Organizational Features and Information Systems

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Questions and Answers

What strategy involves using information systems to achieve the lowest operational costs and prices?

Market niche focus

Low-cost leadership (correct)

Product differentiation

Supplier intimacy

How do smart products typically affect competitive rivalry among firms?

By reducing the need for market research

By eliminating the importance of customer preferences

By making it easier for firms to differentiate their offerings (correct)

By standardizing product functionalities across the board

What is one major impact of the Internet on traditional competitive forces?

It has completely removed competitive rivalry.

It has made customers less informed about product choices.

It has simplified the process for new competitors to enter the market. (correct)

It has stabilized the prices of products and services.

Which of the following is NOT a key component in an information system strategy for competitive advantage?

Minimizing technology adoption Signup and view all the answers

What effect does the Internet of Things (IoT) have on industries?

It increases reliance on information systems and changes industry dynamics. Signup and view all the answers

Which of the following best defines organizational culture?

Undisputed assumptions about how a business should operate Signup and view all the answers

How do business processes and routines relate to each other?

Routines are individual tasks, while business processes are larger systems of routines Signup and view all the answers

What is one reason organizations struggle to adapt to rapid environmental changes?

Standard operating procedures create organizational inertia Signup and view all the answers

What role do disruptive technologies play in business?

They can lead to radical changes in the business landscape Signup and view all the answers

In what way can organizations influence their environments?

Through forming alliances that affect political power Signup and view all the answers

Which statement about organizational structure is true?

It is influenced by the organization's goals and culture Signup and view all the answers

What economic impact does IT have on organizations?

It serves as a substitute for both capital and labor Signup and view all the answers

What is a characteristic feature of standard operating procedures?

They are developed to handle expected situations Signup and view all the answers

How does IT typically influence organizational structures?

By promoting flatter organizational hierarchies. Signup and view all the answers

What is one significant organizational resistance to IT innovation?

Nature of the IT innovation itself. Signup and view all the answers

Which of the following describes the role of the Internet in organizations?

It provides easier access to information and knowledge. Signup and view all the answers

What effect does IT typically have on decision-making within organizations?

It enables faster and more accurate decision-making. Signup and view all the answers

Which factor is least likely to impact the effectiveness of a new information system in an organization?

The political influence of the company's CEO. Signup and view all the answers

What is one key organizational factor to consider when implementing a new IT system?

The organization's culture and politics. Signup and view all the answers

Which statement best captures the nature of agency costs in growing firms?

Agency costs tend to rise as more employees require management. Signup and view all the answers

What does 'flattening' an organization through IT typically achieve?

Lower-level employees gain decision-making rights. Signup and view all the answers

Study Notes

Learning Objectives

Managers need to understand organizational features to effectively build and use information systems.
Information systems impact organizations significantly.
Porter's competitive forces model, value chain, synergies, core competencies, and network economics help companies develop competitive strategies using information systems.
Strategic information systems pose challenges that need thoughtful solutions.

Organization Definitions

Technical Definition: Organizations focus on transforming inputs (capital and labor) into outputs (products/services) within a stable, formal structure.
Behavioral Definition: Organizations are collections of rights, privileges, obligations, and responsibilities, balanced over time through conflict resolution.

Organization Features

Organizations are bureaucracies: Clear division of labor, specializations, and hierarchies with defined authority limits, adhering to procedures.
Goal-oriented: Assumptions about products, processes, and customers define the organizational culture.
Interdependent with environments: Organizations are open systems, interacting with legal regulations, customers, and competitors.

Routines and Business Firms

Routines (Standard Operating Procedures): Precise rules, procedures, and practices within organizations to handle expected situations.
Business Processes: Collection of routines within the firm.
Business Firms: Collection of business processes.

Organizational Culture

Underlying Assumptions: Organizational culture is based on assumptions that define what, how, where, and for whom a business operates.

Organization-Environment Relations

Mutual Dependence: Organizations depend on and also influence their environments, responding to legal requirements and customer/competitor actions.
External Influences: Information systems can be used to monitor and respond to changes in the environment, especially political changes and competition.

Organizational Adaptation

Inertia and Resistance: Existing procedures, political conflicts, and ingrained values hinder organizational adaptation to rapid changes.
Technological Change: Organizational changes in rights, privileges, obligations, responsibilities, and feelings arise from technological changes.

Disruptive Technologies

Radical Changes: Disruptive technologies cause significant changes in the business landscape and environment. "First movers" need resources to exploit their inventions fully.

Organizational Structures

Entrepreneurial: Young firms with simple structures, single leadership.
Machine Bureaucracy: Larger firms producing standard products with centralized management.
Divisionalized Bureaucracy: Combination of machine bureaucracies focused on different products with a central headquarters.
Professional Bureaucracy: Knowledge-based organizations with highly specialized and independent professionals.
Adhocracy: Flexible structures responding to rapid changes using temporary cross-functional teams.

Economic Impact of IT

Transaction Costs: Information systems can reduce costs of capital and information, potentially leading to smaller firms.
Factors of Production: IT is a factor of production, substituting for capital and labor.

Agency Theory and IT

Nexus of Contracts: Firms are seen as connections between self-interested individuals.
Agency Costs: Costs of managing and supervising employees increase with firm size; IT helps mitigate these costs.

Organizational Impact of IT

Flattening Organizations: IT pushes decision-making power to lower levels.
Task Forces: Encourages temporary teams to handle specific tasks.
Organizational Politics: Influences who does what, when, where, and how within the organization.

Resistance to Change

Organizational factors influencing resistance to change include the nature of IT innovation, organizational structure, organizational culture, and tasks affected by the change.

Internet's Impact

Easier Information: Internet provides easier access, storage, and distribution of information.
Lower Transaction Costs: Lower transaction costs and reduced agency costs through easier access to global information.

Organizational Factors in New Systems

Environmental Factors: External environment in which the organization operates.
Organizational Structure: Hierarchy, specialization, routines.
Culture: Company's culture and politics.
Users' Attitudes: Attitudes of employees using the system.
Business Processes: Tasks, decisions, and procedures.

Porter's Five Competitive Forces

Traditional Competitors: Existing rivals.
New Market Entrants: Potential new businesses/companies.
Substitute Products/Services: Alternative offerings.
Customers: Customers' power to negotiate.
Suppliers: Bargaining power of suppliers.

Information Systems Strategies

Low-Cost Leadership: Using IT to achieve lowest operational costs and prices.
Product Differentiation: Developing unique products.
Focus on Market Niche: Targeting specific market segments.
Customer Intimacy: Understanding and serving customer needs.

Internet on Competitive Advantages

Increased Competition: Internet intensifies competitive forces, making price competition easier.
Information Availability: Equally accessible information for all competitors.

Internet of Things (IoT)

Rise of Sensors: Use of sensors in industrial and consumer products.
Industry Changes: Examples of how Internet changes various industries.

Smart Products

Information-Intensive Services: Part of a larger set of services related to the product.
Reliability/Functionality: Greater reliability and functionality for the products.
Market Differentiation: Helps differentiate the products.
Rivalry: More competition among firms.

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Description

This quiz explores the critical understanding of organizational features that managers must grasp to effectively use information systems. It covers Porter's competitive forces model, value chain, and how strategic information systems can present challenges. Gain insight into the technical and behavioral definitions of organizations and their bureaucratic aspects.