3.1 copyright © 2005 pearson education canada inc. management information systems, second canadian...

3.1Copyright © 2005 Pearson Education Canada Inc.

Management Information Systems,Management Information Systems, Second Canadian Edition Second Canadian Edition

Chapter 3: Information Systems, Organizations, Management, and StrategyChapter 3: Information Systems, Organizations, Management, and Strategy

INFORMATION INFORMATION SYSTEMS, SYSTEMS,

ORGANIZATIONS, ORGANIZATIONS, MANAGEMENT, MANAGEMENT, AND STRATEGYAND STRATEGY




• What do managers need to know about What do managers need to know about organizations in order to build and use organizations in order to build and use information systems successfully?information systems successfully?

• What impact do information systems have on What impact do information systems have on organizations?organizations?

• How do information systems support the How do information systems support the activities of managers in organizations?activities of managers in organizations?

continued

OBJECTIVES




• How can businesses use information How can businesses use information systems for competitive advantage?systems for competitive advantage?

• Why is it so difficult to build successful Why is it so difficult to build successful information systems, including systems information systems, including systems that promote competitive advantage?that promote competitive advantage?

OBJECTIVES (continued)



Chapter 3: Information Systems, Organizations, Management, and StrategyChapter 3: Information Systems, Organizations, Management, and StrategyFLEXTRONIC’S STRATEGIC SUPPLY CHAIN




1.1. Sustainability of competitive advantageSustainability of competitive advantage

2. Fitting technology to the organization 2. Fitting technology to the organization (or vice-versa)(or vice-versa)

MANAGEMENT CHALLENGES



Chapter 3: Information Systems, Organizations, Management, and StrategyChapter 3: Information Systems, Organizations, Management, and Strategy3.1 ORGANIZATIONS AND INFORMATION SYSTEMS




Technical Definition of Organization:Technical Definition of Organization:

• Stable, formal social structureStable, formal social structure

• Takes resources from environment and Takes resources from environment and processes them to produce outputsprocesses them to produce outputs

3.1 ORGANIZATIONS AND INFORMATION SYSTEMS

What is an Organization?




Behavioral Definition of Organization: Behavioral Definition of Organization:

• Collection of rights, privileges, obligations, Collection of rights, privileges, obligations, responsibilitiesresponsibilities

• Delicately balanced through conflict and Delicately balanced through conflict and conflict resolutionconflict resolution






Organizations are Bureaucracies that Organizations are Bureaucracies that

Have Certain Structural Features:Have Certain Structural Features:• Clear division of labourClear division of labour• HierarchyHierarchy• Explicit rules and proceduresExplicit rules and procedures• Impartial judgmentsImpartial judgments• Technical qualifications for positionsTechnical qualifications for positions• Maximum organizational efficiencyMaximum organizational efficiency


Common Features of Organizations





Standard Operating Procedures (SOP):Standard Operating Procedures (SOP):• Precise rules, procedures, and practicesPrecise rules, procedures, and practices• Enable organizations to cope with all Enable organizations to cope with all

expected situationsexpected situations• Some are written and formal; others are Some are written and formal; others are

guidelinesguidelines





Organizational Politics:Organizational Politics:

• Divergent viewpoints leads to political Divergent viewpoints leads to political struggle, competition, and conflictstruggle, competition, and conflict

• Hampers organizational changeHampers organizational change





Organizational Culture: Organizational Culture: • A set of fundamental assumptions about:A set of fundamental assumptions about:

– What products the organization should produce

– How and where it should produce them– For whom they should be produced




All Organizations Have Different:All Organizations Have Different:

• StructuresStructures• Goals Goals • ConstituenciesConstituencies• Leadership StylesLeadership Styles• TasksTasks• Surrounding EnvironmentsSurrounding Environments

3.1 ORGANIZATIONS & INFORMATION SYSTEMS

Unique Features of Organizations




Organizational StructuresOrganizational Structures• Entrepreneurial: Entrepreneurial:

– Start-up business• Machine bureaucracy: Machine bureaucracy:

– Midsize manufacturing firm• Divisionalized bureaucracy: Divisionalized bureaucracy:

– Fortune 500• Professional bureaucracy: Professional bureaucracy:

– Law firms, hospitals, school systems• Adhocracy: Adhocracy:

– Consulting firm

3.1 ORGANIZATIONS & INFORMATION SYSTEMS




Chapter 3: Information Systems, Organizations, Management, and StrategyChapter 3: Information Systems, Organizations, Management, and Strategy3.1 ORGANIZATIONS & INFORMATION SYSTEMS





• Ultimate goalUltimate goal

• Different groups and Different groups and constituenciesconstituencies

• Nature of leadershipNature of leadership

• Tasks and technologyTasks and technology


Other Differences Among Organizations



Chapter 3: Information Systems, Organizations, Management, and StrategyChapter 3: Information Systems, Organizations, Management, and Strategy3.2 THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

Information Systems Department:Information Systems Department:The formal organizational unit that is responsible for The formal organizational unit that is responsible for

information systems in the organizationinformation systems in the organization

Includes Specialists:Includes Specialists:• Programmers:Programmers:

– Highly trained, write software

• Systems Analysts:Systems Analysts: – Translate business problems into solutions, act as

liaisons between the information systems department and rest of the organization

continued

Information Technology Infrastructure and Information Technology Services




IS Department Specialists IS Department Specialists (continued)(continued)::• Information System Managers:Information System Managers:

– Leaders of various specialists• Chief Information Officer (CIO): Chief Information Officer (CIO):

– Senior manager in charge of information systems function in the firm

And, outside the IS DepartmentAnd, outside the IS Department• End Users:End Users:

– Department representatives for whom applications are developed

Information Technology Infrastructure and Information Technology Services




Economic Theories:Economic Theories: Information Information technology is a factor of production, like technology is a factor of production, like capital and labourcapital and labour

• Transaction Cost Theory:Transaction Cost Theory: – Firms grow larger because they can

conduct marketplace transactions internally more cheaply than they can with external firms

How Information Systems Affect Organizations

3.2 THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS




Agency Theory:Agency Theory: Firm is nexus of contracts Firm is nexus of contracts among self-interested parties requiring among self-interested parties requiring supervisionsupervision

• Employs agents on firm’s behalfEmploys agents on firm’s behalf• Agents need supervision & managementAgents need supervision & management• Costs for agents increase as firm growsCosts for agents increase as firm grows






Behavioural Theories:Behavioural Theories:

• Information technology could change hierarchy Information technology could change hierarchy of decision makingof decision making

• Lower cost of information acquisitionLower cost of information acquisition

• Broadens the distribution of informationBroadens the distribution of information






Virtual Organization:Virtual Organization:

• Uses networks to link people, Uses networks to link people, assets, and ideas to create and assets, and ideas to create and distribute products and distribute products and services without being limited services without being limited to traditional organizational to traditional organizational boundaries or physical boundaries or physical locationslocations






Classical Model of Management:Classical Model of Management:• Traditional description of management Traditional description of management

that focuses on formal functions: that focuses on formal functions: – plan, organize, coordinate, decide, control

Behavioral Model of Management:Behavioral Model of Management:• Describes management based on Describes management based on

observations of managers on the jobobservations of managers on the job

3.3 MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS

The Role of Managers in Organizations




Managerial RolesManagerial Roles

• Expectations of activities that Expectations of activities that managers should perform in managers should perform in an organizationan organization






CategoriesCategories• Interpersonal:Interpersonal: Managers act as Managers act as

figureheads and leaders figureheads and leaders

• Informational:Informational: Managers receive and Managers receive and disseminate critical information, act as disseminate critical information, act as nerve centersnerve centers

• Decisional:Decisional: Managers initiate activities, Managers initiate activities, allocate resources, and negotiate conflictsallocate resources, and negotiate conflicts






Process of Decision MakingProcess of Decision Making• Strategic Decision Making:Strategic Decision Making:

Determines long-term objectives, Determines long-term objectives, resources, and policiesresources, and policies

• Management Control:Management Control: Monitors Monitors effective or efficient usage of effective or efficient usage of resources and performance of resources and performance of operational unitsoperational units

continued


Managers and Decision Making




Process of Decision Making Process of Decision Making (continued)(continued)

• Operational Control:Operational Control: Determines how to Determines how to perform specific tasks set by strategic and perform specific tasks set by strategic and middle-management decision makersmiddle-management decision makers

• Knowledge-level Decision Making: Knowledge-level Decision Making: Evaluates new ideas for products, Evaluates new ideas for products, services, ways to communicate new services, ways to communicate new knowledge, ways to distribute informationknowledge, ways to distribute information






Decisions are Classified as:Decisions are Classified as:• Unstructured: Unstructured: Non-routine, decision maker Non-routine, decision maker

provides judgment, evaluation, and provides judgment, evaluation, and insights into problem definition, no insights into problem definition, no agreed-upon procedure for decision agreed-upon procedure for decision makingmaking

• Structured: Structured: Repetitive, routine, handled Repetitive, routine, handled using a definite procedureusing a definite procedure





Chapter 3: Information Systems, Organizations, Management, and StrategyChapter 3: Information Systems, Organizations, Management, and Strategy3.3 MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS





• Intelligence:Intelligence: Collect information, identify Collect information, identify problemproblem

• Design:Design: Conceive alternative solution to a Conceive alternative solution to a problemproblem

• Choice:Choice: Select among the alternative Select among the alternative solutions solutions

• Implementation:Implementation: Put decision into effect and Put decision into effect and provide report on the progress of solutionprovide report on the progress of solution


Stages of Decision Making



Chapter 3: Information Systems, Organizations, Management, and StrategyChapter 3: Information Systems, Organizations, Management, and Strategy3.3 MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS

Stages of Decision Making




Rational Model:Rational Model: • People, organizations, and nations engage People, organizations, and nations engage

in consistent, value-maximizing in consistent, value-maximizing calculations or adaptations within certain calculations or adaptations within certain constraintsconstraints


Models of Decision Making




Cognitive Style: Cognitive Style: • Underlying personality dispositions Underlying personality dispositions

toward the treatment of information, toward the treatment of information, selection of alternatives, and evaluation of selection of alternatives, and evaluation of consequencesconsequences – Systematic Decision Makers: people who

approach a problem by structuring it in terms of some formal method

– Intuitive: people who approach a problem with multiple methods in an unstructured manner






Organizational Models:Organizational Models: Consider structural Consider structural and political characteristics of an organizationand political characteristics of an organization

• Bureaucratic modelsBureaucratic models– Goals are to preserve organization & reduce uncertainty– Decision making shaped by organization’s SOP

• Political modelsPolitical models– Decisions result from competition and bargaining

among the organization’s stakeholders

• Garbage can modelGarbage can model– Organizations are not rational– Decisions are accidental






• Organizational environment Organizational environment

• Organizational structure, hierarchy, specialization, Organizational structure, hierarchy, specialization, standard operating proceduresstandard operating procedures

• Culture and politics of the organizationCulture and politics of the organization

• Type of organization and its style of leadershipType of organization and its style of leadership

• Groups affected by the system and the attitudes of Groups affected by the system and the attitudes of workers who will be using the systemworkers who will be using the system

• Kinds of tasks, decisions, and business processes Kinds of tasks, decisions, and business processes that the information system is designed to assistthat the information system is designed to assist


Implications for the Design and Understanding of Information Systems




Systems Should Be Designed with the Systems Should Be Designed with the Following Characteristics:Following Characteristics:• Flexible and provide many options for Flexible and provide many options for

handling data and evaluating informationhandling data and evaluating information• Capable of supporting a variety of styles, Capable of supporting a variety of styles,

skills, and knowledge as well as keeping track skills, and knowledge as well as keeping track of many alternatives and consequencesof many alternatives and consequences

• Sensitive to the organization’s bureaucratic Sensitive to the organization’s bureaucratic and political requirementsand political requirements


Implications for the Design and Understanding of Information Systems



Chapter 3: Information Systems, Organizations, Management, and StrategyChapter 3: Information Systems, Organizations, Management, and Strategy3.4 INFORMATION SYSTEMS AND BUSINESS STRATEGY

Strategic Information SystemStrategic Information System• Computer system at any level of an Computer system at any level of an

organization organization • Changes goals, operations, products, Changes goals, operations, products,

services, or environmental relationshipsservices, or environmental relationships• Helps organization gain a competitive Helps organization gain a competitive

advantageadvantage

What is a Strategic Information System?




Digital FirmsDigital Firms• Manage the supply chain by Manage the supply chain by

building efficient customer building efficient customer “sense and response” systems“sense and response” systems

• Participate in “value webs” to Participate in “value webs” to deliver new products and deliver new products and services services

Business-Level Strategy and the Value Chain Model




Value Chain Model:Value Chain Model:

• Highlights the primary or support Highlights the primary or support activities adding a margin of value to activities adding a margin of value to products or servicesproducts or services

• Shows where IS can be applied to achieve Shows where IS can be applied to achieve a competitive advantagea competitive advantage





Primary Activities:Primary Activities: • Directly related to the production and Directly related to the production and

distribution of a firm’s products or servicesdistribution of a firm’s products or services

Support Activities:Support Activities:• Make the delivery of primary activities Make the delivery of primary activities

possiblepossible• Consist of the organization’s infrastructure, Consist of the organization’s infrastructure,

human resources, technology, and human resources, technology, and procurementprocurement





Value Web:Value Web: • Customer-driven network of independent Customer-driven network of independent

firms firms

• Uses information technology to coordinate Uses information technology to coordinate value chains for collectively producing a value chains for collectively producing a product or service product or service





Information System Products and Information System Products and ServicesServices

• Product Differentiation:Product Differentiation: – Competitive strategy– Creates brand loyalty by developing new and

unique products and services – Products and services not easily duplicated by

competitors

continued





Information System Products and Information System Products and Services Services (continued)(continued)

• Focused Differentiation:Focused Differentiation: – Competitive strategy – Developing new market niches for specialized

services or products– Helps businesses compete better than

competitors in the target areas





Efficient Customer Response System:Efficient Customer Response System: • Directly links consumer behaviour back to Directly links consumer behaviour back to

distribution, production, and supply distribution, production, and supply chainschains

Raise Switching Costs:Raise Switching Costs:• Expense incurred by a customer or Expense incurred by a customer or

company in terms of time and expenditure company in terms of time and expenditure of resources when changing from one of resources when changing from one supplier or system to anothersupplier or system to another

Supply Chain Management and Efficient Customer Response System




Supply Chain Management and Efficient Customer Response System




Firm-Level Strategy and Information Technology




Enhancing Core Competency:Enhancing Core Competency:• Activity at which a firm excels as a world-Activity at which a firm excels as a world-

class leaderclass leader

• An information system that encourages the An information system that encourages the sharing of knowledge across business units sharing of knowledge across business units enhances competencyenhances competency

Firm-Level Strategy and Information Technology




Information Partnership:Information Partnership:• Cooperative alliance formed between two Cooperative alliance formed between two

or more corporations for sharing or more corporations for sharing information to gain strategic advantageinformation to gain strategic advantage

• Helps firms gain access to new Helps firms gain access to new customers, creating new opportunities for customers, creating new opportunities for cross-selling and targeting productscross-selling and targeting products

Industry-Level Strategy and Information Systems




The Competitive Forces Model:The Competitive Forces Model:

• Describes the interaction of external Describes the interaction of external influences, specifically threats and influences, specifically threats and opportunities, affecting an organization’s opportunities, affecting an organization’s strategy and ability to competestrategy and ability to compete





Network Economics:Network Economics:

• Model of strategic systems at the industry Model of strategic systems at the industry level level

• Based on the concept of a network Based on the concept of a network

• Adding another participant entails zero Adding another participant entails zero marginal costs but can create much larger marginal costs but can create much larger marginal gainmarginal gain





Managing Strategic Transitions:Managing Strategic Transitions:• Movement from one level of Movement from one level of

sociotechnical system to anothersociotechnical system to another

• Required when adopting strategic Required when adopting strategic systems demanding changes in the social systems demanding changes in the social and technical elements of an organizationand technical elements of an organization

Using Systems for Competitive Advantage: Management Issues




INFORMATION INFORMATION SYSTEMS, SYSTEMS,

ORGANIZATIONS, ORGANIZATIONS, MANAGEMENT, MANAGEMENT, AND STRATEGYAND STRATEGY

3.1 copyright © 2005 pearson education canada inc. management information systems, second canadian...

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