Chapter 1
Chapter 1: Information Systems in Business
(Bidgoli, 10th Ed.)
1-1 Computers and Information Systems in Daily Life
Pervasiveness of IT: From smartphones and tablets to ATMs and
point-of-sale (POS) systems, computers and information systems (IS)
underpin nearly every facet of personal and professional life.
Key Applications:
o Mobile devices for e-mail, Web browsing, apps, location-
based services, and even room‐unlocking at hotels .
o YouTube and video sharing as marketing channels and
customer‐support tools .
o Social networking for customer engagement—but with
privacy risks (e.g., oversharing personal data) .
1-2 Computer Literacy vs. Information Literacy
Computer literacy: Proficiency with productivity software (word
processors, spreadsheets, databases), hardware basics, Internet,
and collaboration tools.
Information literacy: Understanding how to collect, evaluate, and
use data to produce business intelligence (BI)—insights that
support strategic, tactical, and operational decisions .
1-3 Transaction-Processing Systems (TPS)
Definition: Automate routine, repetitive tasks (e.g., payroll, order
entry) to reduce costs and human error.
Evolution: From the first ATMs in 1969 to today’s cardless,
biometric-enabled kiosks offering faster, more secure transactions .
1-4 Management Information Systems (MIS)
Definition: Integrated hardware, software, data, processes, and
people that generate timely, accurate, and relevant information for
decision making.
Use cases:
o Inventory control: Tracks on-hand, back-ordered, and
reorder levels.
o Sales forecasting: Analyzes historical data to predict future
demand.
o Public sector: Crime statistics and deployment planning in
law enforcement .
1-5 Major Components of an IS
1. Data (input): Raw facts from internal (sales, personnel) and external
(customers, government) sources, collected in aggregated or
disaggregated form.
2. Database: Central repository of related data, managed via a DBMS
(e.g., Oracle, Access).
3. Process: Procedures and rules transforming data into information
(e.g., payroll calculations).
4. Information (output): Data presented in formats (reports, charts,
exception alerts) that support understanding and action .
1-6 Using IS and IT for Competitive Advantage
Functional applications: Finance, marketing, HR, operations (e.g.,
Domino’s online ordering cuts labor costs and enhances customer
engagement).
Porter’s Five Forces:
1. Competitive rivalry
2. Threat of new entrants
3. Threat of substitutes
4. Bargaining power of suppliers
5. Bargaining power of buyers
IT strategies: Cost leadership, differentiation, and focus—
leveraging IS to lower costs (e.g., Walmart’s inventory systems) or
offer unique services (e.g., Netflix’s recommendation engine) .
1-7 The IT Job Market
Key roles:
o CIO/CTO: Strategic leadership of IT.
o Systems analyst: Requirements gathering and system
design.
o Network administrator, DBA, programmer, webmaster:
Technical implementation and maintenance.
1-8 Outlook for the Future
Trends:
o Ubiquitous computing and IoT
o Mobile and cloud services
o Increasing importance of BI, AI, and data analytics
Challenges: Security, privacy, ethical considerations, and rapid
technology change.
Exam-Focus: Main Points & Possible Questions
1. Definitions: TPS, MIS, BI, computer literacy vs. information literacy.
2. Components of an IS: Data, database, process, information—know
examples and their roles.
3. Porter’s Five Forces: Be able to list and apply to a business
scenario.
4. TPS Evolution: Key milestones in ATMs and mobile banking.
5. Competitive Strategies: How companies like Domino’s or Walmart
use IT for cost leadership or differentiation.
6. IT Roles: Responsibilities of CIO, systems analyst, DBA, etc.
7. Future Trends: IoT, cloud computing, AI, and data privacy
concerns.
Key Terms to Review
Computer literacy
Information literacy
Transaction‐processing system
Management information system
Business intelligence
Database management system
Porter’s Five Forces
Competitive advantage
By focusing on these core definitions, components, models, and real-world
applications, you’ll be well prepared for exam questions on Chapter 1.