MIS test 1 study guide
IS: An integrated solution that combines five components: framework; (hardware)
software, data, process, people.
Disruptive Technology: Technology that revolutionizes the way things are done.
Creates a new market and overruns an existing market.
Phases of Disruptive Technology:
1. Big Bang or Irruption
2. Frenzy or Gilded Age
3. Crash or Turning Point
4. Institutional Adjustment
5. Synergy or Golden Age
7. Next Big Bangs leads to next big surge
• Light bulb
• Steam engine
Early Adopter: Those who adapt to new technology early. Most believe that the opp.
cost of changing to a new product is not worth the time and money that it takes to adopt a
IT/COMPLEX ADAPTIVE SYSTEMS THEORY
Complex Adaptive system: A Complex Adaptive System (CAS) is a dynamic network
of many agents (which may represent cells, species, individuals, firms, nations) acting in
parallel, constantly acting and reacting to what the other agents are doing. The control
of a CAS tends to be highly dispersed and decentralized. If there is to be any coherent
behavior in the system, it has to arise from competition and cooperation among the agents themselves. The overall behavior of the system is the result of a huge number of
decisions made every moment by many individual agents.
…a collection of diverse elements (agents) capable of learning that coevolve and are
capable of spontaneous selforganization.
Each element in a system is a system itself, and every system is an element of a larger
system. We could describe systems thinking as the study of how elements in the system
interact, learn, and selforganize to produce emergent behavior.
Emergent behavior: Unanticipated behavior shown by a system. CAS show this
• Ex. Netflix
Equilibrium: Maintaining one’s current strategy and process. Equilibrium = death.
CoEvolution: When a company changes their features/options/look because they feel
the need to adopt a competitor’s features/options/look in order to compete in the business
What are the characteristics of a complex adaptive system? Be sure to understand
ALL of the characteristics on the slide titled “Summary List of CAS
• Contain large number of elements (nobrainer characteristic)
• No one element understands entire system • Have rich interaction
• Operate in an open system, one of many
• Affected by positive and negative feedback loops
• Operate far from equilibrium
• Any agent can influence and be influenced by other agents
• Demonstrate emergent behavior
• Are unknowable and unpredictable
• Selforganize into patterns
• Can experience big change from small causes
• Coevolve with environment in nonlinear ways
• Operate best at the Edge of Chaos
• All systems are a function of their history
Why study complex adaptive systems theory in an MIS class?
Information systems are usually Complex Adaptive Systems. Due to advancements in
technology (i.e. the ability to communicate rapidly) the business landscape has changed.
ROBUST ADAPTIVE STRATEGIES
Robust Adaptive Strategy:
Fitness Landscape: • Imaginary grid
• Each point on the grid represents a possible strategy
• Peaks represent successful adaptations
• Valleys represent
• Theory impacts strategy
– agents influence
other agents in system
• How do you increase chances of success in
a constantly changing business environment?
• The environment is constantly changing – with peaks changing and sometimes a
COLLAPSE can occur.
o Once rebuilt, the landscape can be very different
What is the difference between a theory and a strategy? Don’t get CAS and RAS
• Theory of gravity –
model of the world
• If I take the theory seriously, then I
need a strategy
for when it rains
CAS: This is a theory of how things work.
RAS: Something is actually done, therefore it is a strategy
What Robust Adaptive Strategies can a firm use to succeed in a complex adaptive
What CAS Characteristics Lead to Robust Adaptive Strategies?
• Contain a large number of elements
• Operate in an open system – one of many
• Have rich interaction & thus learn from one another
STRATEGIES must reflect knowledge of the complex system
Business Must Change to Survive
• Coevolve with environment
• Apple –> appeal to kids STRATEGY AND TECHNOLOGY
Barrier to entry:
• Barriers to entry make it difficult for other firms to enter an industry and compete
• When barriers to entry stop your competitors, then sustainable profits are more
• Ex) Cost of pro football team = HUGE barrier to entry
Barriers to Entry Include:
• Brand: Joe’s Diner has trouble competing against McDonalds
• Regulation: Laws, Intellectual Property, etc.
o Patten (i.e. Pharmaceutical companies)
• Distribution Channels: Control of your college bookstore provides an
advantage against competitors
• Capital intensity: How much $ will it take to start a new business?
• Switching costs: A cost that a consumer incurs when switching from one
product to another.
o Ex) While Gmail is free to use and convenient, moving to another
platform would require significant effort to import/export messages or
lose this valuable email history.
• Network Effects: Exist if the value of a network increases with the number of
o Facebook would be of little value to you if your friends weren’t part of
Business Process: The structure or technique of a business to achieve goals and make
profits. Robust adaptive strategy is part of the business process.
Competitive Advantage: An advantage that makes the demand for your product greater
than others. OR The ability to consistently outperform industry peers.
8 Ways to Create Competitive Advantage
1. Develop a new product or service WHAT YOU SELL
2. Enhance products or services
3. Differentiate products or services
4. Lock in customers and buyers
5. Lock in suppliers HOW YOU SELL IT 6. Raise barriers to market entry
7. Establish alliances
8. Reduce Costs
Companies use many business strategies to differentiate themselves in a market saturated
with competitors. A business can leverage its pricing and product mix to give itself a
competitive edge, according to Porter's "Generic Business Strategies." But when products
or businesses are not generic, branding plays a significant role in securing market share
Distribution Channels: How goods and services from a business are moved to
• Ex. College bookstore provides an advantage against competators
Economies of Scale:
The cost advantage that a business can exploit by expanding their scale of production.
Human Resource Management (HRM):
Network Effects: Exist if the value of a network increases with the number of users
Facebook would be of little value to you if your friends weren’t
part of it
Operational Effectiveness: Performing the same tasks better than rivals can perform
Operations: Activities involved in the day to day functions of the business conducted for
the purpose of generating profits.
Procurement: Acquisition of goods, services or works from an external source. It is
favorable that the goods, services or works are appropriate and that they are procured at
the best possible cost to meet the needs of the purchaser in terms of quality and quantity,
time, and location.
Strategic Positioning: Performing different tasks than rivals or the same task in different
Substitute: A good that can replace another good (i.e. Car rental options)
Switching Cost: A cost that a consumer incurs when switching from one product to
Value Chain: Set of activities in which a product is created and delivered to costo
1. Inbound Logistics a. Getting items or creating them
a. How the company runs their business
3. Outbound logistics
a. Getting the product out to people
4. Marketing and Sales
a. Getting your name out there
a. i.e. costumer service
What are the five forces that affect competitive advantage? Be able to apply the five
forces framework to an industry, assessing the competitive landscape and the role of
technology in influencing the relative power of rivals, buyers, suppliers, new
entrants, and substitutes.
Force Example of Strong Forces Example of Weak Force
Bargaining Power of Buyers Toyota’s purchase of auto Your power over the
paint procedures and policies of
Threat of substitute Frequenttraveler’s choice Patients using the only drug
products or services of auto rental effective for their type of
Bargaining Power of Students purchasing Gain farmers in a surplus
Suppliers gasoline year
Threats of Potential New Corner latte stand Professional football team
Rivalry among existing Used car dealers Internal Revenue Service
What are some examples of barriers to entry? Be able to recognize the difference
between low barriers to entry and the prospects for sustainability of new entrant’s
efforts? (Just because it might be easy to START a business doesn’t mean it is easy
to STAY in business.)
What is Porter’s model of competitive strategy? Which quadrant to your favorite
companies operate in? (Given a brief description of a company’s strategy, be
able to identify which quadrant the company belongs to)
COST DIFFERENTIATION INDUSTRY
Why is technology critical to enabling competitive advantage? What are some
examples of firms that have used technology to organize for sustained
Amazon: Used Internet to make shopping more convenient
• Examine industry structure – Porter’s 5 Forces Model
• Choose your competitive strategy – Porter’s Model of Competitive Strategy
• Link the parts of the value chain – Porter’s Value Chain Model
• Streamline business processes – any business process diagram
• Design information system – 5Component IS Framework
• Enable business processes
• Improve value chain links to increase efficiency
• Support competitive strategy
• Influence industry structure
ITBASED STRATEGY AND NETW