Module 1

Information Systems in
Business

Bidgoli, MIS, 10th Edition. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
 Learning Objectives (1 of 2)

• Discuss common applications of computers and information

systems
• Describe the four major components of an information system
• Discuss the differences between data and information
• Explain the differences between computer literacy and
information literacy
• Define transaction-processing systems
• Define management information systems

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 Learning Objectives (2 of 2)

• Explain the importance and applications of information systems in

functional areas of a business
• Analyze how information technologies are used to gain a
competitive advantage
• Apply the Five Forces Model and strategies for gaining a
competitive advantage
• Review the IT job market
• Summarize the future outlook of information systems

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 Computers and Information Systems in Daily Life

• Many uses
• Reduce costs
• Gain a competitive advantage in the marketplace
• Online classes
• Grocery and retail stores
• Telecommuting
• Social networking
• Video sharing

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 A New Era of Marketing: YouTube

• YouTube is a popular video sharing service that can

be used as a marketing tool. Corporations can use it
to promote their products and services:

• HK PolyU (http://youtube.com/HongKongPolyU)
• Different YouTube channels which include video HKPolyU YouTube
testimonials, reviews, and documents that promote the channel
university’s programs

• IKEA (http://youtube.com/IKEAHongKong)
• Free content including commercial ads, practical
knowledge and money-saving tips for home IKEA HK YouTube
improvements channel

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 Exhibit 1.3
Major Components of an Information System

In addition to hardware, software, and human elements,

an I.S. includes four major components as below:

Bidgoli, MIS, 10th Edition. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
 Data (1 of 2)

• Data component of an information system

• Considered the input to the system
• Sources of data
• Internal (e.g. sales and personnel records)
• External (e.g. customers, competitors, suppliers, government
agencies, financial institutions, labor and population statistics, as
well as economic conditions)

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 Data (2 of 2)

• Has a time orientation

• Past data (e.g. performance reports)
• Current data (e.g. operational reports)
• Future data (e.g. predicted for budgets or cash flow reports)
• Can be collected in different forms
• Disaggregated data: helps analyze sales by product, territory, or
salesperson
• Aggregated data: useful for reporting overall performance during a
sales quarter

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 Database

• Collection of relevant data organized in a series of integrated files

• Essential for the success of any information system
• Database management system (DBMS)
• Used to create, organize, and manage databases
• Reduces personnel time needed to gather, process, and interpret
data manually

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 Process

• Generates1 the most useful type of information for making

decisions
• Transaction-processing reports
• Models for decision analysis that can be built into the system or
accessed from external sources
1. By means of calculation, grouping and ordering

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 Information (1 of 2)

• Consists of facts analyzed by the process component and is an

output of an information system
• Usefulness qualities
• Timeliness
• Integration with other data and information
• Relevance
• Consistency and accuracy

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 Information (2 of 2)

• Usefulness is affected by the information system’s user interface

• Graphical user interfaces (GUIs) are used because they are flexible
and easy
• Systems should produce information in different formats,
including graphics, tables, and exception reports
• Increases likelihood of users understanding and being able to use
the information

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 Examples of Information Systems

• Example 1: HKCC
• Stores all student records in databases
• Built-in query capability (e.g. search the overall
GPA of a student)
• Other types of analysis can be done

• Example 2: PARKnSHOP
• Database stores data on products, suppliers,
sales personnel, costs
• Process components
• Forecasting models
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 Using Information Systems and Information
Technologies
• Information technologies
• The Internet
• Computer networks
• Database systems
• Point-of-sale (POS) systems
• Radio-frequency-identification (RFID) tags
• Information technologies act like specialized tools to fulfill one’s
particular information needs such as inputting, processing,
outputting, storing or communicating.

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Computer Literacy and Information Literacy (1 of 2)

• Computer literacy
• Having a basic knowledge of hardware and software, the Internet,
and collaboration tools and technologies
• Having skills in using productivity software (e.g. word processors,
spreadsheets, etc.)

• Information literacy
• Understanding the role of information in generating and using
business intelligence

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Computer Literacy and Information Literacy (2 of 2)

• Business Intelligence (BI)

• provides historical, current, and predictive views of business
operations and environments
• gives organizations a competitive advantage in the marketplace

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 The Beginning: Transaction-Processing Systems

• Transaction-processing systems (TPSs)

• Focus on data collection and processing
• Used for cost reduction
• Applied to structured tasks (e.g., record keeping, simple clerical
operations, and inventory control)
• Require minimal human involvement when automated

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 Management Information Systems (1 of 2)

• Management information system (MIS)

• Organized integration of hardware and software technologies, data,
processes, and human elements
• Designed to produce timely, integrated, relevant, accurate, and
useful information for decision-making

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 Management Information Systems (2 of 2)

• Tasks in designing an MIS

• Define the system’s objectives
• Collect and analyze data
• Provide information in a useful format for decision-making purposes
• MIS applications
• Used in both private (e.g. forecast sales volume for the next fiscal
period) and public sectors (e.g. provide crime statistics, crime
forecasts for police department)

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 The Importance of Information Systems (1 of 5)

• Timely, relevant, and accurate information is a critical tool

• Enhance a company’s competitive position in the marketplace
• Manage the four Ms of resources
• Manpower
• Machinery
• Materials
• Money

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 The Importance of Information Systems (2 of 5)

• Personnel information system (PIS) or human resource

information system (HRIS)
• Designed to provide information that helps decision makers in
personnel carry out tasks effectively

• Logistics information system (LIS)

• Designed to reduce the cost of transporting materials while
maintaining safe and reliable delivery

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 The Importance of Information Systems (3 of 5)

• Manufacturing information system (MFIS)

• Used to manage manufacturing resources
• Reduce manufacturing costs
• Increase product quality
• Improve inventory decisions

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 The Importance of Information Systems (4 of 5)

• Financial information system (FIS)

• Used to provide information to financial executives in a timely
manner

• Marketing information system (MKIS)

• Used to improve marketing decisions
• Provides timely, accurate, and integrated information about the
marketing mix
• Price, promotion, place, and product

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 The Importance of Information Systems (5 of 5)

• Marketing technology tools

• Business, Web, and mobile analytics
• E-mail marketing
• Search engine marketing
• Mobile technologies
• Marketing automation

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 Using Information Technologies
for a Competitive Advantage (1 of 4)
• Michael Porter: three strategies for successfully competing in the
marketplace
• Overall cost leadership
• Differentiation
• Focus

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 Using Information Technologies
for a Competitive Advantage (2 of 4)
• Overall cost leadership
• Use IS to help organizations reduce the cost of products and
services
• Help bottom-line and top-line strategies
• Bottom-line strategy  improving efficiency by reducing overall costs
• Top-line strategy  generating new revenue by offering new products
and services to customers, or increasing revenue by selling existing
products and services to new customers
• Use enterprise systems to create an efficient and effective link
between suppliers and consumers

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 Using Information Technologies
for a Competitive Advantage (3 of 4)
• Differentiation strategies
• Making products and services different from
competitors
• Examples:
• Apple
▶  designing computers to look much different from PCs

& focusing on ease of use

• Amazon.com
▶  using personalization technologies to recommend

products to customers based on their previous purchases

▶  using one-click system for fast checkout
Video about
Personalization

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 Using Information Technologies
for a Competitive Advantage (4 of 4)
• Focus strategies
• Focusing on specific market segments to achieve a cost or
differentiation advantage
• Example:
• Apple
▶ target iPhones to consumer users rather than business users
▶ market Mac computers to creative professionals

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 Porter’s Five Forces Model: Understanding the
Business Environment (1 of 4)
• Analyzes a firm’s position in the marketplace and how information
systems can make it more competitive
 The Five Forces Model

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 Porter’s Five Forces Model (2 of 4)

• Buyer power
• High when customers have many choices and low when customers
have few choices
• Limit buyers’ choices by offering services that make it difficult for
customers to switch (i.e. differentiation strategy)

• Supplier power
• High when customers have fewer options and low when customers
have more options
• Use information systems to make their products and services
cheaper or offer more services to distinguish themselves from
competitors
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 Porter’s Five Forces Model (3 of 4)

• Threat of substitute products or services

• High when many alternatives to an organization’s products and
services are available
• Add services to make organization more distinct
• Add fees to discourage customers from switching to a competitor

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 Porter’s Five Forces Model (4 of 4)

• Threat of new entrants

• Low when duplicating a company’s product or service is difficult
• Focus strategies are used to ensure that the threat remains low

• Rivalry among existing competitors

• High when competitors occupy the same marketplace position
• Low when there are few competitors

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 The IT Job Market (1 of 6)

• Categories of IT jobs
• Operations and help desk
• Programming
• Systems design
• Web design and Web hosting
• Network design and maintenance
• Database design and maintenance
• Robotics and artificial intelligence

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 The IT Job Market (2 of 6)

• Chief technology officer (CTO)/chief information officer (CIO)

• Oversees long-range planning and monitors new developments that
can affect a company’s success

• Chief privacy officer (CPO)

• Responsible for managing the risks and business impacts of privacy
laws and policies

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 The IT Job Market (3 of 6)

• Manager of information systems services

• Responsible for managing hardware, software, and personnel in the
information systems department

• Systems analyst
• Responsible for the design and implementation of information
systems
• Should have a thorough understanding of business systems and
functional areas within a business organization

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 The IT Job Market (4 of 6)

• Network administrator
• Oversees a company’s internal and external network systems
• Provides network and cybersecurity

• Database administrator (DBA)

• Responsible for database design and implementation
• Required to have knowledge and understanding of data warehouses
and data-mining tools

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 The IT Job Market (5 of 6)

• Computer programmer
• Writes programs or software segments that allow the information
system to perform a specific task

• Webmaster
• Designs and maintain the organization’s Web site
• Have been in high demand owing to the popularity of e-commerce
applications

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 The IT Job Market (6 of 6)

• IT-related jobs created in recent years include:

• Data scientist
• Social media/online-community manager
• Social media architect
• Telework manager or coordinator
• Search engine optimization specialist
• Business architect
• Mobile technology expert
• Enterprise mobile developer
• Cloud architect

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 Outlook for the Future (1 of 3)

• Predictions for the future

• Hardware and software costs will decline
• Artificial intelligence and related technologies will improve and
expand
• Computer literacy of users will improve
• Networking technology will improve
• Personal computers will improve in power and quality
• More affordable, easier to maintain

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 Outlook for the Future (2 of 3)

• Internet growth will continue

• Place small and large organizations on the same footing
• Make e-collaboration easier
• Computer criminals will become more sophisticated
• Protecting personal information will become more difficult

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 Outlook for the Future (3 of 3)

• Some trends that should continue

• Ubiquitous computing and the Internet of Things (IoT)
• 3D and 4D printing
• Pervasive analytics, context-aware computing
• Smart machines and devices
• Cloud computing
• Software-defined applications and infrastructures
• Security

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 Summary

After studying this chapter, can you answer these three key
questions?

• How does information system(IS) differ from information

technology(IT)?
• How can information system(IS) gain competitive advantage(CA)
for companies?
• What are the future outlooks of information technology?

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 Key Terms

• Data • Transaction Processing System (TPS)

• Disaggregated Data • Management Information System (MIS)
• Aggregated Data • Personnel Information System (PIS)
• Database • Logistic Information System (LIS)
• Process • Manufacturing Information System (MFIS)
• Information • Financial Information System (FIS)
• Graphical User Interface (GUI) • Marketing Information System (MKIS)
• Computer Literacy • Chief Information Officer (CIO)
• Information Literacy • Chief Privacy Officer (CPO)
• Business Intelligence • Computer Criminals

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 Key Concepts
• Usefulness qualities of information are timeliness, integration with other data
and information, relevance, together with consistency and accuracy.
• Overall cost leadership is to use IS to help organizations reduce the cost of
products and services.
• Differentiation strategies are making products and services different from
competitors
• Focus strategies are focusing on specific market segments to achieve a cost
or differentiation advantage
• Porter’s Five Forces Model analyzes a firm’s position in the marketplace and
how information systems can make it more competitive

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