CHAPTER THREE
Information
Systems,
Organizations,
and Strategy
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
This complex two-way relationship is mediated by many factors,
not the least of which are the decisions made—or not made—by
managers.
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
Features of organizations
• Routines and business processes
• Organizational politics
• Organizational culture
• Organizational environments
• Organizational structure
• Other organizational features
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
Routines and business processes
• Routines (standard operating procedures)
- Precise rules, procedures, and practices
developed to cope with virtually all expected
situations
• Business processes: Collections of routines
• Business firm: Collection of business
processes
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
Organizational politics
• Divergent viewpoints lead to political
struggle, competition, and conflict
• Political resistance greatly hampers
organizational change
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
Organizational culture
• Encompasses set of assumptions that define
goal and product
• What products the organization should produce
• How and where it should be produced
• For whom the products should be produced
• May be powerful unifying force as well as
restraint on change
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
Organizational environments
• Organizations and environments have a reciprocal
relationship
• Organizations are open to, and dependent on, the
social and physical environment
• Organizations can influence their environments
• Environments generally change faster than
organizations
• Information systems can be instrument of
environmental scanning, act as a lens
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
Disruptive technologies
• Technology that brings about sweeping change to
businesses, industries, markets
• Examples: personal computers, word processing
software, the Internet, the PageRank algorithm
• First movers and fast followers
• First movers – inventors of disruptive technologies
• Fast followers – firms with the size and resources to
capitalize on that technology
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Organizations and Information Systems
Organizational structure
• Five basic kinds of organizational
structure
• The kinds of information systems
often reflects the type of
organizational structure
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
How Information Systems Impact Organizations and Business Firms
• Economic impacts
• Organizational and behavioral impacts
- IT flattens organizations
- Postindustrial organizations
- Understanding organizational resistance to change
• The Internet and organizations
• Implications for the design and understanding
of information systems
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
How Information Systems Impact Organizations and Business Firms
Economic impacts
• IT changes relative costs of capital and the costs of
information
• Information systems technology is a factor of
production, like capital and labor
• IT affects the cost and quality of information and
changes economics of information
• Information technology helps firms contract in size
because it can reduce transaction costs (the cost of
participating in markets)
• Outsourcing
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
How Information Systems Impact Organizations and Business Firms
Transaction cost theory
• Firms seek to economize on cost of participating in
market (transaction costs)
• IT lowers market transaction costs for firm, making
it worthwhile for firms to transact with other firms
rather than grow the number of employees
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
How Information Systems Impact Organizations and Business Firms
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
How Information Systems Impact Organizations and Business Firms
Organizational and behavioral impacts
• IT flattens organizations
- Decision making pushed to lower levels
- Fewer managers needed (IT enables faster decision
making and increases span of control)
• Postindustrial organizations
- Organizations flatten because in postindustrial
societies, authority increasingly relies on knowledge
and competence rather than formal positions
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
How Information Systems Impact Organizations and Business Firms
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
How Information Systems Impact Organizations and Business Firms
Understanding Organizational Resistance to
Change
• Information systems become bound up in
organizational politics because they influence
access to a key resource – information
• Information systems potentially change an
organization’s structure, culture, politics, and work
• Most common reason for failure of large projects is
due to organizational and political resistance to
change
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
How Information Systems Impact Organizations and Business Firms
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
How Information Systems Impact Organizations and Business Firms
The Internet and Organizations
• The Internet increases the accessibility, storage,
and distribution of information and knowledge for
organizations
• The Internet can greatly lower transaction and
agency costs
- Example: Large firm delivers internal manuals to
employees via corporate Web site, saving millions of
dollars in distribution costs
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
How Information Systems Impact Organizations and Business Firms
Implications for the Design and
Understanding of Information Systems
• Information systems must be developed with an
understanding of the organization in which they will
be used
• These must be considered: The organization’s
culture, structure, environment, the groups who will
use the IS, and the kinds of tasks, processes and
decisions the information system is meant to assist
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Using Information Systems to Achieve Competitive Advantage
Porter’s Competitive Forces Model
• Traditional competitors
• New market entrants
• Substitute products and services
• Customers
• Suppliers
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Using Information Systems to Achieve Competitive Advantage
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Using Information Systems to Achieve Competitive Advantage
Information systems strategies for dealing with
competitive forces
• Low-cost leadership
• Product differentiation
• Focus on market niche
• Strengthen customer and supplier intimacy
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Using Information Systems to Achieve Competitive Advantage
Low-cost leadership
• produce products and services at a lower price
than competitors while enhancing quality and
level of service
• Examples: Walmart, Dell
Product differentiation
• Enable new products or services, greatly change
customer convenience and experience
• Examples: Google, Land’s End, Apple iPhone
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Using Information Systems to Achieve Competitive Advantage
Focus on market niche
• Use information systems to enable a focused
strategy on a single market niche; specialize
• Example: Hilton Hotels
Strengthen customer and supplier intimacy
• Use information systems to develop strong ties
and loyalty with customers and suppliers;
increase switching costs
• Example: Chrysler, Chapters
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Using Information Systems to Achieve Competitive Advantage
Business value chain model
• Views firm as series of activities that add value
to products or services
• Highlights activities where competitive strategies
can best be applied
• Primary activities vs. support activities
• At each stage, determine how information
systems can improve operational efficiency and
improve customer and supplier intimacy
• Utilize benchmarking, industry best practices
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Using Information Systems to Achieve Competitive Advantage
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Using Information Systems to Achieve Competitive Advantage
Extending the Value Chain: The Value Web
• A firm’s value chain is linked to the value
chains of its suppliers, distributers, and
customers
• [Link] uses systems that
- Make it easy for suppliers to display goods and
open stores on the Amazon site
- Make it easy for customers to pay for goods
- Coordinate the shipment of goods to customers
- track shipments for customers
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Management Information Systems
Chapter 3 Information Systems, Organizations, and Strategy
Using Information Systems to Achieve Competitive Advantage
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