Information Systems: Impact on Organizations & Strategy
Organizations and Information Systems
All modern organizations are hierarchical, specialized, and impartial, using explicit routines to maximize efficiency. All organizations have their own cultures and politics arising from differences in interest groups, and they are affected by their surrounding environment. Organizations differ in goals, groups served, social roles, leadership styles, incentives, types of tasks performed, and type of structure. These features help explain differences in organizations’ use of information systems.
Information systems and the organizations in which they are used interact with and influence each other. The introduction of a new information system will affect organizational structure, goals, work design, values, competition between interest groups, decision making, and day-to-day behavior.
Porter’s Competitive Forces Model
Porter’s competitive forces model states that the strategic position of a firm, and its strategies, are determined by competition with its traditional direct competitors. They are also greatly affected by new market entrants, substitute products and services, suppliers, and customers. Information systems help companies compete by maintaining low costs, differentiating products or services, focusing on a market niche, strengthening ties with customers and suppliers, and increasing barriers to market entry with levels of operational excellence.
Value Chain and Value Web Models
The value chain model highlights specific activities in the business where competitive strategies and information systems will have the greatest impact. The model views the firm as a series of primary and support activities that add value to a firm’s products or services. Primary activities are directly related to production and distribution, whereas support activities make the delivery of primary activities possible.
A value web consists of information systems that enhance competitiveness at the industry level by promoting the use of standards and industry-wide consortia, and by enabling businesses to work more efficiently with their value partners.
Synergies, Core Competencies, and Network Strategies
Because firms consist of multiple business units, information systems achieve additional efficiencies or enhance services by tying together the operations of disparate business units. Information systems help businesses leverage their core competencies by promoting the sharing of knowledge across business units. Information systems facilitate business models based on large networks of users or subscribers that take advantage of network economics.
A virtual company strategy uses networks to link to other firms so that a company can use the capabilities of other companies to build, market, and distribute products and services. In business ecosystems, multiple industries work together to deliver value to the customer. Information systems support a dense network of interactions among the participating firms.