Lesson $$3$$ - Information Systems Organisation and Strategy

A set of vocabulary flashcards covering the features of organisations, the economic impacts of IT, Porter's Competitive Forces Model, and the Business Value Chain Model based on Lesson $$3$$ of the BMC511S course.

Organisation

A group of people with a particular purpose, such as a business or government department, or a social unit that is structured and managed to meet a need or to pursue collective goals.

Mediating Factors

Specific factors influencing the interaction between IT and organisations, including the organisation's structure, business processes, culture, politics, surrounding environment and management decisions.

Organisation's environment

The forces or institutions surrounding an organisation that affect its performance, operations and resources, such as government, competitors, customers, and financial institutions.

Organisation's culture

The assumptions that define the organisation's goals and products, such as the assumption that students attend university to learn.

Organisation's structure

A system used to define a hierarchy within an organisation that defines each job, its function, and where it reports within the organisation.

Business processes

The routines for providing goods and services, such as the gathering of basic information.

Organisation's politics

Informal, unofficial behind-the-scenes efforts to sell ideas, influence an organisation, increase power and achieve other targets through struggles for resources and competition.

Management structure

The system that determines different activities and members and assigns roles, responsibility and authority to carry out different tasks.

Transaction costs

The costs incurred when a firm buys on the market place what it cannot make itself.

Transaction cost theory

The theory that using markets is expensive because of factors such as locating and communicating with distance suppliers, monitoring compliance, buying insurance, and obtaining information on products.

Agency theory

A view of an organisation as a "nexus of contracts" among self-interested individuals rather than as a unified profit-maximizing entity.

Agency costs

The costs of supervising employees, which information technology can reduce to make it possible for firms to grow without adding employees.

Flattening

The process where information systems reduce the number of levels in an organization by providing managers with information to supervise larger numbers of workers and giving lower-level employees more decision-making authority.

Competitive advantage

A condition or circumstance that puts a company in a favorable or superior business position.

Porter's Competitive Forces Model

A model for understanding competitive advantage where $5$ competitive forces shape the fate of a firm: traditional competitors, new market entrants, substitute products and services, customers, and suppliers.

Traditional competitors

Firms that share market space and are continuously devising new products, services, efficiencies, and switching costs.

New market entrants

New companies that may have new equipment and younger workers but little brand recognition, sometimes facing high barriers to entry like in the computer chip business.

Substitute products and services

Alternatives that customers might use if prices become too high, such as iTunes substituting for CDs.

Customers (Competitive Force)

The power of buyers to easily switch to competitor's products or force businesses to compete on price alone in a transparent marketplace.

Suppliers (Competitive Force)

The market power held by providers when a firm cannot raise prices as fast as the costs of its inputs.

Low-cost leadership

The strategy of using IS to achieve the lowest operational costs and prices, such as linking point-of-sale terminals to a central computer for rapid inventory replenishment.

Product differentiation

The strategy of using IS to make a product more attractive by contrasting its unique qualities, such as through creative packaging, new functional features, or advertising campaigns.

Focus on market niche

The strategy of using IS to enable a specific market focus and narrow the target market better than competitors by producing and analyzing data for finely-tuned sales techniques.

Customer and supplier intimacy

The strategy of using IS to develop strong ties and loyalty with customers and suppliers.

Business value chain model

A model that highlights specific activities in the business where competitive strategies can be applied and where IS is most likely to have a strategic impact, subdivided into primary and support activities.

Primary activities

Activities related to the production and distribution of products and services that create value for the customer, including inbound logistics, operations, outbound activities, sales and marketing, and services.

Support activities

Activities that make the delivery of primary activities possible, including administration and management, human resource management, technology development, and procurement.

Inbound logistics

A primary activity involving receiving and storing materials for production, such as inventory control and transportation.

Operations

A primary activity involving the transformation of inputs into finished goods through machining, packaging, and assembly.

Outbound activities

A primary activity entailing the storage and distribution of finished products to customers via warehousing, order fulfilment, and transportation.

Sales and marketing

A primary activity consisting of promoting and selling products through advertising, promotion, and pricing.

Services

A primary activity involving maintenance and repair, including customer support, installation, training, and spare parts management.

Procurement

A support activity involving the acquisition of raw materials, servicing spare parts, buildings, or machines.

Technology development

A support activity including research and development, process automation, design, and redesign used to support the value chain.

Human resource management

A support activity associated with recruiting, development (education), retention, and compensation of employees and managers.

Administration and management

A support activity that includes general management, planning, legal, finance, accounting, and quality management.