Price Competition

Chapter 1

Information Systems in Global Business Today

LEARNING OBJECTIVES

After reading this chapter, you will be able to:

1. Explain why information systems are so essential in business today.

2. Define an information system from both a technical and a business perspective.

3. Identify and describe the three dimensions of information systems.

4. Assess the complementary assets required for information technology to provide value to business.

5. Identify and describe complementary approaches to the study of information systems and distinguish between computer literacy and information systems literacy.

CHAPTER OUTLINE

1.1 THE ROLE OF INFORMATION SYSTEMS IN BUSINESS TODAY

How Information Systems Are Transforming Business

Globalization Opportunities

The Emerging Digital Firm

Strategic Business Objectives of Information Systems

1.2 PERSPECTIVES ON INFORMATION SYSTEMS

What Is an Information System?

Dimensions of Information Systems

It Isn’t Just Technology: A Business Perspective on Information Systems

Complementary Assets: Organizational Capital and the Right Business Model

1.3 CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

Technical Approach

Behavioral Approach

Approach of This Text: Sociotechnical Systems

1.4 HANDS-ON MIS

A. Understanding Information System Requirements: Dirt Bikes USA

B. Improving Decision Making: Using Databases to Analyze Sales Trends

C. Achieving Operational Excellence: Using Internet Software to Budget for Shipping Costs

LEARNING TRACK MODULE

How Much Does IT Matter?

Interactive Sessions:

Virtual Management at Accenture

UPS Competes Globally with Information Technology

п‚» OPENING CASE: SMART SYSTEMS AND SMART WAYS OF WORKING HELP TOYOTA BECOME NUMBER ONE

Toyota has flourished in a highly competitive environment because it has created a set of finely-tuned business processes and information systems that simultaneously promote agility, efficiency, and quality. It can respond instantly to customers and changes in the marketplace as events unfold, while working closely with suppliers and retailers. The experience of Toyota and other companies described in this text will help you learn how to make your own business more competitive, efficient, and profitable.

The chapter-opening diagram highlights important points raised by this case and this chapter. As part of its ongoing effort to monitor quality, efficiency and costs, Toyota management saw there was an opportunity to use information systems to improve business performance. Technology alone would not have provided a solution. Toyota had to carefully revise its business processes to support a build-to-order production model that based vehicle production on actual customer orders rather than “best guesses” of customer demand. Once that was accomplished, Oracle e-business software was useful for coordinating the flow of information among disparate internal production, ordering, and invoicing systems within the company and with systems of retailers and suppliers.

By helping Toyota build only the cars customers have ordered, its vehicle order management system reduces inventory costs, because the company and its dealers do not have to pay for making and storing vehicles customers did not want. The system also increases customer satisfaction by making it easier for customers to buy exactly the model, make and option they desire. Information provided by the system helps management monitor trends and forecast demand and production requirements more accurately. The system creates value for Toyota by making its ordering and production processes more efficient and effective. Electronically integrating key business processes in vehicle ordering and inventory management has made this company much more agile and adaptive to customer demands and changes in its supplier and dealer network.

Use the diagram at the beginning of the chapter to show how Toyota’s vehicle orders management system helped them solve the business challenge presented by fierce competition and rapidly changing customer preferences. The diagram also illustrates how management technology, and organizational elements work together to create the system.

1.1 THE ROLE OF INFORMATION SYSTEMS IN

BUSINESS TODAY

Computers are changing every aspect of our lives from entertainment to shopping, from the work we do and where we do it, to how we communicate with friends and relatives. Even though we are still hearing negative news about the dot-com bubble from the late 1990s through 2001, the death of the Internet has been greatly exaggerated. Not only is it alive and well, but thriving. The difference between then and now is that many of the companies went bust primarily because of poor business planning or simply because their product wasn’t viable to begin with. As you can see from the opening case in the text, many companies are remodeling their businesses and information systems with the Internet in mind.

Ask managers to describe their most important resources and they’ll list money, equipment, materials, and people вЂ" not necessarily in that order. It’s very unusual for managers to consider information an important resource, and yet it is. As electronic business and electronic commerce grow in popularity and more firms digitize their operations, having useful information is becoming even more important to the