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Q3-1 How Does Organizational Strategy Determine Information Systems Structure?

Chapter preview 119

Recall from Chapter 1 that MIS is the development and use of information systems
that enables organizations to achieve their strategies. In Chapter 2, you learned
how information systems can help people collaborate. This chapter focuses on how
information systems support competitive strategy and how IS can create competitive
advantages. As you will learn in your organizational behavior classes, a body of
knowledge exists to help organizations analyze their industry, select a competitive
strategy, and develop business processes. In the first part of this chapter, we will
survey that knowledge and show how to use it, via several steps, to structure
information systems. Then, toward the end of the chapter, we will discuss how
companies use information systems to gain a competitive advantage.
Falcon Security provides a good example. Its strategy has been to differentiate
itself by providing security surveillance services using drones. It has systems
and processes to do that. But, as Cam states, what if the company can't secure
additional security contracts? How will the company grow if it doesn't get them?
Even if it did get those new contracts, does it have the systems and process to
handle them?

Q3-1 How Does Organizational Strategy Determine
Information Systems Structure?

According to the definition of MIS, information systems exist to help organizations achieve their
strategies. As you will learn in your business strategy class, an organization’s goals and objectives
are determined by its competitive strategy. Thus, ultimately, competitive strategy determines the
structure, features, and functions of every information system.
Figure 3-1 summarizes this situation. In short, organizations examine the structure of their
industry and determine a competitive strategy. That strategy determines value chains, which, in
turn, determine business processes. The structure of business processes determines the design of
supporting information systems.
Michael Porter, one of the key researchers and thinkers in competitive analysis, developed
three different models that can help you understand the elements of Figure 3-1. We begin with his
five forces model.

Figure 3-1
Organizational Strategy
Determines Information Systems

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