INFORMATION
SYSTEMS IN GLOBAL
BUSINESS TODAY
Chapter 1
Management Information Systems
Chapter 1 Information Systems in Global Business Today
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In this lecture
Understanding the effects of information systems on
business and their relationship to globalization.
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Explain why information systems are so essential in
business today.
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Define an information system and describe its
management, organization, and technology components.
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Define complementary assets and explain how they ensure
that information systems provide genuine value to an
organization.
Management Information Systems
Chapter 1 Information Systems in Global Business Today
IPL Team Make a Slam Dunk with Information Technology
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IPL Cricket is also a business, INR 20 lakh,
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Problem: Traditional cricket game statistic failed to provide all the details
associated with every play, Lack of hard data usable in decision-making
processes, costly and competitive market.
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Solutions: Developed a new system designed to collect and organize data
using video clips of games, (sports mechanics) by Ramki
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Synergy Sports Technology tags video of each game with hundreds of
descriptive categories and allows coaches and players to stream game footage
from the Web. Demonstrates IT’s role in innovation and improving business
processes.
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Illustrates how the Web has allowed businesses to use new tools to analyze
critical data.
Management Information Systems
Chapter 1 Information Systems in Global Business Today
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The Role of Information Systems in Business Today
How information systems are transforming business
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Information systems are the foundation for conducting business today. In
many industries, survival and even existence is difficult without extensive
use of information technology.
No longer can we imagine going to work and conducting business
without them.
As a society we have come to rely extensively on the use of information
appliances such as cell phones, BlackBerry's, handhelds, and other
hardware.
Communicating and conducting business is increasingly being carried
out through the use of e-mail, online conferencing, and international
teleconferencing.
Internet technologies have become essential business tools
Management Information Systems
Chapter 1 Information Systems in Global Business Today
In the emerging, fully digital firm
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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 key corporate assets are managed through digital
means.
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A truly digital firm has several characteristics that distinguish it from most of
the firms claiming to be digitized:
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Significant business relationships with customers, suppliers, and employees
are digitally enabled.
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Core business processes are accomplished through digital networks and
span the entire organization or link multiple organizations.
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Key corporate assets — intellectual property, core competencies, and
financial and human assets are managed through digital means.
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Internal and external environments are quickly recognized and dealt with.
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Digital firms offer greater flexibility in organization and management
 Time shifting 24/7, space shifting eBay, General Motors
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
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Business firms invest heavily in information
systems to achieve six strategic business
objectives:
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Operational excellence (Wal-Mart)
Improvement of efficiency to attain higher profitability
 Information systems, technology an important tool in
achieving greater efficiency and productivity
 Wal-Mart’s RetailLink system links suppliers to stores
for superior replenishment system
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Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
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Customer and supplier intimacy:
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Serving customers well leads to customers returning,
which raises revenues and profits
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Example: High-end hotels that use computers to track
customer preferences and use to monitor and customize
environment
Intimacy with suppliers allows them to provide vital
inputs, which lowers costs
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
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New Products, Services, and Business
Models
Business model: describes how company produces,
delivers, and sells product or service to create wealth
 Information systems and technology a major enabling
tool for new products, services, business models
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Examples: Apple’s iPod, iTunes, and iPhone, Netflix’s Internetbased DVD rentals
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
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Improved decision making
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Without accurate information:
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Managers must use forecasts, best guesses, luck
Leads to:
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Overproduction, underproduction of goods and services
Misallocation of resources
Poor response times
Poor outcomes raise costs, lose customers
Example: Verizon’s Web-based digital dashboard to
provide managers with real-time data on customer
complaints, network performance, line outages, etc.
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
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Competitive advantage
 Delivering
better performance
 Charging less for superior products
 Responding to customers and suppliers in real
time
 Example: Toyota and TPS (Toyota Production
System) enjoy a considerable advantage over
competitors – information systems are critical to
the implementation of TPS
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
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Survival
 Information
technologies as necessity of business
 Example:
 Industry-level
ATMs
changes, e.g. Citibank’s introduction of
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Data and Information
Information vs. data
Data are streams of raw facts
Information is data shaped into meaningful form
Raw data from a supermarket checkout counter can be processed and organized to produce
meaningful information, such as the total unit sales of dish detergent or the total sales revenue
from dish detergent for a specific store or sales territory.
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
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What is an Information system?
Set of interrelated components
 Collect, process, store, and distribute information
 Support decision making, coordination, and control
OR
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A group of interrelated components working
together toward a common goal by accepting
inputs and producing outputs in an organized
transformation process (dynamic system).
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
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Information system: Three activities produce
information organizations need
Input: Captures raw data from organization or
external environment
 Processing: Converts raw data into meaningful form
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Output: Transfers processed information to people or
activities that use it
Feedback:
 Output returned to appropriate members of
organization to help evaluate or correct input stage
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Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Functions of an Information System
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Dimensions of Information Systems:
 These three themes (Organizations,
Management and Technology) will reappear
throughout the course.
 Understanding the interaction between these
factors and information systems is known as
information system literacy.
 Knowing how to optimize
the relationship between
technology, organizations,
and management is the
purpose of this course.
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Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Examining each of the dimensions of IS:
Organizations, organizational structure (three levels)
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
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Organizational dimension of information
systems (cont.)
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Separation of business functions
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Sales and Marketing
Human Resources
Finance and Accounting
Manufacturing and Production
Unique business processes
 Unique business culture
 Organizational politics
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Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
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Management dimension of information
systems
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Managers set organizational strategy for
responding to business challenges
In addition, managers must act creatively:
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Creation of new products and services
Occasionally re-creating the organization
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
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Technology dimension of information
systems
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Computer hardware and software
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Data management technology
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Networking and telecommunications technology
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Networks, the Internet, intranets and extranets, World Wide
Web
IT infrastructure: provides platform that system is built
on
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
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Investing in information technology does not
guarantee good returns
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Considerable variation in the returns firms
receive from systems investments
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Factors:
Adopting the right business model
 Investing in complementary assets (organizational
and management capital)
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Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Variation in Returns on
Information Technology Investment
Quadrant 1 represents firms that invest
much less in IT but still receive strong
returns.
Quadrant 2 represents firms that invest
a great deal in IT and receive a great
deal in returns.
Quadrant 3 represents firms that invest
much less in IT and receive poor
returns.
Quadrant 4 represents firms that invest
a great deal in IT but receive poor
returns.
Although, on average, investments in information technology produce returns far above
those returned by other investments, there is considerable variation across firms.
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
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Complementary assets:
 Assets
required to derive value from a primary
investment
 Firms supporting technology investments with
investment in complementary assets receive
superior returns
 E.g.: invest in technology and the people to make
it work properly
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Complementary assets include:
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Organizational investments, e.g.
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Managerial investments, e.g.
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Appropriate business model
Efficient business processes
Incentives for management innovation
Teamwork and collaborative work environments
Social investments, e.g.
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The Internet and telecommunications infrastructure
Technology standards
Components of an INFORMATION System
Components of an Information System (Continued)
Information Systems Recourses & Technology
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Recourses
People Resources
 End
Users
 IS Specialists
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Hardware Resources
 Computer
systems
 Peripherals
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Software Resources
 System
software (Operating systems)
 Application software (Payroll program, Word)
 Procedures (filling out a paper form)
Components of an Information System (Continued)
Information Systems Recourses & Technology
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Data Resources
 Data versus Information(Product description,
customer records, employee files, inventory
database)
Network Resources
 Communication
media
 Network support
Information System (IS) versus Information
Technology (IT)
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IS is all the components and resources
necessary to deliver information and functions
to the organization
IT is hardware, software, networking and data
management
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Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Contemporary Approaches to Information Systems
The study of information systems deals with issues and insights contributed
from technical and behavioral disciplines.
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Contemporary Approaches to Information Systems
• Technical approach
• Emphasizes mathematically based models
• Computer science, management science,
operations research
• Behavioral approach
• Behavioral issues (strategic business
integration, implementation, etc.)
• Psychology, economics, sociology
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
Virtual Meetings: Smart Management
Read the Interactive Session and then discuss the following questions:
• What are the advantages of using videoconferencing
technologies? What are the disadvantages?
• What is telepresence and what sorts of companies are best
suited to use it as a communications tool?
• What kinds of companies could benefit from using
videoconferencing? Are there any companies that might
not derive any benefits from this technology?