CHAPTER 1: INFORMATION SYSTEMS

IN GLOBAL BUSINESS TODAY

Question 1: List and describe six reasons why information systems are so
important for business today.
Six reasons why information systems are so important for business today
include:
1) Operational excellence: businesses can constantly improve the efficiency
of their operations in order to achieve higher profitability. Managers of
businesses can accomplish these objectives by using information
systems and the latest technologies, particularly when combined with
changes in business practices and management behavior.
2) New Products, Services, and Business Models : information systems and
technologies play a major role for businesses in creating new products
and services. New business models can also be created and these can
describe how a company create, ship, and sell their products.
3) Customer and Supplier Intimacy: the better a company gets to know its
clients and provides excellent services, the more likely the customers
will come back and purchase more. Revenues and profits increase as a
result of this. Similarly, the more a company approaches its suppliers,
the better they are to provide critical inputs and to save costs. Figuring
out how to really understand millions of clients or suppliers is a major
challenge for businesses.
4) Improved Decision Making: many business managers depend on
forecases to make decisions instead of getting all of the necessary data
at the right time, which leads to the poor business performances.
Information systems make it possibly for managers to use real time data
to make better decisions and not have to waste time looking for
information.
5) Competitive Advantage: all the areas that information systems focus on
helps businesses create a competitive advanatge over their rivals, for
example, businesses might charge less for products or they might
respond to customers and suppliers under a faster time which increases
sales and profits.
6) Survival: information systems and technologies in a firm are necessary
and crucial to keep them catch up with industry-level changes.

Question 2: Define an information system and describe the activities it

performs.
 Technically, an information system contains different interconnected
components that work together to collect, process, store, and distribute data
to support decision making and control in an organization. In addition,
information systems may also help managers and workers analyze problems,
visualize complex subjects, and create new products.
The three activities that information system controls in an organzition
are input, processing, and output. Each activity has its own function that it
serves in an organization. For example, input takes in all the information from
internal and external environments while processing converts that information
into something more meaningful. In the end, output takes care of distributing
the information to the right people for whom the information was intended
for.

Question 3: List and describe the organizational, management, and

technology dimensions of information systems.
 Information systems assists firms in terms of the organization when it
serves the different levels that exists in the firm. The organization
dimension of information systems involves issues such as the
organization’s hierarchy, functional specialties, business processes,
culture, and political interest groups.
o In business hierachy, there are 3 principal levels:
+ Senior management: is responsible for the firm’s financial
results as well as making long-term strategic decisions on goods
and services.
+ Middle management: includes scientists and knowledge
workers. Middle management is in charge of carrying out senior
management’s programs and plans. Engineers, scientists, and
architects are knowledge workes who develop products or
services and generate new knowledge for the company, while
secretaries and clerks help with scheduling and communications
at all levels of the company.
+ Operational management: includes production and service
workers, data workers. Operational management is in charge of
overseeing the business’s daily operations. Production and
service workers are the ones who really make the product and
provide the service.
o Some experts are employed to manage some main business
functions such as sales and marketing, manufacturing and
production, finance and accounting, and human resources.
 o An organization coordinates work through its hierarchy and
through its business processes. Business processes consists of
formal rules that have been built for guiding employees and
achieving daily tasks.
o Culture is also a big part of an organization as it is unique for each
organization. It is all the assumptions, values, and methods of
doing tasks that all employees must agree.
o Different levels have different points of view, which creates the
conflicts and these conflicts are basis for organizational politics.
 Management: The role of management is to analyze of many situations
that companies face, make decisions, and develop action plans to
address organizational issues. Managers recognize business problems in
the surrounding environment and community, develop an organizational
plan to solve them, and assign human as well as financial capital to
organize work and achieve results. The management dimension of
information systems involves leadership, strategy, and management
behavior. Information systems supply tools and information needed by
managers to allocate, coordinate and monitor their work, make
decisions, create new products and services, make long-term strategic
decisions.
 Information Technology: The technology dimensions consist of
computer hardware, software, data management technology, and
networking/telecomunications technology (including the Internet), the
WorldWideWeb. Management uses technology (hardware, software,
storage, telecommunications) to carry out their functions. It is one of the
methods used by managers to deal with transition.
o Computer hardware refers to the physical equipment that is used
for input, encoding, and output. Computers of different sizes and
shapes (including mobile handheld devices); various input, output,
and storage devices; and telecommunications devices that link
computers are all part of it.
o Computer software is known as the comprehensive,
preprogrammed instructions that guide and organize the
computer hardware components in an IS.
o Data management techonology refers to the program that
controls how data is organized on physical storage devices.
o Networking/telecomunications technology connects different
pieces of hardware and transfers data from one physical location
to another. It consists of both physical equipment and software.
 o The WorldWideWeb is an Internet service that employs widely
agreed principles for storing, retrieving, formatting and displaying
information in a page formate. Web pages are connected to other
web pages which contain text, graphics, animations, music and
video.
 Both of these systems, as well as the people who need to operate
and maintain them, are tools that can be spread around the
company and make up the information technology infrastructure.
 The firm’s IT infrastructure serves as the base, or basis, on which
its unique information systems can be built.
 Each business must carefully plan and manage its information
technology infrastructure to ensure that it has the technology
resources it requires to complete the work it intends to do with IS.

Question 4: Define complementary assets and describe their relationship

to information technology.
 Complementary assets are those assets required to derive value from
a primary investment. In order to obtain meaningful value from
information systems, organization must support their technology
investments with appropriate complementary investments in
organization and management. These complementary assets include
new business models and business processes, supportive
organizational culture and management behavior, appropriate
technology standards, regulations and laws.
 New information technology investments are unlikely to produce
high returns unless businesses make the appropriate managerial and
organizational changes to support technology. Firms must rely on
supportive values, structures, and behavior patterns to obtain a
greater value from their IT investments. Value must be added
through complementary assets such as new business processes,
management behavior, organizational culture and training.
Question 5: Describe the complementary social, managerial, and
organizational assets required to optimize returns from information
technology investments. (Table 1.2 page 27)