Chapter 3: Information Systems in Management

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Questions and Answers

What is the primary function of information systems in organizations today?

Managing the entire organization

Maintaining traditional computing facilities

Building software exclusively for programming personnel

Acting as a change agent within the organization (correct)

How does the agency theory relate to information technology?

It has no impact on management practices

It increases agency costs as firms grow

It makes it easier for managers to oversee more employees (correct)

It eliminates the need for supervision entirely

What effect does information technology have on decision-making hierarchies within an organization?

It makes executives less involved in day-to-day decisions

It centralizes all decision-making power

It encourages a more decentralized approach (correct)

It has no noticeable effect

What does transaction cost theory suggest about the role of information technology?

It can lower the cost of market participation Signup and view all the answers

Which of these is NOT a characteristic of the classical model of management?

Ad-hoc decision making Signup and view all the answers

Which behavioral attribute describes how managers prefer to communicate?

Through oral communication Signup and view all the answers

How has the Internet influenced transaction costs in organizations?

It dramatically reduces transaction and agency costs Signup and view all the answers

Which of the following is a potential outcome of using information systems according to behavioral theories?

A flattened organizational shape Signup and view all the answers

What has changed about the professionals in the Information Services department over time?

They now include more specialists acting as change agents Signup and view all the answers

Which theory suggests that as a firm grows, agency and coordination costs rise?

Agency theory Signup and view all the answers

What is a significant feature of the behavioral model of managers?

They conduct work in a fragmented manner Signup and view all the answers

What type of communication do managers typically favor according to the behavioral models?

Ad-hoc and informal conversations Signup and view all the answers

Why is supervision important according to agency theory?

It allows managers to control costs effectively Signup and view all the answers

What is one of the key ways information technology acts as a change agent in organizations?

By facilitating easier communication and information flow Signup and view all the answers

What is one challenge organizations face regarding technology and its application?

Fitting technology to the organization Signup and view all the answers

How can information systems provide a competitive advantage to businesses?

By enhancing decision-making capabilities and efficiencies Signup and view all the answers

Which of the following factors contributes to the difficulty of building successful information systems?

Rapidly changing business environments Signup and view all the answers

Which decision-making model is likely most beneficial when complex organizational decisions need to be made?

Rational decision-making model Signup and view all the answers

What is an important aspect that managers need to consider when utilizing information systems?

Compatibility with organizational culture Signup and view all the answers

In what way can information systems support the activities of managers?

By providing real-time data for better decision-making Signup and view all the answers

What cognitive style might be most advantageous for a manager when faced with strategic decisions?

Holistic thinking Signup and view all the answers

Which of the following best describes how information systems impact organizations?

They redefine roles and processes Signup and view all the answers

What type of decision is characterized by the absence of a defined procedure for making the decision?

Unstructured decision Signup and view all the answers

Which stage of the decision-making process involves identifying the problem and collecting necessary information?

Intelligence Signup and view all the answers

What is the primary focus of the strategic level of decision making?

Determining long-term objectives Signup and view all the answers

In which decision-making model do people engage in consistent, rational decision making?

Rational model Signup and view all the answers

What role do information systems play in decision-making processes?

They facilitate the collection, processing, and dissemination of information Signup and view all the answers

The choice stage in the decision-making process focuses on which of the following?

Selecting among alternative solutions Signup and view all the answers

Which type of decision-making style is often rooted in preconceived notions and past experience?

Cognitive Signup and view all the answers

What is the primary focus of operational control in decision making?

Performing tasks and distributing information Signup and view all the answers

Which role is NOT part of the decisional managerial role category?

Leader Signup and view all the answers

What is the last stage in the decision-making process?

Implementation Signup and view all the answers

Study Notes

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

Objectives for the chapter include understanding the manager's role in building and using information systems, the impact of information systems on organizations, and how information systems support management activities.
Businesses can utilize information systems for competitive advantage.
Building successful information systems, including those that enhance competitive advantage, can be challenging.
Sustainability of competitive advantages and fitting technology to the organization (or vice versa) are management challenges.
Organizations and information technology are in a two-way relationship, with mediating factors like environment, culture, structure, procedures, politics, decisions, and chance influencing both.
An organization is defined technically as a stable, formal social structure that takes resources and processes them to produce outputs.
Behaviorally, an organization is a collection of rights, privileges, obligations, and responsibilities balanced over time through conflict resolution.
Common organizational characteristics include clear division of labor, hierarchy, explicit rules and procedures, impartial judgments, technical qualifications for positions, and maximum organizational efficiency.
Additional features of organizations include standard operating procedures, organizational politics, and organizational culture.
Different organizational types exist, including entrepreneurial, machine bureaucracy, divisionalized bureaucracy, professional bureaucracy, and adhocracy.
Environments and organizations have a reciprocal (two-way) relationship. Factors such as constraints, resources, and interactions of various types influence the interactions.
All organizations have different characteristics: types, environments, goals, functions, leadership, tasks, technology, power structures, and stakeholders.
E-commerce adoption varies among countries, highlighting the influence of organizational factors on technology adoption.
Information services departments have evolved from being primarily programmer-focused to being increasingly specialist-driven, now acting as change agents within organizations.
Information technology services now include senior management, end users, CIOs, managers, systems analysts, designers, programmers, network specialists, database administrators, and clerical staff.
The impact of information systems on organizations can be understood through economic theories such as technology as a free substitute for capital and labor and transactional costs.
Transaction cost theory examines the costs of exchange in markets and illustrates how information technology influences these costs in terms of the impact of firm size.
Agency theory focuses on how information systems reduce agency costs associated with managing larger organizations.
Behavioral theories suggest that information systems can impact decision making hierarchies and organizational structures, potentially changing organizational shapes from hierarchical to decentralized, influencing "virtual organizations" and possibly resulting from competition among subgroups.
The relationship between technology and organizational elements such as tasks, people, structure, and technology is a mutually adjusting one with frequent resistance.
The Internet plays a significant role in reducing transactions and agency costs, and businesses increasingly rely on Internet technology to rebuild their business processes.
The study of the role of managers includes a classical model based on planning, organizing, coordinating, deciding, and controlling.
Behavioral models explain management as non-stop work, fragmented actions, a need for hearsay information, oral communication preferences, and diverse contacts as the informal information system.
Managerial roles are categorized as interpersonal, informational, and decisional.
Decision-making is classified according to organizational level: strategic, management control, and operational control.
Decision making can be unstructured, non-routine decisions made using judgment, or structured, routine decisions done with predefined procedures.
The decision making process includes Intelligence, Design, Choice and Implementation.
Models of decision making include the rational model, as well as cognitive and organizational, bureaucratic, political, and "garbage can" models.
Case studies, including how much new information systems can help GM, analyze the value chain, the relationship of GM's organization and its IT infrastructure, and GM's strategy and use of IT systems.
Organizational factors and planning considerations for the development of new systems include: the organization's environment, the organization's structure, organizational culture and politics, leadership styles, interests and attitudes of workers, types of tasks, decisions, and processes to be supported by the system.
Optimal information systems are flexible, support many evaluation methods, accommodate varied skills and knowledge, and are sensitive to an organization's bureaucratic and political requirements.
Strategic information systems change organizational goals, operations, and environmental relationships while offering competitive advantage.
Competitive strategies include becoming a low-cost producer, differentiating a product or service, and changing the market competition scope by expansion or contraction.
The value chain is seen as a series of activities to generate value. Activities are classified as either primary or support activities. Links between individual organizations in a value chain demonstrate the value chains connected to other organizations.
The value web extends the value chain, connecting all parties using technology.
Product differentiation involves developing new products and services to generate brand loyalty.
Focused differentiation involves creating special product/service niches for new market segments.
Efficient customer response systems link customer behavior to supply chains and reduce inventory costs.
Switching costs are increased by information system convenience and ease of use, in addition to providing stockless inventory methods.
Information systems and competitive forces are influenced by changes at the industry-level, such as information partnerships, the competitive forces model, and network economics.

Chapter 3 Case Study: GM

Analyze GM using value chain and competitive force models.
Describe the relationship between GM and its IT infrastructure.
Evaluate GM’s current business strategy and role of information systems in competitive response.
Assess success of GM's strategy and use of information systems in meeting/solving problems.

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Description

Explore how information systems play a crucial role in enhancing managerial practices and organizational strategies. This chapter delves into the relationship between technology and management, emphasizing the challenges of achieving competitive advantage through information systems. Understand the factors that influence this dynamic and the importance of aligning technology with organizational needs.