CHAPTER 3

CHAPTER 3

WHAT IS  ORGANIZATIONS, INFORMATION SYSTEMS, AND STRATEGY?

§  An organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs.

§  Information systems, is a combination of hardware, software, infrastructure and trained personnel organized to facilitate planning, control, coordination and decision making in an organization. 

§  Strategy is a method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem.

5 TYPES OF ORGANIZATION STRUCTURE 

a) ENTREPRENEURIAL 

- Young, small firm in a fast-changing environment.

- Ex: small start-up business.

b) MACHINE BUREAUCRACY 

- Producing standard product.

-Ex: mid-size manufacturing firm.

c) DIVISIONAL BUREAUCRACY

- Combination of multiple machine and producing a different product.

-Ex: fortune 500 firms.OF FORCES 

d) PROFESSIONAL BUREAUCRACY 

- Goods and services depend on the expertise and knowledge of professional .

- Ex: school systems.

e) ADHOCRACY 

-Consists of large groups of specialists organized.

- Ex: consulting firm. 

2 TYPES OF THEORY 

1) TRANSACTION COST THEORY 

- Transaction cost theory supposes that companies try to minimize the costs of exchanging resources 

with the environment.

2) AGENCY THEORY 

-Agency theory is concerned with resolving problems that can exists in agency relationship that is 

between principles (such as shareholders) and agents of the principles.

5 COMPETITIVE OF FORCES SHAPE FATE OF FIRM 

a) TRADITIONAL COMPETITORS 

-All firm share market place with other competitor who are continuously devising new, more

efficient ways to produce by introducing new products and services. 

-Ex: company D,herb and Quputeh.

b) NEW MARKET ENTRANTS 

- In some industries, there are very low barrier to entry, whereas in other industries, entry is very difficult. 

- Ex: computer chip business.

c) SUBSTITUTE PRODUCTS AND SERVICES 

- The more substitute products and services in your industry, the less you can control pricing and the lower your profits margins.

-Ex: colgate and darlie.

d) CUSTOMERS 

- A profitable company depends in large measure on its ability to attract and retain customer.

-Ex: Online customers report.  

e) SUPPLIER 

- The market power of supplier can have significant impact on firm profits.

-Ex: Display screen.

4 STRATEGIC FOR DEALING WITH COMPETITIVE FORCES

a) LOW COST-LEADERSHIP

- Use information system to achieve the lowest costs and lower prices.

- Ex: walmart.

b) PRODUCT DIFFERENTIATION 

- Enable new products and services, or greatly change the customer convenience in using your existing products and services.

-Ex: Ipod video player.

c) FOCUS ON MARKET NICHE

-  To enable a specific market focus, and serve this narrow target market better than competitors.

-Ex: by customers request. 

d) STRENGTHEN CUSTOMER AND SUPPLIER INTIMACY 

- To tighten linkages with suppliers and develop intimacy with customers.

-Ex: online shopping.