An application program is a computer program designed to support a specific task or business process, whereas a computer based information system is an information system that uses computer technology to perform some or all of its intended tasks
Question Two: What are strategic information systems?
Strategic information systems are systems that help an organisation gain a competitive advantage by supporting its strategic goals and/ or increasing performance and productivity.
Question Three: According to Porter, what are the five forces that could endanger a firm’s position in its industry or marketplaces?
According to Porter, the five forces that could endanger a firm’s position in its industry or marketplace, as shown in the diagram below, can be identified as:
· The threat of new competitors entering the market
· The bargaining power of suppliers
· The bargaining power of customers (buyers)
· The threat of substitute products or services
· The rivalries among existing firms in the industry
Question Four: In relation to Porter's value chain model, what is meant by primary activities and support activities, and how does IT support these activities?
Porter’s value chain model developed in 1985, identify specific activities where they can use competitive strategies for the greatest impact. This model also shows points where an organisation can use information technology to achieve competitive advantage.
The below diagram demonstrates Porter’s value chain model:
According to Porter’s value chain model, the activities conducted in any organisation can be divided into two categories:
· Primary activities: those business activities that relate to the production and distribution of the firm’s products and services, thus creating value for which customers are willing to pay. This includes the following steps:
1. Inbound Logistics (inputs)
2. Operations (Manufacturing and Testing)
3. Outbound Logistics (Storage and Distribution)
4. Marketing and Sales
5. Services (After-sales Services)
· Support activities: do not add value to the firm’s product or services but contribute to the firm’s competitive advantage by supporting the primary activities. This includes the following activities:
1. The firm’s infrastructure (accounting, finance, management)
2. Human Resources Management
3. Product and Technology Development (R&D)
4. Procurement
The Internet has changed the nature of competition. Porter concludes that the overall impact of the Internet is to increase competitions, which has a negative impact on profitability.
Question Five: Discuss the logic of building information systems in accordance with the organizational hierarchical structure.
Information systems have numerous impacts on the organisational hierarchical structure. These include the following:
· IT reduces the number of middle managers needed: IT makes managers more productive and increases the number of employees who can report to a single manager, therefore it decreases the amount of managers and experts that are needed in an organisation
· IT will change the manager’s job: IT changes the way managers make decisions with more time to plan activities, being able to gather information easier and reducing the time necessary in the decision making process. IT allows managers to complete tasks
· Job Security: IT creates the competitive advantage of replacing people with machinery. Outsourcing and offshoring are also a concern that employees now have due to advances in IT.
· IT impacting employees at work: there has been a loss of identity due to computerisation, as there is a reduction/ elimination of the human element that is present in the non- computerised systems. The increased use of the Internet has had an isolating effect on employees also, IT can impacts the health and safety of employees. IT has been able to create jobs for those with disabilities.
· IT provides quality-of-life improvements: IT can provide flexibility that can significantly improve the quality of leisure times, even if it doesn’t increase the total amount of leisure time. However, IT can also place employees on ‘constant call’ so that they are never truly away from the office, even when they are on holidays.
Question Six: How has the Internet affected each of the five forces in Porter’s competitive forces model?
According to Porter, the five forces in the competitive forces model are affected by the Internet in the following ways:
· The threat of new competitors entering the market: The web increase the threat that new competitors will enter the market by sharply reducing traditional barriers to entry. Today, competitors frequently need only to set up a web site. This threat is particularly acute in industries that perform an intermediation role, which is a link between buyers and sellers as well as industries where the primary product or services is digital. In addition, geographical reach of the web enables distant competitors to compete with an existing firm.
· The bargaining power of suppliers: The Internet’s impact on suppliers is mixed. On 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.
· The bargaining power of customers (buyers): The web significantly increases a buyers access to information about products and suppliers. IT can reduce customers’ switching costs, which are the costs of a decision to buy somewhere else. In addition, buyers can more easily buy from suppliers. In these ways the Internet gradually increase customers’ bargaining power
· The threat of substitute products or services: New technologies can substitute products very rapidly. Information based industries are in the greatest danger from substitutes. Any industry in which digitalised information can replace goods must view the Internet as a threat because the Internet can convey this information efficiently and at low costs.
· The rivalries 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.
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