Introduction to Management Information System Lecture notes

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o M.C.A. (SEM III) PAPER – VI MANAGEMENT INFORMATION SYSTEM 9. Decision Support System DSS : Concept and Philosophy DSS : Deterministic Systems AI Systems Knowledge based expert system MIS and Role of DSS Term work/Assignment : Each candidate will submit a journal in which assignments based on the above syllabus and the internal test paper. Test graded for 10 marks and Practical‘s graded for 15 marks. References : th 1. Management Information System, Oz Thomson Learning 5 edition rd 2. Management Information System, W.S.Jawadekar, 3 edition, TMH th 3. Management Information System, James O‘Brien, 7 edition, TMH th 4. Information Systems the foundation of E-Business, Steven Alter, 4 Edition Person education 5. Information Technology for management, Turban, McLean, th Wetherbe, 4 edition, Wiley th 6. Management Information Systems, Loudon and Loudon, 10 edition, Pearsons Educations 7. Management Information Systems, Jaswal Oxford Press Case based approach can be adopted to explain various concepts during tutorials (Internal Evaluation) Assignments USE of IS in different domains as Hospitality, Retail, Supply chain, vendor management, inventory, etc. At least 5 website‘s critical analysis in any of the domain as a market survey for designing the website for the particular business. Research paper on any topic of their interest of this paper Optional  Bibliography Management Information Systems - By W.S.Jawdekar, Second Edition. TMG Publications Management Information Systems - By W.S.Jawdekar, Third Edition. TMG Publications Management Information Systems - Managing the Digital Firm- By Kenneth Laudon and Jane Laudon PHI Publications, Ninth Edition Management Information Systems - Managing the Digital Firm- By Kenneth Laudon and Jane Laudon PHI Publications, Tenth Edition Management Information Systems - By Gordon and Olson Edition. TMG Publications   1 MANAGING THE DIGITAL FIRM Units : 1.1 Why Information Systems? 1.2 Capital Management 1.3 Foundation of Doing Business 1.4 Productivity 1.5 Strategic Opportunities & advantage 1.6 How Much Does IT Matter? 1.7 Why IT Now? Digital Convergence and the Changing Business Environment 1.8 Transformation of Business Enterprise 1.9 Globalization 1.10 Rise in the Information Economy 1.11 Emergence of the digital firm 1.12 Perspective of Information systems 1.1 WHY INFORMATION SYSTEMS? We are in the midst of a swiftly moving river of technology and business innovations that is transforming the global business landscape. An entirely new Internet business culture is emerging with profound implications for the conduct of business. You can see this every day by observing how business people work using high-speed Internet connections for e-mail and information gathering, portable computers connected to wireless networks, cellular telephones connected to the Internet, and hybrid handheld devices delivering phone, Internet, and computing power to an increasingly mobile and global workforce. The emerging Internet business culture is a set of expectations that we all share. We have all come to expect online services for purchasing goods and services, we expect our business colleagues to be available by e-mail and cell phone, and we expect to be able to communicate with our vendors, customers, and employees any time of day or night over the Internet. We even expect our business partners around the world to be ―fully connected.‖ Internet culture is global. Information technology (IT) refers to all of the computer-based information systems used by organizations and their underlying technologies. Briefly, information technologies and systems are revolutionizing the operation of firms, industries, and markets. 1.2 CAPITAL MANAGEMENT Information technology has become the largest component of capital investment for firms in the United States and many industrialized societies. In 2005, U.S. firms alone will spend nearly 1.8 trillion on IT and telecommunications equipment and software. Investment in information technology has doubled as a percentage of total business investment since 1980, and now accounts for more than one-third of all capital invested in the United States and more than 50 percent of invested capital in information- Information Technology capital investment Information technology capital investment, defined as hardware, software, and telecommunications equipment, expanded from 19 percent of all business investment to 35 percent during the period from 1980 to 2003. in the United States and more than 50 percent of invested capital in information- Intensive industries, such as finance, insurance, and real estate. Fig shows that between 1980 and 2003, private business investment in information technology (hardware, software, and telecommunications equipment) grew from 19 percent to more than 35 percent of all domestic private business investment. If one included expenditures for managerial and organizational change programs and business and consulting services that are required to use this technology effectively, total information technology expenditures would rise above 50 percent of total private business investment. As managers, many of you will work for firms that are intensively using information systems and making large investments in information technology. You will certainly want to know how to invest this money wisely. If you make wise choices, your firm can outperform competitors. If you make poor choices, you will be wasting valuable capital. 1.3 FOUNDATION OF DOING BUSINESS: In many industries, survival and even existence without extensive use of information systems is inconceivable. Obviously, all of e-commerce would be impossible without substantial IT investments and firms such as Amazon, eBay, Google, ETrade, or the world‘s largest online university, the University of Phoenix, simply would not exist. Today‘s service industries—finance, insurance, real estate as well as personal services such as travel, medicine, and education—could not operate without IT. Similarly, retail firms such as Wal-Mart and Sears and manufacturing firms such as General Motors and General Electric require IT to survive and prosper. Just like offices, telephones, filing cabinets, and efficient tall buildings with elevators were once of the foundations of business in the twentieth century, information technology is a foundation for business in the twenty-first century.  The interdependence between organizations and information Systems. There is a growing interdependence between a firm‘s ability to use information technology and its ability to implement corporate strategies and achieve corporate goals as shown in fig. What a business would like to do in five years often depend on what its systems will be able to do. Increasing market share, becoming the high-quality or low-cost producer, developing new products, and increasing employee productivity depend more and more on the kinds and quality of information systems in the organization. The more you understand about this relationship, the more valuable you will be as a manager. In contemporary systems there is a growing interdependence between a firm‘s information systems and its business capabilities. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do. 1.4 PRODUCTIVITY: Today‘s managers have very few tools at their disposal for achieving significant gains in productivity. IT is one of the most important tools along with innovations in organization and management, and in fact, these innovations need to be linked together. Investment in IT plays a critical role in increasing the productivity of firms, and entire nations. For instance, economists at the U.S. Federal Reserve Bank estimate that IT contributed to the lowering of inflation by 0.5 to 1 percentage point in the years from 1995 to 2000. Firms that invested wisely in information technology experienced continued growth in productivity and efficiency. 1.5 STRATEGIC OPPORTUNITIES & ADVANTAGE If you want to take advantage of new opportunities in markets, develop new products, and create new services, chances are quite high you will need to make substantial investments in IT to realize these new business opportunities. If you want to achieve a strategic advantage over your rivals, to differentiate yourself from your competitors, IT is one avenue for achieving such advantages along with changes in business practices and management. These advantages might not last forever, but then again most strategic advantages throughout history are short-lived. However, a string of short-lived competitive advantages is a foundation for long-term advantages in business, just as is true of any athletic sport or race. 1.6 HOW MUCH DOES IT MATTER? ―IT Doesn‘t Matter,‖ which is significant debate issue in the business community. This argument in a nutshell is that because every firm can purchase IT in the marketplace, because any advantage obtained by one company can easily be copied by another company, and because IT is now a commodity based on standards (such as the Internet) that all companies can freely use, it is no longer a differentiating factor in organizational performance. So that no firm can use IT to achieve a strategic edge over its competitors any more than it could with electricity, telephones, or other infrastructure. Therefore, it is mentioned that firms should reduce spending on IT, follow rather than lead IT in their industry, reduce risks by preparing for computer outages and security breaches, and avoid deploying IT in new ways. Most management information system (MIS) experts disagree. Many highly adept firms continually obtain superior returns on their investment in IT, whereas less adept firms do not. Copying innovations of other firms can be devilishly difficult, with much being lost in the translation. There is only one Dell, one Wal-Mart, one Amazon, and one eBay, and each of these firms has achieved a competitive advantage in its industry based in large part on unique ways of organizing work enabled by IT that have been very difficult to copy. If copying were so easy, we would expect to find much more powerful competition for these market leaders. Although falling prices for hardware and software and new computing and telecommunications standards such as the Internet have made the application of computers to business much easier than in the past, this does not signal the end of innovation or the end of firms developing strategic edges using IT. Far from the end of innovation, commoditization often leads to an explosion in innovation and new markets and products. For example, the abundance and availability of materials such as wood, glass, and steel during the last century made possible a continuing stream of architectural innovation. Likewise, the development of standards and lowering costs of computer hardware made possible new products and services such as the Apple iPod and iTunes, the Sony Walkman portable music player, Real Media online streaming music, and the entire online content industry. Entirely new businesses and business models have emerged for the digital distribution of music, books, journals, and Hollywood films. It is surely correct in stating that not all investments in IT work out or have strategic value. Some are just needed to stay in business, to comply with government reporting requirements, and to satisfy the needs of customers and vendors. Perhaps the more important questions are how much does IT make a difference, and where can it best be deployed to make a competitive difference? Entrepreneur can use information technology and systems to create differentiation from your competitors and strategic advantage in the marketplace. We need to achieve any measure of ―success,‖ investment in IT must be accompanied by significant changes in business operations and processes and changes in management culture, attitudes, and behavior. Absent these changes, investment in IT can be a waste of precious investor resources. 1.7 WHY IT NOW? DIGITAL CONVERGENCE AND THE CHANGING BUSINESS ENVIRONMENT A combination of information technology innovations and a changing domestic and global business environment makes the role of IT in business even more important for managers than just a few years ago. The Internet revolution is not something that happened and then burst, but instead has turned out to be an ongoing, powerful source of new technologies with significant business implications for much of this century. There are five factors to consider when assessing the growing impact of IT in business firms both today and over the next ten years. • Internet growth and technology convergence •Transformation of the business enterprise •Growth of a globally connected economy •Growth of knowledge and information-based economies •Emergence of the digital firm These changes in the business environment, summarized in number of new challenges and opportunities for business firms and their managements. Internet Growth & technology Convergence New business Technologies with the favorable cost E-business, E-commerce, E-government Rapid changes in market & market structure Increased obsolescence of traditional business models Transportation of the business enterprise Flattening Decentralization Flexibility Location Independence Low transaction & co-ordination cost Empowerment Collaborative work & teamwork Globalization Management & control in a global market place Competition in market Global workgroups Global delivery systems Rise in the Information Economy Knowledge & information-based economics New products & services Knowledge as a central productive & strategic asset Time-based competition Shorter product life cycle Limited employee knowledge base Emergence of the digital firm Digitally enabled relationships with customers, suppliers & employees Digital networks Digital management Agile sensing & responding to environmental changes The internet is bringing about a convergence of technologies, rolling markets, entire industries & firms in the process. New organization structure is built up, Telephone networks are merging to internet etc. Traditional markets & distribution channels are weakening & new markets are being created. 1.8 TRANSFORMATION OF BUSINESS ENTERPRISE: Along with rapid changes in markets and competitive advantage are changes in the firms themselves. The Internet and the new markets are changing the cost and revenue structure of traditional firms and are hastening the demise of traditional business models. For instance, in the United States, 20 percent of travel sales are made online, and experts believe that 50 to 70 percent of travel sales will be online within a decade. Realtors have had to reduce commissions on home sales because of competition from Internet real estate sites. The business model of traditional local telephone companies, and the value of their copper-based networks, is rapidly declining as millions of consumers switch to cellular and Internet telephones. The Internet and related technologies make it possible to conduct business across firm boundaries almost as efficiently and effectively as it is to conduct business within the firm. This means that firms are no longer limited by traditional organizational boundaries or physical locations in how they design, develop, and produce goods and services. It is possible to maintain close relationships with suppliers and other business partners at great distances and outsource work that firms formerly did themselves to other companies. For example, Cisco Systems does not manufacture the networking products it sells; it uses other Companies, such as Flextronics, for this purpose. Cisco uses the Internet to transmit orders to Flextronics and to monitor the status of orders as they are shipped. . At the Orbitz Web site, visitors can make online reservations for airlines, hotels, rental cars, cruises, and vacation packages and obtain information on travel and leisure topics. Such online travel services are supplanting traditional travel agencies. In addition to these changes, there has also been a transformation in the management of the enterprise. The traditional business firm was— and still is—a hierarchical, centralized, structured arrangement of specialists who typically relied on a fixed set of standard operating procedures to deliver a mass-produced product (or service). The new style of business firm is a flattened (less hierarchical), decentralized, flexible arrangement of generalists who rely on nearly instant information to deliver mass- customized products and services uniquely suited to specific markets or customers. The traditional Teams and individuals working in task forces, and a customer orientation to achieve coordination among employees. The new manager appeals to the knowledge, learning, and decision making of individual employees to ensure proper operation of the firm. Once again, information technology makes this style of management possible. 1.9 GLOBALIZATION A growing percentage of the American economy—and other advanced industrial economies in Europe and Asia—depends on imports and exports. Foreign trade, both exports and imports, accounts for more than 25 percent of the goods and services produced in the United States, and even more in countries such as Japan and Germany. Companies are also distributing core business functions in product design, manufacturing, finance, and customer support to locations in other countries where the work can be performed more cost effectively. The success of firms today and in the future depends on their ability to operate globally. Today, information systems provide the communication and analytic power that firms need to conduct trade and manage businesses on a global scale. Controlling the far-flung global corporation— communicating with distributors and suppliers, operating 24 hours a day in different national environments, coordinating global work teams, and servicing local and international reporting needs—is a major business challenge that requires powerful information system responses. Globalization and information technology also bring new threats to domestic business firms: Because of global communication and management systems, customers now can shop in a worldwide marketplace, obtaining price and quality information reliably 24 hours a day. To become competitive participants in international markets, firms need powerful information and communication systems. 1.10 RISE IN THE INFORMATION ECONOMY Many of the industrial powers are being transformed from industrial economies to knowledge-and information-based service economies, whereas manufacturing has been moving to lower-wage countries. In a knowledge-and information-based economy, knowledge and information are key ingredients in creating wealth. Today, most people no longer work on farms or in factories but instead are found in sales, education, health care, banks, insurance firms, and law firms; they also provide business services, such as copying, computer programming, or making deliveries. These jobs primarily involve working with, distributing, or creating new knowledge and information. In knowledge-and information-based economies, the market value of many firms is based largely on intangible assets, such as proprietary knowledge, information, unique business methods, brands, and other ―intellectual capital.‖ Physical assets, such as buildings, machinery, tools, and inventory, now account for less than 20 percent of the market value of many public firms in general. Knowledge and information provide the foundation for valuable new products and services, such as credit cards, overnight package delivery, or worldwide reservation systems. Knowledge- and information-intense products, such as computer games, require a great deal of knowledge to produce, and knowledge is used more intensively in the production of traditional products as well. In the automobile industry, for instance, both design and production now rely heavily on knowledge and information technology. 1.11 EMERGENCE OF THE DIGITAL FIRM: All of the changes we have just described, coupled with equally significant organizational redesign, have created the conditions for a fully digital firm. The digital firm can be defined along several dimensions. A digital firm is one in which nearly all of the organization‘s significant business relationships with customers, suppliers, and employees are digitally enabled and mediated. Core business processes are accomplished through digital networks spanning the entire organization or linking multiple organizations. Business processes refer to the set of logically related tasks and behaviors that organizations develop over time to produce specific business results and the unique manner in which these activities are organized and coordinated. Developing a new product, generating and fulfilling an order, creating a marketing plan, and hiring an employee are examples of business processes, and the ways organizations accomplish their business processes can be a source of competitive strength. Key corporate assets—intellectual property, core competencies, and financial and human assets—are managed through digital means. In a digital firm, any piece of information required to support key business decisions is available at any time and anywhere in the firm. Digital firms sense and respond to their environments far more rapidly than traditional firms, giving them more flexibility to survive in turbulent times. Digital firms offer extraordinary opportunities for more global organization and management. By digitally enabling and streamlining their work, digital firms have the potential to achieve unprecedented levels of profitability and competitiveness. Electronically integrating key business processes with suppliers has made this company much more agile and adaptive to customer demands and changes in its supplier network. Fig illustrates a digital firm making intensive use of Internet and digital technology for electronic business. Information can flow seamlessly among different parts of the company and between the company and external entities—its customers, suppliers, and business partners. More and more organizations are moving toward this digital firm vision. Companies can use Internet technology for e-commerce transactions with customers and suppliers, for managing internal business processes, and for coordinating with suppliers and other business partners. E-business includes e-commerce as well the management and coordination of the enterprise. A few firms, such as Cisco Systems or Dell Computers, are close to becoming fully digital firms, using the Internet to drive every aspect of their business. In most other companies, a fully digital firm is still more vision than reality, but this vision is driving them toward digital integration. Firms are continuing to invest heavily in information systems that integrate internal business processes and build closer links with suppliers and customers. The Window on Organizations describes such a digital firm in the making. Cemex, a world leading global cement and construction materials firm, has achieved impressive results through ruthless focus on operational excellence. Management took an enterprise-wide view of its business processes and developed a series of information systems to turn the company into a lean, efficient, agile machine that could instantly respond to changes in customer orders, weather, and other last minute events. Electronic business and electronic commerce in the emerging digital firm 1.12 PERSPECTIVE OF INFORMATION SYSTEMS: Information systems can be best be understood by looking at them from both a technology and a Business perspective. An information system can be defined technically as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization. In addition to supporting decision making, coordination, and control, information systems may also help managers and workers analyze problems, visualize complex subjects, and create new products. Information systems contain information about significant people, places, and things within the organization or in the environment surrounding it. By information we mean data that have been shaped into a form that is meaningful and useful to human beings. Data, in contrast, are streams of raw facts representing events occurring in organizations or the physical environment before they have been organized and arranged into a form that people can understand and use. Functi ons of an information system Three activities in an information system produce the information that organizations need to make decisions, control operations, analyze problems, and create new products or services. These activities are input, processing, and output. Input captures or collects raw data from within the organization or from its external environment. Processing converts this raw input into a more meaningful form. Output transfers the processed information to the people who will use it or to the activities for which it will be used. Information systems also require feedback, which is output that is returned to appropriate members of the organization to help them evaluate or correct the input stage. An information system contains information about an organization and its surrounding environment. Three basic activities—input, processing, and output—produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental factors such as customers, suppliers, competitors, stockholders, and regulatory agencies interact with the organization and its information systems. Eg.: In Integrated Volume Planning system of vehicles, raw input consists of dealer identification number, model, color, and optional features of cars ordered from dealers. Computers store these data and process them to anticipate how many new vehicles to manufacture for each model, color, and option package. The output would consist of orders to suppliers specifying the quantity of each part or component that was needed and the exact date each part was to be delivered to production facilities to produce the vehicles that customers have ordered. The system provides meaningful information such as what models, colors, and options are selling in which locations; the most popular models and colors; and which dealers sell the most cars and trucks. The system requires numbers or codes for identifying each vehicle part or component and each supplier. Informal information systems (such as office gossip networks) rely, by contrast, on unstated rules of behavior. There is no agreement on what is information or on how it will be stored and processed. Such systems are essential for the life of an organization, but an analysis of their qualities is beyond the scope of this text. Formal information systems can be either computer based or manual. Manual systems use paper-and-pencil technology. These manual systems serve important needs. Computer-based information systems (CBIS), in contrast, rely on computer hardware and software technology to process and disseminate information. From this point on, when we use the term information systems, we are referring to computer-based information systems—formal organizational systems that rely on computer technology. Eg.: United Parcel Service (UPS) invests heavily in information systems technology to make its business more efficient and customer- oriented. It uses an array of information technologies including bar- code scanning systems, wireless networks, large mainframe computers, handheld computers, the Internet, and many different pieces of software for tracking packages, calculating fees, maintaining customer accounts, and managing logistics. Although computer-based information systems use computer technology to process raw data into meaningful information, there is a sharp distinction between a computer and a computer program on the one hand, and an information system on the other. Electronic computers and related software programs are the technical foundation, the tools and materials, of modern information systems. Computers provide the equipment for storing and processing information. Computer programs, or software, are sets of operating instructions that direct and control computer processing. Knowing how computers and computer programs work is important in designing solutions to organizational problems, but computers are only part of an information system. Using a handheld computer called a Delivery Information Acquisition Device (DIAD), UPS drivers automatically capture customers‘ signatures along with pickup, delivery, and time-card information.UPS information systems use these data to track packages while they are being transported. A house is an appropriate analogy. Houses are built with hammers, nails, and wood, but these do not make a house. The architecture, design, setting, landscaping, and all of the decisions that lead to the creation of these features are part of the house and are crucial for solving the problem of putting a roof over one‘s head. Computers and programs are the hammer, nails, and lumber of CBIS, but alone they cannot produce the information a particular organization needs. To understand information systems, you must understand the problems they are designed to solve, their architectural and design elements, and the organizational processes that lead to these solutions. The business information value chain Managers and business firms invest in IT and systems because they provide the economic value to the business. From a business perspective, information systems are part of a series of value-adding activities for acquiring, transforming and distributing the information that managers can use to improve decision making, enhance organizational performance to increase the firm profitability. Using the information systems it is expected to understand the organization, management and IT shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment . Dimensions of Information Systems Organization Information system is the integral part of the organization. The key elements of organization are its people, structure, business process, politics, and culture. Organizations are composed of different levels and specialties in terms of levels and functions. An organization coordinates work through a structured hierarchy. It can be formal or informal in nature. Organisation requires many different kinds of skills and people such as knowledge workers, data workers and production workers. Each organization has a unique culture. Different levels and specialties in an organization create different interests and points of view. Management Management is responsible to take a sense out of many situations faced by organizations, make decisions and formulate action plans to solve the problems. It rests to the managerial level people. It is important to know the managerial roles and decisions vary at different levels of the organization such as senior, middle, operational and junior manager. All the level of management is expected to be creative, to develop novel solutions to a broad range of problems. Each level of management has different needs and requirements. Technology IT is one of the tools to cope up with the change. Computer hardware is the physical equipment used for input, processing and output activities in system. Computer software consists of detailed preprogrammed instructions that control and coordinate the hardware components. Storage technology includes both the physical media for storing data in magnetic disk, optical disk, tape etc. Communication technology consisting both the physical and software recourses links the various parts of hardware and transfers data from one location to other. Computers and communication equipments can be connected into network for sharing the resources. Contemporary approaches to information system Multiple perspectives on information systems show that the information systems are the sociotechnical systems. It can be divided into two approaches: Technical approach This emphasizes mathematically based models to study information systems as well as the physical technology and formal capabilities of these systems. Computer science is concerned with establishing methods of computation, storage and access. Management science emphasizes on development of models for decision making and management practices. Behavioral approach It is concerned with the issues like strategic business integration, design, implementation, utilization and management. It majorly focuses on the cognitive style of an individual. It also focuses on technical solutions, changes in attitudes, management and organizational policies. Learning to use information systems: New opportunities with technology There are few key management issues in terms of the challenges confronted to managers The information systems investment challenge: It focuses on how can organization obtain business value from their information systems? The strategic business challenge: It is concerned with what complementary assets are needed to use the information technology effectively? The globalization challenge: It emphasizes on ―how can firms understand the business and system requirements of global economic environment? The information technology infrastructure challenge: It explains how can organizations develop in information technology infrastructure that can support their goals when business conditions and technologies are changing so rapidly? Ethics and security: The responsibility and control challenge: It describes hoe can organization ensure that their information systems are used in an ehically and socially responsible manner? EXERCISE QUESTIONS: 1) What are the dimensions of information system? 2) Describe the capabilities of digital Firm. Why are digital firms so powerful? 3) Explain the term Globalization. 4) List and describe why information systems are so important for business today. 5) What is the purpose of information system from business perspective? What role does it play in the business information value chain?  2 INFORMATION SYSTEM IN THE ENTERPRISE. Units : 2.1 Types of Information Systems 2.2 Integrating functions and business processes: An Enterprise Information System is generally any kind of computing system that is of "enterprise class". This means typically offering high quality of service, dealing with large volumes of data and capable of supporting some large organization ("an enterprise"). Enterprise Information Systems provide a technology platform that enables organizations to integrate and coordinate their business processes. They provide a single system that is central to the organization and ensure that information can be shared across all functional levels and management hierarchies. Enterprise systems are invaluable in eliminating the problem of information fragmentation caused by multiple information systems in an organization, by creating a standard data structure. A typical Enterprise Information System would be housed in one or more Data centers , run Enterprise software, and could include applications that typically cross organizational borders such as Content management systems. 2.1 TYPES OF INFORMATION SYSTEMS:- For most businesses, there are a variety of requirements for information. Senior managers need information to help with their business planning. Middle management needs more detailed information to help them monitor and control business activities. Employees with operational roles need information to help them carry out their duties. The main kinds of information systems in business are described briefly below: Information Description System Executive An Executive Support System ("ESS") is designed to Support help senior management make strategic decisions. It Systems gathers analyses and summarizes the key internal and external information used in the business. Example:- Imagine the senior management team in an aircraft cockpit - with the instrument panel showing them the status of all the key business activities. ESS typically involves lots of data analysis and modeling tools such as "what-if" analysis to help strategic decision-making. Management A management information system ("MIS") is mainly Information concerned with internal sources of information. MIS Systems usually take data from the transaction processing systems and summaries it into a series of management reports.MIS reports tend to be used by middle management and operational supervisors. Decision- Decision-support systems ("DSS") are specifically Support designed to help management make decisions in Systems situations where there is uncertainty about the possible outcomes of those decisions. DSS comprise tools and techniques to help gather relevant information and analyze the options and alternatives. DSS often involves use of complex spreadsheet and databases to create "what-if" models. Systems from functional perspective Information can be classified by the specific organizational function. Sales and marketing systems: It is responsible for selling the products or services. Marketing is concerned with the customers for the firm`s products, determining the customer needs and advertising and promoting the product accordingly. Sales are concerned with contacting customers, selling the products, taking orders and follow up the sales. Manufacturing and Production systems: It is responsible for actually producing the firm`s goods and services. It deals with the planning, development and maintenance of production facilities. It keeps track of the production at various levels. Finance and accounting system: It is responsible for managing the firm`s financial assets, such as cash, stock, bonds, other investment. The accounting function is responsible for maintaining and managing the firm`s financial records such as receipts, depreciation, payroll etc. Human resource system It is responsible for attracting, developing and maintaining the firm`s workforce. It supports the activities such as identifying the potential employees, maintaining the records etc. Strategic level detects the manpower requirements. 2.2 INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Business process and information systems: Business processes are referred to sets of logically related activities for accomplishing the specific business result. It supports major functional areas. Eg order processing, accounting, manufacturing etc. Systems for Enterprise- wide process integration: Enterprise system creates an integrated organization wide platform coordinate key internal processes of the firm. It can be done with the help of Supply Chain Management and Customer Relationship Management. EXERCISE QUESTIONS: 1) What are the different types of systems in organization? Explain. 2) What are the enterprise systems? How do they change the way of organization work? 3) What is the role of knowledge management system in the enterprise? 4) Describe the relationship between ESS, MIS, and DSS.  3 INFORMATION SYSTEMS, ORGANIZATION, MANAGEMENT AND STRATEGY. Units : 3.1 Organizations and information systems 3.2 Common features of Organizations 3.3 Routines and Business processes: 3.4 Organizational politics 3.5 Organizational culture 3.6 How information systems impact organizations and business firms 3.7 The impact of IT on management decision making 3.1 ORGANIZATIONS AND INFORMATION SYSTEMS. The interaction between IT and Organization is complex and is influenced by many mediating factors, including organization structure, standard, politics, culture and management decision. The organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs. There are three main elements of organization: Capital and labor are primary production factors provided by the environment. The organization transforms these inputs into products and services in organization. Then it consumed by environment in returns for supply inputs. An organization is more stable than informal group. Organization is a collection of rights, privileges, obligations, and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution. Organizations are social structures because they are collection of several elements. In behavioral view of the firm, people who work in the organization develop customary ways of working: they gain attachments to existing relationships; they make agreements with subordinates and superiors about the work. 3.2 COMMON FEATURES OF ORGANIZATIONS Based on the hierarchical structure of an organization all the organizations shares same characteristics like: Clear division of labor, hierarchy, explicit rules and procedures, impartial judgments, technical qualifications for positions, maximum organizations efficiency. All organizations develop business processes, politics, and cultures. 3.3 ROUTINES AND BUSINESS PROCESSES: Individuals in the firm develop a routine for producing goods and services. Routines sometimes called as standard operating procedures in terms of rules, procedures. As employees learn these routines they become highly productive and efficient. Business processes describes the functions involved in the firm. 3.4 ORGANIZATIONAL POLITICS: People in organization occupy different positions with different specialties, concerns and perspectives. Political resistance is one of the great difficulties bringing about organizational changes. Managers who know how to work with the politics of an organization will be more successful than less skilled managers. 3.5 ORGANIZATIONAL CULTURE: Organizational culture is the set of fundamental assumptions about what products the organization should produce, when, why, and for whom. Organizational culture is a powerful restraint on change in technological changes. 3.6 HOW INFORMATION SYSTEMS IMPACT ORGANIZATIONS AND BUSINESS FIRMS: Information systems have become integral, online, interactive tools in the operations and decision making of the firm. Information systems created a impact on the business form the following point of view: Economic Impacts: IT changes both the relative costs of capital and the costs of information. IT can be viewed as a factor of production that can be substituted for capital and labor. IT also affects the cost and quality of information and changes the economics of the information. IT helps firms contract in size because it can reduce the transaction cost. Use of networks can help firms lower the cost of market participation. IT can reduce internal management costs. It helps to oversee the large number of employees in the firm. Organizational and behavioral impact: Following issues suggests the changes in the behavior of the firm.  In complex organizations IT is more useful. IT flattens organization: IT facilitates flattening of hierarchies by broadening the staffing levels to improve the management efficiency. IT pushes decision making rights lower in the organizations because the lower level employees receive the information and they need to take decision without any supervision. This change also reduces the span of control in the organization.  Postindustrial organizations and virtual firms: In these authorities highly relies on the knowledge and competence but not on the formal positions. More firms may operate as virtual firms in which work no longer is tied to geographic location. It uses to link people, assets and ideas. Information systems can reduce the number of levels in an organization by providing mangers with information to supervise larger numbers of workers and by giving lower level employees more decision making authority.  Increasing flexibility of organizations: IT helps to increase the ability to sense and respond to changes in the marketplace and to take advantage of new opportunities. In small systems Information systems helps in keeping the track of inventory, manufacturing department. Large organizations can use IT to achieve some of the functions of small organizations. Information systems can make the production process more flexible.  Understanding organizational resistance to change: Implementing information systems has consequences for task arrangements, structures, technology and people. Information systems potentially change in organization structure, culture, politics and work. The most common reason for failure is a political resistance to change in the organization.  The internet and organizations: The internet mainly WWW is beginning to have an important impact on the relationships between the firms and external entities and even on the organization of business processes inside the firm. The internet increases the accessibility, storage and distribution of information and knowledge for organization. 3.7 THE IMPACT OF IT ON MANAGEMENT DECISION MAKING: IT and systems helps to reduce information uncertainty which results in improvement in decision making. The positive impact of IT on management decision making is measurable form productivity measures and the overall performance of the firm. Here a role of a manager is very complex since manager is responsible to take various types of decisions. Manager‘s responsibility ranges from making decisions, to writing reports, to attending meetings etc. This is more understandable by the classic model of management. There are some functions of a manager described by Henry Fayol as planning, organizing, co-coordinating, and controlling which can be called as formal functions of manger. But it is unsatisfactory to understand the detail working of manager. This can be depicted by some behavioral models. Behavioral models: Behavioral models state that the actual behavior of manager appears to be less systematic, more informal, less reflective, more reactive, and less organized one. Manager‘s behavior has five attributes:  Managers perform a great deal of work without stopping the work.  Managerial activities are fragmented.  Managers prefer investment in terms of ROI (Return on Investment) terms.  They prefer oral communication.  Managers give high priority to maintain the system towards the achievements of goals. Managerial roles fell into three categories as interpersonal roles, informational roles and decisional roles. There are several models of decision making: Rational model: As per this model of human behavior an individual identifies the goals, ranks all the possible actions by their contribution towards the goals. Organizational Model: It considers the structural and political characteristics of an organization. Bureaucratic model: It is used to preserve the organization i.e. to reduce the uncertainty. Political model: It gives the working of organization as a result of political bargains struck among the key leaders and interest groups. Information systems and business strategy: Business strategy is a set of activities and decisions. This helps in strategic planning of an organization. It determines the decisions related to products and services, competition, long term goals. To understand hoe IT fits into the strategic planning it is necessary to consider the three levels o business strategy such as Business level strategy, firm level strategy, industry level strategy. Business level strategy: It is based on the value chain model for managing supply chain. It is concerned with the leveraging technology, information system products and services, systems to focus on market trends, supply management and customer relationship. Firm level strategy: It focuses the usability of information technology. It helps to understand the concept of enhancing core competencies, Industry level strategy: It analyzes the strategy at industry level. The principal concept of this strategy is information partnership, the competitive forces model, business systems, and network economics. EXERCISE QUESTIONS: 1) What are the features of organization? 2) What are the impact of the internet on organizations and the process of management? 3) What is information system? What is its strategy? 4) What is the impact of IT in decision making?  4 DECISION MAKING Units : 4.1 Decision making concepts 4.2 Characteristics of Decision Making 4.3 Rational Decision Making 4.4 Types of rationality 4.5 The problems in making the rational decision 4.6 Steps in the decision making process 4.7 Decision methods tools and procedures 4.8 Methods of deciding the decision Alternatives 4.1 DECISION MAKING CONCEPTS:- The word decision is derived from the Latin root ‗decido‘ that is cut off. Decision can be settlement, a fixed intention on bringing conclusive result, a judgment on a solution. A decision is a choice out of several action made by the decision maker to achieve some objectives in the given situation. Business decisions are those which are made in the process of conducting the business to achieve its objective in the given environment.  According to Haynes and Massie,‖ A decision is a course of action which is consciously chosen for achieving a desired result.‖  According to Trewatha and Newport,‖ Decision making involves the selection of course of action from among two of more possible alternatives in order to arrive at a solution for a given problem. 4.2 CHARACTERISTICS OF DECISION MAKING:- Sequential in nature. Situation based activity Influenced by personal values. Exceedingly complex due to risk and trade off. Made in institutional setting and business environment. In business decision making, the decisions are not individual. Each of them has relation to some other decision or situation. Decision making is situational. It is differed from one situation to other taken by a single person. The personal values of decision makers plays a major role in decision making i.e. the culture discipline and the individuals commitment to the goal will decide the process and success of decision. The decision making process is the complex process in the higher management. The complexity is the result of many factors such as interrelationship among the decision makers, job responsibility, and question of feasibility, ethics and the probable impact on the business. Decision making process requires creativity, understanding the human power, discovers number of human tangible and intangible factors affecting the decision process. It is made according to the business environment. 4.3 RATIONAL DECISION MAKING:- A rational decision ensures the achievement of the goal effectively and efficiently for which decision is made. Eg: If it is raining then it is rational to look for umbrella. The quality of decision making is to be judged on the rationality and not necessarily the result it produces. The rationality of decisions made is not same in every situation. Fixing a price of the product must be greater than its manufacturing cost. Productivity is dependent on the type of customers as well a quality of product. Here a decision may be rational or irrational. It will vary with the organization, situation and the individuals. Therefore rationality is having multi-dimensional concept. Any business decision if ask to be reviewed by share holder, consumer, employee; supplier will result in different criticism with reference to their individual rationality. This is because each one of them will view the situation in different context. There are three dimensions of rationality as satisfaction to an individual, feasibility in terms of objectives, consistency in decisions. 4.4 TYPES OF RATIONALITY:- According to Simon Herbert a decision in a given situation can be of following types: Objectively rational: - If it maximizes the value of the objective. Subjectively rational: -If it maximizes the value in the relation to knowledge. Consciously relational: - To the extent the process of decision making is a conscious one. Organizationally rational: - To the degree of orientation towards organization. Personally rational: - To the extent it achieves the individual‘s personal goals. 4.5 THE PROBLEMS IN MAKING THE RATIONAL DECISION:- Ascertaining the problem. Insufficient knowledge. Not enough time to be rational. Environment may not co-operate. Other limitation. Ascertaining the problem: - According to Peter Ducker the most common source of mistakes in the management decision is the emphasis on finding the right answer rather than the right question. The main task is to define the right problem in clear terms. Eg. sales are declining. The real problem may be in the quality of the product and you may be thinking in improving the quality of advertisement. Insufficient knowledge: - The total information leading to the complete knowledge of the subject is necessary. The main function of the manager is to provide the enough information to all the divided lines. Not enough time to be rational: - Decision maker may be under the pressure to make the decision. If the time is limited he may take the hasty decision which may not satisfy the test of rationality. The environment may not corporate:- The decision may get fail when the test of rationality as the environment factors considered in decision making turned out to be untrue. Eg: The factor of oil and petroleum product price is considered as stable but post decision environment proves it to be wrong. Other limitations: - They are the need for comprising the different position, misjudging, the motives, poor communication, risks, values of the people etc. Advantages of decision making:  Achievements of business objectives  Facilitates optimum utilization of resources.  Satisfactory to ever one in the organization.  Promote the whole management process.  Rational decision making is innovative.

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