Chapter 2 Management Information System Fig: Types of Information System Organizations can be divided into strategic, management, knowledge and operational levels and into five major functional areas- sales and marketing, manufacturing, finance, accounting, and human resource. Information system serves each of these levels and functions. Relationship of systems to one another Fig: Interrelationships among systems The various types of systems in the organization have interdependencies.
TPS are a major producer of information that is required by the other systems which, in turn, produce information for other systems. These different types of systems are only loosely coupled in most organizations. Types of Information system 1. A TPS is a computerized system that performs and records the daily routine transactions necessary to conduct business.
Examples are sales order entry, hotel reservation system, payroll, employee record keeping, etc. TPS are also measure producers of information for the other type of system. Knowledge work system aid knowledge workers whereas office systems primarily aid data workers.
Knowledge workers are people who hold formal university degrees and who are often members of Santosh Dhungana MIS Version 1. Their jobs consist primarily of creating new information and knowledge. Data workers typically have less formal advanced educational degrees and tend to process rather than create information. They consist primarily of secretaries, book-keepers, filing clerks or managers whose jobs are principally to use and manipulate information.
MIS It is the Information system at the management level of an organization that serve the functions of planning, controlling and decision making by providing routine summary and exception reports.
Typically they are oriented almost exclusively to internal, not environmental or external events. MIS usually serve managers interest in weekly, monthly and yearly results not day to day activities.
DSS Decision Support System It is the information system at the organizations management level that combines data and sophisticated analytical models or data analysis tools to support semi-structured and unstructured decision making. DSS use internal information from TPS and MIS; they often bring in information from external sources such as current stock prices or product prices of competitors. DSS have more analytical power then other systems. It is an interactive system in which user can change assumptions, ask new questions and include new data.
ESS Executive Support System It is the information system at the organizations strategic level designed to address unstructured decision making through advanced graphic and communication. ESS is designed to incorporate data about external events such as new tan laws and competitors. They filter, compares and track critical data, emphasizing the reduction of time and effort required to obtain information useful to executive.
Sales are concerned with contacting customers, selling the products and services, taking orders and following up on sales. Sales and marketing information systems support these activities example System Description Organization level Order processing Enter, process and track orders.
Management level Sales trend forecasting Prepare 5-year sales forecast Strategic level 2. Manufacturing and production activities deal with the planning, development, and maintenance of production facilities; the establishment of production goals; the acquisition, storage, and availability of production materials; and the scheduling of equipment, facilities, materials, and labor required to fashion finished products.
The finance function is also in charge of managing the capitalization of the firm. In order to determine whether the firm is getting the best return on its investments, the finance function must obtain a considerable amount of information from sources external to the firm.
System Description Organization level Account receivable Track money owned the firm Operational Level Portfolio Analysis Design the firms portfolio of investments Knowledge level Budgeting Prepare short term budgets Management level Profit planning Plan long term profits Strategic level 4.
Management level Human resource planning Plan the long term labor force needs of the organization. Enterprise Application System See book Fig traditional view of system In most organizations, separate systems built over a long period of time support discrete processes and discrete business function. Generating and fulfilling an order is a multistep process involving activities performed by the sales, manufacturing and production, and accounting functions.
Fig: Enterprise systems Enterprise systems can integrate the key business processes of an entire firm into a single software system that allows information to flow seamlessly throughout the organization. These systems may include transactions with customers and vendors.
These systems focus primarily on the internal processes but may include transactions with customers and vendors. Enterprise system provides a technology platforms where organization can integrated and coordinate their major internal business processes.
They address the problem of organizational inefficiencies created by isolated islands of information, business processes and technology. A large organization typically has many different kind of information systems that support different functions, organizational levels and business processes. Most of these systems are built around different functions; business units and business processes that do not talk to each other.
Managers might have a hard time assembling the data they need for a comprehensive, overall picture of the organizations operations. Enterprise systems, also known as Enterprise Resource Planning ERP systems solve the above mentioned problem by providing a single information system for organization- wide coordination of key business processes.
The enterprise system collects data from various key business and stores the data in a a single comprehensive data repository where they can be used by other parts of business. Managers emerge with more precise and timely information for coordinating the daily operations of the business and firm-wide view of business processes and information flows. Benefits of Enterprise system? See yourself consult book Challenges of enterprise system?
See yourself consult book Supply Chain Management System SCM The above figure illustrates the major entities in the supply chain and the flow of the information upstream and downstream to coordinate the activities involved in buying, making and moving products.
Suppliers transform raw materials into intermediate products or components and then manufacturers turn them into finished products. The products are shipped to distribution centers and from there to retailers and customers. The supply chain is a network of organizations and business processes for procuring materials, transforming raw materials into intermediate and finished products and distributing the finished products to customers.
The supply chain includes reverse logistics in which returned items flow in the reverse direction from the buyers back to the seller. The upstream portion of supply chain includes the organizations suppliers and their suppliers and the processes for managing relationship with them. The downstream portion consists of the organization and processes for distributing and delivering products to their final customers.
Information systems must be aligned with the organization to provide information that important groups within the organization need. At the same time the organization must be aware of and be open influences of information systems in order to benefit from new technologies. The interaction between IT and organizations is very complex and is influence by a great many mediating factors including organizations structure, standard operating procedure, politics, culture, surrounding environment and management decisions.
What is an Organization????? Fig: technical Microeconomic definition of organization. An organization is a stable, formal, social structure that takes resources from the environment and processes them to produce outputs. Capital and labor are primary production factors provided by the environment. The organization the firm transforms these inputs into products and services in a production function.
The products and services are consumed by environment in …………….. An organization is more stable then an informal group in terms of longevity and routines. Organizations are formal legal entities with internal rules and procedures that must abide by laws.
Organizations are also social structures because they are a collection of social elements. Fig: The behavioral view of organization A more realistic behavioral definition of an organization is that is a collection of rights, privilege, obligations and responsibilities that are delicately balanced over a period of time through conflict resolution. In this behavioral view of firm, people who work in organizations develop ways of working; they gain attachments to existing relationship; and they make arrangements and subordinates and superior about how work will be done, how much work will be done and under what condition.
How does these definitions of organization relate to Information System Technology??? The firm is seen as infinitely malleable with capital and labor substituting for each other quite easily. But the more realistic behavioral definition of an organization suggest that building new information systems or building old ones involves more than a technical rearrangement of machines or workers- that some information system that change the organizational balance of rights, privilege, obligations, responsibilities and feelings that have been established over a long period of time.
Organizations arrange specialist in a hierarchy of authority in which everyone is accountable to someone and authority in which everyone is accountable to someone and authority is limited to specific actions. Authority and actions are further limited by abstract rules and procedures Standard Operating Procedures SOPs that are interpreted and applied to specific cases. These rules create a system of impartial and universal decision making; everyone is treated equally.
Organizations try to hire and promote employees on the basis of technical qualifications and professionalism not personal connection. The organization is devoted to the principle of efficiency: maximizing output using limited inputs. Organizations have different shapes or structure for many other reasons. They differ in their ultimate goals and the types of power used to achieve them some organizations have utilitarian goals business , others have normative goods universities, religious groups.
Organizations also serve different groups or have different constituencies, some primarily benefiting their members, others benefiting clients, stock holders or the public. The nature of leadership differs greatly from one to another organization. Some organizations may more democratic than other. Another way organization differs is by task they perform and the technology they use.
Some organization perform primarily routine task that could be reduced to formal use that require little judgment. IT should result in a decline in the number of middle managers and clerical workers as IT substitutes for their labor.
IT also helps firms contract in size because it can reduce transaction cost. According to transaction cost theory, firms and individuals seek to economize on transaction cost, much as they do on Santosh Dhungana MIS Version 1. Using markets is expensive because of costs such as locating and communicating with distance suppliers, buying insurance, obtaining information on products and so on. IT especially by the use of networks can help firms lower the cost of market participation transaction cost.
Information systems make it possible for companies such as CISCO systems and Dell Computer to outsource their production to contract manufacturers such as Flextronics instead of making their product themselves. In the above fig1 transaction cost decreases by the help of IT enable organization then traditional organization. Information technology also can reduce internal management cost.
IT by reducing the cost of acquiring and analyzing information, permits organizations to reduce agency cost because it becomes easier for manager to observe a greater number of employees. IT also expand the power and space of small organizations by allowing them to perform coordinating activities such as processing orders or keep track of inventory with very few clerks and managers.
More firms may operate as virtual organizations where work no longer is tied to geographical location. Virtual organization use networks to link people, assets, and ideas. Another behavioral approach views information systems as the outcome of political competition between organizational groups for influence over the organizations policies, procedures, and resources.
Information systems potentially change an organizations structure, culture, politics, and work. The Internet and Organizations -Internet WWW have an important impact on the relationships between firms and external entities and even on the organizational business process inside a firm. Interpersonal Roles 2.
Informational Roles 3. What are the alternatives? Which should you choose? Is this choice working? Models of Decision Making 1. Organizational Model Considers the structural and political characteristics of an organization.
Bureaucratic Model Whatever organization do is the result of routines and existing business process developed over years of active use. Political Model What an organization does is a key result of political bargains struck among key leaders and interest groups.
Strategic Information System SIS It change the goals, operations, products, services or environmental relationships of organizations to help them gain and edge over competitors.
Systems that have these effects may even change the business of organizations. Strategic information system can be used at all organizations. Strategic information system can be used at all organizational levels and it is not restricted to strategic level system. There are a number of information systems operating at different level of strategy the business, the firm and the industry level Santosh Dhungana MIS Version 1. There are various forces that effect on organizations ability to compete and therefore greatly influence firms business strategy.
There are threats from new market entrance and from substitute products and services. Customers and suppliers develop bargaining power. Traditional competitors constantly adopt their strategies to maintain their market positioning. In fig 2 shows the new competitive force model. The digital firm era requires a more dynamic view of the boundaries between firms, customers and suppliers with competition occurring among industry sets. Information Systems and Business strategies Business can use strategic information systems to gain an edge over competitors.
Such systems change organizations goal, business processes, products, services or environmental relationships driving them into firms of behaviour. Information systems can be used to support strategy at the business, firm and industry level. At the business level of strstegy, information systems can be used to help firms become the low cost procedures, differentiate products and services or serve new markets. Value chain analysis is useful at the business level to highlight specific activities in the business where information systems are most like to have a strategic impact.
At the firm level, information systems can be used to achieve new efficiencies or to enhance services can by trying together the operations of different business unit so that they can function as a whole or promoting the sharing of knowledge across business units.
At the industry level, systems can promote competitive advantage by facilitating cooperation with other firms in the industry, creating consortiums or communities for sharing information, exchanging transactions or coordinating activities.
The competitive force model, information partnership and network economies are useful concepts for identifying strategic opportunities for systems at industry level. Chapter 4 Electronic Business, Electronic commerce and The Emerging digital firms Internet technology and digital firm - The internet is rapidly becoming the infrastructure of choice for electronic commerce because it offers business an even easier way to link with other business and individual at a very low cost.
New business models and value propositions - The internet has introduced major changes in the way companies conduct business. The internet has changed that relationship. Some of the traditional channels for exchanging product information have become unnecessary or uneconomical and business models based on the coupling of information with products and services may no longer be necessary. Such information can be found now abundance on the way, the investors can use financial websites to place their own trades directly for very small transaction fee.
The changing economics of Information Richness Reach Fig: The changing economics of Information The internet and the web have vastly increased the total amount and quality of information available to all market participants, consumers and merchants alike.
It also reduces the search cost, the time and money spent locating a suitable product and determining the best price for that product. Information Asymmetry It is the situation where the relative bargaining power of two parties in a transaction is determined by one party in the transaction then other party. The web has reduced the information asymmetry surrounding in the business.
Before the internet business had to make trade-off between the richness and reach of their information. Richness It is the measurement of the depth and details of information that a business can supply to the customer as well as information the business collects about the customer. Rich It is the measurement of how many people a business can connect with and how many products it can offer to those people.
In the above figure, it shows the changing economics of information. In the past, companies had to trade-off between the richness and reach of their information. Internet connectivity and universal standards for information to large number of people reduce tradeoff.
Internet Business Models 1. Virtual Storefront: Sells physical products directly to consumers or to individual business. Eg: amazon. Information broker: Provides product, pricing and availability information to individuals and business. Generates revenue from advertising or from directing buyers to sellers. Eg: Edmunds. Transaction broker: Saves users money and time by processing online sales transactions, generating a fee each time a transaction occurs.
Also provides information on rates and terms. Eg: expedia. Online market place: Provides a digital environment where buyers and sellers can meet, search for products, display products and establish prices for those products. Can provide online auctions or reserve auctions where buyers submit bids to multiple bids to multiple sellers to purchase at a buyer specified price as well as negotiated or fixed pricing.
Eg: ebay. Content provider: Creates revenue by providing digital content such as digital news, music, photos or video ever the wave. The customer may pay to access the content or revenue may be generated by selling advertising space.
Eg: cnn. Online service provider Provides online service for individuals and business. Generates revenue from subscription or transaction fees, from advertising or from collecting marketing information from users. Eg: xdrive. Virtual community Provides online meeting, place where people with similar interest can communicate and find useful information. Eg: facebook. Portal Provides initial point of entry to the web along with specialized content and other services.
Eg: yahoo. Business-to-consumer B2C electronic commerce involve electronic retailing of products and services directly to individual consumers. Such as Milpro. For example, eBay, the giant Web auction site. Until recently almost all e-commerce transactions took place over wired networks.
Now cell phones and other wireless handheld digital appliances are internet enabled so that they can be used to send t email or access websites. The use of handheld wireless devices for purchasing goods and services is called mobile commerce or m-commerce.
Customer Centered Retailing 1. Direct Sales over the Web Manufacturers can sell their product and services directly to retail customers bypassing intermediaries such as distributor or retail outlets.
Eliminating intermediaries in the distribution channel can significantly lower purchase transaction cost. Operator of virtual storefront such as amazon. Airlines can ell tickets directly to passengers through their own websites or through without paying commission to travel agents. The removal of organizations or business process layers responsible for intermediary steps in a value chain is called disintermediation. The process of shifting the intermediary function in a value chain to a new source is called reinter mediation.
Fig:- Benefits of Direct sales over web 2. Interactive Marketing and personalization Marketers can use the interactive web pages to hold customers attention or to capture detail information about their taste and interest for one-to-one marketing. Some customer information may be obtained by asking visitors to register online and provide information about them but many companies are also collecting customer information by using software tools that track the activities of website visitors. By using web personalization technology to modify the web pages presented to each customer , marketers can achieve the benefits of using individual sales peoples at dramatically lowers cost.
Personalization can also help firms form lasting relationship with customers by providing individualized content. Customers Self Service Many companies are using their websites and email to answer customer question to provide customers with helpful information. Automated self-service or other web based response to customer question cost a fraction of the price of using a customer service representation on the telephone. New products are even integrated the web with customer where customer services problems have been traditionally solved over the telephone.
How intranets support electronic business Intranets can help organizations create a richer, more responsive information environment. Internet corporate applications based on the web page model can be made interactive using a Santosh Dhungana MIS Version 1. A principle use of intranets has been to create online repositories of information that can be updated as often as required.
Organizational benefits of intranet:- 1. Connectively: Accessible from most computing platforms. Can be tied to internal corporate systems and core transactions database. Can create interactive applications with text, audio and video.
Easy to use, universal web interface. Low start-up cost. Richer, more responsible information environment. Reduced information distribution cost. Chapter 5 Redesigning the organization with information system 5. IT also includes changes in jobs skills management and organization. In the socio technical philosophy, one cannot install new technology without considering the people who must work with it. When we design a new information system, we are re- designing organization. One important thing to know about building a new information system is that this process is one kind of planned organizational change.
System builders must understand how a system will affect the organization as a whole, focusing particularly the organizational conflict and changes in the locus of decision making.
Managers must also consider how the nature of work group will change under the new system. Systems can be technical successes but organizational failure because of a failure in the social and political process of building the system.
Analyst and designer are responsible for ensuring that key participants members of the organization participate in the design process are permitted to influence the system ultimate shape. Organization need to develop an information systems plan that supports their overall business plan.
One specific project have been selected within the overall context of a strategic plan for the nosiness and the systems area, an information system plan can be developed. The plan serves as road map indicating the direction of systems development, the rationale, the current situation, the management strategy, the implementation plan, and the budget. How to develop an Information System Plan A good information system plan should address the following topics 1.
Current systems i. Major system supporting business functions and processes ii. Current infrastructure capabilities - Hardware, software - Database iii. Difficulties meeting business requirements iv. Anticipated future demands 4. New developments i. New system projects - Project descriptions and business rationale ii. New infrastructure capabilities required - Hardware, software - Database - Telecommunication and Internet 5. Management strategy i.
Acquisition plans ii. Milestone and timing iii. Organizational realignment iv. Internal reorganization v. Management controls vi. Major training initiatives vii. Personal strategy 6. Implementation plan i. Anticipated difficulties in implementation ii.
Progress plan 7. Budget requirement i. Requirements ii. Potential savings iii. Financing iv. Acquisition cycle 5. Two principal methodologies for establishing the essential information requirements of the organization as whole are enterprise analysis and success factors. Enterprise Analysis Business Systems Planning Enterprise analysis argues that the firm's information requirements can only be understood by looking at the entire organization units, functions, processes, and data Santosh Dhungana MIS Version 1.
Enterprise analysis can help identify the key entities and attributes of the organization's data. The central method used in the enterprise analysis approach is to take a large sample of managers and ask them how they use information, where they get their information, what their environments are like, what their objectives are, how they make decision, and what their data needs are, and how they make decision and what their data needs are.
The results of these large surveys of managers are aggregated into sub units, functions, processes and data matrices. Data elements are organized into logical application groups- groups of data elements that support related sets of organizational processes. The weakness of enterprise analysis is that it produces an enormous amount of data i.
Most of the interviews are conducted with senior or middle managers, but there is little effort to collect information from clerical workers and supervisory managers. CSFs are shaped by the industry, the firm, the manager and the broader environment.
An important premise of the strategic analysis approach is that there are a small number of objectives that managers can easily identify and on which information systems can focus. The principle methods used in CSFs analysis is personal interviews 3 or 4 with a number of top manager to identify their goals and resulting CSFs. Then systems are built to develop and deliver information of these CSFs. The strength of the CSFs method is that it produces a smaller data sat to analyze then enterprise analyze analysis.
Only top managers are interviewed and the questions focus on the small number of CSFs rather than a broad enquiry into what information is used or needed. The CSFs method takes into account the changing environment with which organizations and managers must deal. Unlike enterprise analysis, the CSFs method of focuses organizational attention how information should be handed.
Small of these system projects represents radical restructuring of their business processes, whereas others entail more incremental change. This restructuring of their business processes is called business process re-engineering eliminating repetitive tasks. Work flow management:- The process of stream lining business procedures so that documents can e moved easily and efficiently is called workflow management.
Steps in Effective Re-engineering - Senior management needs to develop a broad strategic vision that calls for re- designing business processes.
Eg: if the objective of process redesign is to reduce time and cost in developing a new product or finding an order, the organization needs to measure the time and cost consumed by the unchanged process. Following these steps it does not automatically guaranteed that re-engineering will always be successful. Fear of changes develops resistance, confusion and even conscious to undermine the change effort.
The scope of re-engineering projects had widened, adding to their complexity. TQM Total Quality Management A concept that makes quality control a responsibility to be shared by all people in an organization.
Sin Sigma A specific measure of quality, representing 3. How the IS support quality improvements???? Simplifying the product r the production process. Benchmarking: setting strict standards for products, services or activities and measuring organizational performance against those standards.
Use customer demands as a guide to improve products and services. Reduce cycle time. Improve the quality and precision of the design 6. Increase the precision of production. System development The activities that go into producing an information systems solution to an organizational problem or opportunity are called system development. These activities consist of system analysis, system design, programming, testing, conversion and production and maintenance.
These activities usually take place in a sequential order. But some of the activities may need to be repeated or some may to taking place simultaneously depending on approach to system building i. Note that each activities interaction with the organization. Systems Analysis System analysis is the analysis of the problem that the organization will try to solve with an information system. It consists of defining the problem, identifying it caused, specifying the solution, and identifying the information requirements that must be met by system solution.
Generally it is the role of a system analyst to perform these jobs. The system analysis creates a road map of the existing organization and systems, identifying the primary owner and users of data in the organization. In addition to these organizational aspects, the analyst also briefly describes the existing hardware and software that serve the organization.
Feasibility study The system analysis would include a feasibility study to determine whether that solution was feasible, or achievable, from a financial, technical and organizational stand point. Normally the system analysis processes will identify several alternative solutions that the organization can pursue. Information Requirements A detailed statement of the information needs that a new system must specify; identifies who needs that information, when that information is needed, where and how the information is needed.
System Design It is a detail of how a system will meet information requirements as determined by the system analysis. Like blueprints of a building or house, it consists of all the specifications. Programming The process of translating the system specifications prepared during the design stage into program code. Testing The exhaustive and through process that determines whether the system produces the desired results under know conditions.
Sometimes called program testing. Unit testing in multiple units results integration test. Alpha test abd Beta test encomprise acceptance test. Conversion Conversion is the process of changing form the old system to the new system. Four main conversion strategies be employed: the parallel strategy, the direct cutover strategy, the pilot study strategy, and the phased approach strategy.
Production and Maintenance After the new system is installed and conversion is complete, the system is said to be in production. During this stage the system will be reviewed by both user and technical specialists to determine how well it has met its original objectives and decide whether any revisions or modifications are in order.
Changes in hardware, software, documentation, or procedures to production system to correct errors, meet new requirements, or improve processing efficiency are termed maintenance. The introduction of new information technology has a ripple of effect, raising new ethical, social and political issues that must be dealt with on the individual, social and political lavels. You can download the syllabus in managerial economics pdf form. Unit — I. Unit — II. Demand and Supply Analysis: Demand, Generalized Demand Function, The law of demand, Shift and movement along demand curve, Elasticity of demand: Price, Income and Cross Price elasticity of demand, Demand Estimation: Basic concepts , Supply, Generalized supply function, Supply functions, Shifts and movement in the supply curve, Supply elasticity, Market equilibrium, Changes in the market equilibrium, Changes in demand supply constant , Changes in supply demand constant.
Unit — III. Unit — IV. Managerial Decisions in Competitive Markets: Features of perfect competition, Profit maximization in the short run, Profit maximization in the long run, Managerial decisions for firms with market power, Measurement of market power: The Lerner Index, Determinants of the market power: Economies of scale, Barriers created by government, Profit maximization under monopoly: output and pricing decisions, Monopolistic competition: short run and long-run equilibrium, Pricing decision in an oligopoly: The Kinked Demand curve model.
Unit — V. Market Failures and Price Regulations: Market failures and need for regulation, Regulations and market structure, Firm behavior, Price regulation. Some of the managerial economics questions and answers are mentioned below. You can download the QnA in managerial economics pdf form.
If you have already studied the managerial economics notes , then its time to move ahead and go through previous year managerial economics question paper will help you to understand question paper pattern and type of managerial economics questions and answers asked in MBA managerial economics exam. Below is the list of managerial economics books recommended by the top university in India.
You can buy them from Amazon. In the above article, a student can download Managerial Economics Notes. We have provided the complete managerial economics study material which includes managerial economics notes for mba , managerial economics books , managerial economics syllabus for MBA , managerial economics question paper , managerial economics reference books , managerial economics questions and answers , managerial economics tutorial in managerial economics pdf form.
Come on! Save my name, email, and website in this browser for the next time I comment. Skip to content Post last modified: 9 July Reading time: 9 mins read. Managerial Economics Notes. Download PDF.
Managerial Economics Author : P. Managerial Economics Publisher: Pearson Education; 6th ed. Managerial Economics Publisher: Pearson, 4th ed.
0コメント