23-Ind-B4 Design of Information Systems · December 2013
Nivaar worked solution (AI-drafted; not reviewed by a licensed engineer)
National Exams — December 2013 — 98-Ind-B4, Design of Information Systems. 3 hours; closed book, no calculator permitted. The exam comprises four parts: Part A (select 20 of 40 terms and explain each in a sentence or two, 2 marks each = 40 marks), Parts B and C (select 2 of 5 questions in each part, 11 marks each = 22 marks per part), and Part D (select 1 of 2 questions, 16 marks). Complete answers to every term and every question in all four parts follow below, not only the minimum selection a candidate would submit on exam day.
Reference texts: Laudon & Laudon, Management Information Systems: Managing the Digital Firm, 15th ed.; Schwalbe, Information Technology Project Management, 9th ed.
Question text not reproduced: the examination questions are © Engineers and Geoscientists BC. Open the official past paper (linked at the top of this page) to read the question, then follow the worked solution below.
Two classical economic theories explain how IT reshapes a firm's structure. Transaction-cost theory holds that firms exist partly to avoid the cost of finding, contracting with, and coordinating outside parties on the open market; because IT lowers the cost of acquiring, verifying, and coordinating information (Question 1's "search costs," term 38, falls as a direct consequence), firms can shrink their own internal size and rely more on external contracting and outsourcing than they could when coordination itself was expensive. Agency theory views a firm as a set of contracts among self-interested parties that require oversight (management) to keep them aligned with firm goals; since supervising more subordinates directly used to be expensive in time and information, IT lets one manager effectively oversee more people by giving that manager better and faster information, which reduces the number of management layers a firm needs and flattens hierarchies that were previously built purely to manage the span of control.
The same forces that flatten hierarchies economically also change how the organization actually behaves day to day. Decision rights shift toward lower-level employees when good information reaches them directly rather than being filtered upward through several management layers first, which changes both authority structures and the number of middle-management positions needed. Work itself is redesigned around new systems — new roles, new required skills, and often resistance from employees whose established routines, expertise, or authority the new system threatens; because information is also a source of organizational power, a new IS that changes who has access to what information can trigger genuine political resistance, not just a technical adoption curve. New systems also enable new organizational forms outright, most visibly telecommuting and virtual/networked organizations, where geographically distributed staff and even distributed partner firms can be coordinated as if co-located, changing what "the organization" physically is.
