Information Systems

in Global Business
Today
 LEARNING OBJECTIVES
• Explain why information systems are so
essential in business today.

• Understanding the effects of information

systems on business and their relationship to
globalization
 Why Information Systems Matter
3

Foundation of Doing Business:

 Managers and employees rely on information systems
every day to conduct business
 All of e-commerce would be impossible without
substantial IT investment, and firms like Google, eBay ,
etc. would not exist

 Businesses use IS and IT

 To improve efficiency and effectiveness of business
processes
 To facilitate managerial decision making
 For workgroup collaboration
 Why Information Systems Matter ……
4

Productivity:
 Investment in I.T plays a critical role in increasing the
productivity of firms

 I.T Tools along with innovations in management has

enabled firms to gain substantial productivity

 For example: Economists at the US Federal Reserve Bank

estimates that I.T contributed to the lowering of inflation by
0.5 to 1 percentage point in the years from 1995 to 2000 (A.
Greenspan, 2000)
 Why Information Systems Matter ……
5

Strategic Opportunity and Advantage:

 Using investment in I.T to develop new products and
create new services
 Using I.T as a tool to achieve strategic advantage:
 Innovate
 Differentiate
 Promote growth
 Alliance
 Cost reduction, etc.
Competitive Strategy / M. Porter
6

Threat of
New Entrants

Bargaining Power Rivalry Among Bargaining Power

of Suppliers Existing Competitors of Buyers

Threat of Substitute
Products or Services
 Why Information Systems Matter
7

Capital Management:
 Information Technology is largest component of
capital investment for most firms and double as
a percentage of total business investment since
1980
Why Information Systems Matter
8

Information technology capital investment, defined as hardware, software, and

communications equipment, grew from 14 percent to 33 percent of all invested
capital between 1999 and 2013.
 Business Transformation through
Technology 9

How are information systems

transforming business?
 Emerging mobile digital platform
 Growing business use of “big data”
 Growth in cloud computing

Globalization opportunities
 Internet has drastically reduced costs of operating on global
scale, increases in foreign trade, outsourcing
 Presents both challenges and opportunities
 Business Transformation through
Technology 10

• In the emerging, fully digital firm:

– Significant business relationships are digitally enabled
and mediated.
– Core business processes are accomplished through
digital networks.
– Key corporate assets are managed digitally.
• Digital firms offer greater flexibility in
organization and management.
– Time shifting, space shifting
 The Role of Information Systems in
Business Today….cont.
Business firms invest heavily in information
systems to achieve the following strategic business
objectives:
1.Promote Operational excellence
2.Create new products, services, and business
models
3.Enhance customer and supplier intimacy
4.Improve decision making
5.Gain Competitive advantage
6.Survival
 Management Information Systems
Chapter 1: Information Systems in Global Business Today

The Interdependence Between Organizations and Information Technology

In contemporary systems there is a growing interdependence between a firm’s information systems and its
business capabilities. Changes in strategy, rules, and business processes increasingly require changes in
hardware, software, databases, and telecommunications. Often, what the organization would like to do depends
on what its systems will permit it to do.
 The Role of Information Systems in
Business Today….cont.
 Promote operational excellence:
 Improvement of efficiency to attain higher
profitability
 Information systems and technology are
important tool in achieving greater efficiency and
productivity
• Example: Shoprite’s MyWebGrocer System links
suppliers to stores for superior replenishment system
 The Role of Information Systems in
Business Today….cont.
 Create new products, services, and business
models:
 Business model: describes how a company
produces, delivers, and sells product or service
to create wealth
 For example:
 The Role of Information Systems in
Business Today….cont.
 Create new products, services, and business
models:
 Technology are a major enabling tool for new
products, services, business models
• Examples:
– Ride-hailing apps Uber, Bolt, Yango, Taxify,
Indriver
– Facebook’s cross-platform messaging and
voice-over-IP (VoIP) service, WhatsApp
– Apple’s iPhones,
– Netflix’s Internet-based box-office movies
 The Role of Information Systems in
Business Today….cont.
 Enhance Customer and Supplier intimacy:
 Serving customers well leads to customers
returning, which raises revenues and profits
• Example: High-end hotels that use computers to
track customer preferences and use to monitor and
customize environment

 Intimacy with suppliers allows them to provide

vital inputs, which lowers costs
• Example: Bui Power Authority’s enterprise
information system which links production records to
contract manufacturer
 The Role of Information Systems in
Business Today….cont.
 Improve decision making
 Without accurate information:
• Managers must use forecasts, best guesses, luck, etc.
• May lead to:
– Overproduction, underproduction of goods and services
– Misallocation of resources
– Poor response times
• Poor outcomes raise costs, lose customers
 Example: MTN’s Web-based digital dashboard provide
managers with real-time data on customer complaints,
network performance, line outages, etc.
 The Role of Information Systems in
Business Today….cont.
 Gain Competitive advantage
 Delivering better performance
 Charging less for superior products
 Responding to customers and suppliers in real
time
 Example: Toyota and TPS (Toyota Production
System) enjoy a considerable advantage over
competitors – information systems are critical to
the implementation of TPS
 The Role of Information Systems in
Business Today….cont.
 Survival
 Information technologies as necessity of
business
 May be:
• Industry-level changes, e.g. Citibank’s introduction of
ATMs
• Governmental regulations requiring record-keeping
– Examples:
» US Sarbanes-Oxley Act (requires that public
firms keep all data, including e-mail, on record for 5
years)
» Toxic Substances Control Act,
 What is a System?
 A system
 set of interrelated components
 with a clearly defined boundary
 working together to achieve a common set of objectives
 by accepting inputs and producing outputs in an organized
transformation process

 Types:
 physical – solar, planet, sun,…
 biological – human body (respiratory, digestive,…..)
 technological – computer, oil refinery,…
 socioeconomic – business organization, land tenure…
20
 What is an Information System?

An organized combination of people,

technology (i.e. hardware, software,
telecommunication networks), data
resources and processes to transform
and disseminate information in an
organization

21
 What Is an Information System?
(1 of 3)
 Information system
 Set of interrelated components
 Collect, process, store, and distribute
information
 Support decision making, coordination, and
control
 Information vs. data
 Data are streams of raw facts
 Information is data shaped into meaningful
form
Figure 1.3: Data and Information

Copyright © 2018 Pearson Education Ltd.

 What Is an Information System?
(2 of 3)
 Three activities of information systems
produce information organizations need
 Input: Captures raw data from organization or
external environment
 Processing: Converts raw data into meaningful
form
 Output: Transfers processed information to
people or activities that use it
 What Is an Information System?
(3 of 3)
 Feedback
 Output is returned to appropriate members of
organization to help evaluate or correct input
stage
 Computer/computer program vs.
information system
 Computers and software are technical
foundation and tools, similar to the material
and tools used to build a house
Figure 1.4: Functions of an Information
System

Copyright © 2018 Pearson Education Ltd.

 IS components

1. People

2. Technology

3. Processes

4. Data

27
 1. People
 The human element plays a crucial role in the
success or failure of most information systems

 Users

 Managers and staff

 Information technology team

 User-generated content
 2. Technology
 Hardware

 Software

 Telecommunications
 3. Processes
 Set of activities to achieve a task
 Organizations implement IS to support, streamline,
and eliminate business processes
 Business process
management (BPM)
 focuses on designing,
optimizing, and
streamlining processes,
taking into account the
ITEC 1010
human element
Information and Organizations
 4. Data
• Raw ingredient for
every information
system

• Converted into digital

format, integrated and
shared across systems
 IN-CLASS ACTIVITIES
• How does Cloud Computing work?
• https://www.youtube.com/watch?v=dH0yz-Osy54
• https://www.youtube.com/watch?v=1ERdeg8Sfv4

• What are the business benefits of Cloud

Computing?
• https://www.youtube.com/watch?v=K6JTSoL5Lvc
• https://ijbssnet.com/journals/Vol_3_No_1_Januar
y_2012/26.pdf
 IN-CLASS ACTIVITIES
• In groups of 4-members research on a named
company in any one of the following industry:
• Manufacturing • Construction
• Retail • Insurance
• Mining • Agriculture
• Energy • Banking
• Health • Telecommunication
• Discuss how a Cloud computing-based
infrastructure may support the company
improve its bottom line.
 The Interdependence Between Organizations
and Information Technology

• Significant investment in IT necessary to achieve

business objectives

• Businesses rely on IS/IT to help achieve their goals; a

business without adequate IS/IT will inevitably fall
short.

• Information systems are also products of the

businesses that use them. Businesses shape their
information systems and information systems shape
businesses
 CASE STUDY
MIS in your Pocket
1. How do the kinds of applications described in the
case study helped improve operational efficiency
and decision-making at Doylestown Hospital?

2. Discuss what it means to say that “the iPhone is

an industry changer: It changes the way that
firms can interact with their customers and
suppliers.”