Information technology the hardware and software a business uses to achieve objectives Information System interrelated components that manage information to Data streams of raw facts Information data shaped into meaningful useful form What is an Information System Input activity of gathering and capturing raw data Processing converting data into useful outputs Output production of useful information in form of a report Feedback output returned to appropriate people or organizations to evaluate and refine the input IT infrastructure foundation or platform that information systems built on System a set of elements or components that interact to accomplish goals System Boundary defines the system and distinguishes it from everything else Configuration the way system elements are organized or arranged Systems can be classified as simple or complex open or close stable or dynamic adaptive or normative and permanent or temporary Efficiency a measure of what is produced divided by what is consumed Effectiveness extent to which system attains its goals System Performance Standard a specific objective of a system Model an abstraction that is used to represent reality Major types of models 1 Narrative based on words 2 Physical tangible 3 Schematic graphic representation 4 Mathematical arithmetic representation CBIS A single set of hardware software databases telecommunications people and procedures that are configured to collect manipulate store and process data into information Operational Management Transaction processing systems TPS keep track of transactions of organization The TPA records the data from everyday operation throughout every division or department in the organization Each division is tied together through management levels throughout the company Middle Managements Management information systems help with monitoring controlling decision making and administrative activities MIS An MIS is used by managers throughout the organization to help them in directing planning coordinating communicating and decision making The MIS will help answer structured questions Senior Managements Executive Decision Support systems help address strategic issues and long term trends both in firm and in external environment DSS ESS DSS is used for complex what if questions that require internal and external data Decisions at this mgt level are somehow semi structured the system should respond to non routine questions and help managers with non routine decisions ESS are high level systems aimed at senior managers that summarize the performance of the firm along key dimensions e g sales by region product sales cost of goods used in production and weekly summaries of financial data Usually this data is presented in an attractive digital dashboard interface Digital Goods can be delivered over a digital network Cost of producing first unit almost entire cost of product marginal cost of 2nd unit is about zero Cost Delivery over the internet is very low Marketing costs remain the same pricing is variable Digital Markets Use of the internet and web to transact business digitally enabled transactions Transactions delivery of good service and payment Why digital goods are different that physical goods 6 features 1 Ubiquity Internet Web technology available anywhere and everywhere Effect Market place removed from temporal geographic locations to become marketspace Enhanced customer convenience and reduced shopping costs 2 Global Reach The technology reaches across national boundaries around earth Effect commerce enabled across cultural and national boundaries seamlessly and without modification Marketspace includes potentially billions of consumers and million of businesses worldwide 3 Richness in goods Supports video audio and text messages Effect Possible to deliver rich messages with text audio and video simultaneously to large numbers of people Video audio and text can be integrated into single marketing message 4 Interactivity The technology works through interaction with the user ex pull marketing approach Effect Consumers engaged in dialog that dynamically adjusts experience to the individual Consumer becomes co participant in process of delivering goods to market 5 Personalization Customization Technology permits modification of messages and goods Effect Personalized messages can be sent to individuals as well as groups Products and services can be customized to individual preferences 6 Social Technology The technology promotes user content generation and social networking Effect New Internet social and business models enable user content creation and distribution and support social networks Digital Markets Reduce Economic Impacts Information asymmetry This is a situation where the relative bargaining power of two parties in a transaction is determined by one party of the transaction possessing more information essential to the transaction than the other party Search costs This refers to the time and money spent locating a suitable product or service and determining the best price for this product or service Transaction costs Cost associated with completing a transaction Digital Markets Enable Dynamic pricing Pricing of items based on real time interactions between buyers and sellers that determine what an item is worth at any particular moment Disintermediation The removal of business process layers responsible for certain intermediary steps in the value chain Price discrimination Selling the same goods or nearly the same goods to different targeted groups at different prices Zara Case Study Sophisticated use of Information Technology o Sales carry PDAs and survey customers connected to database o Point of sales connected to inventory system o Designers use IT to share designs o Manufacturing machines o Takes 2 weeks for an idea to be in stores Vertical Integration company owns most levels of supply chain own supplier and own distributor o Forward integration own distributor o Backward integration own supplier Profitable during recession especially since it is based in Spain Problems o Majority of company is located in Spain natural disaster war etc o Union strikes o Exchange rates Inter Organizational system Electronic Data Interchange B2B eBusiness Improve Operational efficiency Lock customers in Switching cost the cost of moving from one provider to another Higher switching cost more locked in customers Strategy a set of decisions made to achieve competitive advantage Competitive advantage
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