an organization’s goals and objectives are determined by its competitive strategy.

five competitive forces determine industry profitability: bargaining power of customers, threat of
substitutions, bargaining power of suppli-ers, threat of new entrants, and rivalry among existing firms.
The intensity of each of the five forces determines the characteristics of the industry, how profitable it
is, and how sustainable that profitability will be.

An organization responds to the structure of its industry by choosing a competitive strategy.

According to Porter, firms engage in one of these four strategies. An organization can focus on being the
cost leader, or it can focus on differentiating its products or services from those of the competition.
Further, the organization can employ the cost or differentiation strategy across an industry, or it can
focus its strategy on a particular industry segment.

According to Porter, to be effective, the organization’s goals, objectives, culture, and activities must be
consistent with the organization’s strategy. To those in the MIS field, this means that all information
systems in the organization must reflect and facilitate the organization’s competitive strategy.

value as the amount of money that a customer is willing to pay for a resource, product, or service. The
difference between the value that an activity generates and the cost of the activity is called the margin.
A business with a differentiation strategy will add cost to an activity only as long as the activity has a
positive margin.
A value chain is a network of value-creating activities. That generic chain consists of five primary
activities and four support activities.
The value is not only the parts them-selves,
The support activities in the generic value chain contribute indirectly to the production, sale, and service
of the product. They include procurement, which consists of the processes of finding vendors, setting up
contractual arrangements, and negotiating prices.

Porter’s model of business activities includes linkages, which are interactions across value activities.
Such a system uses sales forecasts to plan production; it then uses the production plan to determine raw
material needs and then uses the material needs to schedule purchases.
A business process is a network of activities that generate value by transforming inputs into outputs. The
cost of the business process is the cost of the inputs plus the cost of the activities.
Each activity is a business function that receives inputs and produces outputs. An activity can be
performed by a human, by a computer system, or by both.
A repository is a collection of something; a database is a repository of data, and a raw material
repository is an inventory of raw materials.
Business processes vary in cost and effectiveness. In fact, the streamlining of business processes to
increase margin (add value, reduce costs, or both) is key to competitive advantage.
requires people to work in new ways and to follow different procedures, and employees often resist
such change.
Organizations can lock in customers by making it difficult or expensive for customers to switch to
another product. This strategy is sometimes called establishing high switching costs
competitive advantage can be gained by creating entry barriers that make it difficult and
expensive for new com-petition to enter the market

information system enhances an existing service because it eases the effort

it reduces the amount of customer work when scheduling a shipment. Customers will be locked in by
this system:
This system achieves a competitive advantage in two other ways as well. First, it raises the barriers to
market entry. If another company wants to develop a shipping service, it will not only have to be able to
ship packages, but it will also need to have a similar information system
Computer hardware consists of electronic components and related gadgetry that input, process, output,
and store data according to instructions encoded in computer programs or soft-ware. A
Every computer has a central processing unit (CPU), which is sometimes called “the brain” of the
computer.
two CPUs is called a dual-processor computer. Quad-processor computers have four CPUs. Some high-
end computers have 16 or more CPUs
The CPU works in conjunction with main memory. Main memory is some-times called RAM, for random
access memory.
All computers include storage hardware, which is used to save data and programs. Mag-netic disks (also
called hard disks) are the most common storage device. Solid-state storage (SSD) (or an SSD drive) is
much faster
A server is a computer that is designed to support processing requests from many remote computers
and users.
a server farm is a collection of, typically, thousands of servers.
Computers represent data using binary digits, called bits. A bit is either a zero or a one.
, bits are grouped into 8-bit chunks called bytes.
The cache and main memory are volatile, meaning their contents are lost when power is off. Magnetic
and optical disks are nonvolatile, meaning their contents survive when power is off.
The first disruptive force that has the power to change business is the Internet of Things (IoT). This is the
idea that objects are becoming connected to the Internet so they can interact
Organizations are interested in new hardware because they represent potential opportunities, or
threats, to their ability to generate revenue.
The second disruptive force that has the power to change business is digital reality devices.
The third disruptive force that could change the way businesses operate is self-driving cars
The fourth disruptive force that has the power to change businesses is 3D printing.
Every computer has an operating system (OS), which is a program that controls that computer’s
resources.
Native applications are programs that are written to use a particular operating system. Microsoft Access,
for example, will run only on the Windows operating system; some-times called thick-client applications.
A Web application (also known as a thin-client application) is designed to run within a computer browser

Virtualization is the process by which one physical computer hosts many different virtual (not literal)
computers within it. Those hosted operating systems are called virtual machines (vm).
When you buy a computer program, you are not actually buying that program. Instead, you are buying a
license to use that program
Large organizations do not buy a license for each computer user. Instead, they negotiate a site license,
which is a flat fee that authorizes the company to install the product (operating system or application)
on all of that company’s computers or on all of the computers at a specific site.
Application software performs a service or function.
Horizontal-market application software provides capabilities common across all organizations and
industries.
Vertical-market application software serves the needs of a specific industry
Firmware is computer software that is installed into devices such as printer
The term open source means that the source code of the program is available to the public. Source code
is computer code as written by humans and understandable by humans.
Source code is compiled into machine code that is processed by a computer. Machine code is, in
general, not understandable by humans and cannot be modified.
In a closed source project, say, Microsoft Office, the source code is highly protected and only available to
trusted employees and carefully vetted contractors.
Open source succeeds because of collaboration. A programmer examines the source code and identifies
a need or project that seems interesting. He or she then creates a new feature, redesigns or reprograms
an existing feature, or fixes a known problem.
Mobile systems offer the potential of just-in-time data, which is data delivered to the user at the precise
time it is needed.
professionals who can thrive in a dynamic environment with little need for direct supervision will find
that they can work both where and when they want
organizations today have a love/hate relationship with their employees’ use of their own mobile devices
at work. They love the cost-saving possibility of having employees buy their own hardware, but they
hate the increased vulnerability and loss of control.