• Stable, formal social structure that takes resources from environment and processes them to produce outputs
• A formal legal entity with internal rules and
procedures, as well as a social structure
Technical Definition
• A collection of rights, privileges, obligations, and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution
Behavioral Definition
Precise rules, procedures, and practices developed to cope with virtually all expected situations
Routines (standard operating procedures)
Collections of routines
Business Processes
Business Firm
Collection of business
processes
• Divergent viewpoints lead to political struggle, competition, and conflict
• Political resistance greatly hampers organizational change
Organizational Politics
• Encompasses set of assumptions that define goal and product
• What products the organization should produce
• How and where it should be produced
• For whom the products should be produced
• May be powerful unifying force as well as restraint on change
Organizational Culture
• Organizations and environments have a reciprocal relationship
• Organizations are open to, and dependent on, the social and physical environment
• Organizations can influence their environments
• Environments generally change faster than organizations
• Information systems can be an instrument of environmental scanning, act as a lens
Organizational Environment
– Technology that brings about sweeping change
to businesses, industries, markets
– Examples: personal computers, word processing software, the Internet, the PageRank algorithm
– First movers and fast followers
Disruptive technologies
inventors of disruptive
technologies
First movers
firms with the size and
resources to capitalize on that technology
Fast followers
– Provides general view of firm, its competitors, and environment
– Five competitive forces shape fate of firm
1. Traditional competitors
2. New market entrants
3. Substitute products and services
4. Customers
5. Suppliers
Michael Porter’s competitive forces model
All firms share market space with competitors who are continuously devising new products, services, efficiencies, switching costs
Traditional Competitors
– Some industries have high barriers to entry, e.g. computer chip business
– New companies have new equipment, younger workers, but little brand recognition
New market entrants
– Produce products and services at a lower price than competitors while enhancing quality and level of service
– Examples: Wal-Mart
Low-cost leadership
– Enable new products or services, greatly change customer convenience and experience
– Examples: Google, Nike, Apple
Product differentiation
– Use information systems to enable a focused strategy on a single market niche; specialize
– Example: Hilton Hotels
Focus on market niche
– Use information systems to develop strong ties and loyalty with customers and suppliers; increase
switching costs
– Example: Netflix, Amazon
Strengthen customer and supplier intimacy
