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Questions and Answers
What is a digital firm characterized by?
Which of the following is NOT one of the six strategic business objectives?
How can information systems enhance decision-making?
What role do information systems and technology play in achieving operational excellence?
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Which of the following best describes the use of IT in survival of a business?
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What is the primary purpose of a business as defined by stakeholder value maximization?
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What do intranets primarily use as their basis?
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Which type of system is primarily used by operational managers to monitor routine transactions?
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What is a defining feature of an enterprise application?
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In which type of organizational structure do decision-making processes typically remain centralized?
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How do supply chain management systems benefit organizations?
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What is the role of decision-support systems (DSS) in an organization?
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Which theory views the firm as a collection of self-interested individuals rather than a unified entity?
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What improves productivity and decreases management costs within an organization?
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Which term describes a collection of independent firms that coordinate their value chains using IT?
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In which organizational structure would you expect to find a strong department head influence with weak centralized authority?
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What do complementary assets enable in a business context?
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What is the intended outcome of using management information systems (MIS)?
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What factor does transaction cost theory suggest firms seek to decrease?
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Study Notes
Information Systems in Global Business
- Information Technology (IT): Refers to the hardware and software used to achieve business objectives.
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Information System (IS): Interrelated components that manage information for various business needs.
- Supports decision-making and control.
- Assists in analysis, visualization, and product creation.
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Digital Firm: A business where most operations and relationships are digitally enabled.
- Core business processes are driven by digital networks.
- Key corporate assets are digitally managed.
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6 Strategic Business Objectives:
- Operational Excellence: Use IT to improve efficiency and productivity.
- New Products, Services, & Business Models: New ways to create, deliver, and sell offerings.
- Customer & Supplier Intimacy: Use IT to understand and cater to customer and supplier needs.
- Improved Decision-Making: Real-time data facilitates better decision-making.
- Competitive Advantage: Use IT to gain a competitive edge.
- Survival: Keep up with competition using IT.
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Purpose of a Business: Maximizing stakeholder value.
- Achieve this through maximizing revenue, earnings, which ultimately increases share price.
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Important Terms:
- Intranets: Internal corporate networks using Internet technology.
- Extranets: Private intranets extended to authorized external users.
- Complementary Assets: Assets needed to derive value from a primary investment. Examples include a supportive business culture, strong IS development team.
Global e-business and Collaboration
- Business Processes: Collection of activities to produce a product or service.
- IT Impact: Facilitates information flow, enabling more people to access and share information, reducing decision-making delays, leading to increased productivity and revenue.
Systems for Different Management Groups
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Transaction Processing Systems (TPS): Computerized systems to manage daily routine transactions.
- Examples: Sales order entry, hotel reservations, payroll.
- Used by operational managers to monitor internal operations.
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Systems for Business Intelligence:
- Business Intelligence: Data and software tools for organizing, analyzing, and providing data access for informed decision-making.
- Management Information Systems (MIS): Summarize and report on company operations using data from TPS.
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Decision-Support Systems (DSS): Utilize internal data from TPS and MIS, and external sources to focus on unique and rapidly changing problems.
- Example: Impact on production schedules if sales double in December.
- Executive Support Systems (ESS): Assist senior management in non-routine decisions requiring judgment and insight.
How Systems Come Together
- Enterprise Applications: Systems spanning functional areas, focusing on executing business processes across the firm, involving all management levels.
- Enterprise Systems (ERP): Integrate business processes across various departments like manufacturing, finance, sales, and HR into a single system.
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Supply Chain Management Systems (SCM): Manage relationships with suppliers.
- Share information about orders, production, inventory, and delivery among suppliers, purchasing firms, distributors, and logistics companies.
- Improve productivity and reduce costs associated with moving and producing goods.
- A type of inter-organizational system.
- Customer Relationship Management Systems (CRM): Manage relationships with customers, providing information to optimize revenue, customer satisfaction, and retention.
- Knowledge Management Systems (KMS): Collect and make available relevant knowledge and experience to improve business processes and decision-making.
Organizational Structures
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Entrepreneurial Structure: Typically found in young, small firms in fast-changing environments.
- Simple structure managed by an entrepreneur serving as CEO.
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Machine Bureaucracy: Large bureaucracy in a slowly changing environment.
- Centralized management team and decision-making.
- Divisionalized Bureaucracy: Multiple machine bureaucracies combined under one central headquarters.
- Professional Bureaucracy: Knowledge-based organizations with departments headed by individuals with weak centralized authority. Example: Hospitals.
- Adhocracy: Task force organizations that must adapt to rapidly changing environments. Example: Consulting firms.
Economic Impact
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Transaction Cost Theory: Firms and individuals aim to minimize transaction costs, much like production costs.
- Reduced transaction costs can lead to smaller firm size.
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Agency Theory: Views the firm as a "nexus of contracts" among self-interested individuals rather than a unified entity.
- Increased firm size can lead to higher agency costs.
- IT reduces agency costs by allowing managers to oversee more employees.
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IT Impact on Management and Revenue:
- Decreases overall management costs.
- Increases revenue.
- Decreases middle managers and clerical workforce.
- Decreases firm size.
- Increases revenue per employee (productivity).
Porter's Competitive Forces Model
- Analyze industry structure to design competitive strategy.
- Five forces:
- Threat of new entrants.
- Bargaining power of buyers.
- Bargaining power of suppliers.
- Threat of substitute products or services.
- Rivalry among existing firms.
SWOT Analysis
- Strengths, Weaknesses, Opportunities, Threats.
- Analyze a company's internal and external environment to identify competitive advantages and how to leverage them.
Value Chain Model
- Identifies key activities that create value for a firm and how to improve them for competitive advantage.
- Value Web: A network of independent firms using IT to coordinate their value chains to collectively produce a product or service for a market.
- More customer-driven and operates in a less linear fashion than the traditional value chain.
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Description
Explore the role of Information Technology and Information Systems in modern business. This quiz covers strategic objectives like operational excellence, customer intimacy, and competitive advantage, emphasizing their impact on decision-making and digital transformation.
