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Questions and Answers
What is a competitive advantage?
What is a competitive advantage?
Investing in information systems is optional for businesses looking to remain competitive.
Investing in information systems is optional for businesses looking to remain competitive.
False
What are the four key activities in an information system that produce information?
What are the four key activities in an information system that produce information?
Input, Processing, Output, Feedback
Data is defined as streams of _______ facts.
Data is defined as streams of _______ facts.
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Match the following companies to their known business strategies:
Match the following companies to their known business strategies:
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What is the primary benefit of improved efficiency in operational excellence?
What is the primary benefit of improved efficiency in operational excellence?
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Information systems only improve decision making by providing historical data.
Information systems only improve decision making by providing historical data.
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Name one company that transformed its business model using information systems.
Name one company that transformed its business model using information systems.
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Walmart achieved operational efficiency through digital links between suppliers and __________.
Walmart achieved operational efficiency through digital links between suppliers and __________.
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Match the organization with its business advantage:
Match the organization with its business advantage:
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What is a business model?
What is a business model?
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Close relationships with suppliers lead to higher costs for companies.
Close relationships with suppliers lead to higher costs for companies.
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What did Verizon use to enhance decision making?
What did Verizon use to enhance decision making?
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Which of the following is NOT a dimension of information systems in organizations?
Which of the following is NOT a dimension of information systems in organizations?
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Investing in information technology guarantees good returns for all firms.
Investing in information technology guarantees good returns for all firms.
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What is a key role of managers in the context of information systems?
What is a key role of managers in the context of information systems?
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The value of an information system is determined in part by its ability to lead to better decisions, greater efficiency, and higher ___.
The value of an information system is determined in part by its ability to lead to better decisions, greater efficiency, and higher ___.
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Match the following roles within an organization with their corresponding responsibilities:
Match the following roles within an organization with their corresponding responsibilities:
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Which of the following is a component of the IT infrastructure?
Which of the following is a component of the IT infrastructure?
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Complementary assets do not impact the returns on technology investments.
Complementary assets do not impact the returns on technology investments.
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Name one example of a social asset that can support technology investments.
Name one example of a social asset that can support technology investments.
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A ___ perspective on information systems emphasizes the combination of social and technical systems for optimal performance.
A ___ perspective on information systems emphasizes the combination of social and technical systems for optimal performance.
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Which approach focuses on behavioral issues such as strategic business integration?
Which approach focuses on behavioral issues such as strategic business integration?
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Which of the following is a key component of new business models in management information systems?
Which of the following is a key component of new business models in management information systems?
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Social networking tools are used solely for personal interactions, not in a business context.
Social networking tools are used solely for personal interactions, not in a business context.
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What is a digital firm characterized by?
What is a digital firm characterized by?
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Information systems enable __________ of commerce.
Information systems enable __________ of commerce.
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Match the following components with their descriptions:
Match the following components with their descriptions:
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What is the annual growth rate of internet advertising?
What is the annual growth rate of internet advertising?
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E-commerce revenue surpassed online services revenue in 2018.
E-commerce revenue surpassed online services revenue in 2018.
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What is one strategic business objective of information systems?
What is one strategic business objective of information systems?
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Digital firms allow for __________ and space shifting.
Digital firms allow for __________ and space shifting.
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What percentage of revenue do over half of S&P 500 US firms generate off shore?
What percentage of revenue do over half of S&P 500 US firms generate off shore?
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Study Notes
Management Information Systems: Managing the Digital Firm
- The book's title is Management Information Systems: Managing the Digital Firm, Sixteenth Edition, 16e.
- The authors of the book are Kenneth C. Laudon and Jane P. Laudon.
- The book's chapter, IS1200: Information Systems Management Competencies, is titled Chapter 1: Information Systems in Global Business Today.
PCL Construction: The New Digital Firm
- PCL Construction is an example of a firm using digital technologies.
- Business challenges include widespread operations and paper-intensive processes.
- Management solutions include revising job functions, revising business processes, using mobile devices and touch screen kiosks, using Microsoft Azure Cloud, virtual design, and project management software, as well as analytics dashboards.
- Information system solutions include project management systems for budgeting, costing, forecasting, subcontractor tracking, and production. Solutions also include creating digital models of structures, monitoring project performance, and improving service.
How Information Systems Are Transforming Business
- In 2022, the total population was 7.91 billion.
- Unique mobile phone users numbered 5.31 billion.
- Internet users were 4.95 billion.
- Active social media users totalled 4.62 billion.
- Urbanization was 57.0%.
- Social media usage was 67.1%.
- Internet users as a percentage of total population was recorded at 62.5%
- The average daily time spent using the internet by each internet user was 6 hours and 58 minutes.
- 92.1% accessed the internet via mobile phones.
App Annie App Ranking: Downloads
- TikTok was the #1 mobile app in 2021 in terms of downloads.
- Instagram followed as #2.
- Facebook was #3 in regards to downloads.
- Whatsapp was #4.
- Telegram was #5.
- Snapchat ranked #6.
The World's Most Used Social Platforms
- Facebook is the most used social platform with 2,910 million active users.
- YouTube ranked second with 2,562 million active users.
- After that, Whatsapp, Instagram, WeChat, TikTok, Facebook Messenger, Douyin, Sina Weibo, Kuaishou, Snapchat, Telegram, Pinterest, Twitter, Reddit, and Quora followed in order.
Time Spent With Social Media Apps
- YouTube users spend 23.7 hours on the app per month.
- Facebook users spend 19.6 hours on the app per month.
- Whatsapp users spend 18.6 hours on the app per month.
- Users spend 11.2 hours on Instagram per month
- TikTok users spend 19.6 hours on the app per month.
- Facebook Messenger users spend 3 hours per month.
- Twitter users spend 5.1 hours per month.
- Telegram users spend 3 hours per month.
- Line users spend 11.6 hours per month.
- Snapchat users spend 3 hours per month.
Top Strategic Technology Trends for 2022
- The trending technologies include Data Fabric, Cybersecurity Mesh, Privacy-Enhancing Computation, Cloud-Native Platforms, Composable Applications, Decision Intelligence, Hyperautomation, AI Engineering, Distributed Enterprise Total Experience, Autonomous Systems, and Generative AI.
How Information Systems Are Transforming Business (continued)
- Social networking tools connect employees, customers, and managers in businesses.
- Internet advertising is growing more than 20% per year.
- New laws necessitate business data storage for longer periods.
- Business changes impact job and career changes.
What's New in Management Information Systems
- IT Innovations include cloud computing, big data, the Internet of Things, mobile digital platforms, and artificial intelligence and machine learning.
- New business models include online streaming music and video, and on-demand e-commerce services.
- E-commerce expansion reached nearly $1 trillion in 2018. Netflix has over 125 million US subscribers. Online services revenue is approaching online retail. Mobile advertising is larger than desktop advertising.
- Management changes include the use of social media and collaboration tools, business intelligence applications accelerating, and virtual meetings increasing.
- Firms and organizations are becoming more collaborative and less hierarchical. Firms are emphasizing skills and higher-speed decision-making based on data analysis. Firms are also becoming more willing to interact with consumers, and understanding the importance of IT.
Globalization Challenges and Opportunities
- Internet and global communications changed how and where business is done.
- Cost of operating and transacting globally is drastically reduced.
- Competition for jobs, markets, resources, and ideas is growing globally.
- Interdependence of global economies is growing.
- New understandings of skills, markets, and opportunities are needed.
- Globalization presents challenges but also opportunities.
- Over half of the revenue of S&P 500 US firms is generated offshore.
- Information systems facilitate global commerce.
The Emerging Digital Firm
- Digital firms have significant digital business relationships that are enabled and mediated.
- Digital firms accomplish core business processes using digital networks.
- Key corporate assets are digitally managed.
- Digital companies offer more organizational and management flexibility, leading to time and space shifting.
Strategic Business Objectives of Information Systems
- Businesses rely on information technology to achieve six strategic objectives: operational excellence, new products and services, customer/supplier intimacy, improved decision making, competitive advantage, and survival.
Figure 1.2 The Interdependence Between Organizations and Information Systems
- This figure illustrates the relationships between a business, information systems (software and data management), and related systems like telecommunications, and hardware.
Operational Excellence
- Increased efficiency leads to higher profits.
- Information systems and technologies improve efficiency and productivity.
- Walmart is an example. Combining information systems and best practices achieved $485 billion in sales by 2017.
- Walmart is the world’s most efficient retail store due to a digital network between stores and suppliers
New Products, Services, and Business Models
- Information systems support firms in creating new products, services, and business models.
- A business model details how a company produces, delivers, and sells its products and services.
- Apple is an example; its iTunes, iPod, iPhone, and iPad transformed the old music distribution model.
Customer and Supplier Intimacy
- When customers experience good service, they become repeat customers and purchase more frequently.
- Mandarin Oriental Hotel uses information systems to develop strong customer relationships tracking preferences.
- Strong relationships with suppliers reduce costs. Examples are Mandarin Oriental and JC Penney who use IT to improve supplier relationships.
Improved Decision Making
- Without accurate information, managers rely on forecasts, best guesses, and luck, leading to overproduction, underproduction, misallocation of resources, and poor response times.
- Real-time data helps managers make better decisions regarding customer issues, network performance, and operational issues. Verizon uses a web-based digital dashboard for this purpose.
Competitive Advantage
- Achieving business objectives is key to competing.
- Advantages over competitors can include charging less for high quality products, delivering exceptional results, and providing superior service to customers and suppliers.
- Apple, Walmart, and UPS achieve competitive advantages by using information systems effectively.
Survival
- Businesses need Information Systems either to remain competitive, or because of regulations.
- Information systems become necessary for survival.
- Citibank introduced ATMs to remain competitive.
- Federal and state reporting regulations require the use of Information systems.
What is an Information System
- Information technology includes the hardware and software a business uses to achieve strategic objectives.
- An information system encompasses related components that streamline business operations, support decision-making, and analyze data into useful information.
- Data are raw facts. Information is processed data into useful formats for actionable choices.
- Activities in an information system include input, processing, output, and feedback.
Figure 1.3 Data and Information
- This figure illustrates the process of turning data into usable information with an example of a sales transaction.
- Data are transformed to create Information.
Figure 1.4 Functions of an Information System
- This figure demonstrates the different inputs an information system receives from various stakeholders including customers, suppliers, competitors, regulatory agencies, and internal stakeholders.
- The system processes information to produce information output that is returned to stakeholders in the form of feedback.
Figure 1.5 Information Systems Are More Than Computers
- A fully functional information system needs a combination of organizations, technology, and management working in concert.
Dimensions of Information Systems: Organizations
- The Hierarchy of authority and responsibility involves senior management, middle management, operational management, knowledge workers, data workers, and production or service workers.
- Separation of business functions addresses the different business areas in a company such as marketing, human resources, finance, and production amongst others.
- Unique organizational culture.
- Organizational politics also influence the functionality of Information Systems within those organizations.
Dimensions of Information Systems: Management
- Managers ensure that information system strategy supports business challenges.
- Managers need to be creative, develop new products, and occasionally reinvent the organizational structure to meet business needs.
Dimensions of Information Systems: Technology
- Information Systems rely on the appropriate hardware, software, data management technology, networking technologies, and infrastructure to fully function.
It Isn't Just Technology
- Information Systems are an instrument to create value for the company.
- Investments in information systems will result in superior returns such as increased profitability and revenues, as well as a superior long-term strategic position.
- The business information value chain highlights how raw data transitions through stages to become valuable information, which in turn can lead better business decision-making.
- Business perspectives emphasize the organizational and managerial aspects of information systems.
Figure 1.7 The Business Information Value Chain
- This figure illustrates the flow of data from collecting and storing raw data to creating business value.
Figure 1.8 Variation in Returns on Information Technology
- This figure shows that there is a relationship between IT capital stock and productivity. However, the relationship is not linear, thus investment in both technology and company-specific assets need to be considered along with factors such as organizational needs.
Complementary Assets
- Complementary assets (organizational capital and business models) are crucial to achieve value from an information system investment.
- Firms receive superior returns on investments in support technology and in the people who use that technology.
Figure 1.9 Contemporary Approaches to Information Systems
- This figure shows different approaches including technical, behavioral, and management approaches used to understand and resolve problems in Information Systems.
Technical Approach
- Mathematical models are emphasized in technical approaches to Information Systems, which include computer science, management science, and operations research disciplines.
Behavioral Approach
- Behavioral aspects such as the strategic integration and implementation of business operations are key elements in the behavioral approach to Information Systems
- Disciplines including economics, psychology, and sociology contribute to this approach.
Approach of This Text: Sociotechnical Systems
- The approach of the text uses and combines principles from computer science, management science, operations research, and emphasizes a user-oriented behavioral perspective.
- It considers factors such as suppliers of hardware and software, business firms, managers and employees, and the business environment to assess various possible solutions.
Figure 1.10 A Sociotechnical Perspective on Information Systems
- This figure demonstrates that effective information systems depend on both the technology and the organization working together. Technological solutions and organizational adaptation are both crucial for implementing successful information systems.
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Test your knowledge on competitive advantages and the key activities of information systems. This quiz will explore how data is defined and challenge you to match companies with their business strategies. Ideal for students of business or information systems courses.
