firm’s value
chain.

(3) Have we aligned IT with our business strategy and goals? Articulate the firm’s business
strategy and goals; decide if IT is improving the right business process and activities in accordance
with the firm’s strategy; agree on the right metrics to measure progress toward the goals.

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