CHAPTER 3

The meaning of disruptive technologies:

  • Technology that brings about sweeping change to businesses, industries, markets.
  • Substitute product perform as or better than current product.

       First movers and fast followers

  • First movers: inventors of disruptive technologies example IPhone always invent new technology
  • Fast followers: firms with the size and resources to capitalize on that technology other mobile device company whose follow IPhone company

How does information system (IS) impact the industry

  • Economic impact
  • Organization and behavior impact

First : Economic impact

  • IT lowers market transaction costs for organizations, making it worthwhile for organizations to transact with other organizations rather than grow the number of employees.

         Example many company now day use outsourcing and external supplier

  • transaction cost theory. This theory states organizations seek to economize (minimize) transaction costs (the costs of participating in markets/doing business
  • Strategies: to achieve economies of scale use vertical integration (e.g. Facebook buying Whatsapp, buying suppliers and distributors

Example   Music industry move from old music industry to new music industry by lowers market transaction costs  any one now can by online music no need to physical stores

  • IT can reduce internal management costs ( agency costs)
  • Agency theory states that organizations employ people who need supervision. Otherwise they will pursue self-interest. This requires higher cost (to pay higher overheads).
  • IT can reduce agency costs, through reducing the need for acquiring & analyzing information.
  • Example

Cairo install GPS System to monitor their employee while reducing overtime cost

IT reduce both Agency cost and transaction cost of the firm , so should expect firm size Shrink over time and have lower management cost and revenue per employee increase

 

Second Organization and behavior impact

  • IT flatten organization
  • Postindustrial organization

 

IT flatten organization

  • Decision level pushed to lower level
  • Fewer manager needed will fasten decision making and increase control

Postindustrial organization

Organization flatten because post industry societies, authority will increase , reline on knowledge and competence more than formal position

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