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Management Information Systems - Chapter 3

This document summarizes key aspects of how organizations use information systems strategically. It discusses how organizational features like routines and culture affect information system use. It also examines the economic and organizational impacts of information systems, such as flattening organizations and reducing costs. Several models are presented for how information systems can provide competitive advantages through maintaining low costs, differentiating products, and strengthening relationships. The challenges of sustaining advantages, aligning IT with business objectives, and managing strategic transitions are also noted.

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287 views2 pages

Management Information Systems - Chapter 3

This document summarizes key aspects of how organizations use information systems strategically. It discusses how organizational features like routines and culture affect information system use. It also examines the economic and organizational impacts of information systems, such as flattening organizations and reducing costs. Several models are presented for how information systems can provide competitive advantages through maintaining low costs, differentiating products, and strengthening relationships. The challenges of sustaining advantages, aligning IT with business objectives, and managing strategic transitions are also noted.

Uploaded by

Salsa Ardila
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Management Information Systems

Chapter 3
Information Systems, Organizations, and Strategy

Features of Organizations to Build and Use Information Systems Successfully

An organization is a stable, formal social structure that takes resources from the
environment and processes them to produce outputs. All modern organizations are hierarchical,
specialized, and impartial, using explicit routines to maximize efficiency. All of these features
affect the kinds of information systems used by organizations.
1. Routines and Business Processes
2. Organizational Politics
3. Organizational Culture
4. Organizational Environments
5. Organizational Structure
6. Other Organizational Features
These features help explain differences in organizations’ use of information systems.
Information systems and the organizations in which they are used interact with and influence
each other

The Impact of Information Systems on Organizations


1. Economic Impacts
a) Changes in traditional capital and labor
b) Increases of investment on information technology system
c) Decreases of other forms of capital such as buildings and machinery, which remain
relatively expensive
d) affects the cost and quality of information and changes the economics of
information
e) reduce transaction and agency costs
f) can help firms lower the cost of market participation (transaction costs)
g) reduce internal management costs
2. Organizational and Behavioral Impacts
a) IT Flattens Organizations : reduce the number of levels in an organization by
providing managers with information to supervise larger numbers of workers and
by giving lower level employees more decision-making authority.
b) Postindustrial Organizations : encourage task force–networked organizations in
which groups of professionals come together—face-to-face or electronically— for
short periods of time to accomplish a specific task, once the task is accomplished,
the individuals join other task forces.
c) Understanding Organizational Resistance to Change : New systems disrupt
established patterns of work and power relationships, so there is often considerable
resistance to them when they are introduced.

Porter’s Competitive Forces Model


In Porter’s competitive forces model, the strategic position of the firm and its strategies are
determined by competition with its traditional direct competitors, but they are also greatly
affected by new market entrants, substitute products and services, suppliers, and customers.
Information systems help companies compete by :
1. maintaining low costs, differentiating products or services,
2. focusing on market niche,
3. strengthening ties with customers and suppliers
4. increasing barriers to market entry with high levels of operational excellence.

The Business Value Chain Model


The value chain model highlights specific activities in the business where competitive
strategies and information systems will have the greatest impact. The model views the firm as
a series of primary and support activities that add value to a firm’s products or services. Primary
activities are directly related to production and distribution, whereas support activities make
the delivery of primary activities possible. A firm’s value chain can be linked to the value
chains of its suppliers, distributors, and customers. A value web consists of information
systems that enhance competitiveness at the industry level by promoting the use of standards
and industrywide consortia and by enabling businesses to work more efficiently with their
value partners.

Synergies, Core Competencies, and Network-Based Strategies


The idea of synergies is that when the output of some units can be used as inputs to
other units or two organizations pool markets and expertise, these relationships lower costs and
generate profits. One use of information technology in these synergy situations is to tie together
the operations of disparate business units so that they can act as a whole. Because firms consist
of multiple business units, information systems achieve additional efficiencies or enhance
services by tying together the operations of disparate business units.
Yet another way to use information systems for competitive advantage is to think about
ways that systems can enhance core competencies. Information systems help businesses
leverage their core competencies by promoting the sharing of knowledge across business units.
Information systems facilitate business models based on large networks of users or
subscribers that take advantage of network economics that refers to market situations where
the economic value being produced depends on the number of people using a product. A virtual
company strategy uses networks to link to other firms so that a company can use the capabilities
of other companies to build, market, and distribute products and services. In business
ecosystems, multiple industries work together to deliver value to the customer. Information
systems support a dense network of interactions among the participating firms.

The Challenges Posed by Strategic Information Systems


1. Sustaining Competitive Advantage : The Internet can make competitive advantages
disappear very quickly because virtually all companies can use this technology.
2. Aligning IT with Business Objectives : To align IT with the business and use
information systems effectively for competitive advantage, managers need to perform
a strategic systems analysis
3. Managing Strategic Transitions : Managers will need to devise new business processes
for coordinating their firms’ activities with those of customers, suppliers, and other
organizations.

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