The Business environment encompasses all those factors that affect a company's operations, and includes customers, competitors, stakeholders, suppliers, industry trends, regulations, other government activities, social and economic factors, and technological developments. (http://www.quantum3.co.za/CI%20Glossary.htm#B)
The characteristics of the modern business environment include:
Ø Massively interconnected
Ø Real time
Ø Rapidly changing & dynamic
Ø Operates through e-commerce
Ø Increasing use social networking
Q2. What is meant by a web-based, global platform, what does it provide, and how has it affected business?
The term web-based platform includes the components of hardware, software, and communications technologies as it comprises of the internet and the functionality of the World Wide Web. This platform enables individuals to connect, compute, communicate, compete and collaborate everywhere and anywhere, anytime and all the time, and to access limitless amounts of information, services and entertainment. This platform operates without regard to geography time, distance, and even language barriers. The Web-based platform has created today’s business environment, which is global, massively interconnected, intensely competitive, real-time, rapidly changing and information intensive.
Q3. What are the main pressures that characterize the modern global business environment?
Now days many organizations compete in a challenging environment. Companies must react rapidly to problems and opportunities happening from extreme dynamic conditions. Thus this occurs due to business pressures. The business environment is the combination of social (changing attitudes to goods), legal (changes in law), economic (inflation, unemployment, labour costs), physical (the space, building, noise, ergonomics), and political (local or foreign markets) factors that affect business activities.
o Market pressures – global economy/competition, changing workforce, more power to customers
o Technology pressures – innovation and obsolescence, information overload
o Social pressures ‐ social responsibility government regulation/deregulation, terrorism, ethical issues
These pressures can change quickly, sometimes in an unpredictable manner. Recent pressures include: exchange rate changes, SARS, bird flu, US/Australian free trade agreement, open‐source software.
Q4. What are/discuss some of the common; IT oriented organizational responses to these pressures?
Organizations are responding to the pressures by implementing different organization responses. Organizational Responses, to the pressure is by implementing IT such as strategic systems, customer focus, make to order and mass communication and e-business. Companies need to react frequently and quickly to both the threats and the opportunities resulting from these pressures and the resulting new business environment. Technology is often seen as providing the answer.
— Strategic systems: provide organisations with advantages that enable them to increase their market share and or profits, to better negotiate with suppliers or to prevent competitors from entering their markets.
— Customer focus: provide excellent customer service by attracting and keeping customers, then to losing them to competitors.
— Make to order and mass customization: make to order producing customises products and services (efficiently and low cost). Mass customization large quantity but customizes t fit each customers desire.
— E-commerce: doing transaction electronically for the business is great as it provides flexibility during this competing environment.
Q5. How are IT architecture and IT infrastructure are interrelated:
An organisation’s information technology architecture is a high-level map or plan of the information assets in an organization. The IT architecture integrates the information requirements of the overall organization and all individual users, the IT infrastructure, and all applications. An organisations information technology infrastructure consists of the physical facilities, IT components, IT services and IT managements that support the entire organization. Therefore the two concepts are interrelated as both guide and direct the IT departments of an organisation. Both IT architecture and IT infrastructure provide the basis for all information systems in the organization.
Q6. Is the Internet an infrastructure, an architecture, or an application program? or something else. Why?
Chapter 2: Information Systems: Concepts and Management
Q1. What is the difference between an 'application' and computer-based information systems?
An application program is a computer program designed to support a specific task or business process. Each functional area or department within a business organisation uses dozens of application programs.
Computer based information system is an information system that uses computer technology to perform some or all of its intended tasks. Basic components of information system:
o Procedures and
As a result information systems allow to perform high-speed, high-volume, numerical computations, Provides fast, accurate communication collaboration within and among organisations, Store huge amounts of information, easy to access, Allow quick and cheap access to information, Interprets vast amount of info quickly and Increase effectiveness and efficiency of people.
Q2. What are strategic information systems?
Strategic information systems (SISs) provide a competitive advantage by helping an organization implement its strategic goals and increase its performance and productivity. Any information system that helps an organisation gain a competitive advantage or reduces a competitive disadvantage is a strategic information system. Strategic information systems support or shape a business unit’s competitive strategy. An SIS can significantly change the manner in which business is conducted to help the firm gain a competitive advantage.
Strategic Information Systems - http://it.toolbox.com/wiki/index.php/Strategic_Information_System
Q3. According to Porter, what are the five forces that could endanger a firm’s position in its industry or marketplaces?
The five forces that need to be considered include:
1) Threat of entry of new competitors is high when it is easy to enter a market and low when significant barriers to entry exist. A barrier to entry is a product or service feature that customers expect from organizations in a certain industry. This feature maybe offered by a competing organization for it to survive in the marketplace.
2) The bargaining power of suppliers is high when buyers have few choices from whom to buy and low when buyers have many choices. Therefore, organisations would rather have more potential suppliers to be able to better negotiate price, quality and delivery terms.
3) The bargaining power of customers (buyers)is high when buyers have many choices from whom to buy and low when buyers have few choices.
4) The threat of substitute products or service if there are many substitutes for an organisation’s products or services, then the threat of substitutes is high. New technologies create substitute products very rapidly.
5) The rivalry among existing firms in the industry 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.
Q4. In relation to Porter's value chain model, what is meant by primary activities and support activities, and how does IT support these activities?
Michael Porter’s Value Chain Model (1985): used to identify specific activities where they can use competitive strategies for greatest impact.
Primary activities are those business activities that relate to the production and distribution of the firms products and services, thus creating value for which customers are willing to pay. Five main primary activities include:
· Inbound logics (inputs)
· Operations (manufacturing and testing)
· Outbound logistics (storage and distribution)
· Marketing and sales
Support activities do not add value directly to the firm’s products or services, they contribute to the firms competitive advantage by supporting the primary activities. Four Support activities include:
I. The firms infrastructure (accounting, finance, managements)
II. Human resources management
III. Product and technology development (R&D)
Q5. Discuss the logic of building information systems in accordance with the organizational hierarchical structure.
Organizations employ many different types of information systems (IS), as the IS collects, processes, stores, analyses and disseminates information for a specific purpose.
From this figure, it is evident that there are collections of applications programs (i.e. information systems), therefore building the information systems into the hierarchy supports a particular functional area in the organization.
Q6. How has the Internet affected each of the five forces in Porter’s competitive forces model.
An understanding of these models may lead businesses to adopt one or more competitive strategies:
— Cost leadership – produce products and/or services at the lowest cost in the industry for example Big W.
— Differentiation – offer different products, services or product features for example Apple
— Innovation –introduce new products, services and new features for example 3M
— Operational effectiveness – improve the manner in which internal business processes are executed so that a firm performs similar activities for example BMW
— Customer orientation – concentrate on making customers happy for example AAMI.