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Management Information Systems IS 300 Spring 2026 Organizational Strategy, Competitive Advantage, Ethics & Privacy

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Recap: Types of Information Systems within the Organization

• The collection of application programs in a single department is referred to as a departmental information system or a Functional Area Information System (FAIS).

• An Enterprise Resource Planning (ERP) system tightly integrates the FAISs via a common database and enhances communications among the functional areas of an organization.

Learning Objectives

• Discuss ways in which information systems enable business processes for a single functional area and cross-functional processes.

• Differentiate among business process reengineering, business process improvement, and business process management.

• Identify effective IT responses to different kinds of business pressures.

• Understand the inherent value of organizations to develop strategic information systems.

• Recognize the importance of Porter’s value chain model.

• Describe the strategies that organizations typically adopt to counter Porter’s five competitive forces.

• Define ethics and explain its three fundamental tenets and the four categories of ethical issues related to information technology.

Part I: Organizational Strategy & Competitive Advantage

What is an Organization?

• An entity structured for coordination.

• Characterized by:

  • Social & behavioral characteristics.

  • Centered around human activity.

  • Affected by external market forces.

  • Aligned for production.

  • Driven by innovation.

  • Can be simple or complex.

• Departmentalized:

  • Establishes a chain of command.

  • Provides common views for measuring performance.

  • Organizes labor into distinct units.

• Establishing an ethical framework for any organization is a strategic imperative that requires continual evaluation.

Business Processes

• Business processes allow organizations to function and consist of a collection of activities that generate products or services of value for business partners and customers.

• Comprised of three primary elements:

  • Inputs: Materials, services, and information that flow through and are transformed as a result of process activities.

  • Resources: People and equipment that perform process activities.

  • Outputs: The product or service created by the process.

• Evaluated by:

  • Efficiency: Focuses on doing things well in the business process without delay or wasting resources (speed).

  • Effectiveness: Focuses on doing the things that matter, which is creating outputs of value (goal attainment, high-quality products).

Examples of Business Processes

Accounting (ACCT) Business Processes

• Managing accounts payable.

• Managing accounts receivable.

• Reconciling bank accounts.

• Managing cash receipts.

Finance (FIN) Business Processes

• Managing account collection.

• Managing bank loan applications.

• Producing business forecasts.

• Applying customer credit approval and credit terms.

Marketing (MKT) Business Processes

• Managing post-sale customer follow-up.

• Collecting sales taxes.

• Applying copyrights and trademarks.

• Using customer satisfaction surveys.

• Managing customer service.

• Managing invoice billings.

• Managing petty cash.

• Producing financial cash-flow reports.

• Handling customer complaints.

• Handling returned goods from customers.

• Entering sales orders.

• Training sales personnel.

Production/Operations Management (POM) Business Processes

• Processing bills of materials.

• Processing manufacturing change orders.

• Managing master parts list and files.

• Managing packing, storage, and distribution.

• Processing physical inventory.

• Managing purchasing.

Human Resources Management (HRM) Business Processes

• Applying disability policies.

• Managing employee hiring.

• Handling employee orientation.

• Managing files and records.

• Applying health-care benefits.

• Managing pay and payroll.

Management Information Systems (MIS) Business Processes

• Antivirus control.

• Computer security issues incident reporting.

• Training computer users.

• Applying disaster recovery procedures.

• Managing quality control for finished goods.

• Auditing for quality assurance.

Information Systems and Business Processes

• ISs play a vital role in three core areas:

  • Executing the process:

  • Informing employees when it is time to complete a task.

  • Providing required data.

  • Providing a means to complete the task.

  • Capturing and storing process data:

  • Processes generate data including dates, times, product numbers, quantities, prices, addresses, etc.

  • ISs capture and store this process data (transaction data) providing immediate, real-time feedback.

  • Monitoring performance:

  • IS evaluates information to determine how well a process is being executed, identifying problems for process improvement.

Robotic Process Automation

• Robotic Process Automation (RPA) is a system that enables enterprises to automate business processes and tasks typically carried out by employees.

• Companies that employ RPA develop software “robots” (bots) that automate the steps in a business process.

• Example areas include:

  • Customer service.

  • Invoice processing.

  • Sales orders.

  • Payroll.

  • Manage customer information.

The Five Phases of Business Process Improvement (BPI)

1. Define:

   • Build team.

   • Set objectives.

   • Plan project.

   • Gather the voice of the customer.

   • Plan for change.

2. Measure:

   • Document the process.

   • Collect baseline data.

3. Analyze:

   • Analyze data.

   • Identify root causes.

   • Identify efficiencies.

4. Improve:

   • Generate solutions.

   • Evaluate and optimize solutions.

5. Control:

   • Control the process.

   • Test the solution.

   • Validate project benefits.

BPI vs. BPR

• Business Process Improvement (BPI):

  • Bottom-up approach.

  • Low risk/low cost.

  • Incremental change.

  • Takes less time.

  • Quantifiable results.

  • All employees trained in BPI.

• Business Process Reengineering (BPR):

  • Top-down approach.

  • High risk/high cost.

  • Radical redesign.

  • Time-consuming.

  • Overwhelming impacts.

  • High failure rate.

Business Pressures, Organizational Performance & Responses, and IT Support

• Examples:

  • Labor costs are higher in developed countries; IT has made it easier to move operations to countries with low labor costs.

  • Societal pressure: The digital divide refers to the wide gap between individuals with access to information technologies and those without.

  • Globalization integrates and interdepend economic, social, cultural, and ecological facets, made possible by rapid advances in information technology.

  • Query: Does globalization always result in positive outcomes?

Porter’s Value Chain Model

• The model divides a company’s activities into two categories: primary activities and support activities.

• Primary Activities:

  • Inbound logistics.

  • Operations.

  • Outbound logistics.

  • Marketing and sales.

  • Service.

• Support Activities:

  • Firm infrastructure.

  • Human resource management.

  • Technology development.

  • Procurement.

• Original source: Michael Porter, Competitive Advantage: Creating and Sustaining Superior Performance, 1985.

Competitive Advantage

• Competitive Advantage occurs when a firm sustains profits that exceed the industry average over its rivals (Michael Porter).

• Gained through:

  • Delivering better performance.

  • Charging less for superior products.

  • Responding to customers in real-time.

• Original competitive advantage obtained via:

  • Economic position.

  • Marketing of products & services.

  • IT network & enterprise capabilities.

• Maintained through a focus on core competencies and strategic alliances.

Forces that Shape Competition

• Impact of the internet on this model increases industry competition, diminishing a firm's profitability.

Porter’s Competitive Forces Model

• Entry barriers:

  • Defined as features that customers have learned to expect from organizations in an industry.

  • Surviving in the industry requires meeting these standards.

Generic Strategies

• Cost Leadership Strategy:

  • Produce products/services at the lowest cost in the industry; e.g., Walmart’s automatic inventory replenishment system.

• Differentiation Strategy:

  • Offer unique products/services/features, e.g., Southwest Airlines's low-cost, short-haul express service.

• Innovation Strategy:

  • Introduce new products/services or develop new production methods; e.g., the first ATMs by Citibank.

• Operational Effectiveness Strategy:

  • Improve execution of internal business processes to outperform competitors in quality, productivity, and satisfaction.

• Customer Orientation Strategy:

  • Focus on customer satisfaction; web-based systems can create personalized customer relationships.

Part II: Ethics & Privacy

Understanding the Domain of Ethics

• Domain of Codified Law (Legal Standard): High control.

• Domain of Ethics (Social Standard): Moderate control.

• Domain of Free Choice (Personal Standard): Low control.

Information Systems and Ethics

• Ethics Defined:

  • Principles of right and wrong that individuals use to guide behavior as free moral agents.

• Importance of Ethics:

  • Technology affects societies globally.

  • IS Managers hold legal and ethical obligations.

  • Ethical behavior means taking responsibility for decisions.

Ethical Frameworks for Decision Making

• Five widely used standards:

  • Utilitarian Approach: Minimization of harm or maximization of good.

  • Rights Approach: Balancing privileges for all stakeholders.

  • Fairness Approach: Ensuring equal treatment.

  • Common Good Approach: Focusing on community welfare.

  • Deontology Approach: Based on rule-based moral codes.

• A thoughtful combination of these standards can promote ethical frameworks to resolve conflicts.

Steps to Guide Ethical Decision Making

1. Recognize the ethical issue.

2. Gather the facts.

3. Evaluate alternatives.

4. Make a decision and test it.

5. Act and reflect on the outcome.

• A moral agent is defined as any person in the organization who must make an ethical choice.

Ethics in the Corporate Environment

• Responsibility: Acceptance of consequences for decisions and actions.

• Accountability: Determining who is responsible for actions taken.

• Liability: A legal concept allowing individuals to recover damages caused by others.

• Understanding these concepts empowers IS managers to make appropriate ethical decisions.

• Situations may fall into:

  • Ethical & Legal.

  • Ethical & Illegal.

  • Unethical & Legal.

  • Unethical & Illegal.

Ethics & Information Technology

1. Privacy issues:

   • Involves the collection, storage, and dissemination of individual information (e.g., secure database storage).

2. Accuracy issues:

   • Relate to the authenticity and correctness of collected information.

3. Property issues:

   • Concern ownership and value of information.

4. Accessibility issues:

   • Determine who should access information and if fees apply (e.g., checking credit reports).

What is Privacy?

• The right to be left alone and free from undue personal intrusions; includes freedom from surveillance by organizations or the government.

• In the U.S., privacy is protected under:

  • First Amendment: Freedom of speech.

  • Fourth Amendment: Protection against unreasonable search and seizure.

• Information Privacy: The individual’s right to control information about oneself.

• Court decisions regarding privacy balance individual rights against societal needs, with public interest often superseding individual privacy.

• Query: Are there dangers associated with valuing societal needs over individual privacy rights?

Ethical Issue: Electronic Surveillance

• Defined as monitoring by employers, government, and institutions in various public spaces.

• Examples of tools used:

  • Surveillance cameras.

  • Digital sensors in various devices (laptops, smartphones, etc.).

  • Geotags in smartphones for location tracking.

  • Services like Google street view and drones.

Ethics & Privacy Summary

• Ethics Meaning: Principles of right and wrong guiding behavior.

• Fundamental Tenets: Responsibility (accepting consequences), accountability (determining responsible parties), liability (legal rights for damages).

• Privacy Defined: The right to be free from personal intrusions and electronic surveillance.

• Privacy Challenges: Involves database information, online activities, and policies addressing data collection, accuracy, and confidentiality to prevent legal issues.