Chapter 3sun.csim.scu.edu.tw/.../01MIS/mis12e_ch03-revised.pdf · 2012-10-22 · Management...

ManagementInformationSystemsManagementInformationSystemsMANAGINGTHEDIGITALFIRM,12TH EDITION,GLOBALEDITION

Ch 3Chapter3

INFORMATION SYSTEMS, ORGANIZATIONS AND STRATEGYORGANIZATIONS, AND STRATEGY

VIDEO CASESCase 1: National Basketball Association: Competing on Global Delivery With

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ManagementInformationSystemsManagementInformationSystemsCHAPTER 3: INFORMATION SYSTEMS, ORGANIZATIONS,

AND STRATEGY

LearningObjectivesAND STRATEGY

• Identify and describe important features of organizations that managers need to know about in g gorder to build and use information systems successfully.

• Demonstrate how Porter’s competitive forces model helps companies develop competitivemodel helps companies develop competitive strategies using information systems.

• Explain how the value chain and value web models• Explain how the value chain and value web models help businesses identify opportunities for strategic information system applications.information system applications.

© Pearson Education 20122


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LearningObjectives(cont.)AND STRATEGY

• Demonstrate how information systems help businesses use synergies, core competencies, and y g , p ,network‐based strategies to achieve competitive advantage.



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OrganizationsandInformationSystemsAND STRATEGY

• Information technology and organizations influence one anotherinfluence one another– Complex relationship influenced by organization’sorganization’s• Structure• Business processes• Politics• Culture• Environment, and • Management decisions



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THE TWO‐WAY RELATIONSHIP BETWEEN ORGANIZATIONS AND INFORMATION TECHNOLOGYThis complex two‐way relationship is mediated by many factors, not the least of which are the decisions made—or not made—by managers. Other factors mediating the relationship include the organizational culture, structure, politics,culture, structure, politics, business processes, and environment.

FIGURE 3‐1



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• What is an organization?T h i l d fi iti (結構化的角度)– Technical definition: (結構化的角度)

• Stable, formal social structure that takes resources from environment and processes them to produce outputsenvironment and processes them to produce outputs

• A formal legal entity with internal rules and procedures, as well as a social structure

– Behavioral definition: (人的角度)• A collection of rights privileges obligations andA 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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OrganizationsandInformationSystems

C C C O CO O C O O O G O

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THE TECHNICAL MICROECONOMIC DEFINITION OF THE ORGANIZATION

In the microeconomic definition of organizations, capital and labor (the primary production factors provided by the environment) are transformed by the firm through the production process into products and services (outputs to the environment). The products and services are consumed by the environment, which supplies additional capital and labor as inputs in the feedback loop.

FIGURE 3‐2

p p p



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O O O G O S

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THE BEHAVIORAL VIEW OF ORGANIZATIONS

The behavioral view of organizations emphasizes group relationships, values, and structures.FIGURE 3‐3



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• Features of organizationsU f hi hi l•Use of hierarchical structure

•Accountability, authority in system of impartial y y y pdecision making

•obedience to principle of efficiency•obedience to principle of efficiency

•Routines and business processes

•Organizational politics, culture, environments and structuresand structures



AND STRATEGY


• Routines and business processesR ti ( t d d ti d )• Routines (standard operating procedures)•Precise rules, procedures, and practices developed to cope with virtually all expected situationsp

• Business processes: Collections of routinesi fi ll i f b i• Business firm: Collection of business

processes



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ROUTINES, BUSINESS PROCESSES, AND ,FIRMSAll organizations are composed of individual routines and b h i ll i f hi hbehaviors, a collection of which make up a business process. A collection of business processes make up the business firm. New information system applications require that individual routines and business processes change to achieve high levels of organizational performanceorganizational performance.

FIGURE 3‐4



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•Organizational politics•Divergent viewpoints lead to political struggle competitionpolitical struggle, competition, and conflict

•Political resistance greatly hampers organizational changehampers organizational change



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• Organizational culture:• Encompasses set of assumptions that define goal and product•What products the organization should produceH d h it h ld b d d•How and where it should be produced

• For whom the products should be produced

•May be powerful unifying force as well as restraint on changerestraint on change



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i i l iOrganizationsandInformationSystems

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• Organizational environments:• Organizations and environments have a reciprocal g prelationship

• Organizations are open to, and dependent on, the social g p , p ,and physical environment

• Organizations can influence their environments (ex. 國會遊說)g ( 國會遊說)

• Environments generally change faster than organizations(ex. Disruptive technologies)( p g )

• Information systems can be an instrument of environmental scanning, act as a lensg



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O S O G O S C OC O S

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ENVIRONMENTS AND ORGANIZATIONS HAVE A RECIPROCAL RELATIONSHIP

Environments shape what organizations can do, but organizations can influence their environments and FIGURE 3‐5 p g , gdecide to change environments altogether. Information technology plays a critical role in helping organizations perceive environmental change and in helping organizations act on their environment.



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i i h l iOrganizationsandInformationSystems

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• Disruptive technologies– Technology that brings about sweeping change to gy g p g gbusinesses, industries, markets

– Examples: personal computers, word processing p p p , p gsoftware, the Internet, the PageRank algorithm

– P. 117, Table 3‐1P. 117, Table 3 1– First movers and fast followers

Fi t i t f di ti• First movers – inventors of disruptive technologies

• Fast followers firms with the size and• Fast followers – firms with the size and resources to capitalize on that technology



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• 5 basic kinds of organizational structure– Entrepreneurial:– Entrepreneurial:

• Small start‐up business

– Machine bureaucracy:Machine bureaucracy: • Midsize manufacturing firm

– Divisionalized bureaucracy: y• Fortune 500 firms

– Professional bureaucracy: • Law firms, school systems, hospitals

– Adhocracy: task force organization• Consulting firms



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HowInformationSystemsImpactOrganizationsandBusinessFirmsAND STRATEGY

• Economic impactsIT h l ti t f it l d th t f– IT changes relative costs of capital and the costs of information Information systems technology is a factor of– Information systems technology is a factor of production, like capital and laborIT affects the cost and quality of information and– IT affects the cost and quality of information and changes economics of information

• Information technology helps firms contract in sizeInformation technology helps firms contract in size because it can reduce transaction costs (the cost of participating in markets)

– Outsourcing



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• Transaction cost theoryk– Firms seek to economize on transaction

costs (the costs of participating in markets)• Vertical integration, hiring more employees, buying suppliers and distributorsdistributors

– IT lowers market transaction costs for a fi ki it th hil f fi tfirm, making it worthwhile for firms to transact with other firms rather than grow the number of employeesthe number of employees



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HowInformationSystemsImpactOrganizationsandBusinessFirms

S C O COS O O C O O O

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THE TRANSACTION COST THEORY OF THE IMPACT OF INFORMATIONTECHNOLOGY ON THE ORGANIZATION

Firms traditionally grew in size to reduce market transaction costs. IT potentially reduces the firms market FIGURE 3‐6 y g p ytransaction costs. This means firms can outsource work using the market, reduce their employee head count and still grow revenues, relying more on outsourcing firms and external contractors.



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• Agency theory: Fi i f t t lf i t t d– Firm is nexus of contracts among self‐interested parties requiring supervisionFi i ( h f– Firms experience agency costs (the cost of managing and supervising) which rise as firm growsgrows

– IT can reduce agency costs, making it possible for firms to ro itho t addin to the osts offirms to grow without adding to the costs of supervising, and without adding employees



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HowInformationSystemsImpactOrganizationsandBusinessFirms

G C O O C O O O

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THE AGENCY THEORY OF THE IMPACT OF INFORMATIONTECHNOLOGY ON THE ORGANIZATION

As firms grow in size and complexity, traditionally they experience rising agency costs. FIGURE 3‐7



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• Organizational and behavioral impactsIT fl tt i ti– IT flattens organizations• Decision making pushed to lower levels• Fewer managers needed (IT enables faster decision making and increases span of control)

– Postindustrial (後工業時代) organizations• Organizations flatten because in postindustrial societies, authority increasingly relies on knowledge and competence rather than formal

i ipositions



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FLATTENING ORGANIZATIONS

Information systems can reduce the number of levels in an organization by providing managers with information to supervise larger numbers ofsupervise larger numbers of workers and by giving lower‐level employees more decision‐making authority.

FIGURE 3‐8



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• Organizational resistance to changeI f ti t b b d i– Information systems become bound up in organizational politics because they influence access to a key resource – informationaccess to a key resource – information

– Information systems potentially change an organization’s structure culture politics andorganization s structure, culture, politics, and workMost ommon reason for fail re of lar e proje ts– Most common reason for failure of large projects is due to organizational and political resistance to changechange



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ORGANIZATIONAL RESISTANCE AND THE MUTUALLY ADJUSTING RELATIONSHIP BETWEEN TECHNOLOGY AND THE ORGANIZATION

Implementing information systems has consequences for task arrangements, structures, and people According to thisand people. According to this model, to implement change, all four components must be changed simultaneously.

FIGURE 3 9FIGURE 3‐9



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• The Internet and organizationsTh I t t i th ibilit t– The Internet increases the accessibility, storage, and distribution of information and knowledge for organizationsfor organizations

– The Internet can greatly lower transaction and agency costsagency costs• Example: Large firm delivers internal manuals to employees via a corporate Web site savingto employees via a corporate Web site, saving millions of dollars in distribution costs



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• Central organizational factors to consider when planning a new system:p g y– Environment– StructureStructure

• Hierarchy, specialization, routines, business processes– Culture and politicsp– Type of organization and style of leadership – Main interest groups affected by system; attitudes of– Main interest groups affected by system; attitudes of end users

– Tasks decisions and business processes the systemTasks, decisions, and business processes the system will assist



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UsingInformationSystemstoAchieveCompetitiveAdvantageAND STRATEGY

• Why do some firms become leaders in their industry?

Mi h l P t ’ titi f d l• Michael Porter’s competitive forces model– Provides general view of firm, its competitors, and

ienvironment– Five competitive forces shape fate of firm

1. Traditional competitors 2. New market entrants 3. Substitute products and services4. Customers5 S li5. Suppliers



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UsingInformationSystemstoAchieveCompetitiveAdvantage

O ’S CO O C S O

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PORTER’S COMPETITIVE FORCES MODEL

In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not FIGURE 3‐10 p , g p gonly by competition with its traditional direct competitors but also by four other forces in the industry’s environment: new market entrants, substitute products, customers, and suppliers.



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• Traditional competitorsAll firms share market space with competitors who– All firms share market space with competitors who are continuously devising new products, services, efficiencies, switching costs, g

• New market entrants S i d t i h hi h b i t t– Some industries have high barriers to entry, e.g. computer chip businessN i h i t– New companies have new equipment, younger workers, but little brand recognition



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• Substitute products and servicesSubstitutes customers might use if your prices– Substitutes customers might use if your prices become too high, e.g. iTunes substitutes for CDs

• Customers• Customers – Can customers easily switch to competitor’s

d t ? C th f b i t tproducts? Can they force businesses to compete on price alone in transparent marketplace?

li• Suppliers– Market power of suppliers when firm cannot raise prices as fast as suppliers



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• Four generic strategies for dealing with competitive forces enabled bywith competitive forces, enabled by using IT– Low‐cost leadership Product differentiation–Product differentiation

– Focus on market niche– Strengthen customer and supplier intimacyy



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• Low‐cost leadershipProduce products and services at a lower price than– Produce products and services at a lower price than competitors while enhancing quality and level of service

– Examples: Wal‐Mart

• Product differentiation• Product differentiation– Enable new products or services, greatly change

t i d icustomer convenience and experience– Examples: Google, Nike, Apple



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• Focus on market nicheUse information systems to enable a focused– Use information systems to enable a focused strategy on a single market niche; specialize

– Example: Hilton Hotels– Example: Hilton Hotels

• Strengthen customer and supplier intimacy– Use information systems to develop strong ties and loyalty with customers and suppliers; increase

it hi tswitching costs– Example: Netflix, Amazon



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• The Internet’s impact on competitive advantageTransformation destruction threat to some– Transformation, destruction, threat to some industries

• E g travel agency printed encyclopedia newspaperE.g. travel agency, printed encyclopedia, newspaper– Competitive forces still at work, but rivalry more intense

– Universal standards allow new rivals, entrants to market

– New opportunities for building brands and loyal customer bases


(＋)網際網路讓整體產業更加有效率，因此能夠擴充市場規模

網際網路如何影響產業結構

代替品和服務能夠擴充市場規模

(－)網際網路的運用方法日漸增多，帶來新的替代威脅

影響產業結構威脅

供應商的議價現有公司之間的競爭

通路的最終使用

(＋/－)網路採購可提高企業對供 (－)網際網路降低競爭者的差異，

力量力量間的競爭間的競爭議價力量

者的議價力量

(＋/ )網路採購可提高企業對供應商的議價力量，雖然供應商也可接觸到更多客戶

(－)供應商與終端使用者直接接觸降低了中間商的作用

( )網際網路降低競爭者的差異因此獨家特色越來越難維持

(－)讓競爭者的重心轉移到價格

(＋)網際網路會消除強勢通路，或提高購買者對傳統通

(－)導致議價力量逐漸移轉至終端使用者

觸，降低了中間商的作用

(－)網路採購與數位市場往往為所有企業，提供相同的供應商管道，且採購的產品傾向

(－)擴大市場疆界，導致競爭者數目增加

(－)降低變動成本，增加折扣壓力

註： (＋)正面影響

買者對傳統通路的議價力量 (－)降低轉換成本

(－)降低銷售人員、通路、實體資產等方面的進入障礙

商管道且採購的產品傾向標準化，降低了差異性

(－)進入障礙降低，競爭者數目增加，導致議價力量逐漸移至供應商

折扣壓力(－)負面影響

新加入者的威

37

等方面的進入障礙

(－)網際網路的各種應用容易被新進入者模仿

至供應商新加入者的威脅


AND STRATEGY


• Business value chain modelViews firm as series of activities that add value to– Views firm as series of activities that add value to products or services

– Highlights activities where competitive strategies can– Highlights activities where competitive strategies can best be applied

• Primary activities vs. support activitiesPrimary activities vs. support activities– At each stage, determine how information systems can improve operational efficiency and improve customer p p y pand supplier intimacy



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THE VALUE CHAIN MODELThis figure provides examplesThis figure provides examples of systems for both primary and support activities of a firm and of its value partners that can add a margin of value to a firm’s products or services.

FIGURE 3‐11



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• Value web: –Collection of independent firms using highly synchronized IT to coordinate value chains to produce product or service collectively

–More customer driven, less linear operation than traditional value chainoperation than traditional value chain



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THE VALUE WEB

The value web is a networked system that can synchronizesystem that can synchronize the value chains of business partners within an industry to respond rapidly to changes in supply and demand.

FIGURE 3‐12



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• Information systems can improve overall performance of business units by promotingperformance of business units by promoting synergies and core competencies

S i (綜效)– Synergies(綜效)• When output of some units used as inputs to others,

i i l k d ior organizations pool markets and expertise• Example: merger of Bank of NY and JPMorgan Chase• information technology’s role in promoting synergy is tying together operations of disparate business units

th t th t h lso that they can act as a whole.



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• Core competencies–Activity for which firm is world‐class leader

–Relies on knowledge, experience, and sharing this across business unitssharing this across business units

– Example: Procter & Gamble’s intranet and directory of subject matter expertsand directory of subject matter experts



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• Network‐based strategies–Take advantage of firm’s abilities to network with each other

– Include use of:• Network economics• Network economics• Virtual company model• Business ecosystems



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• Network economics:UsingInformationSystemstoAchieveCompetitiveAdvantage

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• Network economics:– Marginal cost of adding new participant almost zero, with much greater marginal gainmuch greater marginal gain

– Value of community grows with sizeV l f ft i t ll d t b– Value of software grows as installed customer base grows

• Traditional economics: Law of diminishing returns (報酬遞減法則)遞減法則)– The more any given resource is applied to production, the l th i l i i t t til i t i h dlower the marginal gain in output, until a point is reached where the additional inputs produce no additional outputs

• 當農人不斷的施肥，雖然農作物可能會長得比較好，但每單位肥料刺激• 當農人不斷的施肥，雖然農作物可能會長得比較好，但每單位肥料刺激農作物的邊際產出則會減少。



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• Virtual company strategyVi t l t k t ll ith– Virtual company uses networks to ally with other companies to create and distribute products without being limited by traditionalproducts without being limited by traditional organizational boundaries or physical locationslocations



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• Business ecosystems (生態系統)Industry sets of firms providing related services and– Industry sets of firms providing related services and products

• Microsoft platform used by thousands of firmsMicrosoft platform used by thousands of firms• Wal‐Mart’s order entry and inventory management

– Keystone firms: Dominate ecosystem and createKeystone firms: Dominate ecosystem and create platform used by other firms (ex. Google)

– Niche firms: Rely on platform developed by keystoneNiche firms: Rely on platform developed by keystone firm

– Individual firms can consider how IT will help themIndividual firms can consider how IT will help them become profitable niche players in larger ecosystems



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UsingInformationSystemsforCompetitiveAdvantage:

Management Issues

AND STRATEGY

• Sustaining competitive advantage– Because competitors can retaliate and copy strategic

ManagementIssues

p py gsystems, competitive advantage is not always sustainable; systems may become tools for survival

• Aligning IT with Business Objectives– Only one‐quarter of firms achieve alignment of IT with the bbusiness

– What IT can do? How it works?

• Managing strategic transitions– Adopting strategic systems requires changes in business goals, relationships with customers and suppliers, and business processes


Chapter 3sun.csim.scu.edu.tw/.../01MIS/mis12e_ch03-revised.pdf · 2012-10-22 · Management...

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