Ch (2): Information Systems, Organizations and Strategy

Prepared By: Dr. Wail Nassar Badah
MIS
Chapter 2
Information Systems,
Organizations and Strategy

Objectives
After reading this chapter, you will be able to answer the following questions:
1. 2 What is An Organization?
2.2. Features Of Organization?
2.3. The Relations Between The Organization and Its Environments
2.4. How IT Functions Organized In The Organization?
2.5. How Information Systems Impact The Organizations And Business
Firms.

Objectives continued
2.6. How The Internet Impact The Organizations.
2.7. How To Use Information Systems To Achieve The Competitive
Advantage.
2.8. Case Study.
2.9. MIS In Practice

Objectives
1. 2 What Is An Organization?
2.5. How Information Systems Impact The
Organizations And Business Firms.

1.2.What is an organization?
An organization is a stable, formal social structure
that takes resources from the environment and
processes them to produce outputs.

stable

formal social structure

takes resources from the environment and processes them to produce outputs

Student Activity:
Give one more example (other than Mercedes Company) about this
cycle, indicate the components of: Input>Processing>Output and
Feedback.
Send your example via >> Google Classroom > Private Comments

Objectives
1. 2 What Is An Organization?
2.2. What are The Features Of Organization?
2.4. How Its Functions Organized In The Organization?
2.5. How Information Systems Impact The Organizations And Business
Firms.

2.2. FEATURES OF ORGANITIONS:
Features of organaizations
Unique Features Common Features of Organizations

FEATURES OF ORGANITIONS:
Unique Features
Common Features of
Organizations
Routines and Business
Processes
Organizational Politics
Culture

Unique Features
organaizational
type
Environments
Goals
Power
Constituencies
Function
Leadership
Tasks
Technology
Common Features of
Organizations
Routines and Business Processes
Organaizational Politics
Culture

2.2.1 Common Features of Organizations
A) Routines and Business Processes:
• All organizations are composed of individual routines and
behaviors, a collection of which make up a business Process.
• A collection of business processes make up the business firm.
• New information system applications require that individual
routines and business processes change to achieve high levels
of organizational performance

B) Organizational Politics
• People in organizations occupy different positions with
different specialties, concerns, and perspectives.
• As a result, they naturally have divergent viewpoints about how
resources, rewards, and punishments should be distributed.
• These differences matter to both managers and employees, and
they result in political struggle for resources, competition, and
conflict within every organization.

• All organizations have bedrock, unassailable, unquestioned
(by the members) assumptions that define their goals and
products.
• Organizational culture is this set of fundamental
assumptions about what products the organization should
produce, how it should produce them, where, and for whom.
• Generally, these cultural assumptions are taken totally for
granted and are rarely publicly announced or spoken about.
• Organizational culture is a powerful unifying force that
restrains political conflict and promotes common
understanding, agreement on procedures, and common
practices.
C) Organization Culture

• If we all share the same basic cultural assumptions,
agreement on other matters is more likely.
• At the same time, organizational culture is a powerful
restraint on change, especially technological change. Most
organizations will do almost anything to avoid making
changes in basic assumptions.
• Any technological change that threatens commonly held
cultural assumptions usually meets a great deal of resistance.
C) Organization Culture

2.2.2. Unique Features of Organizations
• Although all organizations do have common characteristics, no two
organizations are identical.
• Organizations have different structures, goals, constituencies,
leadership styles, tasks, and surrounding environments.
• One important way in which organizations differ is in their
structure or shape.
• The differences among organizational structures are characterized
in many ways.
• The kind of information systems you find in a business firm and
the nature of problems with these systems often reflects the type of
organization.

• For instance, in a professional bureaucracy such as a hospital it
is not unusual to find parallel patient record systems operated by
the administration, another by doctors, and another by other
professional staff such as nurses and social workers.

• In small entrepreneurial firms you will often find poorly
designed systems developed in a rush that often outgrow
their usefulness quickly.
• In huge multidivisional firms operating in hundreds of
locations you will often find there is not a single
integrating information system, but instead each locale or
each division has its set of information systems.

• Environments shape what organizations can do, but
organizations can influence their environments and decide
to change environments altogether.
• Information technology plays a critical role in helping
organizations perceive environmental change and in
helping organizations act on their environment.
2.3 Organizations and Environments

Figure 2.2: Environments and organizations have a reciprocal relationship

Objectives
1. 2 What is An Organization?

• Given that there are many types of business firms, there are many
ways in which the IT function is organized within the firm.
• In the typical firm the formal organizational unit responsible for
information technology services is called the information systems
department.
• The information systems department is responsible for
maintaining the hardware, software, data storage, and networks that
comprise the firm’s IT infrastructure.
.
2.4 Organizing the IT Function

• The information systems department consists of specialists, such
as programmers, systems analysts, project leaders, and information
systems managers.
• Programmers are highly trained technical specialists who write
the software instructions for computers.
• Systems analysts constitute the principal liaisons between the
information systems groups and the rest of the organization
2.4 Organizing the IT Function >>>continued

• It is the systems analyst’s job to translate business problems and
requirements into information requirements and systems.
• Information systems managers are leaders of teams of
programmers and analysts, project managers, physical facility
managers, telecommunications managers, and heads of office system
groups.
• They are also managers of computer operations and data entry
staff.
• Also external specialists, such as hardware vendors and
manufacturers, software firms, and consultants frequently participate
in the day-to-day operations and long-term planning of information
systems.
2.4 Organizing the IT Function >>>continued

• Information systems have become integral, online,
interactive tools deeply involved in the minute-to-minute
operations and decision making of large organizations.
• Over the last decade, information systems have
fundamentally altered the economics of organizations and
greatly increased the possibilities for organizing work.
2.5. How Information Systems Impact Organizations and Business Firms

2.5.1 Economic Impacts
• From the point of view of economics, IT changes both the
relative costs of capital and the costs of information.
• Information systems technology can be viewed as a factor of
production that can be substituted for traditional capital and
labor.
• As the cost of information technology decreases, it is
substituted for labor, which historically has been a rising cost.
• Hence, information technology should result in a relative
decline in the number of middle managers and clerical workers
as information technology substitutes for their labor.

• As the cost of information technology decreases, it also
substitutes for other forms of capital such as buildings and
machinery, which remain relatively expensive.
• Hence, over time we should expect managers to increase their
investments in IT because of its declining cost relative to other
capital investments.
• IT also obviously affects the cost and quality of information
and changes the economics of information.

• Information technology helps firms contract in size
because it can reduce transaction costs—the costs incurred
when a firm buys on the marketplace what it cannot make
itself.
• According to transaction cost theory, firms and
individuals seek to economize on transaction costs, much
as they do on production costs.

https://study.com/academy/lesson/information-technology-impact-on-the-economy.html

2.5.2. Organizational and Behavioral Impacts
A) IT Flattens Organizations

• Behavioral researchers have theorized that information technology
facilitates flattening of hierarchies by broadening the distribution of
information to empower lower-level employees and increase
management efficiency.
• IT pushes decision-making rights lower in the organization because
lower-level employees receive the information they need to make
decisions without supervision.
• Because managers can now receive so much more accurate
information on time, they become much faster at making decisions,
so fewer managers are required.
• Management costs decline as a percentage of revenues, and the
hierarchy becomes much more efficient.

• Information systems can reduce the number of levels in an
organization by providing managers with information to supervise
larger numbers of workers and by giving lower-level employees more
decision-making authority.
• These changes mean that the management span of control has also
been broadened, enabling high-level managers to manage and control
more employees spread over greater distances.
• Many companies have eliminated thousands of middle managers as a
result of these changes.

• Information technology helps companies organize in more
flexible ways, increasing their ability to sense and respond to
changes in the marketplace and to take advantage of new
opportunities.
• Information systems can give both large and small
organizations additional flexibility to overcome some of the
Small organizations can use information systems to acquire
some of the muscle and reach of larger organizations.
• They can perform coordinating activities, such as processing
bids or keeping track of inventory, and many manufacturing
tasks with very few managers, clerks, or production workers.
B) Increasing Flexibility of Organizations

• Using markets is expensive because of costs such as locating
and communicating with distant suppliers, monitoring contract
compliance, buying insurance, obtaining information on
products, and so forth.
• Information technology, especially the use of networks, can
help firms lower the cost of market participation (transaction
costs), making it worthwhile for firms to contract with external
suppliers instead of using internal sources.

• The Internet, especially the World Wide Web, is beginning to have an
important impact on the relationships between firms and external entities,
and even on the organization of business processes inside a firm.
• The Internet increases the accessibility, storage, and distribution of
information and knowledge for organizations.
• In essence, the Internet is capable of dramatically lowering the transaction
and agency costs facing most organizations.
• For instance, brokerage firms and banks in New York can now deliver
their internal-operations procedures manuals to their employees at distant
locations by posting them on the corporate Web site, saving millions of
dollars in distribution costs.
2.6. The Internet and Organizations

• Businesses are rapidly rebuilding some of their key business processes
based on Internet technology and making this technology a key component
of their IT infrastructures.
• One result will be simpler business processes, fewer employees, and
much flatter organizations than in the past.
• A global sales force can receive nearly instant price product information
updates using the Web or instructions from management sent by e-mail.
• Vendors of some large retailers can access retailers’ internal Web sites
directly for up-to-the minute sales information and to initiate replenishment
orders instantly.

Firms that ―do better‖ than others are said to have a competitive
advantage
over others: They either have access to special resources that others
do not,
or they are able to use commonly available resources more
efficiently —
usually because of superior knowledge and information assets. In
any
event, they do better in terms of revenue growth, profitability, or
productivity growth (efficiency), all of which ultimately in the long
run
translate into higher stock market valuations than their competitors.
2.7. Using Information Systems to Achieve Competitive Advantage

Michael Porter’s framework – called the competitive
forces model – has
long been accepted as a useful tool for business people
to use when
thinking about business strategy and the impact of IT.
• PORTER’S COMPETITIVE
FORCES MODEL

“
”
Traditional Competitors
Efficient business processes can give companies the edge they need to
place themselves in the lead. The rivalry among existing competitors in the
Competitive Forces Model is high when competition is fierce in a market,
and low when competition is more complacent.

New Markets Extranets
Upstarts can give you fits when you least expect it –Amazon.com is a good
example. The threat of new entrants in the Competitive Forces Model is
high when it is easy for new competitors to enter a market, and low when
there are significant entry barriers to entering a market.

Substitute Products and Services
Even if they aren’t better than your product, substitutes may be cheaper and
the customer will be enticed by the lower price. The threat of substitute
products or services in the Competitive Forces Model is high when there
are many alternatives to a product or service, and low when there are few
alternatives from which to choose.

Customers
The Internet offers customers the opportunity to quickly and easily
compare prices. The Internet also makes it easy for customers to switch to a
competitor’s product or service where there is little product
differentiation and all prices are known instantly. Customer power in the
Competitive Forces Model is high when customers have many choices
from whom to buy, and low when their choices are few.
- Suppliers
New technology offers suppliers the chance to integrate information
systems that tie them closer to their customers. Supplier power in the
Competitive Forces Model is high when buyers have few choices from
whom to buy; and low when their choices are many.

Amazon.com has become one of the Web’s most satisfying online
retail
shopping site. Their success is attributed to their ability to use Internet
technology as a way to develop and execute a value web strategy to link
up
more efficiently with their suppliers, strategic partners, and customers.
The
continuous efforts by Amazon to be innovative in their business
strategy
and use of information systems have been the main ingredient for
Amazon’s success. The case demonstrates the vital importance of
information technology to the success of Amazon.com.
2.8. Case Study : Organizations Amazon.Com:
An Internet Giant Fine-
Tunes Iegts Straty

1. Analyze Amazon.com using the competitive forces and value chain
models. How has it responded to pressures from its competitive
environment? How does it provide value to its customers?
2. Describe Amazon’s evolving business strategy.
3. Why did the company change its strategy?
4. Do you think Amazon can continue to be successful? Explain your
answer.
CASE STUDY QUESTIONS

Google Docs: is a free thin-client application for sharing documents,
spreadsheets, Presentations, drawings, and other types of data, as
shown
in Figure (1.4). (Google Docs is evolving; by the time you read this,
Google may have added additional file types or changed the system
from
what is described here. Google the name ―Google Docs‖ to obtain the
latest information about it).
With Google Docs, anyone who edits a document must have a Google
account, which is not the same as a Gmail account. You can establish a
Google account using an email address from Hotmail, a university, or
any
other email service. Your Google account will be affiliated with
whatever email account you enter.
2.9. MIS in Practice:

To create a Google document, go to http://docs.google.com (note
that
there is no
www in this address). Sign in with (or create) your Google account.
From
that point on, you can create, upload, process, save, and download
documents. You can also save most of those documents to PDF and
Microsoft Office formats, such as Word, Excel, and PowerPoint.
With Google Docs, you can make documents available to others by
entering their
email addresses or Google accounts. Those users are notified that the
document exists and are given a link by which they can access it. If
they
have a Google account, they can edit the document; otherwise they
can
just view the document.

Done by God’s
goodness
By/ Dr. Wael Badah

Ch (2): Information Systems, Organizations and Strategy

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