Subject: MIS

Chapter 3: DevelopmentInformation
Systems, Organizations, and Strategy

@salaamuniversity

Abdihak Ahmed Abdullahi

 The Relationship Between Organizations
and Information Technology

The relationship between information technology (IT) and

organizations affects both sides and is shaped by different
factors within the organization.
Structure
Business processes
Politics
Culture
Environment
Management decisions

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 What Is an Organization?
Technical definition
An organization is a formal social structure that processes
resources from the environment to produce outputs,
operating as a legal entity with internal rules and
procedures that govern its activities
• Behavioral definition
An organization is a collection of rights, privileges,
obligations, and responsibilities, balanced over time
through conflict and resolution, shaped by the interactions
and relationships of the people within it.

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
The Behavioral View of Organizations

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Features of Organizations

Use of hierarchical structure

Accountability, authority in system of impartial
decision making
Adherence to principle of efficiency
Routines and business processes
Organizational politics, culture, environments, and
structures

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Routines and Business Processes

Routines (standard operating procedures)

Business processes: Collections of routines
Business firm: Collection of business
processes

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Organizational Culture in Management Information
Systems

Organizational culture significantly impacts the effectiveness of

Management Information Systems (MIS) through the following aspects:
Definition: Organizational culture is made up of shared values and
beliefs that guide how information is handled and used in a company. It
affects how well management information systems (MIS) are accepted
and successful.
Key Influences:
 Openness to Change: Cultures that embrace change and
innovation support the implementation of new information systems.
 Communication Style: Cultures promoting open communication
enhance data sharing and collaboration, improving MIS
effectiveness.
Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Organizational Culture in Management Information
Systems

 Decision-Making Processes: Centralized cultures may limit MIS

usage, while decentralized cultures empower employees to make
data-driven decisions.
 Training and Development: A culture valuing learning prioritizes
employee training on MIS, leading to better engagement and
utilization.

Impact of MIS on Culture: Implementing MIS can transform

organizational culture by promoting data-driven decision-making and
fostering transparency and collaboration.

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Components of Organizational
Environments in MIS
External Environment:
• Technological: Advances in technology (e.g., cloud computing, AI) impact
how organizations collect and analyze data.
• Economic: Economic conditions affect budgeting and investment in MIS;
downturns may lead to cuts, while growth may boost tech investments.
• Legal and Regulatory: Compliance with laws and regulations (like GDPR)
is essential to avoid penalties.
• Competitive: The level of competition drives organizations to innovate and
improve services through MIS.
• Social and Cultural: Changing consumer behaviors and expectations
necessitate adaptive information systems.
• Political: Government policies and political stability can impact operations
and data management.

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Components of Organizational
Environments in MIS
Internal Environment:
Organizational Structure: The hierarchy (centralized vs. decentralized)
influences MIS implementation; centralized structures may use unified
systems, while decentralized ones might favor distributed systems.
Business Processes: MIS are tailored to support key operational
workflows, such as supply chain and customer relationship management.
Human Resources: The skills and adaptability of employees play a crucial
role in MIS success.
Management and Leadership: Leadership priorities affect investments in
MIS, with an emphasis on data-driven decision-making promoting
advanced solutions.

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Role of MIS in Organizational
Environments
MIS enhances decision-making through data analytics,
improves operational efficiency, fosters innovation by
enabling new business models, and manages risks and
compliance with regulations. By aligning information
systems with organizational strategies, businesses can
successfully navigate complex environments and achieve
long-term growth and success.
Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Organizational Structure in MIS

Organizational structure in Management Information Systems (MIS) refers to

how a company is arranged to facilitate effective use and management of
information systems, influencing information flow and decision-making
processes.
Types of Organizational Structures in MIS:
Hierarchical Structure:
 Description: Clear chain of command with multiple management levels.
 MIS Implications: Centralized information systems controlled by top
management.
Flat Structure:
 Description: Fewer management levels promoting direct communication.
 MIS Implications: Decentralized systems that empower employees.

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Organizational Structure in MIS
Divisional Structure:
Description: Organized by products, markets, or regions.
MIS Implications: Each division may have tailored systems, leading to data
silos.
Team-Based Structure:
Description: Emphasizes teamwork and cross-functional project teams.
MIS Implications: Systems that support collaboration and shared data access.
Role of MIS in Organizational Structures
Facilitates communication and supports decision-making.
Enhances operational efficiency and enables flexibility.
Integrates data across departments and aligns with strategic goals.

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Economic Impacts

I T changes relative costs of capital and the costs of information

Information systems technology is a factor of production, like
capital and labor
I T affects the cost and quality of information and changes
economics of information
Information technology helps firms contract in size because
it can reduce transaction costs (the cost of participating in
markets)
Outsourcing

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Transaction Cost Theory
Firms seek to economize on transaction costs (the costs of
participating in markets)
Vertical integration, hiring more employees, buying
suppliers and distributors
I T lowers market transaction costs, making it worthwhile for
firms to transact with other firms rather than grow the
number of employees

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Organizational and Behavioral Impacts

IT makes organizations less hierarchical. Decision-making

is moved to lower levels, so fewer managers are needed.
IT helps decisions happen faster and allows managers to
oversee more people.

In postindustrial Organizational become flatter because

power relies more on knowledge and skills instead of just
job title

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
Flattening Organizations

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Understanding Organizational Resistance to Change

Information systems become bound up in organizational politics

because they influence access to a key resource—information
Information systems potentially change an organization’s structure,
culture, politics, and work
Four factors
Nature of the innovation
Structure of organization
Culture of organization
Tasks affected by innovation

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 The Internet and Organizations
The Internet increases the accessibility, storage, and
distribution of information and knowledge for organizations
The Internet can greatly lower transaction and agency
costs
Example: Large firm delivers internal manuals to
employees via a corporate website.

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Implications for the Design and
Understanding of Information Systems
Organizational factors in planning a new system:
Environment
Structure
Hierarchy, specialization, routines, business processes
Culture and politics
Type of organization and style of leadership
Main interest groups affected by system; attitudes of end users
Tasks, decisions, and business processes the system will assist

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
Porter’s Competitive Forces Model (1 of
3)
Why do some firms become leaders in their industry?
Michael Porter’s competitive forces model
It gives an overall picture of the company, its competitors, and its
environment.
• Five competitive forces that determine the company's success
are:
– Traditional competitors
New market entrants
Substitute products and services
Customers
Suppliers

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Porter’s Competitive Forces Model (2 of 3)

Traditional competitors: All companies compete in the

same market, constantly trying to create new products,
improve services, and reduce costs for customers to
encourage them to stay.
New market entrants: In some industries, like the
computer chip business, there are high barriers to entering
the market. New companies may have modern equipment
and younger workers, but they often struggle with brand
recognition and trust.

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Porter’s Competitive Forces Model (3 of 3)

Substitute products and services: These are alternatives that

customers might choose if your prices go up. For example, iTunes
serves as a substitute for CDs.
Customers: Can customers easily switch to a competitor's products? If
they can, it can force businesses to compete mainly on price in a clear
marketplace.
Suppliers: Suppliers have market power when a company can't raise
its prices as quickly as suppliers increase theirs. This can put pressure
on the company’s profit margins.

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
Porter’s Competitive Forces Model

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Information System Strategies for Dealing with
Competitive Forces (1 of 3)

Four generic strategies for dealing with competitive forces,

enabled by using I T:
Low-cost leadership
Product differentiation
Focus on market niche
Strengthen customer and supplier intimacy

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Information System Strategies for Dealing with
Competitive Forces (2 of 3)
Low-cost leadership
Produce products and services at a lower price than competitors
Example: Walmart’s efficient customer response system
Product differentiation
Enable new products or services, greatly change customer
convenience and experience
Example: Google Nike
Mass customization; customer experience management

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Interactive Session: Organizations: Shipping Wars

Class discussion
Why is shipping so important for e-commerce? Explain your
answer.
Compare the shipping strategies of Amazon, FedEx, and
UPS. How are they related to each company’s business
model?

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Information System Strategies for Dealing with
Competitive Forces (3 of 3)
Focus on market niche
Use information systems to enable a focused strategy on a single
market niche; specialize
Example: Hilton Hotels’ On Q system
Strengthen customer and supplier intimacy
Use information systems to develop strong ties and loyalty with
customers and suppliers
Increase switching costs
Examples: Toyota, Amazon

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 END
Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved