According to the value chain model, human resources is considered a ________ of the firm.

Which features of organizations do managers need to know about to build and use information systems successfully?

dissecting an organization from both a technical and behavioral point of view. The technical definition focuses on three elements: capital and labor; inputs from the environment; and outputs to the environment. The behavioral view emphasizes group relationships, values, and structures. These two definitions are not contradictory. The technical definition focuses on thousands of firms in competitive markets while the behavioral definition focuses on individual firms and an organization’s inner workings.

What is the impact of information systems on organizations?

By understanding that information systems impact organizations two ways, economically and behaviorally, students can understand that technological change is much more than just updating computer hardware and software. Technology becomes a substitute for traditional capital like labor, buildings, and machinery.

Economic standpoint = transaction cost and agency theory. From a behavioral standpoint, information technology flattens or reduces the levels of hierarchy in an organization because information flows more freely and more widely through the firm.

What is the transaction cost theory?

says that firms and individuals seek to economize on transaction costs much as they do on production costs. Information technology helps lower transaction costs by making it cheaper and easier to communicate and collaborate with external suppliers instead of trying to do everything in-house.

impact of information technology on both this theory and agency theory show why firms can reduce the number of employees while maintaining or increasing the levels of production.

What is the agency theory?

says that a firm is viewed as a “nexus of contracts” among self-interested individuals rather than as a unified, profit-maximizing entity. Information technology reduces agency costs by reducing the number of managers necessary to supervise the individual agents (employees)

impact of information technology on both this theory and the transaction cost theory show why firms can reduce the number of employees while maintaining or increasing the levels of production.

How do flat organizations differ from traditional bureaucratic hierarchies?

Flat organizations try to minimize headcount and maximize agility be eliminating management hierarchy. User-friendly software and low-cost web-based services are used to store corporate data, analyze the data, and present the results in dashboards that anyone in the firm can use. Flat organizations allow all employees to access the same data as its top managers.

How has information technology made it possible to eliminate middle manager positions?

At Chubbies clothing start-up, an event planner working alone can use an array of dashboards to determine exactly how many Facebook likes, Instagram posts, and sales arose from a particular event, and she is able to decide on her own whether future events should be scheduled. With the right data and tools to back up her decision, she doesn’t need a manager to validate her choices.

What management, organization, and technology issues would you consider if you wanted to move from a traditional bureaucracy to a flatter organization?

Management: Managers must be confident in themselves and in their employees.

Organization: The most common reason large IT projects fail is not the failure of technology, but because of organizational and political resistance to change. People simply don’t like change and will resist it in a variety of ways. New information systems require changes in personal, individual routines that can be painful for those involved and require retraining and additional effort that may or may not be compensated.

Technology: Information technology flattens or reduces the levels of hierarchy in an organization because information flows more freely and more widely through the firm. Decision making is pushed to lower levels of the hierarchy.

Define an organization and compare the technical definition of organizations with the behavioral definition.

The technical definition defines an organization as a stable, formal social structure that takes resources from the environment and processes them to produce outputs. This definition of an organization focuses on three elements: capital, labor, and production and products for consumption. The technical definition also implies that organizations are more stable than an informal group, are formal legal entities, and are social structures.

The behavioral definition states that an organization is a collection of rights, privileges, obligations, and responsibilities that are delicately balanced over a period of time through conflict and conflict resolution. This definition highlights the people within the organization, their ways of working, and their relationships.

Identify and describe the features of organizations that help explain differences in organizations’ use of information systems.

• Routines and business processes: Standard operating procedures
• Organizational politics: Divergent viewpoints about how resources, rewards, and punishments should be distributed bring about political resistance to organization change.
• Organizational culture:
• Organizational environments: Reciprocal relationships exist between an organization and environments; information systems provide organizations a way to identify external changes that might require an organizational response.
• Organizational structure: Information systems reflect the type of organizational structure—entrepreneurial, machine bureaucracy, divisionalized bureaucracy, professional bureaucracy, or adhocracy.

Describe the major behavioral theories that help explain how information systems affect organizations.

Behavioral researchers theorize that information technology could change the decision-making hierarchy by lowering the costs of information acquisition and distribution. IT could eliminate middle managers and their clerical support by sending information from operating units directly to senior management and by enabling information to be sent directly to lower-level operating units. It even enables some organizations to act as virtual organizations because they are no longer limited by geographic locations.

One behavioral approach views information systems as the outcome of political competition between organizational subgroups. IT becomes very involved with this competition because it controls who has access to what information, and information systems can control who does what, when, where, and how.

Describe the impact of the Internet and disruptive technologies on organizations.

The Internet increases the accessibility, storage, and distribution of information and knowledge for organizations; nearly any information can be available anywhere at any time. The Internet increases the scope, depth, and range of information and knowledge storage. It lowers the cost and raises the quality of information and knowledge distribution.

Disruptive technologies caused by technological changes can have different effects on different companies depending on how they handle the changes. Some companies create the disruptions and succeed very well. Other companies learn about the disruption and successfully adopt it. Other companies are obliterated by the changes because they are very efficient at doing what no longer needs to be done. Some disruptions mostly benefit the firm. Other disruptions mostly benefit consumers.

Define Porter’s competitive forces model and explain how it works.

This model provides a general view of the firm, its competitors, and the firm’s environment. Porter’s model is all about the firm’s general business environment. In this model, five competitive forces shape the fate of the firm:

· Traditional competitors

· New market entrants

· Substitute products and services

· Customers

· Suppliers

Describe what the competitive forces model explains about competitive advantage.

Some firms do better than others because they either have access to special resources that others do not, or they are able to use commonly available resource more efficiently. It could be because of superior knowledge and information assets. Regardless, they excel in revenue growth, profitability, or productivity growth, ultimately increasing their stock market valuations compared to their competitors.

List and describe four competitive strategies enabled by information systems that firms can pursue.

The four generic strategies, each of which often is enabled by using information technology and systems include:

· Low-cost leadership: Lowest operational costs and the lowest prices.

· Product differentiation: Enable new products and services, or greatly change the customer convenience in using existing products and services.

· Focus on market niche: Enable a specific market focus and serve this narrow target market better than competitors.

· Strengthen customer and suppliers: Tighten linkages with suppliers and develop intimacy with customers.

Describe how information systems can support each of the 4 competitive strategies and give examples

1) Low-cost leadership: Use information systems to improve inventory management, supply management, and create efficient customer response systems. Example: Walmart.

2) Product differentiation: Use information systems to create products and services that are customized and personalized to fit the precise specifications of individual customers. Examples: Google, eBay, Apple

3) Focus on market niche: Use information systems to produce and analyze data for finely tuned sales and marketing techniques. Analyze customer buying patterns, tastes, and preferences closely in order to efficiently pitch advertising and marketing campaigns to smaller target markets. Examples: Hilton Hotels, Harrah’s.

4) Strengthen customer and supplier intimacies: Use information systems to facilitate direct access from suppliers to information within the company. Increase switching costs and loyalty to the company. Examples: IBM, Amazon.com.

Explain why aligning IT with business objectives is essential for strategic use of systems.

The basic principle of IT strategy for a business is to ensure the technology serves the business and not the other way around. The more successfully a firm can align its IT with its business goals, the more profitable it will be. Business people must take an active role in shaping IT to the enterprise. They cannot ignore IT issues. They cannot tolerate failure in the IT area as just a nuisance to work around. They must understand what IT can do, how it works, and measure its impact on revenues and profits.

Define and describe the value chain model.

The value chain model highlights specific activities in the business where competitive strategies can best be applied and where information systems will most likely have a strategic impact. The model identifies specific, critical leverage points where a firm can use information technology most effectively to enhance its competitive position. The value chain model views the firm as a series of basic activities that add a margin of value to a firm’s products or services. The activities are categorized as either primary or support activities. Primary activities are most directly related to production and distribution of the firm’s products and services, which create value for the customer. Support activities make the delivery of primary activities possible and consist of organization infrastructure. A firm’s value chain can be linked to the value chains of its suppliers, distributors, and customers

Explain how the value chain model can be used to identify opportunities for information systems.

Information systems can be used at each stage of the value chain to improve operational efficiency, lower costs, improve profit margins, and forge a closer relationship with customers and suppliers. Organizations can use information systems to help examine how value-adding activities are performed at each stage of the value chain. Information systems can improve the relationship with customers (customer relationship management systems) and with suppliers (supply chain management systems) who may be outside the value chain but belong to an extended value chain. Information systems can help businesses track benchmarks in the organization and identify best practices of their particular industries. After analyzing various stages in the value chain, an organization can devise a list of candidate applications for information systems.

Define the value web and show how it is related to the value chain.

A value web is a collection of independent firms that use information technology to coordinate their value chains to collectively produce a product or service. It is more customer driven and operates in a less linear fashion than the traditional value chain. The value web is a networked system that can synchronize the business processes of customers, suppliers, and trading partners among different companies in an industry or in related industries

Explain how the value web helps businesses identify opportunities for strategic information systems.

Information systems enable value webs that are flexible and adaptive to changes in supply and demand. Relationships can be bundled or unbundled in response to changing market conditions. Firms can accelerate their time to market and to customers by optimizing their value web relationships to make quick decisions on who can deliver the required products or services at the right price and location. Information systems make it possible for companies to establish and operate value webs.

Describe how the Internet has changed competitive forces and competitive advantage.

The Internet has nearly destroyed some industries and severely threatened others. The Internet has also created entirely new markets and formed the basis of thousands of new businesses. The Internet has enabled new products and services, new business models, and new industries to rapidly develop.

Because of the Internet, competitive rivalry has become much more intense. Internet technology is based on universal standards that any company can use, making it easy for rivals to compete on price alone and for new competitors to enter the market. Because information is available to everyone, the Internet raises the bargaining power of customers, who can quickly find the lowest-cost provider on the web.

Explain how information systems promote synergies and core competencies.

A large corporation is typically a collection of businesses that are organized as a collection of strategic business units. Information systems can improve the overall performance of these business units by promoting synergies and core competencies.

Describe how promoting synergies and core competencies enhances competitive advantages.

The concept of synergy is that when the output of some units can be used as inputs to other units, or two organizations can pool markets and expertise, these relationships lower costs and generate profits. In applying synergy to situations, information systems are used to tie together the operations of disparate business units so that they can act as a whole.

A core competency is an activity for which a firm is a world-class leader. In general, a core competency relies on knowledge that is gained over many years of experience and a first-class research organization or simply key people who stay abreast of new external knowledge. Any information system that encourages the sharing of knowledge across business units enhances competency.

Explain how businesses benefit by using network economics and ecosystems.

In a network, the marginal costs of adding another participant are almost zero, whereas the marginal gain is much larger. The larger the number of participants in a network, the greater the value to all participants because each user can interact with more people.

The availability of Internet and networking technology has inspired strategies that take advantage of the abilities of the firm to create networks or network with each other. In a network economy, information systems facilitate business models based on large networks of users or subscribers that take advantage of network economies. Internet sites can be used by firms to build communities of users that can result in building customer loyalty and enjoyment and build unique ties to customers, suppliers, and business partners.

Define and describe a virtual company and the benefits of pursuing a virtual company strategy.

A virtual company uses networks to link people, assets, and ideas, enabling it to ally with other companies to create and distribute products and services without being limited by traditional organizational boundaries or physical locations. One company can use the capabilities of another company without being physically tied to that company. The virtual company model is useful when a company finds it cheaper to acquire products, services, or capabilities from an external vendor or when it needs to move quickly to exploit new market opportunities and lacks the time and resources to respond on its own.

Define and describe business ecosystems and platforms.

usiness ecosystems describe loosely coupled but interdependent networks of firms. Rather than participate in one industry, modern firms participate in many industries, with multiple industries working together to deliver value to the customer. Platforms are collections of information systems and technologies that firms across a wide array of industries use to enhance their own capabilities, such as the Microsoft Windows platform or the Facebook social networking platform.

List and describe the management challenges posed by strategic information systems.

Information systems are closely intertwined with an organization’s structure, culture, and business processes. New systems disrupt established patterns of work and power relationships, so there is often considerable resistance to them when they are introduced.

Implementing strategic systems often requires extensive organizational change and a transition from one sociotechnical level to another. Such changes are called strategic transitions and are often difficult and painful to achieve. Moreover, not all strategic systems are profitable. They are expensive and difficult to build because they entail massive sociotechnical changes within the organization. Many strategic information systems are easily copied by other firms so that strategic advantage is not always sustainable. The complex relationship between information systems, organizational performance, and decision making must be carefully managed.

Explain how to perform a strategic systems analysis.

Managers should ask the following questions to help them identify the types of systems that may provide them with a strategic advantage.

1) What is the structure of the industry in which the firm is located?

2) What are the business, firm, and industry value chains for this particular firm?

3) Have we aligned IT with our business strategy and goals?

When performing strategic systems analysis and answering What is the structure of the industry in which the firm is located?

Analyze the competitive forces at work in the industry; determine the basis of competition; determine the direction and nature of change within the industry; and analyze how the industry is currently using information technology.

When performing strategic systems analysis and answering What are the business, firm, and industry value chains for this particular firm

Decide how the company creates value for its customers; determine how the firm uses best practices to manage its business processes; analyze how the firm leverages its core competencies; verify how the industry supply chain and customer base are changing; establish the benefit of strategic partnerships and value webs; clarify where information systems will provide the greatest value in the firm’s value chain.

When performing strategic systems analysis and answering Have we aligned IT with our business strategy and goals?

Articulate the firm’s business strategy and goals; decide if IT is improving the right business processes and activities in accordance with the firm’s strategy; agree on the right metrics to measure progress toward the goals.

Sometimes called standard operating procedures. Precise rules, procedures, and practices that have been developed to cope with virtually all expected situations. For instance, when you visit a doctor’s office, receptionists have

a well-developed set of routines for gathering basic information from you

What is an efficient customer response system?

An efficient customer response system directly links consumer behavior to distribution and production and supply chains. Walmart’s continuous replenishment system provides such an efficient customer response.

What is mass customization?

ability to offer individually tailored products or services using the same production resources as mass production. ex is Nike custom shoes, xbox customizable controllers

What is the value chain model?

Highlights specific activities in the business where competitive strategies can best be applied and where information systems are most likely to have a strategic impact. Views the firm as a series or chain of basic activities that add a margin of value to a firm’s products or services. These activities can be categorized as either primary activities or support activities.

What are primary activities?

Most directly related to the production and distribution of the firm’s products and services, which create value for the customer. Primary activities include inbound logistics, operations, outbound logistics,

sales and marketing, and service. Inbound logistics includes receiving and storing materials for distribution to production. Operations transforms inputs into

finished products. Outbound logistics entails storing and distributing finished products.

What are support activities?

make the delivery of the primary activities possible and consist of organization infrastructure (administration and management), human resources (employee recruiting, hiring, and training), technology (improving

products and the production process), and procurement (purchasing input).

Involves comparing the efficiency and effectiveness of your business processes against strict

standards and then measuring performance against those standards.

Industry best practices are usually identified by consulting companies, research organizations, government agencies, and industry associations as the most successful solutions or problem-solving methods for consistently and effectively achieving

a business objective.

What is network economics?

refers to market situations where

the economic value being produced depends on the number of people using a

product.

What is a business ecosystem?

Another term for these loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms, and technology manufacturers

What is a strategic transition?

sociotechnical changes, affecting both social and technical elements of the organization, can be considered strategic

transitions —a movement between levels of sociotechnical systems.

What is the value chain model quizlet?

Which of the following is a support activity in the value chain of a firm?

What is value chain management best defined as quizlet?

Which of the following does the value chain help determine?