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

Chapter 3 Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems, Organizations, Management, and Strategy 3.1 © 2005 by Pr...

Chapter 3 Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems, Organizations, Management, and Strategy 3.1 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Objectives 1. What do managers need to know about organizations in order to build and use information systems successfully? 2. What impact do information systems have on organizations? 3. How do information systems support the activities of managers in organizations? 3.2 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Objectives 4. How can businesses use information systems for competitive advantage? 5. Why is it so difficult to build successful information systems, including systems that promote competitive advantage? 3.3 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Management Challenges 1. Sustainability of competitive advantages 2. Fitting technology to the organization (or vice versa). 3.4 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizations and Information Systems The two-way relationship between organizations and information technology Figure 3-1 3.5 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizations and Information Systems What Is an Organization? Technical Definition Stable, formal social structure that takes resources from the environment and processes them to produce outputs Behavioral Definition A collection of rights, privileges, obligations, and responsibilities that are delicately balanced over a period of time through conflict and conflict resolution 3.6 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizations and Information Systems The technical microeconomic definition of the organization Figure 3-2 3.7 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizations and Information Systems The behavioral view of organizations Figure 3-3 3.8 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizations and Information Systems Common Features of Organizations Structural Characteristics of All Organizations Clear division of labor Hierarchy Explicit rules and procedures Impartial judgments Technical qualifications for positions Maximum organizational efficiency 3.9 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizations and Information Systems Common Features of Organizations Additional Features of Organizations Standard Operating Procedures (SOPs): Precise procedures to cope with all expected situations Organizational Politics: Struggle to resolve divergent viewpoints within the organization Organizational Culture: Fundamental assumptions about what products the organization should produce 3.10 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizations and Information Systems Unique Features of Organizations Organizational Types Entrepreneurial: Start up business Machine bureaucracy: Midsize manufacturing firm Divisionalized bureaucracy: Fortune 500 firms Professional bureaucracy: Law firms, hospitals, school systems Adhocracy: Consulting firm 3.11 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizations and Information Systems Environments and organizations have a reciprocal relationship Figure 3-4 3.12 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizations and Information Systems Unique Features of Organizations All organizations have different: Organizational type Function Environments Leadership Goals Tasks Power Technology Constituencies Business processes 3.13 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Organizations and Information Systems Window on Organizations E-Commerce French and German Style What organizational factors explain why France and Germany have had such different experiences adopting e-commerce? 3.14 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy The Changing Role of Information Systems in Organizations Information Technology Infrastructure and Information Technology Services Information Services Department Past: Consisted primarily of programmers, building own software and managing own computing facilities Today: A growing proportion of specialists, with department acting as powerful change agent in the organization 3.15 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy The Changing Role of Information Systems in Organizations Information technology services Figure 3-5 3.16 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy The Changing Role of Information Systems in Organizations How Information Systems Affect Organizations Economic Theories Information system technology is a factor of production, freely substituted for capital and labor Transaction cost theory: Information technology can help lower the cost of market participation 3.17 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy The Changing Role of Information Systems in Organizations The transaction cost theory of the impact of information technology on the organization Figure 3-6 3.18 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy The Changing Role of Information Systems in Organizations How Information Systems Affect Organizations Economic Theories – The Agency Theory Agents (employees) need supervision As firm grows, agency and coordination costs rise Information technology reduces agency costs because it becomes easier for managers to oversee more employees 3.19 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy The Changing Role of Information Systems in Organizations The agency cost theory of the impact of information technology on the organization Figure 3-7 3.20 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy The Changing Role of Information Systems in Organizations How Information Systems Affect Organizations Behavioral Theories IT could change hierarchy of decision making by lowering costs of information acquisition and distribution Organization shape could “flatten” as decision making becomes more decentralized Growth of “virtual organizations” Information systems seen as outcome of political competition between subgroups 3.21 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy The Changing Role of Information Systems in Organizations Organizational resistance and the mutually adjusting relationship between technology and the organization Figure 3-8 3.22 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy The Changing Role of Information Systems in Organizations The Internet and Organizations The Internet is capable of dramatically reducing transaction and agency costs Businesses are rapidly rebuilding some key business processes based on Internet technology Internet technology becoming a key component of IT infrastructure 3.23 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems The Role of Managers in Organizations Classical Model: Five Functions of Managers Planning Organizing Coordinating Deciding Controlling 3.24 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems The Role of Managers in Organizations Behavioral Models: Five Attributes of Managers Perform much work at non-stop pace Fragmented activities Prefer speculation, hearsay, current and ad-hoc information Prefer oral communication Maintain diverse web of contacts as informal information system. 3.25 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems The Role of Managers in Organizations Managerial Role Categories Interpersonal: Figurehead, leader, liaison Informational: Nerve center, disseminator, spokesperson Decisional: Entrepreneur, disturbance handler, resource allocator, negotiator 3.26 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems Managers and Decision Making Decision Making Classified by Organizational Level Strategic: determines long-term objectives, resources, policies Management control: monitors effective usage of resources, performance Operational control: determines how to perform tasks and ways to distribute information 3.27 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems Managers and Decision Making Decisions are classified as: Unstructured: Nonroutine, decision maker provides judgment, evaluation, and insights into problem definition, no agreed-upon procedure for decision making Structured: Repetitive, routine, handled using a definite procedure 3.28 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems Information systems and levels of decision making Figure 3-9 3.29 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems Managers and Decision Making Stages of Decision Making Intelligence: Collect information, identify problem Design: Conceive alternative solution to a problem Choice: Select among the alternative solutions Implementation: Put decision into effect and provide report on the progress of solution 3.30 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems The decision-making process Figure 3-10 3.31 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems Managers and Decision Making Models of Decision Making Rational model: people engage in consistent, rational decision making. Individuals rank all alternatives and select the one that most contributes to their goal Critics point out that individuals can’t rank all possible alternatives; tend to select first viable alternative Built-in biases, frame of reference, distort decision making 3.32 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems Managers and Decision Making Models of Decision Making Cognitive style: Describes underlying personality dispositions toward decision making Systematic decision makers Intuitive decision makers 3.33 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems Managers and Decision Making Models of Decision Making Organizational models Bureaucratic models Political models “Garbage can” model 3.34 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems Window on Management Why War Games Can’t Always Simulate the Battlefield How useful are war games in simulating combat scenarios and predicting outcomes? How would the models of decision making described here explain how they are designed and performed? 3.35 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems Implications for the Design and Understanding of Information Systems Organizational Factors in Planning New Systems Organization’s environment Structure of organization Organization’s culture and politics Type of organization and leadership style Principle interest groups and attitudes of workers Kinds of tasks, decisions, processes system will assist 3.36 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Managers, Decision Making, and Information Systems Implications for the Design and Understanding of Information Systems Optimal Information Systems: Flexible; provide many options for handling and evaluating data Support a variety of styles, skills, knowledge; keep track of many alternatives Sensitive to organization’s bureaucratic and political requirements 3.37 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy What Is a Strategic Information System? Computer system at any level of an organization Changes goals, operations, products, services, or environmental relationships Helps organization gain a competitive advantage 3.38 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Business Competitive Strategies Become the low-cost producer Differentiate product or service Change scope of competition by enlarging or narrowing market 3.39 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Value Chain Model Firm seen as series or “chain” of activities that add a margin of value to firm’s products or services Highlights activities in business where competitive strategies are best applied Primary or support activities Firm’s value chain linked to value chains of other partners 3.40 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy The firm value chain and the industry value chain Figure 3-11 3.41 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Value Web Value chain extended by Internet technology that connects all the firm’s suppliers, partners, and customers Collection of independent firms using IT to coordinate value chains to collectively produce a product or service More customer-driven, less linear than value chain Flexible, adaptive to changes in supply and demand 3.42 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy The value web Figure 3-12 3.43 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Product Differentiation Strategy for creating brand loyalty by developing new and unique products and services not easily duplicated by competitors Information systems used to create new information technology-based products and services Examples: ATMs, computerized reservation services 3.44 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Focused Differentiation Strategy for developing new market niches for specialized products and services Information systems used to produce data for sales and marketing; analyze customer behavior Examples: One-to-one and customized marketing 3.45 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Efficient Customer Response Systems Links consumer behavior back to distribution, production, and supply chains Information systems used to link customer’s value chain to firm’s value chain Reduce inventory costs; deliver product or service more quickly to customer 3.46 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Business-Level Strategy and the Value Chain Model Switching Costs Cost of switching to competitive product; higher switching costs discourage customers going to competitors Information systems offer convenience, ease of use, raise switching costs Stockless inventory systems 3.47 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Stockless inventory compared to traditional and just-in-time supply methods Figure 3-13 3.48 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Business-level strategy Figure 3-14 3.49 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Firm-Level Strategy and Information Technology At firm level, information technology can: Promote synergies between business units, pool resources Tie together operations of disparate business units Improve core competencies 3.50 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Industry-Level Strategy and Information Technology Industry-Level Strategies: Information partnerships Competitive forces model; e.g., developing industry standards Network economics: cost of adding new participant negligible, but adds great marginal gain 3.51 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Porter’s competitive forces model Figure 3-15 3.52 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Industry-Level Strategy and Information Technology Impact of Internet on Competitive Forces Reduces barriers to entry Enables new substitute products and services Shifts bargaining power to customer Raises firm’s bargaining power over suppliers Suppliers benefit from reduced barriers to entry and from elimination of intermediaries Widens geographic market, increases number of competitors, reduces differentiation among competitors 3.53 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy The new competitive forces model Figure 3-16 3.54 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Information Systems and Business Strategy Using Systems for Competitive Advantage: Management Issues Strategic Transitions A movement from one level of sociotechnical system to another Often required when adopting strategic systems that demand changes in the social and technical elements of an organization 3.55 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Chapter 3 Case Study How Much Can New Information Systems Help GM? 1. Analyze GM by using the value chain and competitive forces models. 2. Describe the relationship between GM’s organization and its information technology infrastructure. What management, organization, and technology factors influenced this relationship? 3.56 © 2005 by Prentice Hall  Essentials of Management Information Systems, 6e Chapter 3 Information Systems, Organizations, Management, and Strategy Chapter 3 Case Study How Much Can New Information Systems Help GM? 3. Evaluate the current business strategy of GM in response to its competitive environment. What is the role of information systems in that strategy? How do they provide value for GM? 4. How successful have GM’s strategy and use of information systems been in addressing the company’s problems? What kind of problems can they solve? What are some of the problems that they cannot address? 3.57 © 2005 by Prentice Hall