Information:

Anything that can be digitized , e.g. Text, images, videos, music, etc. ,Content or digital goods
Cost Structure of Information

Information is expensive to produce, but cheap to reproduce

High fixed cost, low marginal cost (Not only fixed, but sunk)

No significant capacity constraints (production, distribution, storage)

Set price where MC = MR

Compete with free by adding value to user experience (ease of use, convenience, quality) e.g. buy separate
songs -> set price premium
Consumption of information

Experience good: Quality can only be ascertained after consumption, Consumer must experience
information to value it -> e.g. rating, review, previews, trailer, trial, brand and reputation, sampling

Information overload: how to grab users attention, 1firms can make targeted & personalized
recommendations -> e.g. Demographic (gender, income, race) , interest, history; 2provide search and filter
Technology/Systems:

Infrastructure: Store, Retrieve, Filter, Manipulate, View, Transmit, and Receive information

Input, Process, Output

Add value to information by provides accessibility to information:

1.
real-time and simultaneous
2.
Enriches information e.g. Manipulation and filtering, Combining
3.
Facilitates exchange of information
Michael Dell: changing role of IT in business -> embedded in business, e.g. customer service, sales, marketing;
CIO = Business strategist -> understand drivers of business
Roles of IS in business:

Support Business Process (Facilitate transactions, Record activities, Track inventory) e.g. octopus card

Support Decision Making: What items to add or discontinue?, Which markets should I enter/exit? , What
incentives can I provide to key customers?, Where should I invest in?

Support Competitive Advantage: Enter new markets, Build loyalty, IT and innovation
Some interesting information that is made available by innovative technologies, e.g. NIKE+, watch
Predict consumer behavior, classify consumers in different segment to sale products more effectively
Operational effectiveness (O.E.):
Better utilization of a firms inputs in production: Using fewer inputs to achieve same (or more)
output, Reducing defects in products, Developing better products faster
How does IT affect O.E.?
Process innovation/improvement: Automation, business process reengineering, Agile systems (e.g.
Flexible to changing market condition -> time sensitive company, e.g. fashion wear, ZARA, ensure product is
not outdated, meet up customers taste, lower the unsold rate)
Operation intelligence: Real-time view of value chain activities, support timely decisions
IT-driven O.E. is not sustainable: easily duplicated (fast follower problems)
->non-proprietary technology (provided by 3rd party)
-> reverse engineering (e.g. Iphone and Xioami)
Narrowing of O.E. gap among companies: top company, gentle improvement
O.E. is non-negotiable, but non-differentiator: have to do it, otherwise, lack behind
Firms strategic positioning:

strategic implies 1dsitinguish your firm from competitors, 2competitve edge/advantage

enhance operation by using IT to 1perform different activities from competitors,

perform same activities as

competitors, but in different ways (e.g. shorten the delivery time, Amazon -> helicopter)