INFORMATION
SYSTEMS
ORGANIZATION &
STRATEGY
● Organization and Information Systems
● Environments of Organization
● Using Information Systems To Achieve
Competitive Advantage and
Challenges
FUNCTIONAL KNOWLEDGE
● Describing the features of organizations.
● Understanding the organizational theories for IS to
create impact.
● Analyzing the different use of IS to develop competitive
strategies
INTENDED LEARNING OUTCOME
(ILO)
● Understand what managers need to know about
organizations for using information systems effectively.
● Learn systems impact organizations in terms of
efficiency, productivity, decision- making, and
competitiveness.
● Explore how strategic frameworks like Porter's model
and value chain help
create competitive strategies using information systems
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Organizations and Information Systems
The IT in a business is influenced by a company’s:
● Structure.
● Business Processes.
● Politics and Culture/ Environment
● Management Decisions
Two-way relationship between Organizations and IT
What is an Organization?
- An organization technically is a formal social structure that produces
outputs
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Behavioral view of Organizations
- An organization behaviorally is a collection of obligations and
responsibilities that is balanced over periods of conflict and conflict
resolution.
- Organizations have features, such as:
● hierarchy structure
● Accountability and authority
● principles of efficiency,
● routines and processes
● organizational politics, culture and environment...etc.
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Routines, Business Processes and Firms
Organizational Politics
It arises from divergent interests, competition, and conflicts within an
organization and can greatly hinder organizational change, especially when
introducing new information systems
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Environments of Organization
Organizational Environments
organization is not an isolated entity but an open system that constantly
interacts with and is affected by its environment.
Internal environment
The internal environment consists of elements within an
organization's boundaries that directly influence its activities and
decisions. In contrast to the external environment, the organization
has a greater degree of control over internal factors
Factors: Organizational Culture, Business Processes, Structure,
Politics, Management, Resources
External environment
consists of all elements outside the organization's boundaries
that can affect it. It presents both opportunities and threats that
influence a company's strategy and performance.
● Task environment: Specific external entities with which the
organization interacts directly.
○ Suppliers, Customers, Strategic Partners, Competitors
● General environment: The broad societal forces that indirectly
influence all organizations in an industry
○ Economic forces, political and legal forces, Technological,
socio-cultural, global forces.
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↓ All that encompass:
1) What products are produced.
2) Where and how products are produced.
3) For whom these products are.
The organizational structure is a powerful force and a restrain on change, it
can make or break a company.
- Organizations influence their environments. Environments change more
often than organizations. IT can analyze the company’s environment.
Disruptive technology → Substitutes, innovations...etc.
First mover: Invents the distributive technology.
First followers: Builds on that technology and takes advantage of it.
IT can affect a business in two ways:
1) Economically: - It’s a factor of production; affects cost and quality of
business processes.
a) -Transaction theory: IT makes it easier and cheaper to transact
with other firms, no need to hire more employees.
b) -Agency theory: Less hassle when making contracts, no need for
high employee supervising costs.
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2) Behaviorally: - Organizations “flatten”. - Less decisions needed to be
made, less managers needed. - In post-industrial organizations, they need
more knowledge than “formal” positioned people.
Flattening Organizations
An organization CAN be resistant to change due to four factors:
1) Nature of innovation.
2) Tasks affected by the innovation.
3) Company structure.
4) Company culture,
Internet + Organizations = Accessibility, distribution of information and
knowledge, lower costs.
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Using Information Systems To Achieve
Competitive Advantage and Challenges
Before picking an IT system:
A. Environment, Culture, and Politics.
B. Structure, Business Processes, and Routines.
C. Main interest group.
D. What features are needed in the system.
-Porter's 5 Competitive Forces Model “Fate of the Firm”
1) Traditional competitors.
2) New market entrants.
3) Substitute products/ services.
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4) Customers.
5) Suppliers (can change their prices).
Challenges in IT:
- Rivals can copy.
- System updates are key to survival.
- Aligning IT with the business.
- Adopting management systems (they require changes from already
installed processes/ relationships).
How can a business deal with competition?
- Lower cost. - Different product(s) or service(s).
- Niche focus.
- Customer and supplier intimacy.
Internet is GOOD and BAD for competitiveness:
- Intense rivalry.
- More universal competition.
- Universal standards.
- New opportunities and more loyal customers.
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The Business Value Chain: Value of a business determined by
↓ Primary activities: Operations and sales.
Support activities: HR, Administration and Management
How can a business extend its value chain?
- Customer and supplier value
- Industry value chain - Value web (highly synchronized IT).
- Synergies (cooperation of organizations together).
- Core competencies (doing something successfully and efficiently).
- Overall customer driven.
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