EM4218E - MANAGEMENT INFORMATION SYSTEMS

CHAPTER 3 –
Information Systems, Organizations and
Strategy

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Learning Objectives

1. Which features of organizations do managers need to know about to build and use information
systems successfully?
2. What is the impact of information systems on organizations?
3. How do Porter’s competitive forces model, the value chain model, synergies, core competencies, and
network economics help companies develop competitive strategies using information systems?
4. What are the challenges posed by strategic information systems, and how should they be addressed?

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CONTENTS

3.1 Relationship between Organizations and IT

3.2 Impacts of IT on Organizations
3.3 Aligning IT with Business Objectives
3.4 Challenges for Strategic Information Systems

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3.1. Relationship between Organizations and IT

• The two-way relationship between organizations and information technology

• Video Lecture Figure 3.1

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3.1. Relationship between Organizations and IT | What Is an Organization?

Organization definition
Technical view
An organization is a stable, formal social structure that takes resources from the environment and processes them to
produce outputs

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3.1. Relationship between Organizations and IT | What Is an Organization?

Organization definition
Behavioural view
A collection of rights, privileges, obligations, and responsibilities that is delicately balanced over a period of time
through conflict and conflict resolution

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3.1. Relationship between Organizations and IT | Features of Organization

• Routines and business processes

• Video Lecture Figure 3.4 Figure 3.5
Environments and Organizations Have a Reciprocal Relationship
• Organizational politics
• Organizational culture
• Organizational environments

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3.1. Relationship between Organizations and IT | Features of Organization

• Routines and business processes

• Video Lecture Figure 3.4
• Organizational politics
• Organizational culture
• Organizational environments
• Disruptive technologies

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3.1. Relationship between Organizations and IT | Features of Organization
Table 3.2 Organizational Structures
• Routines and business processes
• Video Lecture Figure 3.4
• Organizational politics
• Organizational culture
• Organizational environments
• Organizational structure

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3.1. Relationship between Organizations and IT | Features of Organization

• Routines and business processes

• Video Lecture Figure 3.4
• Organizational politics
• Organizational culture
• Organizational environments
• Organizational structure
• Other organizational features
• Goals
• Constituencies
• Leadership styles
• Tasks
• Technology

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CONTENTS

3.1 Relationship between Organizations and IT

3.2 Impacts of IT on Organizations
3.3 Aligning IT with Business Objectives
3.4 Challenges for Strategic Information Systems

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3.2. Impacts of IT on Organizations

• Think about this question

• From the economics point of view, the development of IT will increase or decrease firm size (numbers of
employees)?

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3.2. Impacts of IT on Organizations

• Economic Impacts
• Decline in the number of middle managers and clerical workers as information technology substitutes for
their labor
• Increase investments in IT because of its declining cost relative to other capital investments
• Reduces transaction costs and outsource work to a competitive marketplace rather than hire employees
• Reduce internal management costs
-> We should expect firm size to shrink over time as more capital is invested in IT

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3.2. Impacts of IT on Organizations

• Organizational and Behavioral Impacts

• IT flattens organizations
• Lower-level employees receive the information they need to make decisions without supervision
• Post-industrial Organizations
• Authority increasingly relies on knowledge and competence and not merely on formal positions

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3.2. Impacts of IT on Organizations

• Organizational and Behavioral Impacts

• IT flattens organizations
• Post-industrial Organizations
• Organizational Resistance to Change (Chapter 14)

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CONTENTS

3.1 Relationship between Organizations and IT

3.2 Impacts of IT on Organizations
3.3 Aligning IT with Business Objectives
3.4 Challenges for Strategic Information Systems

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3.3. Aligning IT with Business Objectives

• Porter’s Competitive Force Model

• Video Lecture Figure 3.8

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3.3. Aligning IT with Business Objectives

• Information system strategies for dealing with competitive forces

Example of Walmart

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3.3. Aligning IT with Business Objectives

• The Internet’s impact on competitive advantage

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3.3. Aligning IT with Business Objectives

• Value chain model

• The value chain model views the firm as a series or chain of basic activities that add a margin of value to
a firm’s products or services

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3.3. Aligning IT with Business Objectives

• Extending the value chain

• The value web

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3.3. Aligning IT with Business Objectives

• Information systems can improve the overall performance of business units by promoting
synergies and core competencies
• Synergy
• When the output of some units can be used as inputs to other units or two organizations pool markets and expertise,
these relationships lower costs and generate profits.
• Core competency
• A core competency relies on knowledge that is gained over many years of practical field experience with a technology.
This practical knowledge is typically supplemented with a long-term research effort and committed employees. Any
information system that encourages the sharing of knowledge across business units enhances competency
• Network-Based strategy
• Network-based strategies include the use of network economics, a virtual company model, and business ecosystems.
• The example of Haidilao

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CONTENTS

3.1 Relationship between Organizations and IT

3.2 Impacts of IT on Organizations
3.3 Aligning IT with Business Objectives
3.4 Challenges for Strategic Information Systems

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3.4 Challenges for Strategic Information Systems

• Sustaining competitive advantage

• Aligning IT with business objectives

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