Information Systems Organisations and Structure

Information Systems Organisation and Structure

Contents

1. Features of Organisations
2. Economic impact of Information Systems on Organisations
3. Porter’s Competitive Forces Model
4. Information Systems Strategies for Dealing with Competitive Forces
5. 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

1. Traditional competitors

• All firms share market space with competitors who are continuously devising new products, services, efficiencies and switching cost

1. New market entrants

• Some industries have high entry barriers
• New companies don’t have much brand recognition

1. Substitute product and services

• Other products or services that customers use if your prices become too high

1. Customers

• Can customers easily switch to competitor’s products or can they force business to compete on price alone

1. 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