Why is information system so essential for running and managing a business today

MIS 650 Homework

1-1 How are information systems transforming business, and why are they so essential for running and managing a business today?

(1) Describe how information systems have changed the way businesses operate and their products and services

Answer: Information systems have dramatically changed the way businesses operate due to the explosion of the usage of internet-connected devices such as mobile smart phones and tablet devices by hundreds of millions of Americans as well as billions of people worldwide. In order to adapt to this consumer behavior in the 21st century, companies have exponentially increased their presence on the internet by opening up online stores which enable consumers with several clicks of the mouse directly order goods to be delivered to their homes.

Multi-billion dollar companies such as Google, Facebook, and Twitter have sprung up in the last 20 or so years which conduct their businesses almost exclusively online. These companies could not have existed in the past – because they derive a large percentage of their revenue from online advertising, which would be impossible without IT systems.

Companies are also using IT systems to drive for greater efficiency and profitability. As mentioned in the book “Management Information Systems, Managing the Digital Firm” by Kenneth & Jane Laudon, the grocery chain giant Kroger used IT systems such as QueVision, Food Temperature Monitoring System, ClickList, and Mobile apps to reduce checkout line wait time, increase revenue & customer loyalty, and enhance profitability [1, p. 3 – 5].

Finally, new regulations and laws are mandating electronic book keeping of records. As a result, companies are required to keep electronic records such as emails and other employee related data at an exponential rate of increase.

(2) Identify three major new information system trends

Answer: The first major trend within information systems is IT innovations. Examples include the recent emergence of clouding computing; the emergence of mobile digital business platforms that enable businesses such as mobile app development companies to conduct and deliver their products & services exclusively online [2, p. 7 – 8]. Cloud computing is enabling companies to out-source its computation and data storage needs to a third party where computing and storage resources can be provided in a just-in-time manner. Digital business platforms are threatening to put entire industries out of existence.

The second major trend is the emergence of new business models. A good example of that is the company Netflix, where videos and shows are streamed to the consumer via

the internet, bypassing the traditional cable company. Netflix is even becoming a major content producer, making premium and original TV shows which attract millions of viewers.

The third major trend is management changes. With the emergence of smart mobile phones, high-speed wireless networks, and mobile operating systems such as Android and iOS where smart apps run, today’s manager is able to stay in continuous contact with their employees [3, p. 8], and the growth of usage of Enterprise Resource Planning (ERP) software today gives a manager an almost instantaneous snapshot of the firm’s most critical information. This capability would not be possible even 20 years ago where a manager has to constantly deal with the “Information Fog of War” even inside his/her own firm.

(3) Describe the characteristics of a digital firm

The characteristics of a digital firm are (1) Core business processes (activities such as developing a new product, generating and fulfilling an order, hiring an employee) are accomplished through digital networks spanning the entire organization (2) Critical corporate assets such as intellectual property, a firm’s core competencies, and financial and human assets are managed digitally. This means information relating to these key corporate assets would be instantly available upon demand. (3) Digital firms can sense and respond to their environment more quickly than traditional, non-digital firms can because of former’s ability to quickly gather, analyze, make decisions, and then respond to these environmental changes. This gives digital firms flexibility and adaptability non- digital firms do not have. (4) Digital firms have more flexibility in terms of organization and management at a global scale. A digital firm is able to conduct business 24 hours a day, 7 days a week; it is also able to allow its employees to perform productive tasks wherever those tasks are best to be performed, worldwide. [4, p. 12 – 13]

(4) Describe the challenges and opportunities of globalization in a “flattened” world

There are many challenges and opportunities of globalization in a world where information can be transmitted instantaneously. Challenges include (1) The opportunity to arbitrage due to localized market is becoming increasingly small. With the advent of online shopping platforms and powerful search engines, you almost have 100% price transparency across the globe, and with overnight / fast shipping services, a firm’s pricing power is severely degraded if that firm does not have other attributes such as brand name recognition or superior quality. (2) The out-source of jobs from high-wage countries to low-wage countries. In the age of globalization, in order to compete and survive, firms are looking to out-source jobs to low-wage countries to reduce production/service cost. If you are a prospective employee in a high-wage country, then you need to think seriously about how you can add value to a firm where that value adding mechanism cannot be easily outsourced. However, there are opportunities as well. They include (1) It forces high-wage countries to go up the value chain even more as (non-high tech, mass-scale light) manufacturing becomes an increasingly small part of their economy; it forces the creation of new jobs in service industries as well as in IT related industries. (2) It allows

Why are information system so essential in running and managing a business today?

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