Management Information Systems

Chapter 1: Information Systems in Global Business Today

Course : MIS 501 (Management Information Systems)

Recommended Text Book

Management Information Systems: Managing the Digital Firm

FIFTEENTH EDITION

Kenneth C. Laudon

New York University

Jane P. Laudon

Azimuth Information Systems

Course Teacher

Mohammad Abul Kashem ,Professor

Department of MIS,University of Dhaka

Mobile: +8801711735930

Email: [email protected]

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

Course Contents

Brief Contents

Part One

Organizations, Management, and the Networked Enterprise

Chapter 1 Information Systems in Global Business Today

Chapter 2 Global E-Business and Collaboration

Chapter 3 Information Systems, Organizations, and Strategy

Chapter 4 Ethical and Social Issues in Information Systems 150

Part Two : Information Technology Infrastructure

Chapter 5 IT Infrastructure and Emerging Technologies

Chapter 6 Foundations of Business Intelligence: Databases and Information Management

Chapter 7 Telecommunications, the Internet, and Wireless Technology

Chapter 8 Securing Information Systems

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

Part Three: Key System Applications for the Digital Age

Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

Chapter 10 E-Commerce: Digital Markets, Digital Goods

Chapter 11 Managing Knowledge

Chapter 12 Enhancing Decision Making

Part Four : Building and Managing Systems

Chapter 13 Building Information Systems Chapter 14 Managing Projects

Chapter 15 Managing Global Systems

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

Learning Objectives

• How are information systems transforming business,

and why are they so essential for running and
managing a business today?
• What is an information system? How does it work?
What are its management, organization, and
technology components? Why are complementary
assets essential for ensuring that information systems
provide genuine value for organizations?
• What academic disciplines are used to study
information systems and how does each contribute to
an understanding of information systems?
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Management Information Systems
Chapter 1: Information Systems in Global Business Today
What is an Information System?
Communication
networks

Policies and
procedures People
Any organized
combination of…

Hardware and
Data resources
software

Stores, retrieves, transforms,

and disseminates information
in an organization

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Management Information Systems
Chapter 1: Information Systems in Global Business Today
What Should Business Professionals Know?

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

The Role of Information Systems in Business Today

• How information systems are transforming business

– Emerging mobile digital platform
– Growing business use of “big data”
– Growth in cloud computing

• Globalization opportunities
– Internet has drastically reduced costs of operating on global scale
– Increases in foreign trade, outsourcing
– Presents both challenges and opportunities

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

The Role of Information Systems in Business Today

• In the emerging, fully digital firm:
– Significant business relationships are digitally enabled and mediated.
– Core business processes are accomplished through digital networks.
– Key corporate assets are managed digitally.

• Digital firms offer greater flexibility in organization and management.

– Time shifting, space shifting

• Growing interdependence between:

– Ability to use information technology and
– Ability to implement corporate strategies and achieve corporate goals

• 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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Management Information Systems
Chapter 1: Information Systems in Global Business Today

The Interdependence Between Organizations and Information Technology

Figure 1.2 In contemporary systems there is a growing interdependence between a firm’s information systems and its
business capabilities. Changes in strategy, rules, and business processes increasingly require changes in
hardware, software, databases, and telecommunications. Often, what the organization would like to do depends
on what its systems will permit it to do.

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

The Role of Information Systems in Business Today

• Operational excellence:
– Improvement of efficiency to attain higher profitability
– Information systems, technology an important tool in achieving greater efficiency and productivity
– Walmart’s Retail Link system links suppliers to stores for superior replenishment system

• 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
• Examples: Apple’s iPad, Google’s Android OS, and Netflix

• Customer and supplier intimacy:

– Serving customers well leads to customers returning, which raises revenues and profits.
• Example: High-end hotels that use computers to track customer preferences and used to monitor and
customize environment
– Intimacy with suppliers allows them to provide vital inputs, which lowers costs.
• Example: JCPenney’s information system which links sales records to contract manufacturer

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Management Information Systems
Chapter 1: Information Systems in Global Business Today
• Improved decision making
– Without accurate information:
• Managers must use forecasts, best guesses, luck
• Results in:
– Overproduction, underproduction
– 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, and so on

• Competitive advantage
– Delivering better performance
– Charging less for superior products
– Responding to customers and suppliers in real time
– Examples: Apple, Walmart, UPS

• Survival

– Information technologies as necessity of business

– Industry-level changes
• Example: Citibank’s introduction of ATMs
– Governmental regulations requiring record-keeping
• Examples: Toxic Substances Control Act, Sarbanes-Oxley Act
• Dodd-Frank Act

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

What Is an Information System?

• Information system:
– Set of interrelated components
– Collect, process, store, and distribute information
– Support decision making, coordination, and control

• Information vs. data

– Data are streams of raw facts.
– Information is data shaped into meaningful form.

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

What Is an Information System?

• Three activities of information systems produce information organizations need

– Input: Captures raw data from organization or external environment
– Processing: Converts raw data into meaningful form
– Output: Transfers processed information to people or activities that use it

• 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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Management Information Systems
Chapter 1: Information Systems in Global Business Today

Functions of an Information System

An information system contains

information about an
organization and its surrounding
environment. Three basic
activities—input, processing,
and output—produce the
information organizations need.
Feedback is output returned to
appropriate people or activities
in the organization to evaluate
and refine the input.
Environmental actors, such as
customers, suppliers,
competitors, stockholders, and
regulatory agencies, interact
with the organization and its
information systems.

Figure 1.4

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

Information Systems Are More Than Computers

Using information systems

effectively requires an
understanding of the
organization, management, and
information technology shaping
the systems. An information
system creates value for the
firm as an organizational and
management solution to
challenges posed by the
environment.

Figure 1.5

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

What Is an Information System?

• Organizational dimension of information

systems
– Hierarchy of authority, responsibility
• Senior management
• Middle management
• Operational management
• Knowledge workers
• Data workers
• Production or service workers

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

Levels in a Firm

Business organizations are

hierarchies consisting of three
principal levels: senior
management, middle
management, and operational
management. Information
systems serve each of these
levels. Scientists and
knowledge workers often work
with middle management.

Figure 1.6

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

What Is an Information System?

• Organizational dimension of information systems (cont.)

– Separation of business functions
• Sales and marketing
• Human resources
• Finance and accounting
• Manufacturing and production
– Unique business processes
– Unique business culture
– Organizational politics

• Management dimension of information systems

– 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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Management Information Systems
Chapter 1: Information Systems in Global Business Today

What Is an Information System?

• Technology dimension of information systems
– 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

• Business perspective on information systems:

– Information system is instrument for creating value
– Investments in information technology will result in superior returns:
• Productivity increases
• Revenue increases

• Superior long-term strategic positioning

• 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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Management Information Systems
Chapter 1: Information Systems in Global Business Today

The Business Information Value Chain

Figure 1-7 From a business perspective, information systems are part of a series of value-adding activities for acquiring,
transforming, and distributing information that managers can use to improve decision making, enhance
organizational performance, and, ultimately, increase firm profitability.

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

What Is an Information System?

• 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)

• Complementary assets:

– Assets required to derive value from a primary investment

– Firms supporting technology investments with investment in complementary assets receive superior returns

– Example: Invest in technology and the people to make it work properly

• Complementary assets include:

– Organizational assets, for example:

• Appropriate business model
• Efficient business processes
– Managerial assets, for example:
• Incentives for management innovation
• Teamwork and collaborative work environments
– Social assets, for example:
• The Internet and telecommunications infrastructure
• Technology standards

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

Contemporary Approaches to Information Systems

The study of information

systems deals with issues and
insights contributed from
technical and behavioral
disciplines.

Figure 1.9

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

Studying 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

– Combines 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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Management Information Systems
Chapter 1: Information Systems in Global Business Today

A Sociotechnical Perspective on Information Systems

Figure 1-10 In a sociotechnical perspective, the performance of a system is optimized when both the technology and the
organization mutually adjust to each other until a satisfactory fit is obtained.

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Management Information Systems
Chapter 1: Information Systems in Global Business Today

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