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Chapter 1
Information Systems in Global Business Today
Student Learning Objectives
1. How are information systems transforming business and why are they so essential
for running and managing a business today?
2. What is an information system? How does it work? What are its management,
3. What academic disciplines are used to study information systems and how does
each contribute to an understanding of information systems?
Learning Catalytics is a “bring your own device” student engagement, assessment, and
classroom intelligence system. It allows instructors to engage students in class with real-
Key Terms
The following alphabetical list identifies the key terms discussed in this chapter. The
page number for each key term is provided.
Business functions, 19
Information technology (IT) infrastructure, 22
Business model, 14
Input, 16
Business processes, 19
Internet, 21
Complementary assets, 27
Intranets, 22
Computer hardware, 21
Knowledge workers, 21
Computer literacy, 18
Management information systems (MIS), 18
Computer software, 21
Middle management, 19
Data, 16
Networking and telecommunications technology, 21
Data management technology, 21
Operational management, 19
Data workers, 19
Organizational and management capital, 28
Digital firm, 12
Output, 17
Extranets, 22
Processing, 17
Feedback, 18
Production or service workers, 21
Information, 16
Senior management, 21
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Teaching Suggestions
You are probably meeting in the first class session to introduce yourself, the course, and
to meet the students. It is good to get to the classroom early and meet the students as they
come in. Learn a few names as the students enter.
After going over any requirements you may have for the course, try to give an overview
of the course stressing that this is not a technical course. Usually, you can’t do enough to
put nontechnical types at ease.
The opening case, “The San Francisco Giants Win Big with Information Technology,”
shows students that even the major league sports industry has embraced technology as a
The San Francisco Giants attribute some of their success, both as a team and as a
business to their use of information technology. The team uses a video system to help
them analyze player reaction times. That technology makes player data analysis much
more accurate and provides information that didn’t exist before.
The Giants are also collecting data about fans, including ticket purchases and social
media activity. The organization pioneered dynamic ticket pricing in order to maximize
Section 1.1, “How are information systems transforming business and why are they so
essential for running and managing a business today?” gives students a feel for the
importance of information systems in business today and how they have transformed
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Table 1.1 is a great way to introduce students to much of the new IT jargon that has
developed over the last several years. Most of the technologies will be discussed in future
chapters. Ask students how much hands-on experience they’ve had with some of the new
business tools as either an employee or a customer.
Globalization is affecting virtually every country in the world. The most striking
evidence of this trend is the increasing presence of cell phones in the very small villages
of Africa. As technology becomes more pervasive and, in some cases easier to use,
Interactive Session: Management: Meet the New Mobile Workers
Case Study Questions
1. What kinds of applications are described here? What business functions do they
support? How do they improve operational efficiency and decision making?
E-mail, messaging, social networking, and salesforce management are described in this
case study. The applications support business functions including collaboration, location-
based services, and communications with colleagues. These applications improve
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iPhones. PepsiCo managers use iPads with custom applications to monitor their teams’
2. Identify the problems that businesses in this case study solved by using mobile
digital devices.
McClendon’s Select organic family-run farm uses iPads to monitor and record all of its
operations. A wireless camera is mounted on tractors to ensure crop rows are as straight
as possible. The farm’s planting manager no longer needs to leave the field to handle the
careful record-keeping required to maintain an organic certification. A Web-based
management system helps the manager update records of seed types and where and when
they’re planted.
Before all the technology was incorporated into the farm’s operations, orders were
handwritten on a white board, a process that was too time-consuming, error-prone, and
3. What kinds of businesses are most likely to benefit from equipping their
employees with mobile digital devices such as iPhones and iPads?
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Student answers will vary as they relate their own experiences and knowledge of using
mobile digital devices. Try to encourage the students’ creativity and imagination with this
question. Here are a couple examples:
Insurance companies: claims adjusters or agents writing new policies or updating old
4. One company deploying iPhones has said, “The iPhone is not a game changer,
it’s an industry changer. It changes the way that you can interact with your
customers and with your suppliers.” Discuss the implications of this statement.
First and foremost, those that effectively and efficiently deploy mobile digital device
technology gain a huge competitive advantage over those who do not use the technology
Section 1.2, “What is an information system? How does it work? What are its
management, organization, and technology components and why are complementary
assets essential for ensuring that information systems provide genuine value for
organizations?” gives students the facts and definitions that underpin information
systems and allow students to knowledgeably discuss information systems. Students do
not need the knowledge of a technical person, but they do need to understand the role of
information technology and how it must support the organization’s business strategy.
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Interactive Session: Technology: UPS Competes Globally with Information
Technology
Case Study Questions
1. What are the inputs, processing, and outputs of UPS’s package tracking system?
Inputs: The inputs include package information, customer signature, pickup,
2. What technologies are used by UPS? How are these technologies related to
UPS’s business strategy?
Technologies include handheld computers (DIADs), barcode scanning systems, wired
and wireless communications networks, desktop computers, UPS’s central computer
(large mainframe computers), and storage technology for the package delivery data.
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3. What strategic business objectives do UPS’s information systems address?
• Operational excellence: UPS has maintained leadership in small-package
delivery services despite stiff competition from FedEx and the U.S. Postal System
by investing heavily in advanced information technology.
• New products, services, and business models: In June 2009 UPS launched a
new Web-based Post Sales Order Management System (OMS) that manages
global service orders and inventory for critical parts fulfillment. The system
4. What would happen if UPS’s information systems were not available?
Arguably, UPS might not be able to compete effectively without technology. If the
technology were not available, then UPS would, as it has through most of its history,
Section 1.3, “What academic disciplines are used to study information systems and
how does each contribute to an understanding of information systems?”
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Too often, information systems are thought to be all about hardware and software. Issues
Review Questions
1-1 How are information systems transforming business and why are they so
essential for running and managing a business today?
Describe how information systems have changed the way businesses operate and
their products and services.
Wireless communications, including computers and mobile handheld computing
devices, are keeping managers, employees, customers, suppliers, and business
partners connected in every way possible. E-mail, online conferencing, the Web, and
Identify three major new information system trends.
Three information system trends that are influencing the way businesses interact with
employees, customers, suppliers, and business partners include emerging mobile
digital platforms, growth of online software-as-a-service, and the growth of cloud
computing.
Table 1.1 (page 8) outlines new MIS changes and their impact on business. The table
Describe the characteristics of a digital firm.
• Significant business relationships with customers, suppliers, and employees
are digitally enabled and mediated.
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• Core business processes are accomplished through digital networks spanning
the entire organization or linking multiple organizations.
• Key corporate assets—intellectual property, core competencies, and financial
Describe the challenges and opportunities of globalization in a “flattened” world.
Customers no longer need to rely on local businesses for products and services. They
can shop 24/7 for virtually anything and have it delivered to their door or desktop.
Companies can operate 24/7 from any geographic location around the world. Jobs can
just as easily move across the state or across the ocean. Employees must continually
develop high-level skills through education and on-the-job experience that cannot be
outsourced. Business must avoid markets for goods and serves that can be produced
offshore much cheaper. The emergence of the Internet into a full-blown international
communications system has drastically reduced the costs of operating and transacting
business on a global scale. (Learning Objective 1.1: How are information systems
transforming business and why are they so essential for running and managing a
business today? AACSB: Application of knowledge.)
List and describe six reasons why information systems are so important for
business today.
Six reasons why information systems are so important for business today include:
(1) Operational excellence
(3) Customer and supplier intimacy
(5) Competitive advantage
(6) Survival
Information systems are the foundation for conducting business today. In many
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1-2 What is an information system? How does it work? What are its management,
organization and technology components and why are complementary assets
essential for ensuring that information systems provide genuine value for
organizations?
Define an information system and describe the activities it performs.
An information system is a set of interrelated components that work together to
collect, process, store, and disseminate information to support decision making,
coordination, control, analysis, and visualization in an organization. In addition to
List and describe the organizational, management, and technology dimensions of
information systems.
• Organization: The organization dimension of information systems involves
issues such as the organization’s hierarchy, functional specialties, business
processes, culture, and political interest groups.
• Management: The management dimension of information systems involves
Distinguish between data and information and between information systems
literacy and computer literacy.
• Data are streams of raw facts representing events occurring in organizations or
the physical environment before they have been organized and arranged into a
form that people can understand and use.
• Information is data that have been shaped into a form that is meaningful and
useful to human beings.
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• Information systems literacy is a broad-based understanding of information
systems. It includes a behavioral as well as a technical approach to studying
information systems.
• In contrast, computer literacy focuses primarily on knowledge of information
technology. It is limited to understanding how computer hardware and
software works. (Learning Objective 1.2: What is an information system?
How does it work? What are its management, organization and technology
Explain how the Internet and the World Wide Web are related to the other
technology components of information systems.
The Internet and World Wide Web have had a tremendous impact on the role that
information systems play in organizations. These two tools are responsible for the
increased connectivity and collaboration within and outside the organization. The
Define complementary assets and describe their relationship to information
technology.
Complementary assets are those assets required to derive value from a primary
investment. Firms must rely on supportive values, structures, and behavior patterns to
obtain a greater value from their IT investments. Value must be added through
Describe the complementary social, managerial, and organizational assets
required to optimize returns from information technology investments.
Table 1.3 lists the complementary social, managerial, and organization assets required
to optimize returns from information technology investments. Here are a few of them:
Organizational assets:
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• Supportive culture that values efficiency and effectiveness
Managerial assets:
• Strong senior management support for technology investment and change
• Incentives for management innovation
• Teamwork and collaborative work environments
Social assets:
• The Internet and telecommunications infrastructure
• IT-enriched educational programs raising labor force computer literacy
• Standards (both government and private sector) (Learning Objective 1.2:
What is an information system? How does it work? What are its management,
1-3 What academic disciplines are used to study information systems and how does
each contribute to an understanding of information systems?
List and describe each discipline that contributes to a technical approach to
information systems.
A technical approach to information systems emphasizes mathematically-based
models to study information systems and the physical technology and formal
capabilities of information systems. Students should know the differences between
List and describe each discipline that contributes to a behavioral approach to
information systems.
A behavioral approach to information systems focuses on questions such as strategic
business integration, behavioral problems of systems utilization, system design and
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Describe the sociotechnical perspective on information systems.
A sociotechnical perspective combines the technical approach and behavioral
approach to achieve optimal organizational performance. Technology must be
Discussion Questions
1-4 Information systems are too important to be left to computer specialists. Do you
agree? Why or why not?
Student answers to this question will vary.
1-5 If you were setting up the Web site for Disney World visitors, what
management, organization, and technology issues might you encounter?
Student answers to this question will vary.
1-6 What are some of the organizational, managerial, and social complementary
assets that help make UPS’s information systems so successful?
Student answers to this question will vary.
Hands-On MIS Projects
This section gives students an opportunity to analyze real world information systems
needs and requirements. It provides several exercises you can use to determine if students
are grasping the material in the chapter.
Management Decision Problems
1-7 Snyder’s of Hanover: The financial department uses spreadsheets and manual
processes for much of its data gathering and reporting. Assess the impact of this
situation on business performance and management decision making.
• Data entry errors from repetitive entry
• No information available on-demand
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(Learning Objective 1.2: What is an information system? How does it work? What are its
1-8 Dollar General Corporation: Wants to keep costs as low as possible so it does not
use an automated method for keeping track of inventory at each store. What decisions
have to be made before investing in an information system solution?
• Determine business problems—mismanagement of inventory, too little or too
much inventory, no ability to track inventory.
(Learning Objective 1.1: How are information systems transforming business and why
are they so essential for running and managing a business today? AACSB: Analytical
thinking, Application of knowledge.)
Improving Decision Making: Using Databases to Analyze Sales Trends:
Software skills: Database querying and reporting
Business skills: Sales Trend Analysis
1-9 This exercise helps students understand how they can use database software to
produce valuable information from raw data. The solutions provided here were created
using the query wizard and report wizard capabilities of Microsoft Access. Students can,
• Which products should be restocked?
• Which stores and sales regions would benefit from a promotional campaign
and additional marketing?
• Which times of the year should products be offered at full price?
• Which times of the year should products be discounted?
The answers to these questions can be found in the Microsoft Access File named:
MIS14ch01_solutionfile.mdb
(Learning Objective 1.2: What is an information system? How does it work? What are its
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assets essential for ensuring that information systems provide genuine value for
organizations? AACSB: Analytical thinking.)
1-10 In addition to having students research jobs in their chosen career field, it may be
quite interesting to have them research jobs in other career fields so they can see that
virtually every job and/or career requires information systems skills.
(Learning Objective 1.3: What academic disciplines are used to study information
Collaboration and Teamwork Project
1-11 In MyMISLab, you will find a Collaboration and Teamwork Project dealing
with the concepts in this chapter. You will be able to use Google Drive, Google Docs,
Google Sites, Google +, or other open source collaboration tools to complete the
assignment.
Case Study: Home Depot renovates itself with new systems and ways of working
1-12 What problems and challenges did Home Depot experience?
What started out as two stores grew into the fourth largest retailer in the United States
and the fifth largest retailer in the world operating 2,256 stores worldwide. During its
early years, the retail giant was very low-tech relying on in-store customer service to fuel
its growth. However, as the chain grew, items were often out of stock because the
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1-13 Describe the relationship between management, organization, and technology
at Home Depot. How did this relationship change over time?
Management: When the retailer began with just two stores, it was very low-tech and
concentrated on customer service rather than technology to increase its sales. Over time,
as it grew, management became more difficult because of the lack of technology. Many
items were out-of-stock or not delivered most efficiently and effectively. Over time, rapid
Technology: Even as late as 2000, Home Depot lacked the hardware infrastructure for its
CEO to send a companywide e-mail. Items were often out of stock because the inventory
system was so poor. CEO Robert Nardelli pushed hard to improve technology throughout
the entire organization and centralize management decisions and inventory levels.
1-14 How much was Home Depot’s management responsible for its problems? What
about the role of technology and organizational factors?
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grew, it became too cumbersome and too expensive to keep the decentralized
management structure.
CEO Robert Nardelli went to the opposite extreme by centralizing operations and cutting
jobs. Those actions alienated many store managers, rank and file sales staff and
customers. He spent $1 billion in overhauling Home Depot’s infrastructure with much of
it spent on enterprise software. That was supposed to allow sales associates to access
1-15 Mark Holifield, Home Depot’s Vice President of Supply Chain, has noted that
the company didn’t have the most leading-edge technology but it was still able to
make a major change in its supply chain. Discuss the implications of this statement.
Holifield worked to make the process of managing suppliers more streamlined and
efficient. He turned the company’s supply chain design on its head by calling for 75
percent of Home Depot inventory to move through regional distribution centers rather
than from suppliers to individual stores. The rapid deployment centers (RDC) would take
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essential for running and managing a business today? AACSB: Analytical thinking,
1-16 Give three examples each of complementary organizational, managerial, and
social assets and explain how each helps information systems deliver more value.
Visit MyMISLab for suggested answers.
1-17 Define an information system from a business perspective and explain why
managers and firms need to have this perspective to build and use information
systems effectively.
Visit MyMISLab for suggested answers.