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Chapter 03


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Information Systems, organizations & Strategy

Created by: Rabeya Rahaman

Published in: Business
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Chapter 03

  1. 1. Chapter: 03Information Systems, organizations & Strategy<br />Created by: Rabeya Rahaman<br />
  2. 2. Organization & IS<br />The interaction between IS & organization is complex and influenced by many mediator factors<br />The Two-Way Relationship Between Organizations and Information Technology<br />
  3. 3. Organization <br /><ul><li>Technical definition:
  4. 4. Stable, formal social structure that takes resources from environment and processes them to produce outputs
  5. 5. A formal legal entity with internal rules and procedures, as well as a social structure</li></li></ul><li>Organization <br /><ul><li>Behavioral definition:
  6. 6. A collection of rights, privileges, obligations, and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution</li></li></ul><li>Features of organizations<br />Routines & business process<br />Organizational politics<br />Organizational culture<br />Organizational environments<br />Organizational structure<br /><ul><li>Other Organizational Features
  7. 7. Goals
  8. 8. Constituencies
  9. 9. Leadership styles
  10. 10. Tasks
  11. 11. Surrounding environments</li></li></ul><li>Continued…..<br /><ul><li>Routines and business processes
  12. 12. Routines (standard operating procedures)
  13. 13. Precise rules, procedures, and practices developed to cope with virtually all expected situations
  14. 14. Business processes: Collections of routines
  15. 15. Business firm: Collection of business processes</li></li></ul><li>Continued…..<br /><ul><li>Organizational politics
  16. 16. Divergent viewpoints lead to political struggle, competition, and conflict
  17. 17. Political resistance greatly hampers organizational change</li></li></ul><li>Continued…..<br /><ul><li>Organizational culture:
  18. 18. Encompasses set of assumptions that define goal and product
  19. 19. What products the organization should produce
  20. 20. How and where it should be produced
  21. 21. For whom the products should be produced
  22. 22. May be powerful unifying force as well as restraint on change</li></li></ul><li>Continued…..<br /><ul><li>Organizational environments:
  23. 23. Organizations and environments have a reciprocal relationship
  24. 24. Organizations are open to, and dependent on, the social and physical environment
  25. 25. Organizations can influence their environments
  26. 26. Environments generally change faster than organizations
  27. 27. Information systems can be instrument of environmental scanning, act as a lens</li></li></ul><li>Continued…..<br />Environments and Organizations have a Reciprocal Relationship<br />
  28. 28. Continued…..<br /><ul><li>Organizational structure
  29. 29. Five basic kinds of structure
  30. 30. Entrepreneurial: Small start-up business
  31. 31. Machine bureaucracy: Midsize manufacturing firm
  32. 32. Divisionalized bureaucracy: Fortune 500 firms
  33. 33. Professional bureaucracy: Law firms, school systems, hospitals
  34. 34. Adhocracy: Consulting firms</li></li></ul><li>Disruptive technologies<br /><ul><li>Technology that brings about sweeping change to businesses, industries, markets
  35. 35. Examples: personal computers, word processing software, the Internet, the PageRank algorithm
  36. 36. First movers and fast followers
  37. 37. First movers – inventors of disruptive technologies
  38. 38. Fast followers – firms with the size and resources to capitalize on that technology</li></li></ul><li>How Information Systems Impact Organizations and Business Firms<br /><ul><li>Economic impacts
  39. 39. IT changes relative costs of capital and the costs of information
  40. 40. Information systems technology is a factor of production, like capital and labor
  41. 41. IT affects the cost and quality of information and changes economics of information
  42. 42. Information technology helps firms contract in size because it can reduce transaction costs (the cost of participating in markets)
  43. 43. Outsourcing</li></li></ul><li>Continued…..<br /><ul><li>Transaction cost theory
  44. 44. Firms seek to economize on cost of participating in market (transaction costs)
  45. 45. IT lowers market transaction costs for firm, making it worthwhile for firms to transact with other firms rather than grow the number of employees </li></li></ul><li>Continued…..<br />The Transaction Cost Theory of the Impact of Information Technology on the Organization<br />
  46. 46. Continued…..<br /><ul><li>Agency theory:
  47. 47. Firm is nexus of contracts among self-interested parties requiring supervision
  48. 48. Firms experience agency costs (the cost of managing and supervising) which rise as firm grows
  49. 49. IT can reduce agency costs, making it possible for firms to grow without adding to the costs of supervising, and without adding employees</li></li></ul><li>Continued…..<br />The Agency Cost Theory of the Impact of Information Technology on the Organization<br />
  50. 50. Continued…..<br /><ul><li>Organizational and behavioral impacts
  51. 51. IT flattens organizations
  52. 52. Decision making pushed to lower levels
  53. 53. Fewer managers needed (IT enables faster decision making and increases span of control)
  54. 54. Postindustrial organizations
  55. 55. Organizations flatten because in postindustrial societies, authority increasingly relies on knowledge and competence rather than formal positions</li></li></ul><li>Continued…..<br />Flattening Organizations<br />
  56. 56. Continued…..<br /><ul><li>Organizational resistance to change
  57. 57. Information systems become bound up in organizational politics because they influence access to a key resource – information
  58. 58. Information systems potentially change an organization’s structure, culture, politics, and work
  59. 59. Most common reason for failure of large projects is due to organizational and political resistance to change</li></li></ul><li>Continued…..<br />Organizational Resistance and the Mutually Adjusting Relationship Between Technology and the Organization<br />
  60. 60. The Internet and organizations<br /><ul><li>The Internet increases the accessibility, storage, and distribution of information and knowledge for organizations
  61. 61. The Internet can greatly lower transaction and agency costs
  62. 62. Example: Large firm delivers internal manuals to employees via corporate Web site, saving millions of dollars in distribution costs</li></li></ul><li>Central organizational factors to consider when planning a new system:<br /><ul><li>Environment
  63. 63. Structure
  64. 64. Hierarchy, specialization, routines, business processes
  65. 65. Culture and politics
  66. 66. Type of organization and style of leadership
  67. 67. Main interest groups affected by system; attitudes of end users
  68. 68. Tasks, decisions, and business processes the system will assist</li>