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Chapter 3

COMMERCE 2KA3 Chapter Notes - Chapter 3: Carriage, Information System, Factors Of Production


Department
Commerce
Course Code
COMMERCE 2KA3
Professor
A L I R M O N T A Z E M I
Chapter
3

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Commerce 2KA3
Chapter 3: Information Systems, Organizations, and Strategy
Organizations and Information Systems
Organization: is a stable, formal social structure that takes resources from the
environment and processes them to produce outputs. The technical definition focuses on 3
elements of an organization. Capital and labour (the production factors provided by
environment) the origination (the firm doing the transformations), and the products and
services (consumed by environment)
Routines: sometimes called standard operating procedures are precise rules, procedures,
and practices, that have been developed to cope with virtually all expected situations.
Disruptive Technologies: are substitute products that perform as well or better than
anything currently produced. Eg. Car substituted the horse drawn carriage
There are 5 basic kinds of organizational structure
How Information Systems Impact Organizations and Business Firms
Transaction Cost Theory: firms and individuals seek to economize on transaction costs
such as locating and communicating with distant suppliers, monitoring contract
compliance, buying insurance, obtaining information on products, and buying their own
suppliers and distributors, as both GM and Ford used to do. Firms thought that by
integrating vertically they could reduce transaction costs.
Agency Theory: the firm is viewed a s a nexus of contracts among self-interested
individuals rather than as a unified, profit maximizing entity. A principal owner employs
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