IFSM 300 Week 1-Information Systems in Organizations

Please find the attached files and let me know if you have any questions. 

Globalization and the

Digital Divide

Globalization is the term used to refer to the integration of goods,

services, and culture among the nations of the world. Globalization is not

necessarily a new phenomenon; in many ways, we have been

experiencing globalization since the days of European colonization.

Further advances in telecommunication and transportation technologies

accelerated globalization. The advent of the worldwide internet has made

all nations next‐door neighbors. The internet has wired the world. Today

it is just as simple to communicate with someone on the other side of the

world as it is to talk to someone next door.

The new era of globalization allows any business to become international.

Some of the advantages include the following:

• The ability to locate expertise and labor around the world. Instead of

drawing employees from their local area, organizations can now hire

people from the global labor pool. This also allows organizations to

pay a lower labor cost for the same work based on the prevailing

wage in different countries.

• The ability to operate 24 hours a day. With employees in different

time zones all around the world, an organization can literally operate

around the clock, handing off work on projects from one part of the

world to another. Businesses can also keep their digital storefront

(their website) open all the time.

Learning Resource

Globalization and the Digital Divide https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

1 of 3 1/10/2023, 6:23 PM

• A larger market for their products. Once a product is being sold

online, it is available for purchase from a worldwide consumer base.

Even if a company’s products do not appeal beyond its own country’s

borders, being online has also made the product more visible to

consumers within that country.

In order to fully take advantage of these new capabilities, companies need

to understand that there are also challenges in dealing with employees

and customers from different cultures. Some of these challenges include:

• Infrastructure differences. Each country has its own infrastructure,

many of which are not of the same quality as the US.

• Labor laws and regulations. Different countries (even different states

in the United States) have different laws and regulations. A company

that wants to hire employees from other countries must understand

the different regulations and concerns.

• Legal restrictions. Many countries have restrictions on what can be

sold or how a product can be advertised. It is important for a

business to understand what is allowed.

• Language, customs, and preferences. Every country has its own (or

several) unique culture(s), which a business must consider when

trying to market a product there. Additionally, different countries

have different preferences. For example, in some parts of the world,

people prefer to eat their french fries with mayonnaise instead of

ketchup; in other parts of the world, specific hand gestures (such as

the thumbs‐up) are offensive.

• International shipping. Shipping products between countries in a

timely manner can be challenging. Inconsistent address formats,

dishonest customs agents, and prohibitive shipping costs are all

factors that must be considered when trying to deliver products

internationally.

Digital Divide

Globalization and the Digital Divide https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

2 of 3 1/10/2023, 6:23 PM

As the internet continues to make inroads across the world, it is also

creating a separation between those who have access to this global

network and those who do not. This separation is called the digital divide

and is of great concern. The digital divide can occur between countries,

regions, or even neighborhoods. In many US cities, there are pockets with

little or no internet access, while just a few miles away high‐speed

broadband is common. Solutions to the digital divide have had mixed

success over the years. Many times, just providing internet access and/or

computing devices is not enough to bring true internet access to a

country, region, or neighborhood. Organizations must evaluate this

potential issue as they seek to operate in different geographical areas to

determine whether technology solutions are readily accessible and usable

to their target audience.

Licenses and Attributions

Chapter 11: Globalization and the Digital Divide

(https://www.saylor.org/site/textbooks

/Information%20Systems%20for%20Business%20and%20Beyond

/Textbook.html#_Chapter_11:_Globalization) from Information

Systems for Business and Beyond was adapted by The Saylor Foundation

and is available under a Creative Commons Attribution 3.0 Unported

(https://creativecommons.org/licenses/by‐nc‐sa/3.0/) license. © 2014,

David T. Bourgeois. UMGC has modified this work and it is available

under the original license.

© 2023 University of Maryland Global Campus

All links to external sites were verified at the time of publication. UMGC is not responsible for the

validity or integrity of information located at external sites.

Globalization and the Digital Divide https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

3 of 3 1/10/2023, 6:23 PM

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://www.saylor.org/site/textbooks/Information%20Systems%20for%20Business%20and%20Beyond/Textbook.html#_Chapter_11:_Globalization

https://creativecommons.org/licenses/by-nc-sa/3.0/

https://creativecommons.org/licenses/by-nc-sa/3.0/

https://creativecommons.org/licenses/by-nc-sa/3.0/

https://creativecommons.org/licenses/by-nc-sa/3.0/

https://creativecommons.org/licenses/by-nc-sa/3.0/

https://creativecommons.org/licenses/by-nc-sa/3.0/

https://creativecommons.org/licenses/by-nc-sa/3.0/

Introduction to Information
Systems in Organizations

As the course catalogue describes IFSM 300, this is an “overview of

information systems, their role in organizations, and the relationship

between information systems and the objectives and structure of an

organization.” Information systems collect, organize, process, and make

available or distribute data. The systems involve people, technology, and

processes. Students in this class come from a variety of different majors

and disciplines; however, in today’s business and personal world, each of

us is impacted by information systems on a regular basis.

Many of you have been or will be involved in a project where processes

are analyzed in anticipation of incorporating or revising an information

technology solution to increase productivity and meet business needs.

Even as a user within a functional department (human resources,

marketing, finance, etc.), you may be asked to test systems to ensure they

meet business requirements or otherwise be involved in technology

implementation. There may be a specific role or position of business

analyst that can exist in a functional department, or an Information

Technology department, and is tasked with this type of work. In addition,

you may be inputting data into an information system and receiving

information from a system as part of your job responsibilities. Whatever

your specific role is, understanding how businesses use information

technology effectively is a critical skill in today’s business world.

Learning Resource

Introduction to Information Systems in Organizations https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

1 of 3 1/10/2023, 6:22 PM

IT management must be sensitive to the business and its needs, rather

than being in awe of or driven by technology. Conversely, business

managers must be aware that systems can and should be used in the

business to solve problems and improve the various functions, and that

the advice of IT management is essential to the success of the business.

This also implies that business managers should be conversant with IT

terminology and its possible uses if they are going to achieve the

maximum benefits of IT systems. It is in the best interests of the

organization that both business managers and IT managers recognize

each other’s importance and strengths in maximizing systems’

effectiveness in solving problems. This will ultimately lead to better

business solutions enabled by IT that will lead to achievement of business

goals and strategic objectives.

There is a clear relationship between information (derived from raw data),

information technology (the computer‐based tools used to work with

information), and people (you). What is critical to keep in mind is that they

all contribute (together) to supporting and improving business processes

to achieve business success. Investments in technology and information

systems are worthless if they do not support or contribute to the

business’s success. The processes are the business activities of the

organization. In order for those processes to work, information is needed.

Information, therefore, becomes the lifeblood of the organization. It is

one of the most important assets in an organization, and the primary way

that people get information is through information technology.

Information technology in and of itself is not useful unless it delivers the

right information to the right people at the right time. Since people,

information, and information technology (in that order of priority) are

inextricably linked, if one fails, they all fail.

So, we will begin our study of “Information Systems in Organizations”

with developing an understanding of the business environment. We will

use the term business to represent a variety of organizational types:

government entities, nonprofit organizations, educational institutions, and

Introduction to Information Systems in Organizations https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

2 of 3 1/10/2023, 6:22 PM

general businesses, both large and small. The concepts apply in all of

those environments. As you approach each week’s work, you should read

the assigned items in the order presented. They are grouped by topic to

aid your understanding of the topic and to prepare you to demonstrate

your learning when it comes time to complete the assignments.

© 2023 University of Maryland Global Campus

All links to external sites were verified at the time of publication. UMGC is not responsible for the

validity or integrity of information located at external sites.

Introduction to Information Systems in Organizations https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

3 of 3 1/10/2023, 6:22 PM

PLEASE READ CAREFULLY

– Please use APA (7th edition) formatting 

– All questions and each part of the question should be answered in detail (Go into depth)

– Response to questions must demonstrate understanding and application of concepts covered in class, 

– Use in-text citations and at LEAST 2 resources per discussion from the school materials that I provided to support all answers. Include at least 2 references and include in-text citations.

– Responses MUST be organized (Should be logical and easy to follow)

Minimum 1.5 Page

Discussion 1 – Information Systems in Organizations

Do some research, or draw from personal experience, and tell us about a company that used an information system for STRATEGIC purposes. Please be sure to tell us what the strategy was that they were working toward. There are many examples in the Course Content reading, but our discussion will be much richer if you select something that is not covered there. Be sure you’re not just discussing their business strategy but also including the use of information systems to enable that strategy. Researching a company’s mission and strategic goals can help you align the pieces.

Business Strategy

This section presents a high‐level overview of the strategic planning

process for business. All companies want to formulate technology

solutions that effectively support the business and its objectives. To do

so, the company must first understand its business model, the

fundamentals of its business type (manufacturing, finance, service, etc.),

and its strategy. Only once the company has understood these, should it

begin to focus on its systems. Information systems are only tools that are

used to support a business; therefore, if the tools are not aligned with

business requirements, then its resources (time, money, and people) may

be wasted, triggering an undesirable outcome.

Many businesses establish an overall mission or vision statement—Why

are we in business? Following is a list of companies with their mission

statements:

Amazon—”to be earth’s most customer‐centric company, to build a place

where people can come to find and discover anything they might want to

buy online.” (Amazon Jobs, 2018)

Marriott—”to be the world’s favorite travel company” (Marriott Investor

Relations).

Google—“to organize the world’s information and make it universally

accessible and useful” (Google.com, 2018).

Learning Resource

Business Strategy https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

1 of 4 1/10/2023, 6:23 PM

As you can see, these mission and vision statements are very broad and

overarching; however, to achieve these, organizations need more specifics

with actionable areas to accomplish to help support the mission/vision. In

order to define the goals and objectives, first organizations scan the

environment looking at several factors, such as competition, business

environment, customers, employees, and location. This analysis helps

identify threats and opportunities. A frequent tool used in business is

SWOT Analysis: identifying Strengths, Weaknesses, Opportunities and

Threats. The section Does IT Matter? also looks at further methods to

analyze the competitive environment.

This analysis can result in organizations defining business goals and

objectives and the specific actions needed to be successful. When these

objectives are defined, opportunities can be identified to use information

technology to help reach those objectives.

It’s important that technology support the business objectives rather than

drive the objectives. For example, looking back at Amazon’s mission

statement, specific goals and objectives would need to be defined (e.g.,

How can customer‐centric be increased?). One approach is customizing

the user experience so customers feel valued and that Amazon really

“knows” them. A strategic goal might be to maximize the customer’s

experience through personalization of the online shopping

experience.

With technology, information regarding customers’ browsing and

shopping habits can be stored and retrieved when a customer returns to

the Amazon site, prompting with messages such as “Hello John—

Recommended Links for You” or “John—Buy it Again,” followed by a list of

recent purchases John has made. The benefits of the information

technology can be increased sales and increased customer loyalty, which

give Amazon a competitive advantage in the online retail arena.

This information would then be documented for everyone in the company

to understand and be able to do their part to support the business

strategy. For example, Amazon might document as follows:

Business Strategy https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

2 of 4 1/10/2023, 6:23 PM

Mission/Vision: Our vision is to be earth’s most customer‐centric

company, to build a place where people can come to find and discover

anything they might want to buy online.

Business Strategy (derived from the Mission/Vision): to be earth’s most

customer‐centric company, to build a place where people can come to

find and discover anything they might want to buy online.

• Technology Support: A robust online shopping system would

accommodate millions of customers and products and focus on the

individual customer’s searches and buying habits.

• Competitive Advantage: Availability of millions of products would

increase sales, and a focus on the customer would increase customer

loyalty.

Strategic Goal 1: Increase customer‐centricity by maximizing the

customer’s experience through personalization of the online shopping

experience.

Objective: Provide customer with at least five other items they might be

interested in based on previous purchases by the end of the first quarter.

Technology Support: The system would store each customer’s purchases

and retrieve that information when the customer returns to the Amazon

site, and present a message such as “Hello, John – Recommended for

you” with icons of several items related to his recent purchases.

Strategic Goal 2: Increase the number of items available.

Objective: Add 10% more items to the inventory.

Technology Support: The system would provide the ability to store and

retrieve items for display to customers.

To achieve success, an organization should translate its high‐level mission

into specific objectives so it can align its technology support to those

Business Strategy https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

3 of 4 1/10/2023, 6:23 PM

objectives. The alignment can provide clear direction and enable all levels

of the organization to work towards maximizing their investments in

information technology.

References

Amazon Jobs (2018). Retrieved from https://www.amazon.jobs

/en/working/working‐amazon

Google.com/About. (n.d.). Retrieved from https://www.google.com

/about/

Marriott. (2018). Marriott investor relations: Frequently asked questions.

Retrieved from https://marriott.gcs‐web.com/investor‐faqs

© 2023 University of Maryland Global Campus

All links to external sites were verified at the time of publication. UMGC is not responsible for the

validity or integrity of information located at external sites.

Business Strategy https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

4 of 4 1/10/2023, 6:23 PM

What Is an Information System?

Introduction

If you are reading this, you are most likely taking a course in information

systems, but do you even know what the course is going to cover? When

you tell your friends or your family that you are taking a course in

information systems, can you explain what it is about? Sometimes when

students are asked what they think an information system is, they give

answers such as “computers,” “databases,” or “Excel.” These are good

answers, but definitely incomplete ones. The study of information

systems goes far beyond understanding some technologies. Let’s begin

our study by defining information systems.

Defining Information Systems

Almost all programs in business require students to take a course in

something called information systems. But what exactly does that term

mean? Let’s take a look at some of the more popular definitions, first from

Wikipedia and then from a couple of textbooks:

• “Information systems (IS) is the study of complementary networks of

hardware and software that people and organizations use to collect,

filter, process, create, and distribute data (“Information Systems,”

2012).

Learning Resource

What Is an Information System? https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

1 of 16 1/10/2023, 6:23 PM

• “Information systems are combinations of hardware, software, and

telecommunications networks that people build and use to collect,

create, and distribute useful data, typically in organizational settings

(Valacich & Schneider, 2010).

• “Information systems are interrelated components working together

to collect, process, store, and disseminate information to support

decision making, coordination, control, analysis, and visualization in

an organization (Laudon & Laudon, 2012).

As you can see, these definitions focus on two different ways of

describing information systems: the components that make up an

information system and the role that those components play in an

organization. Let’s take a look at each of these.

The Components of Information Systems

Many students understand that an information system has something to

do with databases, spreadsheets, computers and e‐commerce. And they

are all right, at least in part: information systems are made up of different

components that work together to provide value to an organization.

Information systems are made up of five components: hardware,

software, data, people, and process. The first three, fitting under the

category technology, are generally what most students think of when

asked to define information systems. But the last two, people and

process, are really what separate the idea of information systems from

more technical fields, such as computer science. In order to fully

understand information systems, students must understand how all of

these components work together to bring value to an organization.

Technology

Technology can be thought of as the application of scientific knowledge

for practical purposes. From the invention of the wheel to the harnessing

What Is an Information System? https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

2 of 16 1/10/2023, 6:23 PM

of electricity for artificial lighting, technology is a part of our lives in so

many ways that we tend to take it for granted. As discussed before, the

first three components of information systems—hardware, software, and

data—all fall under the category of technology. Each will be discussed in

more detail in later sections, but we will take a moment here to introduce

them so we can get a full understanding of what an information system is.

Hardware

Information systems hardware is the part of an information system you

can touch—the physical components of the technology. Computers,

keyboards, disk drives, iPads, and flash drives are all examples of

information systems hardware.

Software

Software is a set of instructions that tells the hardware what to do.

Software is not tangible—it cannot be touched. When programmers

create software programs, what they are really doing is simply typing out

lists of instructions that tell the hardware what to do. There are several

categories of software, with the two main categories being operating‐

system software, which makes the hardware usable, and application

software, which does something useful. Examples of operating systems

include Microsoft Windows on a personal computer and Google’s Android

on a mobile phone. Examples of application software are Microsoft Excel

and Angry Birds.

Data

The third component is data. You can think of data as a collection of facts.

For example, your street address, the city you live in, and your phone

number are all pieces of data. Like software, data is also intangible. By

themselves, pieces of data are not really very useful. But aggregated,

indexed, and organized together into a database, data can become a

powerful tool for businesses. In fact, all of the definitions presented at

What Is an Information System? https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

3 of 16 1/10/2023, 6:23 PM

the beginning of this section focused on how information systems

manage data. Organizations collect all kinds of data and use it to make

decisions. These decisions can then be analyzed as to their effectiveness

and the organization can be improved. The reading, Data and Databases,

will cover their uses in organizations.

Networking Communication: A Fourth Technology Piece?

Besides the components of hardware, software, and data, which have

long been considered the core technology of information systems, it has

been suggested that one other component should be added:

communication. An information system can exist without the ability to

communicate—the first personal computers were stand‐alone machines

that did not access the internet. However, in today’s hyper‐connected

world, it is an extremely rare computer that does not connect to another

device or to a network. Technically, the networking communication

component is made up of hardware and software, but it is such a core

feature of today’s information systems that it has become its own

category.

People

When thinking about information systems, it is easy to get focused on the

technology components and forget that we must look beyond these tools

to fully understand how they integrate into an organization. A focus on

the people involved in information systems is the next step. From the

frontline help‐desk workers, to systems analysts, to programmers, all the

way up to the chief information officer, the people involved with

information systems are an essential element that must not be

overlooked.

Process

The last component of information systems is process. A process is a

What Is an Information System? https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

4 of 16 1/10/2023, 6:23 PM

Does IT Matter?

Introduction

For over 50 years, computing technology has been a part of business.

Organizations have spent trillions of dollars on information technologies.

But has all this investment in IT made a difference? Have we seen

increases in productivity? Are companies that invest in IT more

competitive? In this reading, we will look at the value IT can bring to an

organization and try to answer these questions. We will begin by

highlighting two important works from the past two decades.

The Productivity Paradox

In 1991, Erik Brynjolfsson wrote an article, published in the

Communications of the ACM, entitled “The Productivity Paradox of

Information Technology: Review and Assessment.” By reviewing studies

about the impact of IT investment on productivity, Brynjolfsson was able

to conclude that the addition of information technology to business had

not improved productivity at all—the “productivity paradox.” From the

article, he does not draw any specific conclusions from this finding and

provides the following analysis (Brynjolfsson, 1991):

Although it is too early to conclude that IT’s productivity contribution has

been subpar, a paradox remains in our inability to unequivocally

Learning Resource

Does IT Matter? https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

1 of 16 1/10/2023, 6:23 PM

document any contribution after so much effort. The various explanations

that have been proposed can be grouped into four categories:

1. Mismeasurement of outputs and inputs,

2. Lags due to learning and adjustment,

3. Redistribution and dissipation of profits, and

4. Mismanagement of information and technology.

In 1998, Brynjolfsson and Lorin Hitt published a follow‐up paper entitled

“Beyond the Productivity Paradox” (Brynjolfsson & Hitt, 1998). In this

paper, the authors utilized new data that had been collected and found

that IT did, indeed, provide a positive result for businesses. Further, they

found that sometimes the true advantages in using technology were not

directly relatable to higher productivity, but to “softer” measures, such as

the impact on organizational structure. They also found that the impact of

information technology can vary widely between companies.

IT Doesn’t Matter

Just as a consensus was forming about the value of IT, the internet stock

market bubble burst. Just two years later, in 2003, Harvard professor

Nicholas Carr wrote his article “IT Doesn’t Matter” in the Harvard

Business Review. In this article, Carr asserts that as information

technology has become more ubiquitous, it has also become less of a

differentiator. In other words, because information technology is so

readily available and the software used so easily copied, businesses

cannot hope to implement these tools to provide any sort of competitive

advantage. Carr goes on to suggest that since IT is essentially a

commodity, it should be managed like one: low cost, low risk. Using the

analogy of electricity, Carr describes how a firm should never be the first

to try a new technology, thereby letting others take the risks. IT

management should see themselves as a utility within the company and

work to keep costs down. For IT, providing the best service with minimal

Does IT Matter? https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

2 of 16 1/10/2023, 6:23 PM

downtime is the goal.

As you can imagine, this article caused quite an uproar, especially from IT

companies. Many articles were written in defense of IT; many others in

support of Carr. Carr released a book based on the article in 2004,

entitled “Does IT Matter?”

Probably the best thing to come out of the article and subsequent book

was that it opened up discussion on the place of IT in a business strategy,

and exactly what role IT could play in competitive advantage, which is

addressed in this reading.

Competitive Advantage

What does it mean when a company has a competitive advantage? What

are the factors that play into it? While there are entire courses and many

different opinions on this topic, let’s go with one of the most accepted

definitions, developed by Michael Porter (2001) in his book Competitive

Advantage: Creating and Sustaining Superior Performance. A company is

said to have a competitive advantage over its rivals when it is able to

sustain profits that exceed average for the industry. According to Porter,

there are two primary methods for obtaining competitive advantage: cost

advantage and differentiation advantage. So the question becomes: how

can information technology be a factor in one or both of these methods?

In the sections below, we will explore this question using two of Porter’s

analysis tools: the value chain and the five forces model. We will also use

Porter’s analysis in his 2001 article “Strategy and the Internet,” which

examines the impact of the internet on business strategy and competitive

advantage, to shed further light on the role of information technology in

competitive advantage.

The Value Chain

In his book, Porter describes exactly how a company can create value

Does IT Matter? https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

3 of 16 1/10/2023, 6:23 PM

How Organizations Use
Information Systems Strategically

So far you’ve learned about what is meant by information system and

how IT matters in organizations, as well as how businesses align their

strategy with the use of information technology. It’s important to keep in

mind that organizations have basically two ways to increase profits

—either raise prices or reduce expenses (or a combination of the two).

Organizations can’t just focus on money coming in because there are

expenses that must be paid out of that income resulting in a net income

(Gross Income ₋ Expenses = Net Income). Even governmental agencies

and nonprofit companies need to take in money (governmental budgets,

taxpayers, donations, etc.), pay the expenses incurred in achieving the

organization’s mission, and have money left over to reinvest in the

business.

In the section Does IT Matter?, the concept of the value chain was

presented. Each of the five primary areas of the value chain along with

the support activities (frequently referred to as back‐office functions)

provide opportunities to improve profitability and identify where

technology can help improve processes. Each business would define

specifically what its primary activities are and then analyze where there

are opportunities within each area.

Learning Resource

How Organizations Use Information Systems Strategically https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

1 of 3 1/10/2023, 6:23 PM

Porter’s Value Chain

Series of activities that contribute to the overall value of a product or service

Does IT Matter? also introduced Porter’s Five Forces, a framework to

help organizations assess its environment. Understanding how the five

forces impact the organization can help organizations determine where to

focus to increase their competitive advantage. For example, if operating

in a highly competitive environment (many companies offering the same

or very similar products or services), then the company could establish a

strategy to provide its goods and services at a lower cost or to target a

specific market niche. When a company has decided its strategy, then it’s

time to look at how to achieve that strategy. Here’s where the use of

information technology and information systems can come into play.

Improving the ability to deliver goods and services at a lower cost or in a

unique way can be enabled by information systems.

Licenses and Attributions

Chapter 7: Does IT Matter? (https://bus206.pressbooks.com/chapter

/chapter‐7‐does‐it‐matter/) from Information Systems for Business

and Beyond by David T. Bourgeois is available under a Creative

Commons Attribution 3.0 Unported (https://creativecommons.org

/licenses/by/3.0/) license. © 2014, David T. Bourgeois. UMGC has

modified this work and it is available under the original license.

© 2023 University of Maryland Global Campus

How Organizations Use Information Systems Strategically https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

2 of 3 1/10/2023, 6:23 PM

https://bus206.pressbooks.com/chapter/chapter-7-does-it-matter/

https://bus206.pressbooks.com/chapter/chapter-7-does-it-matter/

https://bus206.pressbooks.com/chapter/chapter-7-does-it-matter/

https://bus206.pressbooks.com/chapter/chapter-7-does-it-matter/

https://bus206.pressbooks.com/chapter/chapter-7-does-it-matter/

https://bus206.pressbooks.com/chapter/chapter-7-does-it-matter/

https://bus206.pressbooks.com/chapter/chapter-7-does-it-matter/

https://bus206.pressbooks.com/chapter/chapter-7-does-it-matter/

https://bus206.pressbooks.com/chapter/chapter-7-does-it-matter/

https://creativecommons.org/licenses/by/3.0/

https://creativecommons.org/licenses/by/3.0/

https://creativecommons.org/licenses/by/3.0/

https://creativecommons.org/licenses/by/3.0/

https://creativecommons.org/licenses/by/3.0/

https://creativecommons.org/licenses/by/3.0/

https://creativecommons.org/licenses/by/3.0/

https://creativecommons.org/licenses/by/3.0/

https://creativecommons.org/licenses/by/3.0/

https://creativecommons.org/licenses/by/3.0/

https://creativecommons.org/licenses/by/3.0/

All links to external sites were verified at the time of publication. UMGC is not responsible for the

validity or integrity of information located at external sites.

How Organizations Use Information Systems Strategically https://leocontent.umgc.edu/content/umuc/tus/ifsm/ifsm300/2228/learni…

3 of 3 1/10/2023, 6:23 PM