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What is an organization?
A stable, formal, social structure that takes inputs from the environment and processes them to produce outputs
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What is a strategic inflection point?
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Digital Darwinism
Organizations that cannot adapt fail
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The value chain: Who created it and explain
- Porter
- Divides activities into 2 categories - Primary activities are directly related to production and distribution. Support activities make the delivery of a firm's activities possible
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How is the value chain broken down?
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What is the value chain used for?
- To decide where to invest the company's resources, IT and otherwise
- IT uses it to see the strategy of the firm and make it the strategy of IT
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Define supply chain
Network of organizations and business processes for production and distribution of products
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What is IT's role in the supply chain?
- To create integrations or tight process and information linkages between functions within a firm
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Four specific impacts of IT on the organization
- Reduce transaction costs: search, negotiation, and enforcement costs
- Reduce agency costs: IT makes it easier and cheaper to make a decision
- Improve collaboration
- Facilitate new organizational strategies: helps in all five of Porter's forces
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Four different system types used by the organization
- Systems by level
- Systems across all levels
- System by functional area
- Integrating levels and functions
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Four levels of organizational structure
- Operational: elementary activities and transactions: TPS
- Tactical - Knowledge workers: systems support knowledge and data workers: OAS/KWS
- Tactical - Middle managers: systems support monitoring, controlling, decision-making, and administrative activities: MIS/DSS/GDSS
- Strategic: long range planning: EIS
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TPS
- Transaction processing systems
- Input: transactions
- Processing: sorting, listing, merging, updating
- Output: detailed reports, lists, summaries
- Users: Operations personnel, supervisors
- Ex: accounts payable and receivable, order tracking and processing, payroll
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OAS
- Office automation systems
- Computer systems that are designed to increase the productivity of data workers in the office
- Users: clerical workers
- Ex: word processing, desktop publishing, document imaging systems
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KWS
- Knowledge based(work) systems
- Captures the expertise of human beings: ES - expert system - used for limited domains of knowledge, KMS - knowledge management system
- Some companies use AI and neural networks so that the systems learn from their history
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MIS
- Management Information Systems
- Provide reports and access to company data
- Input: high volume data
- Processing: routine reports, simple models, low-level analysis
- Output: Summary and exception reports
- Users: middle managers
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DSS
- Decision Support Systems
- Combine data and analytic models to support nonroutine decision making for individuals
- Use input from TPS data plus external sources
- Users: Professionals, staff managers
- Input: data, analytic models, data analysis tools
- Processing: interactive, simulations, analysis
- Output: special reports, decision analyses, responses to queries
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GDSS
- Group Decision Support System
- Facilitates the solution to unstructured problems for decision makers working in a group
- AKA collaboration system
- Uses software tools called groupware to help it arrive at a decision: questionnaire/voting software, electronic brainstorming tools, idea organizer, electronic meeting system
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Differences between DSS and GDSS
- Users: DSS - individuals; GDSS - groups
- Objective of use: DSS - build models using data; GDSS: facilitate interaction between individuals
- Effectiveness: DSS - depends on how well the tool is built by designers; GDSS: depends on facilitators, tools selected, participants
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ESS
- Executive Support System
- Address nonroutine decision making
- Incorporate data from TPS, MIS, DSS and external sources
- Users: senior managers
- Input: external and internal aggregate data
- Processing: graphics, simulations, interactive
- Output: projections, responses to queries
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Relationship ESS, MIS, DSS, and TPS systems
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IOS
- Interorganizational System
- Automates the flow of information between organizations to support the planning, design, development, production, and delivery of products and services
- Ex. extranet
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Extranet
- Private intranet that is accessible to authorized outsiders
- Used to coordinate value chains between organizations to collectively produce a product or service - more customer driven, less linear, flexible
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How do companies integrate their manufacturing, accounting, finance, marketing, and HR systems?
- Build their own patches
- Use enterprise systems, or firm-wide information systems that integrate key business processes so that information can flow freely between parts of the firm
- Known as ERP: enterprise resource planning
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ERP
- Enterprise Resource Planning
- Automate business processes
- Integrates all aspects of the firm
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Advantages of using an ERP
- Creation of one unified organization
- Automation of manually-intensive processes
- Better reporting and decision making
- Unified technology platform
- More efficient company and customer driven business
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