Chapter 1
Information Systems
in Global Business
Today
1.1 © 2010 by Prentice Hall
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
• Increase in wireless technology use, Web sites
• Shifts in media and advertising
• New federal security and accounting laws
• Globalization opportunities
• Internet has drastically reduced costs of operating on
global scale
• Presents both challenges and opportunities
1.2 © 2010 by Prentice Hall
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
Information Technology Capital Investment
Information technology investment, defined as hardware, software, and communications
equipment, grew from 32% to 51% between 1980 and 2008.
Source: Based on data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income
and Product Accounts, 2008.
Figure 1-1
1.3 © 2010 by Prentice Hall
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
1.4 © 2010 by Prentice Hall
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
Virtual Meetings: Smart Management
Read the Interactive Session and then discuss the following questions:
• What are the advantages of using videoconferencing
technologies? What are the disadvantages?
• What is telepresence and what sorts of companies are
best suited to use it as a communications tool?
• What kinds of companies could benefit from using
videoconferencing? Are there any companies that might
not derive any benefits from this technology?
1.5 © 2010 by Prentice Hall
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
• Growing interdependence between ability to use
information technology and ability to implement
corporate strategies and achieve corporate goals
• Business firms invest heavily in information
systems to achieve six strategic business
objectives:
– Operational excellence
– New products, services, and business models
– Customer and supplier intimacy
– Improved decision making
– Competitive advantage
– Survival
1.6 © 2010 by Prentice Hall
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
– Wal-Mart’s RetailLink system links suppliers to stores
for superior replenishment system
1.7 © 2010 by Prentice Hall
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
• 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 iPod, iTunes, and iPhone, Netflix’s
Internet-based DVD rentals
1.8 © 2010 by Prentice Hall
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
• 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 use to monitor and customize
environment
– Intimacy with suppliers allows them to provide vital
inputs, which lowers costs
• Example: J.C.Penney’s information system which links sales
records to contract manufacturer
1.9 © 2010 by Prentice Hall
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
• Improved decision making
– Without accurate information:
• Managers must use forecasts, best guesses, luck
• Leads to:
– Overproduction, underproduction of goods and services
– 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, etc.
1.10 © 2010 by Prentice Hall
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
• New products, services, and business models:
– Enabled by technology
• Customer and supplier intimacy:
– Serving customers raises revenues and profits
– Better communication with suppliers lowers costs
• Improved decision making
– More accurate data leads to better decisions
1.11 © 2010 by Prentice Hall
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
• Competitive advantage
– Delivering better performance
– Charging less for superior products
– Responding to customers and suppliers in
real time
– Example: Toyota and TPS (Toyota Production
System) enjoy a considerable advantage over
competitors – information systems are critical
to the implementation of TPS
1.12 © 2010 by Prentice Hall
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
• Survival
– Information technologies as necessity of
business
– May be:
• Industry-level changes, e.g. Citibank’s introduction
of ATMs
• Governmental regulations requiring record-keeping
– Examples: Toxic Substances Control Act, Sarbanes-
Oxley Act
1.13 © 2010 by Prentice Hall
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
The Interdependence Between Organizations and
Information Technology
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.
Figure 1-2
1.14 © 2010 by Prentice Hall
