Chapter 2

What is the difference between an 'application' and a computer-based information systems?

- A computer-based information system is an information system that uses computer technology to perform some or all of its intended tasks. The basic components of information systems are as follows, hardware, software, database, a network, procedures and people. An application program is a computer based designed to support a specific task or business process. Each functional area or department within a business organisation uses dozens of application programs for example HR, one for screening and one for monitoring employee turnover.

What are strategic information systems?

- Systems that help an organisation gain a competitive advantage by supporting its strategic goals and/or increasing performance and productivity.

According to Porter, what are the five forces that could endanger a firm’s position in its industry or marketplaces?

- Michael Porter’s competitive force models describe five forces that could endanger the firms industry or marketplaces. These five forces include:
· The threat of entry of new competitors
· The bargaining power of suppliers
· The bargaining power of customers
· The threat of substitute products or services
· The rivalry among existing firms in the industry

In relation to Porter's value chain model, what is meant by primary activities and support activities, and how does IT support these activities?

- Primary activities are those business activities that relate to the production and distribution of the firms products and services, thus creating value for which the customers are willing to pay.
- Primary activities are buttressed by support activities. Support activities do not add direct value to the firm’s products or services. They contribute to the firms competitive advantage by supporting the primary activities. Support activities consists of:
· The firms infrastructure
· Human Resource Management
· Product and technology development
· Procurement

Discuss the logic of building information systems in accordance with the organizational hierarchical structure.

Once the company forms its hierarchical structure it then forms systems for each of these structures. They are then interconnected. most organisations have a structure of the CEO at the top then downwards. Specialisation and customisation then takes place in each division, the business focuses on what types of software and hardware are necessary for each division for each of there specialised tasks. For example; graphic editing software and hardware for marketing division of a business

How has the Internet affected each of the five forces in Porter’s competitive forces model?

- 1) threat of entry of new competitors – the web increases the threat of entry of new competitors. Competitors frequently need only to set up a web site. This threat is particularly acute in industries that perform an intermediation role, which is a link between buyers and sellers.
- 2) the bargaining power of suppliers – buyers can find alternative suppliers and compare prices more easily, reducing suppliers’ bargaining power. Campanies can also integrate their supply chain, participating suppliers prosper by locking in customers
- 3)the bargaining power of customers – increases a buyers access to information about products and suppliers. Can reduce the customers switching costs (the cost of switching elsewhere).
- 4) the threat of substitute products and services – any industry in which digitalised can replace material goods must view the internet as a threat because the internet can convey this information efficiently and at low cost.
- 5) the rivalry among existing firms in the industry – the internet increases and intensifies competition and therefore makes the rivalry high among different firms in an industry.