Unit 1: Information Systems in Global Business Today

UNIT 1
Information Systems in Global

Business Today
Role of information system in Business Today
• Globalization
• WHAT’S NEW IN MANAGEMENT
INFORMATION SYSTEMS?
– Technology
• Cloud computing
• Big Data
• Mobile digital platform
– Management
– Organizations
STRATEGIC BUSINESS OBJECTIVES OF
INFORMATION SYSTEMS
• Operational Excellence
– Businesses continuously seek to improve the efficiency of their
operations in order to achieve higher profitability.
– Information systems and technologies are some of the most important
tools available to managers for achieving higher levels of efficiency and
productivity in business operations, especially when coupled with
changes in business practices and management behavior.
– Walmart, the largest retailer on earth, exemplifies the power of
information systems coupled with brilliant business practices and
supportive management to achieve world-class operational efficiency.
– Walmart has Retail Link system, which digitally links its suppliers to every
one of Walmart’s stores. As soon as a customer purchases an item, the
supplier monitoring the item knows to ship a replacement to the shelf.
• New Products, Services, and Business Models
– Information systems and technologies are a major
enabling tool for firms to create new products and
services, as well as entirely new business models.
A business model describes how a company
produces, delivers, and sells a product or service
to create wealth.
• Customer and Supplier Intimacy
– When a business really knows its customers, and serves them well, the customers
generally respond by returning and purchasing more. This raises revenues and profits.
– Likewise with suppliers: the more a business engages its suppliers, the better the
suppliers can provide vital inputs.
– The Mandarin Oriental in Manhattan and other high-end hotels exemplify the use of
information systems and technologies to achieve customer intimacy. These hotels use
computers to keep track of guests’ preferences, such as their preferred room
temperature, check-in time, frequently dialed telephone numbers, and television
programs, and store these data in a large data repository. Individual rooms in the
hotels are networked to a central network server computer so that they can be
remotely monitored or controlled. When a customer arrives at one of these hotels,
the system automatically changes the room conditions, such as dimming the lights,
setting the room temperature, or selecting appropriate music, based on the
customer’s digital profile. The hotels also analyze their customer data to identify their
best customers and to develop individualized marketing campaigns based on
customers’ preferences.
• JCPenney exemplifies the benefits of information systems-
enabled supplier intimacy. Every time a dress shirt is bought at
a JCPenney store in the United States, the record of the sale
appears immediately on computers in Hong Kong at the TAL
Apparel Ltd. supplier, a contract manufacturer that produces
one in eight dress shirts sold in the United States. TAL runs the
numbers through a computer model it developed and then
decides how many replacement shirts to make, and in what
styles, colors, and sizes. TAL then sends the shirts to each
JCPenney store, bypassing completely the retailer’s
warehouses. In other words, JCPenney’s shirt inventory is near
zero, as is the cost of storing it.
• Improved Decision Making
– For instance, Verizon Corporation, one of the largest
telecommunication companies in the United States, uses a
Web-based digital dashboard to provide managers with precise
real-time information on customer complaints, network
performance for each locality served, and line outages or
storm-damaged lines. Using this information, managers can
immediately allocate repair resources to affected areas, inform
consumers of repair efforts, and restore service fast.
• Competitive Advantage
• Survival
DIMENSIONS OF INFORMATION SYSTEMS
• Using information systems effectively requires

an understanding of the organization,
management, and information technology
shaping the systems. An information system
creates value for the firm as an organizational
and management solution to challenges posed
by the environment.
• Organizations
– Organizations have a structure that is composed of
different levels and specialties. Their structures
reveal a clear-cut division of labor. Authority and
responsibility in a business firm are organized as a
hierarchy, or a pyramid structure.
– Have various functions---business functions
– Organizational culture
Management
– There are three types of decisions made by
different sections of the organization. Information
systems are used to help with these decisions.
• Information and technology
– Computer hardware
– Software
– Data management technology
– Networking and telecommunications technology
– IT infrastructure
• Business perspective on IS
– IS is instrument for creating value to firms
– The decision to build or maintain an information system
assumes that the returns on this investment will be
superior to other investments in buildings, machines, or
other assets.
– Information systems enable the firm to increase its
revenue or decrease its costs by providing information
that helps managers make better decisions or that
improves the execution of business processes.
– Every business has an information value chain, in
which raw information is systematically acquired
and then transformed through various stages that
add value to that information.
COMPLEMENTARY ASSETS: ORGANIZATIONAL
CAPITAL AND THE RIGHT BUSINESS MODEL
• Investing in information technology does not
guarantee good returns.
• Information technology investments alone
cannot make organizations and managers
more effective unless they are accompanied
by supportive values, structures, and behavior
patterns in the organization and other
complementary assets.
• Some firms fail to adopt the right business
model that suits the new technology, or seek
to preserve an old business model that is
doomed by new technology.
• COMPLEMENTARY ASSETS
– Assets required to derive value from a primary investment
– It includes
• Organizational assets
– Supportive organizational culture that values efficiency and effectiveness
– Appropriate business model
– Efficient business processes
– Decentralized authority
– Distributed decision-making rights
– Strong IS development team
• Managerial assets
– Strong senior management support for technology investment and change
– Incentives for management innovation
– Teamwork and collaborative work environments
– Training programs to enhance management decision skills
– Management culture that values flexibility and knowledge-based decision making.
• Social assets
– The Internet and telecommunications infrastructure
– IT-enriched educational programs raising labor force computer literacy
– Standards (both government and private sector)
– Laws and regulations creating fair, stable market environments
– Technology and service firms in adjacent markets to assist implementation
• These investments in organization and
management are also known as
organizational and management capital.
Emerging digital firm
• A digital firm is one in which nearly all of the
organization’s significant business
relationships with customers, suppliers, and
employees are digitally enabled and mediated.
• Core business processes are accomplished
through digital networks spanning the entire
organization or linking multiple organizations.
• Business processes refer to the set of logically
related tasks and behaviors that organizations
develop over time to produce specific
business results and the unique manner in
which these activities are organized and
coordinated.

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UNIT 1

Information Systems in Global

• Using information systems effectively requires

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