Chapter 1: Information Systems in Global Business Today (PDF)

**Chapter I - Information Systems In Global Business Today** Irma Babić 77374, Ajla Smajlović 77375 Learning Objectives 1\. How are information systems transforming business, and why are they so essential for running and managing a business today? Organizations are trying to become more competit...

**Chapter I - Information Systems In Global Business Today** Irma Babić 77374, Ajla Smajlović 77375 Learning Objectives 1\. How are information systems transforming business, and why are they so essential for running and managing a business today? Organizations are trying to become more competitive and efficient by digitally enabling their core business processes and evolving into digital firms. The Internet has stimulated globalization by dramatically reducing the costs of producing, buying, and selling goods on a global scale. New information system trends include the emerging mobile digital platform, big data (including IoT), more remote management, democratization of decision making, machine learning systems, and the growing use of social media in business. Information systems are a foundation for conducting business today. In many industries, survival and the ability to achieve strategic business goals are difficult without extensive use of information technology. Businesses today use information systems to achieve six major objectives: operational excellence; new products, services, and business models; customer/supplier intimacy; improved decision making; competitive advantage; and day-to-day survival. 2\. What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations? [From a technical perspective,] an information system collects, stores, and disseminates information from an organization\'s environment and internal operations to support organizational functions and decision making, communication, coordination, control, analysis, and visualization. Information systems transform raw data into useful information through three basic activities: input, processing, and output. From a [business perspective], an information system provides a solution to a problem or challenge facing a firm and represents a combination of management, organization, and technology elements. The management dimension of information systems involves issues such as leadership, strategy, and management behavior. The technology dimension consists of computer hardware, software, data management technology, and networking/telecommunications technology (including the Internet). The organization dimension of information systems involves issues such as the [organization\'s hierarchy, functional specialties, business processes, culture, and political interest groups]. In order to obtain meaningful value from information systems, organizations must support their technology investments with appropriate complementary investments in organizations and manage-ment. These complementary assets include new business models and business processes, supportive organizational culture and management behavior, and appropriate technology standards, regulations, and laws. New information technology investments are unlikely to produce high returns unless businesses make the appropriate managerial and organizational changes to support the technology. 3\. What academic disciplines are used to study information systems, and how does each contribute to an understanding of information systems? The study of information systems deals with issues and insights contributed from technical and behavioral disciplines. The disciplines that contribute to the technical approach focusing on formal models and capabilities of systems are computer science, management science, and operations research. The disciplines contributing to the behavioral approach focusing on the design, implementation, man-agement, and business impact of systems are psychology, sociology, and economics. A sociotechnical view of systems considers both technical and social features of systems and solutions that represent the best fit between them. Questions: A digital firm is one in which nearly all of the organization's significant business relationships with customers, suppliers, and employees are digitally enabled and mediated. Core business processes are accomplished through digital networks spanning the entire organization or linking multiple organizations. Business processes refer to the set of logically related tasks and behaviors that organizations develop over time to produce specific business results and the unique manner in which these activities are organized and coordinated. [Developing a new product, generating and fulfilling an order, creating a marketing plan, and hiring an employee are examples of business processes,] and the ways organizations accomplish their business processes can be a source of competitive strength. Six strategic business objectives: operational excellence; new products, services, and business models; customer and supplier intimacy; improved decision making; competitive advantage; and survival. Information technology (IT) consists of all the hardware and software that a firm needs to use in order to achieve its business objectives. Information system (IS) collects, stores, and disseminates (distubute) information from an organization\'s environment and internal operations to support organizational functions and decision making, communication, coordination, control, analysis, and visualization. By information we mean data that have been shaped into a form that is meaningful and useful to human beings. Data, in contrast, are streams (input.flow) of raw facts representing events occurring in organizations or the physical environment before they have been organized and arranged into a form that people can understand and use. Three activities in an information system are input, processing, and output. Input captures or collects raw data from within the organization or from its external environment. Processing converts this raw input into a meaningful form. Output transfers the processed information to the people who will use it or to the activities for which it will be used. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Organizations, management and information technology. The key elements of an organization are its people, structure, business processes, politics and culture. Authority and responsibility in a business firm are organized as a hierarchy, or a pyramid structure. The upper levels of the hierarchy consist of managerial, professional, and technical employees, whereas the lower levels consist of operational personnel. -Senior management makes long-range strategic decisions about products and services as well as ensures financial performance of the firm. -Middle management carries out the programs and plans of senior management, and operational management is responsible for monitoring the daily activities of the business. -Knowledge workers, such as engineers, scientists, or architects, design products or services and create new knowledge for the firm, -whereas data workers, such as secretaries or clerks, assist with scheduling and communications at all levels of the firm. -Production or service workers actually produce the product and deliver the service. Experts are employed and trained for different business functions. Management's job is to make sense out of the many situations faced by organizations, make decisions, and formulate action plans to solve organizational problems. Computer hardware is the physical equipment used for input, processing, and output activities in an information system. Computer software consists of the detailed, preprogrammed instructions that control and coordinate the computer hardware components in an information system. Data management technology consists of the software governing the organization of data on physical storage media. Networking and telecommunications technology, consisting of both physical devices and software, links the various pieces of hardware and transfers data from one physical location to another. A network links two or more computers to share data or resources. The world's largest and most widely used network is the Internet. Internal corporate networks based on Internet technology are called intranets. Private intranets extended to authorized users outside the organization are called extranets, and firms use such networks to coordinate their activities with other firms for making purchases, collaborating on design, and other interorganizational work. The World Wide Web is a service provided by the Internet that uses universally accepted standards for storing, retrieving, formatting, and displaying information in a page format on the Internet. The World Wide Web (WWW) is a global network of information that uses the internet to connect users to multimedia content, such as text, images, and videos, through web browsers using hyperlinks. The IT infrastructure provides the foundation, or platform, on which the firm can build its specific information systems. Each organization must carefully design and manage its IT infrastructure so that it has the set of technology services it needs for the work it wants to accomplish with information systems.  Complementary assets are those assets required to derive value from a primary investment. For instance, to realize value from automobiles requires substantial complementary investments in highways, roads, gasoline stations, repair facilities, and a legal regulatory structure to set standards and control drivers. Research indicates that firms that support their technology investments with investments in complementary assets, such as new business models, new business processes, management behavior, organizational culture, or training, receive superior returns, whereas those firms failing to make these complementary investments receive less or no returns on their information technology investments. 23\. What is organizational and management capital? Organizational and management capital refers to the investments in complementary assets, such as business models, processes, management behavior, culture, and training, that enhance the returns on technology investments.