Information Systems Organisation and Structure
Contents
- Features of Organisations
- Economic impact of Information Systems on Organisations
- Porter’s Competitive Forces Model
- Information Systems Strategies for Dealing with Competitive Forces
- The Business Value Chain Model
Features of Organisations
An organisation’s:
- A group of people with a particular purpose such as a business or government department
- A social unit of people that is structured and managed to meet a need to pursue collective goals
- Environment
- The forces or institutions surrounding an organisation that affect its performance, operations and resources.
- Organisations draw resources which supply goods and services from the environment
- Culture is the assumptions that define the organisation’s goals and products
- Structure is a system used to define a hierarchy with an organisation
- It defines each job, it’s functions and where it reports within the organisation
- Business processes are the routine for providing goods and services
- Politics are the informal, unofficial behind-the-scenes effort to sell ideas, influence an organisation, increase power and achieve other targets.
- These are struggles for resources, competition and using informal networks to gain power and accomplish tasks.
- Management structure determines the different activities and members and assigned roles, responsibility and authority to carry out different task.
Mediating Factors
- The factors that influence the interaction between IT and organisations
- Environment
- Culture
- Structure
- Business Processes
- Politics
- Management Decisions
Economic Impact of Information Systems in an Organisation.
- IT as a factor of production that can be substituted for traditional labour.
- Low cost of IT results I it substituting other forms of capital such as building and machinery
- IT affects the cost and quality of information
- IT reduces transaction cost (market participation)
- Firms contract external suppliers instead of using internal resources
- IT reduces management cost
- IT can reduce agency cost
- The cost of supervising employees
- IT reduces the cost of acquiring and analysing information
Transaction Cost Theory
- Using markets to locate and communicate with distant suppliers, monitoring compliance, buying insurance and obtaining information on products is expansive.
Agency Theory
- A theory to explain what’s the best way to organise the relationship wherein one person determines the work while another person does the work
Porter’s Competitive Forces Model
- The model for understanding competitive advantage
- Provides a general view of a firm, its competitors and environment
- It allows the company to produce goods or services at a lower price or in a more desirable fashion for customers
The Five Forces
- Traditional competitors
- All firms share market space with competitors who are continuously devising new products, services, efficiencies and switching cost
- New market entrants
- Some industries have high entry barriers
- New companies don’t have much brand recognition
- Substitute product and services
- Other products or services that customers use if your prices become too high
- Customers
- Can customers easily switch to competitor’s products or can they force business to compete on price alone
- Suppliers
- Suppliers have power when firms can’t raise prices as fast as suppliers
Information Systems Strategies for Dealing with Competitive Forces
- Low-Cost Leadership
- Lower operational Cost and Prices
- Product Differentiation
- More attractive products compared to competitors
- Focus on Market Niche
- Specific market focus
- Narrowing the target market
- Customer and Supplier Intimacy
- Develop strong relationships with customers and suppliers
- Increase Switching Cost
- Increase the cost incurred by customers if they switch to a competitor
Business Value Chain Model
- The model highlights the specific activities in the business where competitive strategies can be best applied and where information systems are most likely to have strategic impact
- It has critical leverage points where a firm can use IT to enhance its competitive position
- It is subdivided into primary and support activities
Primary Activities
Related to the production and distribution of the firm’s products and services.
- Inbound Logistics
- Receiving and storing materials from distribution to production
- Receiving, storing, inventory control and transportation
- Operations
- Inputs into finished goods
- Machining, packaging and assembly
- Outbound Activities
- Storing and distributing finished products to customers
- Warehousing, order fulfilment, distribution and transportation
- Sales and Marketing
- Promoting and selling the firms products or services
- Services
- Maintenance and repair of the firm’s goods and services
Support Activities
Makes the delivery of the primary activities possible