Chapter 3: Information Systems, Organzations, and Strategy Flashcards Preview

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Flashcards in Chapter 3: Information Systems, Organzations, and Strategy Deck (28)
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Which features of organizations do managers need to know about to build and use information systems successfully?

All modern organizations are hierarchical, specialized, and impartial, using explicit routines to maximize efficiency. All organizations have their own cultures and politics arising from differences in interest groups, and they are affected by their surrounding environment. Organizations differ in goals, groups served, social roles, leadership styles, incentives, types of tasks performed, and type of structure. These features help exlpain differences in organizations' use of information systems.


What is the impact of information systems on organizations?

Information systems and the organizations in which they are used interact with and influence each other. The introduction of a new information system will affect organizational structure, goals, work design, values, competition between interest groups, decision making, and day-to-day behavior. At the same time, information systems must be designed to serve the needs of important organizational groups and will be shaped by the organization's structure, business processes, goals, culture, politics, and management. Information technology can reduce transaction and agency costs, and such changes have been accentuated in organizations using the Internet. New systems disrupt established patterns of work and power relationships, so there is often considerable resistance to them when they are introduced.


How does Porter's competitive forces model help companies develop competitive strategies using information systems?

In Porter's competitive forces model, the strategic position of the firm, and its strategies, are determined by competition with its traditional direct competitors, but they are also greatly affected by new market entrants, substitute products and services, suppliers, and customers. Information systems help companies compete by maintaining low costs, differentiating products or services, focusing on market niche, strengthening ties with customers and suppliers, and increasing barriers to market entry with high levels of operational excellence.


How do the value chain and value web models help businesses identify opportunities for strategic information system applications?

The value chain model highlights specific activities in the business where competitive strategies and information systems will have the greatest impact. The model views the firm as a series of primary and support activities that add value to a firm's products or services. Primary activities are directly related to production and distribution, whereas support activities make the delivery of primary activities possible. A firm's value chain can be linked to the value chains of its suppliers, distributors, and customers, A value web consists of information systems that enhance competitiveness at the industry level by promoting the use of standards and industry-wide consortia, and by enabling businesses to work more efficiently with their value partners.


How do information systems help businesses use synergies, core competencies, and network-based strategies to achieve competitive advantage?

Because firms consist of multiple business units, information systems achieve additional efficiencies or enhance services by tying together the operations of disparate business units. Information systems help businesses leverage their core competencies by promoting the sharing of knowledge across business units. Information systems facilitate business models based on large networks of users or subscribers that take advantage of network economics. A virtual company strategy uses networks to link to other firms so that a company can use the capabilities of other companies to build, market, and distribute products and services. In business ecosystems, multiple industries work together to deliver value to the customer. Information systems support a dense network of interactions among the participating firms.


What are the challenges posed by strategic information systems and how should they be addressed?

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, and they can be expensive to build. Many strategic information systems are easily copied by other firms so that strategic advantage is not always sustainable.


Agency Theory

Economic theory that views the firm as a nexus of contracts among self-interested individuals who must be supervised and managed.



Setting strict standards for products, services, or activities and measuring organizational performance against those standards.


Best Practices

The most successful solutions or problem-solving methods that have been developed by a specific organization or industry.


Business Ecosystem

Loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms, and technology manufacturers.


Competitive Forces Model

Model used to describe the interaction of external influences, specifically threats and opportunities, that affect an organization's strategy and ability to compete.


Core Competency

Activity at which a firm excels as a world-class leader.


Disruptive Technologies

Technologies with disruptive impact on industries and businesses, rendering existing products, services and business models obsolete.


Efficient Customer Response System

System that directly links consumer behavior back to distribution, production, and supply chains.


Mass Customization

The capacity to offer individually tailored products or services using mass production resources.


Network Economics

Model of strategic systems at the industry level based on the concept of a network where adding another participant entails zero marginal costs but can create much larger marginal gains.


Organization (Behavior Definition)

A collection of rights, privileges, obligations, and responsibilities that are delicately balanced over a period of time through conflict and conflict resolution.


Primary Activities

Activities most directly related to the production and distribution of a firm's products or services.


Product Differentiation

Competitive strategy for creating brand loyalty by developing new and unique products and services that are not easily duplicated by competitors.



Precise rules, procedures and practices that have been developed to cope with expected situations.


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.


Support Activities

Activities that make the delivery of a firm's primary activities possible. Consist of the organization's infrastructure, human resources, technology, and procurement.


Switching Costs

The expense a customer or company incurs in lost time and expenditure of resources when changing from one supplier or system to a competing supplier or system.


Transaction Cost Theory

Economic theory stating that firms grow larger because they can conduct marketplace transactions internally more cheaply than they can with external firms in the marketplace.


Value Chain Model

Model that highlights the primary or support activities that add a margin of value to a firm's products or services where information systems can best be applied to achieve a competitive advantage.


Value Web

Customer-driven network of independent firms who use information technology to coordinate their value chains to collectively produce a product or service for a market.


Virtual Company

Organization using networks to link people, assets and ideas to create and distribute products and services without being limited to traditional organizational boundaries or physical location.


Organization (Technical Definition)

A stable, formal, social structure that takes resources from the environment and processes them to produce outputs.