Week 2: Information Systems in Business

1) Explain information technology’s role in business.

Information Technology is found in all aspects of a business including:

-       Accounting; deals with the strategic financial issues associated with the value of the business

-       Finance; deals with strategic financial issues associated with increasing the value of business whilst observing social responsibilities

-       Human Resources (HR); includes policies, plans and procedures for effective management of employees

-       Sales; the function of selling a good or service and focuses on customer sales to increase company revenue

-       Marketing; the process associated with promoting the sale of goods or services. This department supports the sales department by creating promotions that help sell products

-       Operations Management; the management of systems or processes that converts or transforms resources into goods and services including human resources

-       Management information systems (MIS); business function and academic discipline covering the application of people, technologies and procedures to solve business problems

2) What are efficiency and effectiveness metrics? Provide some examples of each.

Efficiency IT metrics focus on the technology itself. While efficiency metrics are important to monitor, they do not always guarantee effectiveness.. Efficiency focuses on the extent to which an organization is using its resources in an optimal way,

for example, throughput, speed and availability.

Effectiveness metrics are determined according to an organization’s goals, strategies and objectives. It focuses on how well an organization is achieving its goals and objectives,

for example, customer satisfaction, conversion rates and sell-through increases.

3) What does Porter’s five forces model attempt to explain? How does the internet affect the model?

Understanding Porter’s five forces can help a company to identify any potential opportunities to create a competitive advantage while deterring potential rivals. The five forces that are enforced in order to determine the attractiveness of an industry include:

-       Buying power

-       Selling power

-       Threat of substitute products or services

-       Threat of new entrants

-       Rivalry among existing competitors

4) Describe the relationship between business processes and value chains

A business process in a standardized set of activities that accomplish a specific task such as processing a customer’s order. Value chains however views an organization as a series of processes, each of which adds value to the product or service for each customer.