UCI 202 Topic 1 Notes
UCI 202 Topic 1 Notes
UCI 202 Topic 1 Notes
3. Boundary
It defines the limits of the system.
It defines what is inside and outside the system.
4. Environment
Constitutes entities outside the system that interacts with it.
6. Control Mechanism
Monitors the output to check that it conforms to the expected goals and objectives.
Variations from the goals or output are fed back into the system in order to adjust the system towards
the set goals.
Classification of Systems
Can be classified based on:
(i) Interaction with the environment
a) Open systems
b) Closed systems
Open systems
Is a system that interacts with and exchanges information with the outside environment i.e. systems that interact
with the environment.
All Business systems are open system
Closed systems
Information Quality
Quality of an information product can be viewed in three dimensions: time, content and form dimensions
1. Time Dimension
a) Timeliness – Information should be provided when needed
b) Currency - Information should be up-to-date when it is provided
c) Frequency - Information should be provided as often as needed
d) Time Period - Information should be provided about past, present, and future time periods
2. Content Dimension
(i) Accuracy - Information should be free from errors
(ii) Relevance - Information should be related to the information needs of a specific recipient for a
specific situation.
(iii) Completeness – all information that is needed should be provided
(iv) Conciseness – only information that is needed should be provided
(v) Scope – information can have a broad or narrow scope; an internal or external focus.
(vi) Performance – information can reveal performance by measuring activities accomplished,
progress made, or resources accumulated.
3. Form Dimension
(i) Clarity - Information should be provided in a form that is easy to understand.
(ii) Detail - Information should be provided in detail or summary form.
(iii) Order - Information should be arranged in a predetermined sequence
(iv) Presentation - Information should be presented in a narrative, numeric, graphic, or other forms.
(v) Media - Information can be provided in the form of printed paper documents, video displays, or
other media.
Roles of Information Systems in Business
There are three vital roles that information systems can perform for a business enterprise:
1. Support of its business processes and operations
2. Support of decision making by its employees and managers.
3. Support of its strategies for competitive advantage
The threat of new competitor entry is high when it is easy to enter your market and low when
significant barriers to entry exist.
An entry barrier is a product or service feature that customers have learned to expect from
organizations in a certain industry. This feature must be offered by a competing organization for it
to survive in the marketplace. For example, the threat of entry into automobile manufacturing is very
low because the auto industry has major entry barriers, particularly the enormous capital costs for
the manufacturing facility and equipment.
For most firms, the Web increases the threat that new competitors will enter the market by sharply
reducing traditional barriers to entry, such as the need for a sales force or a physical storefront to
sell goods and services.
2. The bargaining power of suppliers
Supplier power is high when buyers have few choices from whom to buy and low when buyers have
many choices. Therefore, organizations would rather have more potential suppliers to be able to
better negotiate price, quality, and delivery terms.
The Internet’s impact on suppliers is mixed. On the one hand, buyers can find alternative suppliers
and compare prices more easily, reducing the supplier’s bargaining power. On the other hand, as
companies use the Internet to integrate their supply chains, participating suppliers prosper by locking
in customers.
3. The bargaining power of customers (buyers)
Buyer power is high when buyers have many choices from whom to buy and low when buyers have
few choices. For example, in the past, students had few places from which to buy their textbooks
(typically, one or two campus bookstores). As a result, students had low buyer power. Today, students
have a multitude of choices to choose from, and as a result, student buyer power has greatly
increased.
The Web also significantly increases a buyer’s access to information about products and suppliers.
Internet technologies can reduce customers’ switching costs, which are the costs, in money and time,
of a decision to buy elsewhere. In addition, buyers can more easily buy from other suppliers. In these
ways the Internet greatly increases customers’ bargaining power.
If there are many substitutes for an organization’s products or services, then the threat of substitutes
is high. If there are few substitutes, then the threat is low.
Today, new technologies create substitute products very rapidly. For example, customers today can
purchase wireless telephones instead of land-line telephones, Internet music services instead of
traditional CDs, and ethanol instead of gasoline in cars.
Information-based industries are in the greatest danger from substitutes. Any industry in which
digitized information can replace material goods (e.g., music, books, software) must view the Internet
as a threat because the Internet can convey this information efficiently and at low cost.
5. The rivalry among existing firms in the industry
The threat from rivalry is high when there is intense competition among many firms in an industry.
The threat is low when the competition is among fewer firms and is not as intense.
The visibility of Internet applications on the Web makes proprietary systems—systems that belong
exclusively to a single organization—more difficult to keep secret. The result is fewer differences
among competitors.
Internet-based systems are changing the nature of competition and even industry structure in many
other ways. Companies that have both online and offline sales operations are termed click-and-
mortar firms because they combine both “brick-and-mortar” and e-commerce operations.
Competition also is being affected by the extremely low variable cost of digital products. That is,
once the product has been developed, the cost of producing additional “units” approaches zero.
Consider the music industry as an example. The costs in a physical distribution channel are much
higher than the costs involved in delivering the songs over the Internet in digital form.
2. Differentiation strategy
Offer different products, services, or product features that differentiate a firm from its competitors’
or reduce the differentiation advantage of competitors.
For example, Dell has differentiated itself in the personal computer market through its mass-
customization strategy.
3. Innovation strategy
Introduce new products and services, add new features to existing products and services, or
develop new ways to produce them.
May also involve making radical changes to the business processes for producing or distributing
products and services.
A classic example is the introduction of automated teller machines (ATMs) by Citibank. The
convenience and cost-cutting features of this innovation gave Citibank a huge advantage over
its competitors.
4. Growth strategies
Significantly expanding a company’s capacity to produce goods and services,
expanding into global markets, diversifying into new products and services, or
integrating into related products and services.
5. Alliance strategies
Establish new business linkages and alliances with suppliers, customers, competitors,
consultants and other companies.
These alliances may involve mergers, acquisitions, joint ventures, forming of virtual
companies, or other marketing, manufacturing, or distribution agreements between a
business and its trading partners.
Strategic Uses of Information Technology
1. Lower cost
Use IT to substantially reduce cost of doing business.
Use IT to lower the costs of customers or suppliers.
2. Differentiate
Develop new IT feature to differentiate products and services.
Use IT features to reduce the differentiation advantage of competitors.
Use IT features to focus products and services at selected market niches.
3. Innovate
Create new products and services that include IT components
Develop unique new markets or market niches with the help of IT
Make radical changes to business processes with IT that dramatically cut costs, improve quality,
efficiency, or customer service, or shorten time to market
4. Promote growth
Use IT to manage regional and global business expansions.
Use IT to diversify and integrate into other products and services.
5. Develop alliances
Use IT to create virtual organizations of business partners.
Develop inter-enterprise information systems linked by Internet and extranets that support strategic
business relationships with customers, suppliers, subcontractors, and others.
Other competitive strategies
6. Locking in customers and suppliers
Investment in IT can allow a business to lock in customers and suppliers (and lock out
competitors) by building valuable new relationships with them.
7. Building switching costs
Develop inter-enterprise information system whose convenience and efficiency create switching
cost that lock in customers and suppliers.
8. Raising barriers to entry
o By increasing the amount of investment or complexity of IT, a company can discourage or delay
new entrants in the industry because of the level of technology required to compete in the market.
9. Leverage investment in IT
o Leverage investment in IS people, hardware, software, databases, and networks from
operational uses into strategic applications.
10. Lock out substitute products
o Include IT components in the products and services to make substitution of competing products
or services more difficult.
Benefits of KMS
1. They make best practices, which are the most effective and efficient ways of doing things, readily
available to a wide range of employees. Enhanced access to best-practice knowledge improves
overall organizational performance. For example, account managers can now make available their
tacit knowledge about how best to handle large accounts.
2. Can be used to train/orientate new employs.
3. Better customer service.
4. More efficient product development.
5. Improved employee morale and retention.