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Tutorial based Question and Answers(MIS)

Sample Questions
1. Which features of organizations do managers need to now about to build and use
information s!stems successfull!" What is the im#act of information s!stems on
$efine an organization and com#are the technical definition of organizations with
the beha%ioral definition.
Students can make use of Figures 32 and Figure 33 in answering this question.
The technical definition for an organization defines an organization as a stable, formal
social structure that takes resources from the environment and rocesses them to roduce
oututs. This definition of an organization focuses on three elements! caital, labor, and
roduction and roducts for consumtion. The technical definition also imlies that
organizations are more stable than an informal grou, are formal legal entities, and are
social structures.
The behavioral definition states that an organization is a collection of rights, rivileges,
obligations, and resonsibilities that are delicatel" balanced over a eriod of time through
conflict and conflict resolution. This definition highlights the eole within the
organization, their wa"s of working, and their relationshis.
The technical definition shows us how a firm combines caital, labor, and information
technolog". The behavioral definition e#amines how information technolog" imacts the
inner workings of the organization.
Identif! and describe the features of organizations that hel# e&#lain differences in
organizations' use of information s!stems.
$ommon features for organizations include formal structure, standard oerating
rocedures, olitics, and culture. %rganizations can differ in their organizational t"e,
environment, goals, ower, constituencies, function, leadershi, tasks, technolog", and
business rocesses.
$escribe the ma(or economic theories that hel# e&#lain how information s!stems
affect organizations.
The two economic theories discussed in the book are transaction cost theor" and agenc"
theor". The transaction cost theor" is based on the notion that a firm incurs transaction
costs when it bu"s goods in the marketlace rather than making roducts for itself.
Traditionall", firms sought to reduce transaction costs b" getting bigger, hiring more
emlo"ees, vertical and horizontal integration, and small&coman" takeovers. 'nformation
technolog" hels firms lower the cost of market articiation (transaction costs) and hels
firms shrink in size while roducing the same or greater amount of outut.
The agenc" theor" views the firm as a ne#us of contracts among interested individuals.
The owner emlo"s agents (emlo"ees) to erform work on his or her behalf and
delegates some decision&making authorit" to the agents. *gents need constant suervision
and management, which introduces management costs. *s firms grow, management costs
rise. 'nformation technolog" reduces agenc" costs b" roviding information more easil"
so that managers can suervise a larger number of eole with fewer resources.
$escribe the ma(or beha%ioral theories that hel# e&#lain how information s!stems
affect organizations.
+ehavioral theories, from sociolog", s"cholog", and olitical science, are useful for
describing the behavior of individual firms. +ehavioral researchers theorize that
information technolog" could change the decision&making hierarch" b" lowering the
costs of information acquisition and distribution. 'T could eliminate middle managers and
their clerical suort b" sending information from oerating units directl" to senior
management and b" enabling information to be sent directl" to lower&level oerating
units. 't even enables some organizations to act as virtual organizations because the" are
no longer limited b" geograhic locations.
%ne behavioral aroach views information s"stems as the outcome of olitical
cometition between organizational subgrous. 'T becomes ver" involved with this
cometition because it controls who has access to what information, and information
s"stems can control who does what, when, where, and how.
)&#lain wh! there is considerable organizational resistance to the introduction of
information s!stems.
There is considerable organizational resistance to new information s"stems because the"
change man" imortant organizational dimensions, such as culture, structure, olitics, and
work. ,eavitt uts forth a model that sa"s that changes in technolog" are absorbed,
deflected, and defeated b" organizational task arrangements, structures, and eole. 'n
this model the onl" wa" to bring about change is to change the technolog", tasks,
structure, and eole simultaneousl". 'n a second model, the authors seak of the need to
unfreeze organizations before introducing an innovation, quickl" imlementing the new
s"stem, and then refreezing or institutionalizing the change.
$escribe the im#act of the Internet and disru#ti%e technologies on organizations.
The 'nternet increases the accessibilit", storage, and distribution of information and
knowledge for organizations- nearl" an" information can be available an"where at an"
time. The 'nternet increases the scoe, deth, and range of information and knowledge
storage. 't lowers the cost and raises the qualit" of information and knowledge
distribution. That is, it lowers transaction costs and information acquisition costs. +"
using the 'nternet, organizations ma" reduce several levels of management, enabling
closer and quicker communication between uer levels of management and the lower
levels. The 'nternet also lowers agenc" costs.
.isrutive technologies caused b" technological changes can have different effects on
different comanies deending on how the" handle the changes. Some comanies create
the disrutions and succeed ver" well. %ther comanies learn about the disrution and
successfull" adot it. %ther comanies are obliterated b" the changes because the" are
ver" efficient at doing what no longer needs to be done. Some disrutions mostl" benefit
the firm. %ther disrutions mostl" benefit consumers.
*. +ow does ,orter's com#etiti%e forces model hel# com#anies de%elo# com#etiti%e
strategies using information s!stems"
$efine ,orter's com#etiti%e forces model and e&#lain how it wors.
This model rovides a general view of the firm, its cometitors, and the firm/s
environment. 0orter/s model is all about the firm/s general business environment. 'n this
model, five cometitive forces shae the fate of the firm!
traditional cometitors
new market entrants
substitute roducts and services
$escribe what the com#etiti%e forces model e&#lains about com#etiti%e ad%antage.
Some firms do better than other because the" either have access to secial resources that
others do not, or the" are able to use commonl" available resource more efficientl". 't
could be because of suerior knowledge and information assets. 1egardless, the" e#cel in
revenue growth, rofitabilit", or roductivit" growth, ultimatel" increasing their stock
market valuations comared to their cometitors.
-ist and describe four com#etiti%e strategies enabled b! information s!stems that
firms can #ursue.
Table 3.2 can be used to hel answer this question. The four generic strategies, each of
which often is enabled b" using information technolog" and s"stems include!
,ow&cost leadershi! lowest oerational costs and the lowest rices.
0roduct differentiation! enable new roducts and services, or greatl" change the
customer convenience in using e#isting roducts and services.
Focus on market niche! enable a secific market focus and serve this narrow
target market better than cometitors.
Strengthen customer and suliers! tighten linkages with suliers and develo
intimac" with customers.
$escribe how information s!stems can su##ort each of these com#etiti%e strategies
and gi%e e&am#les.
,ow&cost leadershi! use information s"stems to imrove inventor" management,
sul" management, and create efficient customer resonse s"stems. 2#amle!
0roduct differentiation! use information s"stems to create roducts and services
that are customized and ersonalized to fit the recise secifications of individual
customers. 2#amle! 5oogle, e+a", *le, ,ands/ 2nd.
Focus on market niche! use information s"stems to roduce and anal"ze data for
finel" tuned sales and marketing techniques. *nal"ze customer bu"ing atterns,
tastes, and references closel" in order to efficientl" itch advertising and
marketing camaigns to smaller target markets. 2#amle! 6ilton 6otels,
Strengthen customer and sulier intimacies! use information s"stems to facilitate
direct access from suliers to information within the coman". 'ncrease
switching costs and lo"alt" to the coman". 2#amle! '+4, *
)&#lain wh! aligning IT with business ob(ecti%es is essential for strategic use of
The basic rincile of 'T strateg" for a business is to ensure the technolog" serves the
business and not the other wa" around. The more successfull" a firm can align its 'T with
its business goals, the more rofitable it will be. +usiness eole must take an active role
in shaing 'T to the enterrise. The" cannot ignore 'T issues. The" cannot tolerate
failure in the 'T area as 7ust a nuisance to work around. The" must understand what 'T
can do, how it works, and measure its imact on revenues and rofits.
.. +ow do the %alue chain and %alue web models hel# businesses identif! o##ortunities
for strategic information s!stem a##lications"
$efine and describe the %alue chain model.
The value chain model highlights secific activities in the business where cometitive
strategies can best be alied and where information s"stems will most likel" have a
strategic imact. The model identifies secific, critical leverage oints where a firm can
use information technolog" most effectivel" to enhance its cometitive osition. The
value chain model views the firm as a series of basic activities that add a margin of value
to a firm/s roducts or services. The activities are categorized as either rimar" or
suort activities. 0rimar" activities are most directl" related to roduction and
distribution of the firm/s roducts and services, which create value for the customer.
Suort activities make the deliver" of rimar" activities ossible and consist of
organization infrastructure. * firm/s value chain can be linked to the value chains of its
suliers, distributors, and customers.
)&#lain how the %alue chain model can be used to identif! o##ortunities for
information s!stems.
'nformation s"stems can be used at each stage of the value chain to imrove oerational
efficienc", lower costs, imrove rofit margins, and forge a closer relationshi with
customers and suliers.
$efine the %alue web and show how it is related to the %alue chain.
* value web is a collection of indeendent firms that use information technolog" to
coordinate their value chains to collectivel" roduce a roduct or service. 't is more
customer driven and oerates in a less linear fashion than the traditional value chain. The
value web is a networked s"stem that can s"nchronize the business rocesses of
customers, suliers, and trading artners among different comanies in an industr" or in
related industries.
)&#lain how the %alue web hel#s businesses identif! o##ortunities for strategic
information s!stems.
'nformation s"stems enable value webs that are fle#ible and adative to changes in sul"
and demand. 1elationshis can be bundled or unbundled in resonse to changing market
conditions. Firms will accelerate time to market and to customers b" otimizing their
value web relationshis to make quick decisions on who can deliver the required roducts
or services at the right rice and location. 'nformation s"stems make it ossible for
comanies to establish and oerate value webs.
$escribe how the Internet has changed com#etiti%e forces and com#etiti%e
The 'nternet has nearl" destro"ed some industries and severel" threatened others. The
'nternet has also created entirel" new markets and formed the basis of thousands of new
businesses. The 'nternet has enabled new roducts and services, new business models,
and new industries to raidl" develo.
+ecause of the 'nternet, cometitive rivalr" has become much more intense. 'nternet
technolog" is based on universal standards that an" coman" can use, making it eas" for
rivals to comete on rice alone and for new cometitors to enter the market. +ecause
information is available to ever"one, the 'nternet raises the bargaining ower of
customers, who can quickl" find the lowest&cost rovider on the 3eb.
/. +ow do information s!stems hel# businesses use s!nergies0 core com#etencies and
networ1based strategies to achie%e com#etiti%e ad%antage"
)&#lain how information s!stems #romote s!nergies and core com#etencies.
* large cororation is t"icall" a collection of businesses that are organized as a
collection of strategic business units. 'nformation s"stems can imrove the overall
erformance of these business units b" romoting s"nergies and core cometencies.
$escribe how #romoting s!nergies and core com#etencies enhances com#etiti%e
The concet of s"nerg" is that when the outut of some units can be used as inuts to
other units, or two organizations can ool markets and e#ertise, these relationshis lower
costs and generate rofits. 'n al"ing s"nerg" to situations, information s"stems are
used to tie together the oerations of disarate business units so that the" can act as a
* core cometenc" is an activit" for which a firm is a world&class leader. 'n general, a
core cometenc" relies on knowledge that is gained over man" "ears of e#erience and a
first&class research organization or siml" ke" eole who sta" abreast of new e#ternal
knowledge. *n" information s"stem that encourages the sharing of knowledge across
business units enhances cometenc".
)&#lain how businesses benefit b! using networ economics.
'n a network, the marginal costs of adding another articiant are almost zero, whereas
the marginal gain is much larger. The larger the number of articiants in a network, the
greater the value to all articiants because each user can interact with more eole.
The availabilit" of 'nternet and networking technolog" has insired strategies that take
advantage of the abilities of the firm to create networks or network with each other. 'n a
network econom", information s"stems facilitate business models based on large
networks of users or subscribers that take advantage of network economies. 'nternet sites
can be used b" firms to build communities of users that can result in building customer
lo"alt" and en7o"ment and build unique ties to customers, suliers, and business
$efine and describe a %irtual com#an! and the benefits of #ursuing a %irtual
com#an! strateg!.
* virtual coman" uses networks to link eole, assets, and ideas, enabling it to all" with
other comanies to create and distribute roducts and services without being limited b"
traditional organizational boundaries or h"sical locations. %ne coman" can use the
caabilities of another coman" without being h"sicall" tied to that coman". The
virtual coman" model is useful when a coman" finds it cheaer to acquire roducts,
services, or caabilities from an e#ternal vendor or when it needs to move quickl" to
e#loit new market oortunities and lacks the time and resources to resond on its own.
2. What are the challenges #osed b! strategic information s!stems and how should the!
be addressed"
-ist and describe the management challenges #osed b! strategic information
'nformation s"stems are closel" intertwined with an organization/s structure, culture, and
business rocesses. 8ew s"stems disrut established atterns of work and ower
relationshis, so there is often considerable resistance to them when the" are introduced.
'mlementing strategic s"stems often requires e#tensive organizational change and a
transition from one sociotechnical level to another. Such changes are called strategic
transitions and are often difficult and ainful to achieve. 4oreover, not all strategic
s"stems are rofitable. The" are e#ensive and difficult to build because the" entail
massive sociotechnical changes within the organization. 4an" strategic information
s"stems are easil" coied b" other firms so that strategic advantage is not alwa"s
sustainable. The comle# relationshi between information s"stems, organizational
erformance, and decision making must be carefull" managed.
)&#lain how to #erform a strategic s!stems anal!sis.
4anagers should ask the following questions to hel them identif" the t"es of s"stems
that ma" rovide them with a strategic advantage.
9. What is the structure of the industry in which the firm is located? *nal"ze the
cometitive forces at work in the industr"- determine the basis of cometition-
determine the direction and nature of change within the industr"- and anal"ze how
the industr" is currentl" using information technolog".
2. What are the business, firm, and industry value chains for this particular firm?
.ecide how the coman" creates value for its customers- determine how the firm
uses best ractices to manage its business rocesses- anal"ze how the firm
leverages its core cometencies- verif" how the industr" sul" chain and
customer base are changing- establish the benefit of strategic artnershis and
value webs- clarif" where information s"stems will rovide the greatest value in
the firm/s value chain.
3. Have we aligned IT with our business strategy and goals? *rticulate the firm/s
business strateg" and goals- decide if 'T is imroving the right business rocesses
and activities in accordance with the firm/s strateg"- agree on the right metrics to
measure rogress toward the goals.

$iscussion Questions
1. It has been said that there is no such thing as a sustainable com#etiti%e ad%antage.
$o !ou agree" Wh! or wh! not"
Students will argue both sides, and there is no definite answer to the question. There is
little that a coman" can do that cannot be dulicated over time. $itibank and its *T4
machines and *merican *irlines and its reservation s"stems are good e#amles. Think
about comanies that had strategic advantages in the 9:2;s or 9:<;s that no longer e#ist.
'n contrast, some comanies, such as 3al&4art, maintain a strategic advantage for a long
time. 3al&4art maintains its lead b" striving to advance even further.
5ar" 6amel, whom some call the leading strateg" e#ert in business toda", sa"s there is
no such thing as sustainable strategic advantage. 6amel is founder and chairman of
Strategos and a research fellow at 6arvard +usiness School. 6e believes that, in the ast,
most comanies were built to do one thing e#ceedingl" well for an e#ceedingl" long
eriod of time. 'n toda"/s marketlace, comanies built for scale, relication, diligence,
and e#actitude must learn to change, adat, and e#eriment at the seed that "ou see in
the new econom".
8ew econom" comanies must master some virtues of the old econom". These comanies
are learning that scale, oerational e#cellence, and global infrastructure are imortant.
The" can constitute hard&to&dulicate cometitive advantages that allow them to cature
the rents on their innovation. 4an" have been trained to think that there is no such a thing
as sustainable cometitive advantage. The" have been trained to think about innovation in
roducts and technolog", not innovation in business models. The" assume that being
radical is risk" and being incremental is safe. 3e have to rewire eole with new thinking
*. It has been said that the ad%antage that leading1edge retailers such as $ell and Wal1
Mart ha%e o%er their com#etition isn't technolog!3 it's their management. $o !ou
agree" Wh! or wh! not"
Student answers will var" but here are some oints their answers should include!
6ow well has each coman", .ell and 3al&4art, used information s"stems to
reduce transaction costs and agenc" costs=
6ow well has each coman" used information s"stems to take advantage of
0orter/s $ometitive Forces model!
o >eeing new market entrants out
o 2ither reventing substitute roducts and services that ma" comete
with their own, or introducing substitute roducts and services that
ull customers awa" from their cometitors
o 6olding onto customers b" cometing on rices alone when there is
ver" little roduct differentiation
o 2#ercising more control over suliers
6ow well has each coman"/s management used information s"stems to
o ,ow&cost leadershi 3al&4art is the king at this- .ell sometimes
uses this strateg"
o 0roduct differentiation .ell uses this strateg" against *le and 60
(the two leading comuter sellers)
o Focusing on market niche neither coman" uses this much
o Strengthening customer and sulier intimac" 3al&4art wrote the
book on this one- .ell uses this strateg" e#tensivel".