Chapter 1

Information Systems in
Global Business Today

1-1
 Management Information Systems
Chapter 1 Information Systems in Global Business Today

LEARNING OBJECTIVES

• Explain why information systems are so essential in

business today.
• Define an information system from both a technical and a
business perspective.
• Identify and describe the three dimensions of information
systems.
• 1- management
• 2- organization
• 3- information technology

Continued …

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Smart Systems and Smart Ways of Working Help Toyota Become Number One

• Problem: Tough competition and demanding customers.

• Solutions: Redesigned order and production processes
reduce costs, increase revenue, and improve customer
service.
• Oracle E-Business Suite makes it possible to build cars to
order and forecast demand and production requirements
more accurately. (JIT)
• Demonstrates IT’s role in analyzing market trends and
monitoring quality, efficiency, and costs.
• Illustrates the emerging digital firm landscape where
businesses can use tools to analyze critical data.

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 Toyota system

Three dimensions
of information
systems

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

The Role of Information Systems in Business Today

• How information systems are transforming business

• More cell phones accounts are opened than telephone land lines.
• Internet of things (IoT), handheld devices, online conferencing are essential
for busines)s today.

• Globalization opportunities:
• The Internet has supported international trade, allowing customers,
suppliers and manufacturers to set up relationships online

• The emerging digital firm

• Time shifting (24/7) and space shifting (global workshop) are norm

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

The Role of Information Systems in Business Today

Virtual Management at Accenture

• Accenture is a virtual company. It is a global consulting services and
outsourcing firm with over 129 000 employees serving clients in 48
different countries.

• It has no operational headquarters and no formal branches, encouraging

its employees to move from location to location to work on projects at
client sites.

• Managers use e-mail, phones, the Web, and other information

technologies to manage virtually, often while they are traveling
themselves.

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 • Read the Window on Organizations, and then discuss the following questions:
Q) What are the advantages of working in a virtual environment like the one created
by Accenture? What are the disadvantages?
• Advantages:
– No overhead costs required to maintain physical infrastructures
– Project work greatly continues around the clock: Realization of time and space shifting.
– Increased employee productivity.
– Increased communication capabilities.
– Ability to determine the physical location of every traveling employee.

• Disadvantages:
– Staff in constant motion. Productivity can be affected as employees suffer from the effects of
jet lag.
– Disruptions on the personal lives of project team members located through the different time
zones
– Staff may feel that because of their lack of physical presence in the workplace environment
that they do not know the future of their career.

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 Q) Would you like to work at a company like Accenture? Why or why not? Explain
your answer.
• Some may seek the comfort of knowing that they have a home base, close
family and personal relationships with colleagues, and a feeling of being in
one place.
• Others would like to see the world and this would be an excellent way to do
it.

Q) What kinds of companies could benefit from being run virtually like Accenture?
Could all companies be run virtually like Accenture?
• Accenture are a (digital firm) using technology to create close digital
integration with their suppliers, customers, and employees.
• Architectural, exploration or drilling companies are examples of digital firms
like Accenture.
• Not all companies can be run like Accenture. Factories with huge production
lines, for example, still require a physical presence.

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Strategic business objectives of information systems

1. Operational excellence: increase efficiency and productivity

• Wal-Mart: uses RetailLink which digitally links its suppliers to every one of Wal-Marts
10,585 stores worldwide.
2. New products, services, and business models:
• business models: how a company produces, delivers or sells products and services.
• Apple computer adopted a new business model: online legal distribution; instead of
record, taps and CDs
• Netflix adopted Internet-enabled distribution system, where it sends videos using the
postal mail, while blockcbuster still has physical distributing stores.
3. Customer and supplier intimacy:
• How to keep your customers and suppliers.
• Hotels keep track of guests preferences: room temperature, television programs and
store the data in a database so that they are remotely monitored and controlled
• Nygard: clothing company links its suppliers to its inventory system ➔ it has zero
inventory
4. Improved decision making
5. Competitive advantage
6. Survival
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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Strategic business objectives of information systems

4- Improved decision making

• Previously, managers relied on forecasts, best guesses, and luck.
• Now, managers to use realtime data from the marketplace when making
decisions.
5- Competitive advantage
• Dell remains the most efficient producer of PCs in the world.
• Dell ships customized PCs ordered online in few days or even overnight.
6- Survival
• Citibank first introduced the ATM, other banks rushed to provide ATMs.
Now in order to survive, banks need to have a link to national and
international ATM networks, such as CIRRUS.

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Perspectives on Information Systems

Information Technology (IT):

• consists of all the hardware and software that a firm needs to use
in order to achieve its business objectives.
Information system:
• A set of interrelated components that collect (or retrieve), process,
store, and distribute information to support decision making and
control in an organization.
• It contains information about significant people, places and things
within the organization or in the environment surrounding it.

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Perspectives on Information Systems

Data and Information

Data: raw facts Information:
data that have
been shaped
into a
meaningful
form.

Information systems:
It contains
information about Functions of an
Raw data from a supermarket checkout counter can be processed and
significant people, information system:
organized to produce meaningful information, such as the total unit sales of
places and things dish detergent or the total sales revenue from dish detergent for a specific Input, output,
within the store or sales territory. processing,
organization or in the feedback: increase
environment
in the sales so
surrounding it.
increase the
Figure 1-4 inventory point

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Perspectives on Information Systems

Computer literacy:
One is familiar with the Internet, online
gaming, storing music on computers, and
using PowerPoint and Word.

management information systems (MIS):

deals with behavioural and technical
issues surrounding the development, use,
and impact of information systems used
by managers and employees in the firm

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Perspectives on Information Systems

I) Organization:
• Senior managers:
• make long-range strategic decisions about Pyramid structure of
products and services and ensure financial rising authority and
performance of the firm. responsibility

• Middle managers:
• carry out the plans and goals set by senior
managers
• knowledge management: engineers,
scientists: design products and services
• Operational managers:
• handle the day-to-day activities of the
company
• Data workers: secretaries and clerks.
• Operational and service workers.

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 I) Organization:

MIS determines how a customer receives credit, or how

customers are billed

1-16
 II) Management:
• Making decisions
• Formulating plans to solve organizational problem
• Make use of information technology to design and deliver new products and
services

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 III) Information Technology:
• Computer hardware: computers, printers, scanners, storage devices and communication
devices.
• Computer software: programmed instructions
• Data management technology: software that organizes data on physical devices.
• Networking and telecommunication technology: consists of both physical devices and
software that connects between two or more computers and communication devices.

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Perspectives on Information Systems

UPS Competes Globally with Information Technology

Read the Window on Technology, and then discuss
the following questions:
• What are the inputs, processing, and outputs of
UPS’s package tracking system?
• What technologies are used by UPS? How are
these technologies related to UPS’s business
strategy?
• What problems do UPS’s information systems
solve? What would happen if these systems
were not available?

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Perspectives on Information Systems

UPS Competes Globally with Information Technology

United Parcel Services (UPS) invests heavily in information systems
technology to make its business more efficient and customer
oriented.

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Perspectives on Information Systems

The business value chain

begins with raw data and
ends up with enhanced
firm profitability.

Value added

From a business perspective:

An information system is an important But, why some firms achieve
better results (higher profitability)
instrument for creating value for the firm.
than others

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Perspectives on Information Systems

A great investment
A small investment
➔ a great return
➔ a great return

A small investment A great investment

➔ a few return ➔ a few return

Figure 1-9
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 Perspectives on Information Systems

• Some firms fail to adopt the

right business model that
suits the new technology:
– Recording label companies: still
has physical music stores for
distribution rather than adopting a
new online distribution model.
The online music sale is
dominating this business.

• Complementary assents

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Contemporary Approaches to Information Systems

• Technical approach
• computer science: method of
computation, data storage/access
• management science: models for helping
managers to take decision.
• operations research: mathematical model
for optimizing selected parameters, such
as transportation and inventory control.

• Behavioral approach
• Sociology: study how IS affect
individuals and groups
• Psychology: looking at how people’s
brains process information, and how
humans best use graphical user
interfaces (such as icons on a desktop).
• Economics: study how IS change the
cost
• Approach of this text: Sociotechnical systems

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 Management Information Systems
Chapter 1 Information Systems in Global Business Today

Contemporary Approaches to Information Systems

Sociotechnical systems

© 2009 Pearson Education Canada 1-28