BIS4225.

1
Introduction to
Organizations

1
 Objectives
To understand features of
Organizations in order to
design, build, and operate
Information Systems.

2
 Reading Materials
Campbell (1997) Chap. 1
Laudon & Laudon (2002)
Chap. 3

3
 Analytical Framework

L&L(2002, 67) 4
 Organizations
Organizations are social
arrangements for the
controlled performance of
collective goals.
Facilitates Synergy
Divides Labour
Formal Responsibility and Authority

C (1997, 3-4) 5
 Organizational Theories
To explain how and why
organizations work (to
maximize efficiency)
Classical Theories
Human Relations Theories
Systems Theories
Contingency Theories
C (1997, 5) 6
 Organizational Theories
Classical Theories
Assumes humans are
relatively predictable.
If , then ...
Scientific Management
Bureaucracy
C (1997, 5-10) 7
 Organizational Theories
Human Relations Theories
Focuses on human needs
and motivations
People are the key resources
of an Organization

C (1997, 10-2) 8
 Organizational Theories
Systems Theories
Org is a Total and Open system

Input Conversion Output

Org is a Socio-Technical system

C (1997, 13-5) 9
 Organizational Theories
Contingency Theories
Management of Org depends
upon a wide range of variables
which may apply at any time
Impossible to prescribe one type
of management style
Mechanistic, Organic Orgs
C (1997, 15-8) 10
 Organizational Theories
Contingency Theories
Bruns & Stalker (Mechanistic & Organic
Organizations)
Lawrence & Lorch (Differentiation,
Integration)
The most appropriate
Management Practices are
contingent on the environment
C (1997, 15-8) 11
 Goals & Objectives
Goals
Usually expressed in qualitative terms
For Medium to Long term
Objectives
Usually expressed in quantitative terms
For Short term

12
 Stakeholders
A person or party that has
an interest in the activities
of an organization
Low
Least Influential
Stakeholder
Power
Most Influential
High
Low High
Stakeholder Interest
C (1997, 26-7) 13
 Mission Statements
A concise and clearly
written statement of goals
and objectives.
Communicates values of
organization to
stakeholders.
C (1997, 29-34) 14
Mission Statements
CORPORATE
MISSION

GOALS
OBJECTIVES

IS OTHER
OBJECTIVES OBJECTIVES

IS OTHER
BUSINESS PLAN BUSINESS PLANS
15
 Changes
Changes in competitive
pressures from
environment.
Systems cannot succeed
without organizational and
management change.
L&L(2002, 68) 16
 Changes
Strengths
Environmental Weaknesses
Changes CORPORATE
Political/legal, Industry
MISSION Changes
Economic,
Social/Cultural,
Technological. Opportunities
Threats
GOALS
OBJECTIVES

IS OTHER
OBJECTIVES OBJECTIVES

IS OTHER
BUSINESS PLAN BUSINESS PLANS
17
 Management Challenges
Sustainability of
competitive advantage
Fitting technology to the
organization (or vice-versa)

L&L(2002, 68) 18
 Org-IT Relationship

L&L(2002, 69) 19
 Org-IT Relationship
Interactions between IT
and Organizations are very
complex.

L&L(2002, 69) 20
 Technical Definition

Combine resources from environment to product outputs

L&L(2002, 69) 21
 Behavioural Definition
FORMAL ORGANIZATION

Environmental Environmental
Resources Outputs

How technology affects Organizations inner workings.

L&L(2002, 70) 22
Common Features of Orgs
Bureaucracy
Clear-cut division of labour
and specialization
Standard Operating Procedures
Organizational Politics
Organizational Culture
L&L(2002, 70-1) 23
 Unique Features of Orgs
Different
Structures
Goals
Leadership Styles
Environments

L&L(2002, 70-1) 24
 Unique Features of Orgs
Information Systems have
different impacts on
different Organizations.
Different Organizations will
experience different effects
from same Technology.

L&L(2002, 72-3) 25
 Information Systems Dept

L&L(2002, 74-5) 26
 Economic Theories
Explain how Organizations
act in the marketplace.
IS Technology is a factor of
production that can be
freely substituted for
Capital and Labour.
L&L(2002, 76) 27
 Economic Theories
Microeconomic Model:
IT substitutes for labour:

IT Employees

L&L(2002, 76) 28
 Economic Theories
Transaction Cost Theory
IT reduces Transaction
Costs
(Transaction Costs = Costs
incurred when a firm buys from
the marketplace what it cannot
make itself)
L&L(2002, 76) 29
 Economic Theories
Transaction Cost Theory

L&L(2002, 76) 30
 Economic Theories
Agency Theory
IT reduces Internal
Management Costs
(easier for management to
oversee employees)

L&L(2002, 76) 31
 Economic Theories
Agency Theory

L&L(2002, 76-7) 32
 Behavioural Theories
Describes behaviour of
individual firms.
IT could change hierarchy
of decision-making by:
Lowering costs of acquiring info
Broadening distribution of info

L&L(2002, 77-8) 33
 Behavioural Theories
Various levels of
employees can use info to
make decisions.
Disintermediation:
Distribution of info by-passes
intermediaries (removing the
middlemen).
L&L(2002, 77-8) 34
 Behavioural Theories
Virtual Organizations
Organizations that uses
computer networks to link
people, assets, and ideas
without being limited by
traditional physical
boundaries.
L&L(2002, 77-8) 35
 Implementing Change
IS potentially changes an
organizations structure,
culture, politics, and work.
Generally, there is
resistance to such
changes.
L&L(2002, 78) 36
 Implementing Change
Leavitts
(1965)
model
All four
components
must be
changed
simultaneously
Mutually adjusting character of Technology and Organizations.
L&L(2002, 78) 37
 Implementing IT
To reap the benefits of IT,
changes in organizational
culture, values, norms, and
interests must be managed.
This requires planning and
effort.

L&L(2002, 79) 38
 Models of Management
Classical Model of
Management
Fayol:
Planning Deciding
Organizing Controlling
Coordinating
but these are not what managers actually do!

L&L(2002, 79-80) 39
 Models of Management
Behavioural Models of
Management
The actual behaviour of managers
appears to be:
Less systematic More informal
Less well-organized More reactive
More
than expected. frivolous
L&L(2002, 80-1) 40
 Models of Management
Behavioural Models of
Management

Kotters three critical activities

Mintzbergs ten managerial roles
(interpersonal, informational,
decisional)
L&L(2002, 81) 41
 Managerial Roles

L&L(2002, 81) 42
 Decision-Making
Strategic

Management

Knowledge

Operational
L&L(2002, 82) 43
 Decision-Making
Unstructured Decisions
Requires judgment, evaluation, and
insights into problem; not
procedural
Structured Decisions
Repetitive, routine, procedural

L&L(2002, 82) 44
 IS for Decision-Making
ORGANIZATIONAL LEVEL
TYPE OF DECISION Operational Knowledge Management Strategic

Structured

Semi-structured

Unstructured

L&L(2002, 82) 45
 IS for Decision-Making
Information systems do not
make decisions for people
but rather support the
decision-making process.

L&L(2002, 82) 46
 Model of Decision-Making
Problem Definition

Identification of Alternatives
Evaluation of Alternatives

Choice

Evaluation of Choice

L&L(2002, 83) 47
 Strategic IS
Changes the business
and/or ways to do business
to help organizations gain
Competitive Advantage.

L&L(2002, 85) 48
 Strategic IS
Strategic Strategic-
Information Level
Systems Systems
(used at all (for long-term
organizational decision-
levels) making)

L&L(2002, 85) 49
 Strategies
Business-Level Strategies
Firm-Level Strategies
Industry-Level Strategies

L&L(2002, ) 50
 Business-Level Strategies
Competitive
Advantage BETTER!
Cost Leadership
Differentiation CHEAPER!
Focus
FASTER!

L&L(2002, 87-8) 51
 Business-Level Strategies
Value Chain Model
(Porter 1985)
Highlights specific business
activities where competitive
strategies can be applied.
5 Primary Activities
4 Support Activities
L&L(2002, ) 52
 Business-Level Strategies
Support
Activities

Primary
Activities
VALUE CHAIN

L&L(2002, ) 53
Business-Level Strategies
Linkages

ACTIVITY 1 LINK ACTIVITY 2 LINK ACTIVITY 3

Linkages are a major source of

competitive advantage.
54
Business-Level Strategies
Value Delivery System

Supplier Firm Channel Consumer

Value Chain Value Chain Value Chain

55
 Business-Level Strategies
Supply Chain Management
Efficient Customer
Response Systems
Switching Costs

L&L(2002, 89-91) 56
 Business-Level Strategies
Example:

Traditional Bulk Storage Delivery Storeroom

Just-in-Time
Bulk Storage Delivery Storeroom

Stockless
Delivery
Bulk Storage
L&L(2002, 91) 57
 Business-Level Strategies
Vendors Business-Level Strategy Customers

L&L(2002, 92) 58
 Firm-Level Strategies
Synergy
Some units used as Inputs to
others
Pool Markets and Expertise
Core Competencies
Sharing of Knowledge
L&L(2002, 92-3) 59
 Industry-Level Strategies
Informational Partnerships
Join forces (without merging)
to share information and
knowledge.
Alliances with competitors.

L&L(2002, 93) 60
 Industry-Level Strategies
Sharing of Knowledge
Know-How (Practical)
Understand existing Processes
Know-Why (Theoretical)
Develop new Products/Services
Know-What (Strategic)
Identify/Define new Products/Services
61
 Industry-Level Strategies
Competitive
Forces

Porter (1985)

L&L(2002, 94) 62
 Industry-Level Strategies

L&L(2002, 94) 63
 Network Economics
Traditional Economics
Diminishing Returns (More
resources (inputs) gives lower
marginal gains in output).
Network Economics
Marginal costs can be close to zero,
for huge marginal gains.
L&L(2002, 95) 64