Theoretical Aspects

Chapter 1 – Managing the Digital Firm

Define: What is Information System?

A set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization.
It is an organizational and management solution to a challenge posed by the business environment, which is based on information technology.

Why Businesses need Information System?
Four major changes in the global business environment:
1. Emergence of the global economy
2. Transformation of industrial economies
3. Transformation of the business enterprise
4. The emerging digital firm

Business environment has become more competitive and complex with globalization and the IT revolution. The development of information communication technology significantly alters the way businesses operate. ICT becomes the integral part of businesses in today’s world, hence it is important that businesses posses information system and computer literacy.
-Information systems literacy: Broad-based understanding of information systems that includes behavioral knowledge about organizations and individuals using information systems as well as technical knowledge about computers.
-Computer literacy: Knowledge about information technology, focusing on under-standing how computer-based technologies work

Digital Firms and Information System
• Digital firms refer to firms which its core business processes are accomplished via digital networks.
• Relationships with customers, suppliers, and employees are digitally-enabled.
• Key corporate assets are digitally-managed.
• The use of ICT allows businesses to respond to environmental changes rapidly.
• There is a heavy emphasis on computer-based information system where processing and disseminating of information are relied on computer hardware and software.
• The spread of Internet created digital virtual marketplace which enabled electronic commerce.
• Information systems link buyer and sellers to exchange information, product, service, and payment.
Management Challenges in using Information system
1. Design competitive and effective systems
2. Understand system requirements of global business environment
3. Create information architecture that supports organization’s goal
4. Determine business value of information systems
5. Design systems people can control, understand and use in a socially, ethically responsible manner


Chapter 2 – Information Systems In The Enterprise

Objectives
• What are the key system applications in a business? What role do they play?
• How do information systems support the major business functions?
• Why should managers pay attention to business processes?
• What are the business benefits of using collaborative commerce, private industrial networks and enterprise systems?
• What types of information systems are used by companies that operate internationally?

Types of Information System
Integration: Different systems serve variety of functions, connecting organizational levels difficult, costly
Types of systems:
Operational Level – Transaction Processing Systems (TPS)
Knowledge Level – Office Automation Systems (OAS) & Knowledge Work Systems (KWS)
Managerial Level – Decision Support Systems (DSS) & Management Information Systems (MIS)
Executive Level – Executive Support Systems (ESS)

What is DSS?
Used by management level
Inputs: Low volume data Processing: Interactive
Outputs: Decision analysis Users: Professionals, staff
Example: Contract cost analysis

Customer Relationship Management (CRM)
• Manages all ways used by firms to deal with existing and potential new customers
• Business and Technology discipline
• Uses information system to coordinate entire business processes of a firm
• Provides end-to-end customer care
• Provides a unified view of customer across the company
• Consolidates customer data from multiple sources and provides analytical tools for answering questions

Supply Chain Management (SCM)
• Close linkage and coordination of activities involved in buying, making, and moving a product
• Integrates supplier, manufacturer, distributor, and customer logistics time
• Reduces time, redundant effort, and inventory costs
• Network of organizations and business processes
• Helps in procurement of materials, transformation of raw materials into intermediate and finished products
• Helps in distribution of the finished products to customers
• Includes reverse logistics - returned items flow in the reverse direction from the buyer back to the seller

Chapter 3 – Information Systems, Organizations, Management and Strategy

Objectives
• What do managers need to know about organizations in order to build and use information systems successfully?
• What impact do information systems have on organizations?
• How do information systems support the activities of managers in organizations?
• How can businesses use information systems for competitive advantage?
• Why is it so difficult to build successful information systems, including systems that promote competitive advantage?

Standard Operating Procedures (SOP)
• Is a set of precise rules, procedures, and practices
• Enable organizations to cope with all expected situations

Organization and Its Environment
• Economic theories – money, financial, transactions, etc
• Transaction cost theories – using Information Systems to conduct transactions, eg. cash register, POS
• Behavioural theories – decision support making with lower cost of information acquisition
• Virtual organization – organizations that probably not existed using networks to link people, assets & ideas, eg. P2P sharing
The Role of Managers
It should be based on:
• Interpersonal: Managers act as figureheads and leaders
• Informational: Managers receive and disseminate critical information, nerve centers
• Decisional: Managers initiate activities, allocate resources, and negotiate conflicts

Manager’s Process of Decision Making
• Strategic Decision Making: Determines long-term objectives, resources, and policies
• Management Control: Monitors effective or efficient usage of resources and performance of operational units
• Operational control: Determines how to perform specific tasks set by strategic and middle-management decision makers
• Knowledge-level decision making: Evaluates new ideas for products, services, ways to communicate new knowledge, ways to distribute information


Chapter 4 – The Digital Firm: E-Commerce & E-Business
Objectives
• How has Internet technology changed value propositions and business models?
• What is electronic commerce? How has electronic commerce changed consumer retailing and business-to-business transactions?
• What are the principal payment systems for electronic commerce?
• How can Internet technology support electronic business and supply chain management?
• What are the major managerial and organizational challenges posed by electronic commerce and electronic business?
Management Challenges
• Emerging digital firm
• Electronic commerce
• Electronic business
• Challenges and opportunities
Internet Technology and the Digital Firm
• Information technology infrastructure: Provides a universal and easy-to-use set of technologies and technology standards that can be adopted by all organizations
• Direct communication between trading partners: Disintermediation removes intermediate layers, streamlines process
• Round-the-clock service: Web sites available to consumers 24 hours a day
• Extended distribution channels:
Outlets created for attracting customers who otherwise would not patronize
• Reduced transaction costs: Costs of searching for buyers, sellers, etc. reduced
The Changing Economies of Information
• Information asymmetry: One party in a transaction has more information than the other
• Increases richness: Depth and detail of information
• Increases reach: Number of people contacted

Chapter 5- Ethical and Social Issues in the Digital Firm

Ethics are principles of right and wrong. It can be used by individuals acting as free moral agents to make choices to guide their behavior. A model for thinking about ethical, social, and political issues illustrates the dynamics connecting ethical, social, and political issues. It identifies the moral dimensions of the “information society”, across individual, social, and political levels of action.
Various types of Internet challenges to privacy are Cookies, Web Bugs, Opt-out model and Opt-in model. Cookies a tiny file deposited on a hard drive. It used to identify the visitor and track visits to the website. Web Bugs is a tiny graphic files embedded in e-mail messages and web pages. It designed to monitor online Internet user behavior. Opt-out model is informed consent permitting the collection of personal information. Consumer specifically requests for the data not to be collected. Opt-in model is informed consent prohibiting an organization from collecting any personal information. Individual has to approve information collection and use.