BUS206 Study Guide

Unit 4: Information Systems and Organization Strategy

4a. Describe how information systems can provide businesses with competitive advantage

Cost advantage and differentiation advantage are the two main methods companies can obtain competitive advantage.

  • Information technology plays a role in creating value by contributing to cost advantage or differentiation advantage, or both.

Read Strategy and the Internet to see how Michael E. Porter urged business planners not to lose focus on strategic development and competitive advantage. Read "Competitive Advantage" in Does IT Matter? to prepare for the final exam.


4b. Describe how information technology influences Porter's Five Forces and the Value Chain model

1. Porter's Five Forces model was developed as a framework for industry analysis. The model helps companies understand the competition in their industry and helps companies analyze their strengths and weaknesses.

  • The "Bargaining Power of Customers" force tells us that the Internet has given customers the upper hand in industry by making available many options.
  • Price becomes a huge factor when the number of competitors grows. In the force Porter called "Rivalry among competitors", the Internet expands markets geographically and lowers the cost of doing business.
  • What are the other three forces? Which force helps answer the question, "How easy it for a company to replace a product or service?"


2. Value is built through the value chain – a series of activities undertaken by a company to produce a product or service. Each step in the value chain contributes to the overall value of a product or service.

  • Primary activities and support activities are the two main activities that make up the value chain.
  • Support activities are functions that support and cut across all primary activities in an organization.
  • How do primary functions directly impact the creation of a product or service? How can companies benefit from the firm infrastructure support activity? 

To prepare for the final exam, read "The Value Chain" and "Porter's Five Forces" in Does IT Matter? to find out how each of the five forces is used to analyze an industry to gain competitive advantage and a definition of each of the primary and support activities in the value chain.


4c. Identify the different systems needed to support business processes in an organization

1. Information systems that support business processes can give companies a competitive advantage over their rivals. Electronic Data Interchange (EDI) is a process that works as a computer-to-computer exchange of business documents in standard electronic format between business partners.

  • EDI helps reduce the process of manually ordering supplies, which can be complex and time-consuming. EDI simplifies the process through an internal computer system.
  • How does EDI reduce the resources required to manage relevant information?

To help prepare for the exam, read the section "Electronic Data Interchange" in Does IT Matter?.


2. Collaborative systems help employees brainstorm ideas without the need to have face-to-face meetings.

  • Social networks, instant messaging, and shared document drives are all forms of collaboration tools that help multiple users interact.
  • List a few specific collaboration tools available for businesses today.

Read the section "Collaborative Systems" in Does IT Matter? to understand tools and features that help employees interact whether they are physically present or working remotely.


3. A Decision Support System (DSS) is an information system built to help organizations make specific decisions or sets of decisions. A DSS can assist each level of the decision-making process of an organization from the CEO to first-level managers and team leaders.

  • Decisions can be structured or unstructured. Structured decisions include the necessary information to make the decision. Unstructured decisions involve unknowns.
  • Semi-structured decisions are a middle ground in a DSS because they include most of the factors needed to make a decision and influence experience and other external factors.

Read the section "Decision Support Systems" in Does IT Matter? to read more about the different formats a DSS can come in. This will be handy as you prepare for the final exam.


4d. Understand how information technology combined with business processes can bring an organization competitive advantage

When combined with existing business processes, IT can make a difference in giving companies a competitive advantage. Technology can accelerate and amplify how a company selects, adopts, and exploits innovations.

  • To successfully implement technology, qualified vendors, consultants, and IT departments are necessary in an organization. The real value of IT is the innovations that can be delivered in an organization.
  • Organizations need to have a firm grasp on how they can use information systems to their advantage by knowing how to differentiate themselves and use technology to accomplish that differentiation.
  • What types of tools and applications can companies use to gain competitive advantage?
  • In the value chain, what activities that directly impact the creation of products or services can be used to add value and provide a competitive advantage?

To prepare for the exam, "Investing in IT for Competitive Advantage" and the primary activities in "The Value Chain" from Does IT Matter?.


4e. Describe each of the different roles that people play in the design, development, and use of information systems

People are the final component in an information system. Without people to use a management information system, all the hardware, software, data, and business processes sit alone unused.

  • Systems analysts have two main roles: identifying business needs and developing methods for computing systems to fit those needs.
  • Computer engineers' work falls into four main categories: hardware, software, systems, and networks.

Read the following sections in The People in Information Systems to prepare for the final exam: "Systems Analyst", "Computer Engineer", "Information-Systems Operations and Administration", and "Computer Operator".


4f. Describe the career paths available to those who work with information systems

There are a variety of types of careers one may choose within information systems. Problem-solving, critical thinking, a strong work ethic, and the ability to handle "burst stress" are all common attributes of successful employees in IT.

  • Individuals who have a combined skill set that includes technical and managerial expertise could pursue a systems analyst career.
  • A career in IT typically begins as an IT generalist and can change into a more refined role depending on what a person's interests are.

Read So You Want to Get a Job in Information Technology? to see some of the possible IT career paths available. To prepare for the exam, read "Systems Analyst" and "Project Managers" in The People in Information Systems.


4g. Explain the importance of where the information-systems function is placed in an organization

Before organizations had dedicated information systems functions, computing was placed in the finance or account department and was referred to as "data processing". As technology crept into daily business operations and practices, information systems were classified as a separate function, but it was still under the domain of the CFO.

  • As the use of business computers grew in the 1980s, the information systems function of an organization was combined with telecommunications to form an information technology department.
  • With the addition of a separate IT department came a new role known as the Chief Information Officer (CIO), who reports directly to the organization's CEO.

Read "Organizing the Information Systems Function" and "Where in the Organization should IS be?" in The People in Information Systems. Refer to the Find the IT Function on Organization Charts task.


4h. Describe the different types of users of information systems

Other than those who create, administer, and manage information systems, users are the largest category involved in a management information system. Users must be able to operate an information system successfully; otherwise, the system fails its primary intended purpose: to be useful to people.

  • Innovators, early adopters, early majority, late majority, and laggards are the five types of technology adopters.
  • Each type of adopter can be turned into an information technology user who can provide insight into how new information systems can be implemented in an organization.

Read each subsection under "Information-Systems Users – Types of Users" in The People in Information Systems to learn more about what each type of technology adopter is to prepare for the final exam.


Unit 4 Vocabulary

This vocabulary list includes terms that might help you answer some of the review items above and some terms you should be familiar with to be successful in completing the final exam for the course.

  • Adopter
  • Collaborative systems
  • Competitive advantage
  • Computer Engineer
  • Computer Operator
  • Decision Support System (DSS)
  • Electronic Data Interchange (EDI)
  • Five Forces
  • Innovators
  • Primary activities
  • Project Manager
  • Support activities
  • Systems Analyst
  • Value chain