c h a p t e r
3
INFORMATION
SYSTEMS,
ORGANIZATIONS,
MANAGEMENT,
AND STRATEGY
3.1 © 2002 by Prentice Hall
LEARNING OBJECTIVES
• IDENTIFY SALIENT CHARACTERISTICS
OF ORGANIZATIONS
• ANALYZE RELATIONSHIP BETWEEN
INFO SYSTEM & ORGANIZATIONS
*
3.2 © 2002 by Prentice Hall
LEARNING OBJECTIVES
• CONTRAST THEORIES OF
ORGANIZATIONS
• DESCRIBE DECISION PROCESSES
• EVALUATE ROLE OF INFORMATION
SYSTEMS IN SUPPORTING
BUSINESS STRATEGY
*
3.3 © 2002 by Prentice Hall
MANAGEMENT CHALLENGES
• ORGANIZATIONS & INFORMATION
SYSTEMS
• CHANGING ROLES OF SYSTEMS IN
ORGANIZATIONS
• MANAGERS, DECISION MAKING &
INFORMATION SYSTEMS
• INFORMATION SYSTEMS & BUSINESS
STRATEGY
*
3.4 © 2002 by Prentice Hall
MANAGEMENT CHALLENGES
1. SUSTAINABILITY OF
COMPETITIVE ADVANTAGE
2. FITTING TECHNOLOGY &
ORGANIZATION
*
3.5 © 2002 by Prentice Hall
ORGANIZATIONS & INFORMATION
TECHNOLOGY
MEDIATING FACTORS:
Environment
Culture
Structure
ORGANIZATIONS Standard Procedures INFORMATION
Politics TECHNOLOGY
Management Decisions
Chance
3.6 © 2002 by Prentice Hall
CEO
ORGANIZATION
TECHNICAL DEFINITION:VP VP VP
STABLE, FORMAL STRUCTURE
• TAKES RESOURCES FROM
ENVIRONMENT AND PROCESSES
THEM TO PRODUCE OUTPUTS
*
3.7 © 2002 by Prentice Hall
TECHNICAL MICROECONOMIC DEFINITION
OF ORGANIZATION
ORGANIZATION
INPUTS FROM PRODUCTION OUTPUTS TO
ENVIRONMENT PROCESS ENVIRONMENT
3.8 © 2002 by Prentice Hall
ORGANIZATION
BEHAVIORAL DEFINITION:
COLLECTION OF:
• RIGHTS, PRIVILEGES,
OBLIGATIONS, RESPONSIBILITIES
• DELICATELY BALANCED
• CONFLICT RESOLUTION
*
3.9 © 2002 by Prentice Hall
ENVIRONMENTAL RESOURCES FORMAL ORGANIZATION
STRUCTURE:
ENVIRONMENTAL OUTPUTS
Hierarchy
Division of labor
Rules, Procedures
PROCESS:
Rights/Obligations
Privileges/Responsibilities
Values
Norms
People
3.10 © 2002 by Prentice Hall
STRUCTURAL CHARACTERISTICS OF ALL
ORGANIZATIONS
• CLEAR DIVISION OF LABOR
• HIERARCHY
• EXPLICIT RULES & PROCEDURES
• IMPARTIAL JUDGMENTS
• TECHNICAL QUALIFICATIONS
• MAXIMUM ORGANIZATIONAL
EFFICIENCY
3.11
*
© 2002 by Prentice Hall
COMMON FEATURES OF
ORGANIZATIONS
• FORMAL STRUCTURE
• STANDARD OPERATING
PROCEDURES
• POLITICS
• CULTURE
*
3.12 © 2002 by Prentice Hall
UNIQUE FEATURES OF
ORGANIZATIONS
• ORGANIZATIONAL TYPES
• ENVIRONMENTS, GOALS, POWER
• CONSTITUENCIES, FUNCTION
• LEADERSHIP, TASKS
• TECHNOLOGY
• BUSINESS PROCESSES
*
3.13 © 2002 by Prentice Hall
ORGANIZATIONAL STRUCTURES
• ENTREPRENEURIAL: Startup business
• MACHINE BUREAUCRACY: Mid-sized
manufacturing firm
• DIVISIONALIZED BUREAUCRACY:
Fortune 500
• PROFESSIONAL BUREAUCRACY: Law
firms, hospitals
• ADHOCRACY: Consulting firm
*
3.14 © 2002 by Prentice Hall
ORGANIZATION & ITS ENVIRONMENT
THE ENVIRONMENT:
RESOURCES & CONSTRAINTS
GOVERNMENTS
COMPETITORS
THE FIRM
FINANCIAL INSTITUTIONS
CULTURE
KNOWLEDGE INFORMATION SYSTEMS
TECHNOLOGY
3.15 © 2002 by Prentice Hall
INFORMATION SYSTEMS DEPARTMENT
• PROGRAMMERS: Write software
• SYSTEMS ANALYSTS: Translate
business problems into solutions
• IS MANAGERS: Department leaders
• END USERS: Department reps for
whom applications are
developed
*
3.16 © 2002 by Prentice Hall
THE ORGANIZATION
SENIOR MANAGEMENT
MAJOR END-USERS (DIVISIONS)
INFORMATION SYSTEMS DEPARTMENT
Information System
Specialists:
IT Infrastructure: CIO
Managers
Hardware System Analysts
Software System Developers
Data Networks Programmers
Network Specialists
Database
Administrator Clerical
3.17 © 2002 by Prentice Hall
HOW INFO SYSTEMS
AFFECT ORGANIZATIONS
• MICROECONOMIC MODEL: Info
technology is a factor of production,
like capital & labor
• TRANSACTION COST THEORY:
Firms attempt to minimize
transaction costs internally &
externally
*
3.18 © 2002 by Prentice Hall
HOW INFO SYSTEMS
AFFECT ORGANIZATIONS
• AGENCY THEORY: Firm is nexus of
contracts among self-interested
parties requiring supervision
• BEHAVIORAL THEORIES: Info
systems could change hierarchy of
decision making; reduce need for
middle management & clerical
support; distribute information
3.19 * © 2002 by Prentice Hall
IMPLEMENTING CHANGE
TASK
RESISTANCE
TECHNOLOGY PEOPLE
MUTUAL
ADJUST
MENT
STRUCTURE
3.20 © 2002 by Prentice Hall
Source: Leavitt, Handbook of Organization (1965)
INTERNET & ORGANIZATIONS
• E-mail communication
• Electronic handbooks published &
revised
• Interactive training classes
• Employees review, update personal
data
*
3.21 © 2002 by Prentice Hall
ROLE OF MANAGERS
• CLASSICAL: Describe functions-
plan, organize, coordinate, decide,
control
• BEHAVIORAL: Based on
observations of managers on the job
*
3.22 © 2002 by Prentice Hall
INFO SYSTEMS, LEVELS, DECISIONS
ORGANIZATIONAL LEVEL
TYPE OF
DECISION OPERATIONAL KNOWLEDGE MANAGEMENT STRATEGIC
STRUCTURED ACCOUNTS
RECEIVABLE
ELECTRONIC PRODUCTION
SCHEDULING COST OVERRUNS
TPS
OAS MIS
SEMI- BUDGET
STRUCTURED PREPARATION
PROJECT
SCHEDULING DSS
FACILITY
LOCATION
KWS ESS
UNSTRUCTURED PRODUCT DESIGN NEW PRODUCTS
NEW MARKETS
3.23 © 2002 by Prentice Hall
STAGES OF
DECISION MAKING
• INTELLIGENCE: Collect
information; identify problem
• DESIGN: Conceive alternatives;
select criteria
• CHOICE: Use criteria to evaluate
alternatives; select
• IMPLEMENTATION: Put decision into
effect; allocate resources; control
*
SOURCE: Simon, The New Science of Management Decision (1960)
3.24 © 2002 by Prentice Hall
INDIVIDUAL MODELS OF
DECISION MAKING
• RATIONAL: Comprehensive
rationality; evaluate all
alternatives
• SYSTEMATIC: Structured, formal
method
• INTUITIVE: Trial & error, unstructured,
multiple approach
*
3.25 © 2002 by Prentice Hall
ORGANIZATIONAL
MODELS OF
DECISION MAKING
• BUREAUCRATIC: Follow
standard operating procedures
(SOP)
• POLITICAL: Key groups compete and
bargain
• “GARBAGE CAN”: Organizations not
rational; solutions accidental
3.26
*
© 2002 by Prentice Hall
BUSINESS LEVEL STRATEGY
LOCK IN CUSTOMERS & SUPPLIERS
• SUPPLY CHAIN MANAGEMENT: Stockless
inventories, continuous replenishment,
just-in-time delivery
• INTRA FIRM STRATEGY: Product
differentiation, focused differentiation,
low-cost producer
• EFFICIENT CUSTOMER RESPONSE:
Point-of-sale systems, datamining
3.27 * © 2002 by Prentice Hall
COMPETITIVE FORCES MODEL
SUBSTITUTE
NEW MARKET
PRODUCTS &
ENTRANTS
SERVICES
THE
INDUSTRY
TRADITIONAL
THE FIRM INDUSTRY
COMPETITORS
SUPPLIERS CUSTOMERS
3.28 © 2002 by Prentice Hall
COMPETITIVE FORCES MODEL
INDUSTRY SUBSTITUTE
NEW MARKET
PRODUCTS &
ENTRANTS SET
SERVICES
INDUSTRY INDUSTRY
1 2
INDUSTRY COMPETITORS
INDUSTRY INDUSTRY
3 4
SUPPLIERS CUSTOMERS
3.29 © 2002 by Prentice Hall
c h a p t e r
3
INFORMATION
SYSTEMS,
ORGANIZATIONS,
MANAGEMENT,
AND STRATEGY
3.30 © 2002 by Prentice Hall