Learning Objectives Back

1.1 How are information systems transforming business, What’s New in

Management Information Systems and why are they so essential for
running and managing a business today?

1.2 What is an information system? How does it work? What are its
Dimensions: management, organization, and technology
components? It Isn’t Just Technology: A Business Perspective
on Information Systems .

1.3 What academic disciplines are used to study information systems, and how
does each contribute to an understanding of information systems?
 How Information Systems Are Back

Transforming Business
• Global spending on information technology (IT) and IT
services: nearly $3.8 trillion in 2019; $160 billion spent on
management consulting and services
• Organizational, management, and cultural changes are
often required for firms to derive full business value from IT
investments

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Management Information Systems:
Managing the Digital Firm
Seventeenth Edition, Global Edition

Chapter 1
Information Systems in Global
Business Today

Dr Natheer Gharaibeh

https://www.youtube.com/playlist?list=PLp-
GLxmbWefD_Wk5jFJ2u3BEgRakhCKQK

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 What’s New in Management Back

Information Systems (1 of 3)
• IT Innovations are transforming the traditional business world.
– Cloud computing, big data, Internet of Things
– Mobile digital platform These are enabling entrepreneurs and innovative traditional firms
to create new products and services, transform the day-to-day

– AI and machine learning conduct of business. , some old businesses, even industries, are
being destroyed while new businesses are springing up.

– Use of social networks for business objectives

• New Business Models (pp 38)
– Online streaming and downloadable video
 Examples: Netflix, Apple TV Channels, Amazon
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 What’s New in Management Back

Information Systems (2 of 3)
• E-commerce Expansion
– E-commerce worldwide expands to nearly $3.6 trillion in 2019
– Growth in social commerce spurred by growth of mobile platform
– Mobile retail e-commerce growing more than 20 percent a year,
reaching almost $300 billion in 2020
• Management Changes
– Managers becoming more mobile
– Managers use social networks, collaboration tools
– Business intelligence applications accelerate
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 Globalization Challenges and Back

Opportunities: A Flattened World

• Prior to AD 1500, there was no truly global economic system of trade that connected all
the continents on earth although there were active regional trade markets. After the
sixteenth century, a global trading system began to emerge based on advances in
navigation and ship technology. The world trade that ensued after these developments has
brought the peoples and cultures of the world much closer together.

• The Industrial Revolution was really a worldwide phenomenon energized by expansion of

trade among nations, making nations both competitors and collaborators in business. The
Internet has greatly heightened the competitive tensions among nations as global trade
expands..

• From Quora: shorturl.at/fyKOW

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 What’s New in Management Back

Information Systems (3 of 3)
• Firms and Organizations Change
– More collaborative, less emphasis on hierarchy and
structure
– Greater emphasis on competencies and skills
– Higher-speed/more accurate decision making based on data
and analysis
– More willingness to interact with consumers (social media)
– Better understanding of the importance of I T

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 Back

Timeline of industrial progress

• What is industry 4.0?
 Back
Globalization Challenges and
Opportunities: A Flattened World
• In 2005, journalist Thomas Friedman wrote an influential book
declaring the world was now “flat,” by which he meant that the Internet
and global communications had greatly reduced the economic and
cultural advantages of developed countries. Friedman argued that the
United States and European countries were in a fight for their
economic lives, competing for jobs, markets, resources, and even
ideas with highly educated, motivated populations in low-wage areas
in the less-developed world (Friedman, 2007). This “globalization”
presents both challenges and opportunities for business firms.

• What does globalization have to do with management

information systems?

• That’s simple: everything. The emergence of the Internet into a full-

blown international communications system has drastically reduced ..
 Globalization Challenges and Back

Opportunities: A Flattened World

• Internet and global communications have greatly changed
how and where business is done
– Drastic reduction of costs of operating and transacting
on global scale
– Competition for jobs, markets, resources, ideas
– Growing interdependence of global economies
– Requires new understandings of skills, markets,
opportunities
Briefly, information systems enable globalization
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Pp 12
 The Emerging Digital Firm Back

• In a fully digital firm:

– Significant business relationships are digitally enabled
and mediated
– Core business processes are accomplished through
digital networks PP 42 (A detailed discussion of business
processes can be found in Chapter 2.)

– Key corporate assets are managed digitally

 Key corporate assets—intellectual property, core competencies,
and financial and human assets— are managed through digital
means.

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 The Emerging Digital Firm Back

• Digital firms sense and respond to their environments far more rapidly
than traditional firms, giving them more flexibility to survive in turbulent
times.
• Digital firms offer greater flexibility in organization and management
– Time shifting, space shifting
 Time shifting refers to business being conducted continuously, 24/7, rather
than in narrow “work day” time bands of 9 a.m. to 5 p.m. Space shifting means
that work takes place in a global workshop as well as within national
boundaries. Work is accomplished physically wherever in the world it is best
accomplished

• Many firms, such as Cisco Systems, 3M, and GE, are

close to becoming digital firms,
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 Quiz1 – 5 mins Back
Disruption or Innovation?
Microsoft Airbnb Alibaba Facebook Uber Apple Google

The world’s largest taxi firm _____, owns no cars

The world’s most popular media firm ________creates no

content

One of world’s most valuable retailer _______ carries no

stock

The world’s largest accommodation provider _______owns no

property
The Battle Is For The Customer Interface
 Strategic Business Objectives of Back

Information Systems >>Why…

• What makes information systems so essential today? Why are businesses
investing so much in information systems and technologies?

• Information systems are essential for conducting day-to-day business in

most advanced countries as well as achieving strategic business objectives.

• E-commerce firms such as Amazon, eBay, Google, and ETrade simply would
not exist. Today’s service industries— finance, insurance, and real estate as
well as personal services such as travel, medicine, and education—could not
operate without information systems. Similarly, retail firms such as Walmart
and Tesco and manufacturing firms such as General Motors and Siemens
require information systems to survive and prosper.

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 Strategic Business Objectives of Back

Information Systems (1 of 2)
What a business would like
• Growing interdependence between: to do in five years often
– Ability to use information technology depends on what
systems will be able to do
its

– Ability to implement corporate strategies and achieve

corporate goals >> (see Figure 1.2)
The more you understand about this relationship, the more
valuable you will be as a manager. Specifically, business
firms invest heavily in information systems to achieve six
strategic business objectives:
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 Figure 1.2 The Interdependence Between Back

Organizations and Information Systems

Increasing market share,
becoming the high-quality
or low-cost producer,

developing new
products,
and increasing
employee productivity

depend more and more on the kinds and quality of information systems in the
organization.
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 Strategic Business Objectives of Back

Information Systems (2 of 2)
• Firms invest heavily in information systems to achieve six
strategic business objectives:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
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 1- Operational Excellence Back

• Improved efficiency results in higher profits

• Information systems and technologies help improve
efficiency and productivity
• Example: Walmart
– Power of combining information systems and best
business practices to achieve operational efficiency—
and over $524 billion in sales in 2019
– Most efficient retail store in world as result of digital
links between suppliers and stores
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 2- New Products, Services, and Back

Business Models
• Information systems and technologies enable firms to create
new products, services, and business models
• Business model: how a company produces, delivers, and sells
its products and services
• Example: Apple
– Transformed old model of music distribution with iTunes
– Constant innovations—iPod, iPhone, iPad, etc.

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 3-Customer and Supplier Intimacy Back

• Customers who are served well become repeat customers who

purchase more
– Example: Mandarin Oriental Hotel
– Uses IT to foster an intimate relationship with its customers,
keeping track of preferences, etc.
• Close relationships with suppliers result in lower costs
– Examples: Mandarin Oriental Hotel and JC Penney (in text)
– JC Penney uses IT to enhance relationship with supplier in
Hong Kong

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 4- Improved Decision Making Back

• Without accurate information, managers must use

forecasts, best guesses, and luck, resulting in
misallocation of resources, inventory, employees
• Real-time data improves ability of managers to make
decisions
– Example: Verizon’s web-based digital dashboard to
provide managers with real-time data on customer
complaints, network performance, line outages, etc.

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 5- Competitive Advantage Back

• Often results from achieving previous business objectives

• Advantages over competitors
– Charging less for superior products, better performance,
and better response to suppliers and customers
– Examples: Apple, Walmart, UPS are industry leaders
because they know how to use information systems for this
purpose

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 6- Survival Back

• Businesses may need to invest in information systems out

of necessity; it is simply the cost of doing business
• Keeping up with competitors
– Citibank’s introduction of ATMs
• Federal and state regulations and reporting requirements
– Toxic Substances Control Act and the Sarbanes-Oxley
Act

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 What Is an Information System? Back

(1 of 3)
• Information technology: the hardware and software a
business uses to achieve objectives
• Information system: interrelated components that manage
information to:
– Support decision making and control
– Help with analysis, visualization, and product creation
• Data: streams of raw facts
• Information: data shaped into meaningful, useful form
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 Figure 1.3 Data and Information Back

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 What Is an Information System? Back

(2 of 3)
• Activities in an information system that produce
information:
– Input
– Processing
– Output
– Feedback
• Sharp distinction between computer or computer program
versus information system
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 What is an Information System? Back

(3 of 3)
• Feedback
– Output is returned to appropriate members of
organization to help evaluate or correct input stage
• Computer/computer program vs. information system
– Computers and software are technical foundation and
tools, similar to the material and tools used to build a
house

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 Figure 1.4 Functions of an Back

Information System

Smart Shelf by AWM

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 Dimensions of Information Systems Back

• To fully understand information systems, you must

understand the broader Dimensions of
1. Organizations
2. Management
3. Technology

MIS deals with behavioral issues as well as technical issues

surrounding the development, use, and impact of information systems
used by managers and employees in the firm.

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 Figure 1.5 Information Systems Are Back

More Than Computers

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 Dimensions of Information Systems: Back

1- Organizations (1 of 2)
• Hierarchy of authority, responsibility
– Senior management
– Middle management
– Operational management
– Knowledge workers
– Data workers
– Production or service workers

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 Figure 1.6 Levels in a Firm Back

makes long-range strategic

decisions about products and
services as well as ensures
financial performance of the
firm
carries out the
programs and Knowledge workers, such as engineers,
plans of senior scientists, or architects, design products or service
management, and create new knowledge for the firm
data workers, such as secretaries or clerks,
is responsible for
monitoring the daily assist with scheduling and communications at
activities of all levels of the firm.
the business. Production or service workers actually produc
the product and deliver the service
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 33
Figure 1-1 Management Pyramid with Information Requirements Back

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Back
 Dimensions of Information Systems: Back

1- Organizations (2 of 2)
• Separation of business functions
– Sales and marketing
– Human resources
– Finance and accounting
– Manufacturing and production
• Unique business processes
• Unique business culture
• Organizational politics
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 Quiz2 – 5 mins
So what are the functional area’s?
Back

1. This functional area is typically responsible for recruitment and the

well being of it’s employees______
2. This functional area is responsible for defining the strategy and
steering the direction of the company ______
3. This functional area is responsible for ensuring that communication
and computer equipment is provided and supported ______
4. This functional area is responsible for promoting the company’s
services and attracting customers ______
5. This functional area is responsible for running and/or producing the
company’s services and products ______
Operations
Management / Administration
Marketing
Human Resources (HR)
Information Communication Technology (ICT)or IT
 Quiz – 5 mins Back

So what are the functional area’s?

1. This functional area is typically responsible for recruitment and the well being
of it’s employeesHuman
______Resources
(HR)
2. This functional area is responsible for defining the strategy and steering the
direction of the company ______
Management /
Administration
3. This functional area is responsible for ensuring that communication and
computer equipment is provided and supported ______
Information Communication
Technology (ICT)or IT
4. This functional area is responsible for promoting the company’s services and
attracting customers ______
Marketing

5. This functional area is responsible for running and/or producing the

company’s services and products Operations
______ Operations
Management / Administration
Marketing
Human Resources (HR)
Information Communication Technology (ICT)or IT
 Dimensions of Information Systems: Back

2-Management
• Managers set organizational strategy for responding to
business challenges
• In addition, managers must act creatively
– Creation of new products and services
– Occasionally re-creating the organization

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 Dimensions of Information Systems: Back

3-Information Technology
• Computer hardware and software
• Data management technology
• Networking and telecommunications technology
– Networks, the Internet, intranets and extranets, World
Wide Web
• IT infrastructure: provides platform that system is built on

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 It Isn’t Just Technology: A Business Back

Perspective on Information Systems

(1 of 3)
• Information system is instrument for creating value
• Investments in information technology should result in
superior returns
– Productivity increases
– Revenue increases
– Superior long-term strategic positioning

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 It Isn’t Just Technology: A Business Back

Perspective on Information Systems

(2 of 3)
• Business information value chain

– Raw data acquired and transformed through stages that add

value to that information
– Value of information system determined in part by extent to which
it leads to better decisions, greater efficiency, and higher profits
• Business perspective
– Calls attention to organizational and managerial nature of
information systems
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 It Isn’t Just Technology: A Business Back

Perspective on Information Systems

(3 of 3)
• Investing in information technology does not guarantee good
returns
• There is considerable variation in the returns firms receive from
systems investments
• Factors
– Adopting the right business model
– Investing in complementary assets (organizational
and management capital)
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 Figure 1.7 The Business Information Back

Value Chain

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 Figure 1.9 Contemporary Approaches Back

to Information Systems

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 Technical Approach Back

• Emphasizes mathematically based models

• Computer science, management science, operations
research

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 Behavioral Approach Back

• Behavioral issues (strategic business integration,

implementation, etc.)
• Psychology, economics, sociology

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 Approach of This Text: Back

Sociotechnical Systems (1 of 2)
• Management information systems
– Combine computer science, management science,
operations research, and practical orientation with
behavioral issues
• Four main actors
– Suppliers of hardware and software
– Business firms
– Managers and employees
– Firm’s environment (legal, social, cultural context)
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 Approach of This Text: Back

Sociotechnical Systems (2 of 2)
• Sociotechnical view
– Optimal organizational performance achieved by jointly
optimizing both social and technical systems used in
production
– Helps avoid purely technological approach

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 Figure 1.10 A Sociotechnical Back

Perspective on Information Systems

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