2. What Is an Information System?
• Information technology: the hardware and software a business uses
to achieve objectives
• Information system: interrelated components that manage
information to:
• Support decision making and control
• Help with analysis, visualization, and product creation
• Data: streams of raw facts
• Information: data shaped into meaningful, useful form
4. Information System Definition
• “Information system is a set of interrelated components that collect
(or retrieve), process, store, and distribute information to support
decision making and control in an organisation” ( Laudon, 2022).
5. How Information Systems Are Transforming
Business (1 of 2)
• In 2019, global spending on information technology (IT) and IT
services was nearly $3.8 trillion (Gartner, 2019).
• In addition, firms spent another $160 billion on management,
consulting and services-much of which involves redesigning firm’s
business operations to take advantage of these technologies (Statista,
2020).
6.
7. How Information Systems Are
Transforming Business (2 of 2)
• Social networking tools being used by businesses to connect
employees, customers, and managers
• Internet advertising continues to grow at more than 20 percent per
year
• Changes in business result in changes in jobs and careers
8. What’s New in Management Information
Systems (1 of 3)
• IT Innovations
• Cloud computing, big data, Internet of Things
• Mobile digital platform
• AI and machine learning
• New Business Models: How companies produces, delivers and sells a
produce or service to create wealth
• Online streaming music and video
• On-demand e-commerce services
9. What’s New in Management
Information Systems (2 of 3)
• E-commerce Expansion
– E-commerce expands to nearly $1 trillion in 2018
– Online services now approach online retail in revenue
– Online mobile advertising now larger than desktop
• Management Changes
– Managers use social networks, collaboration tools
– Business intelligence applications accelerate
– Virtual meetings proliferate
10. What’s New in Management
Information Systems (3 of 3)
Firms and Organizations Change
– More collaborative, less emphasis on hierarchy and structure
– Greater emphasis on competencies and skills
– Higher-speed/more accurate decision making based on data and
analysis
– More willingness to interact with consumers (social media)
– Better understanding of the importance of IT
11. Strategic Business Objectives of
Information Systems (1 of 2)
• Growing interdependence between:
– Ability to use information technology
– Ability to implement corporate strategies and achieve corporate goals
13. Strategic Business Objectives of Information
Systems (2 of 2)
• Firms invest heavily in information systems to achieve six strategic
business objectives:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
14. Operational Excellence
• Improved efficiency results in higher profits
• Information systems and technologies help improve efficiency and
productivity
• Example: Walmart
– Power of combining information systems and best business practices
to achieve operational efficiency—and over $485 billion in sales in
2017
– Most efficient retail store in world as result of digital links between
suppliers and stores
15. New Products, Services, and Business Models
• Information systems and technologies enable firms to create new
products, services, and business models
• Business model: how a company produces, delivers, and sells its
products and services
• Example: Apple
– Transformed old model of music distribution with iTunes
– Constant innovations—iPod, iPhone, iPad, etc.
16. Customer and Supplier Intimacy
• Customers who are served well become repeat customers who purchase
more
– Example: Mandarin Oriental Hotel
– Uses IT to foster an intimate relationship with its customers, keeping
track of preferences, etc.
• Close relationships with suppliers result in lower costs
– Examples: JC Penney (US departmental store chain)
– JC Penney uses IT to enhance relationship with supplier in Hong Kong
17. Improved Decision Making (1 of 2)
• Without accurate information:
– Managers must use forecasts, best guesses, luck
– Results in:
Overproduction, underproduction
Misallocation of resources
Poor response times
18. Improved Decision Making (2 of 2)
• Poor outcomes raise costs, lose customers
• Real-time data improves ability of managers to make decisions.
• Example: Privi Organics Ltd., a leading Indian company that manufactures, supplies,
and exports aroma chemical products worldwide, uses the Oracle Human Capital
Management system for real-time insight into individual employee information—including
performance rating and compensation history.
• Digital dashboard helps management view and monitor hiring status in multiple locations,
such as the number of open positions and the time taken to fill these positions.
19. Competitive Advantage
• Often results from achieving previous business objectives
• Advantages over competitors
• Charging less for superior products, better performance, and better
response to suppliers and customers
• Examples: Apple, Walmart, UPS are industry leaders because they know
how to use information systems for this purpose
20. Survival
• Businesses may need to invest in information systems out of necessity;
simply the cost of doing business
• Keeping up with competitors
– introduction of ATMs (Barclays Bank, 1967), London
Physical retail stores using IT to compete with E-commerce players
21. Functions of an Information System
• An information system contains information about an organisation and its
surrounding environment.
• Three basic activities-input, processing and output-produce the information
organisation need.
• Feedback is output returned to appropriate people or activities in the organisation
to evaluate and refine the input.
• Environmental factors, such as customers, suppliers, competitors, stockholders,
and regulatory agencies, interact with the organisation and its information
systems.
24. 1) Which of the following is not one of the six strategic business
objectives of information systems?
• A) New products and services
• B) Improved decision making
• C) Improved community relations
• D) Competitive advantage
• E) Survival
• Answer: C
25. 2) Which of the following may lead to competitive advantage?
• 1. New products, services, and business models;
• 2. Charging less for superior products;
• 3. Responding to customers in real time
• A) 1 only
• B) 1 and 2
• C) 2 and 3
• D) 1 and 3
• E) 1, 2, and 3
• Answer: E
26. 3) A firm that invests in an information system because it is a necessity
of doing business does so because it is seeking to achieve which of the
following business objectives?
• A) Operational excellence
• B) Improved decision making
• C) Competitive advantage
• D) Customer intimacy
• E) Survival
• Answer: E
27. 4) The Mandarin Oriental's use of computer systems to keep track of
guests' preferences is an example of which of the following?
• A) Improved flexibility
• B) Improved decision making
• C) Improved efficiency
• D) Customer intimacy
• E) Operational excellence
• Answer: D
28. 5) Which of the following is an example of a business using information
systems to improve customer and supplier intimacy?
• A) Walmart's RetailLink system
• B) The Mandarin Oriental's use of computers to keep track of guest preferences
• C) Verizon's use of a web-based digital dashboard to provide real-time company
information for managers
• D) Apple's creation of the iPad
• E) PCL Construction's use of cloud computing
• Answer: B
29. 6) Walmart exemplifies the power of information systems coupled with
state-of-the-art business practices and supportive management to
achieve which of the following?
• A) New products and services
• B) Operational efficiency
• C) Survival
• D) Customer intimacy
• E) Competitive advantage
• Answer: B
30. 7) To make sure they stock clothes that their customers will purchase, a
department store implements a new application that analyzes spending
levels at their stores and cross-references this data to popular clothing
styles. Which of the following business objectives is this information
intended to support?
• A) Customer intimacy
• B) Survival
• C) Operational excellence
• D) Improved decision making
• E) New products and services
• Answer: C
31. 8) All of the following are new technology-related trends in MIS except:
• A) cloud computing.
• B) big data.
• C) IoT.
• D) the mobile digital platform.
• E) co-creation of business value.
• Answer: E
32. 9) Which of the following statements about digital firms is not true?
• A) In digital firms, time shifting and space shifting are the norm.
• B) Today, most firms are fully digital.
• C) Digital firms offer extraordinary opportunities for flexible global organization
and management.
• D) Digital firms sense and respond to their environments more rapidly than
traditional firms.
• E) Digital firms have more flexibility to survive in turbulent times.
• Answer: B
33. 10) A firm that must invest in new information systems capabilities in
order to comply with federal legislation is investing to achieve which
business objective?
• A) Customer intimacy
• B) Operational excellence
• C) Survival
• D) Creation of new products
• E) Improved decision making
• Answer: C
34. 11) Which of the following is not one of the IT innovations
changing the world of business today?
• A) IoT
• B) Big data
• C) The mobile digital platform
• D) Cloud computing
• E) Business intelligence
• Answer: D
35. 12) Which of the following is not one of the current changes
taking place in information systems technology?
• A) Growing business use of big data
• B) Growth in cloud computing
• C) Growth in the PC platform
• D) Emerging mobile digital platform
• E) Increased usage of data generated by the Internet of Things
• Answer: C
36. • 13) Internet advertising is growing at approximately 5 percent a year.
Answer: FALSE
• 14) Creating a marketing plan is not an example of a business process.
Answer: FALSE
• 15) A business model describes how a company produces, delivers,
and sells a product or service to create wealth.
Answer: TRUE
37. • 16. In order to be considered a digital firm, all of the firm's significant business
relationships and core business processes must be digitally enabled.
• Answer: FALSE
• 17. Private business investment in information technology constituted 55 percent
of all invested capital in 2017.
• Answer: FALSE
