MANAGEMENT MANAGEMENT INFORMATIONINFORMATION

SYSTEMSYSTEM

By,By,

IkhlaqIkhlaq

History of IT in businessHistory of IT in business

Manual transactionsManual transactions MS-OfficeMS-Office Business Software (Accounting)Business Software (Accounting) Computer Communications( WWW, Computer Communications( WWW,

Internet, E-commerce etcInternet, E-commerce etc Data, Information, Data, Information,

Knowledge ,processes , organization. Knowledge ,processes , organization. DSS, ES, KM, Data mining and Data-DSS, ES, KM, Data mining and Data-warehousing, Business Intelligence.warehousing, Business Intelligence.

Future of ITFuture of IT

Cont……Cont……

IT related and managerial solutions and IT related and managerial solutions and business strategies are being used to make business strategies are being used to make business more effective , efficient and business more effective , efficient and competitive.competitive.

Typically a business has two resourcesTypically a business has two resources 1-Physical resources.1-Physical resources. (Personnel, Material, (Personnel, Material,

Machines (including facilities and energy) and Machines (including facilities and energy) and Money.Money.

2- Virtual resources.2- Virtual resources. (Information (including (Information (including data) also known as conceptual resources.data) also known as conceptual resources.

Cont…. Physical recourses and virtual recourses are used Physical recourses and virtual recourses are used

to cope with business problems/pressures.to cope with business problems/pressures. Data and information is used to represent the Data and information is used to represent the

physical resources.physical resources. Virtual systems to represent/control physical Virtual systems to represent/control physical

systemssystems Computers are not being used merely to manage Computers are not being used merely to manage

physical firm (As virtual systems) but are also physical firm (As virtual systems) but are also have a big breakthrough in business applications.have a big breakthrough in business applications.

H/W and S/W are physical sources, also machines H/W and S/W are physical sources, also machines ,materials and human resources are physical ,materials and human resources are physical resources.resources.

Chapter PreviewChapter Preview Marketplace pressures faced by today’s Marketplace pressures faced by today’s

businesses and various tactical and strategic businesses and various tactical and strategic responses.responses.

The distinction between data, information, and The distinction between data, information, and knowledge.knowledge.

The characteristics of high quality information.The characteristics of high quality information. The components of an information system.The components of an information system. The capabilities organizations aspect of The capabilities organizations aspect of

information systems.information systems. How computer technology is applied to business How computer technology is applied to business

problems and pressures.problems and pressures. Business processes are required to be more effective Business processes are required to be more effective

and efficient competitively.and efficient competitively. In which areas of businesses, an IS may have big In which areas of businesses, an IS may have big

impact.impact. Opportunities to use information systems strategically.Opportunities to use information systems strategically. All about “Information Processing Life Cycle”All about “Information Processing Life Cycle”

Learning ObjectivesLearning Objectives

Describe The characteristics of the Describe The characteristics of the digital economy and e-business.digital economy and e-business.Discuss the relationships among Discuss the relationships among business pressures, organizational business pressures, organizational responses, and information systems.responses, and information systems.Describe strategic information Describe strategic information system (SISs) and how information system (SISs) and how information technology helps companies improve technology helps companies improve their competitive positions.their competitive positions.

Digital EconomyDigital Economy An economy based on electronic goods An economy based on electronic goods

and services produced by digital and services produced by digital technologies, technologies, electronic business and and traded through traded through electronic commerce. . That is, a business with electronic That is, a business with electronic production and management processes production and management processes and that interacts with its partners and and that interacts with its partners and customers and conducts transactions customers and conducts transactions through through Internet and and Web technologies. technologies.

Also sometimes called the Internet Also sometimes called the Internet economy, the new economy, or the Web economy, the new economy, or the Web economy . economy .

Infrastructure for e-Infrastructure for e-businessbusiness

e-business/ e-commercee-business/ e-commerce the conducting the conducting of business functions (e.g., buying and selling of business functions (e.g., buying and selling goods and services, servicing customers, goods and services, servicing customers, collaborating with business partners) collaborating with business partners) electronically, in order to enhance an electronically, in order to enhance an organization’s operationsorganization’s operations..

The infrastructure for e-business is The infrastructure for e-business is network network computing,computing, known as the known as the internetinternet, or to , or to its counter part within organizations, called its counter part within organizations, called an an intranetintranet, many companies link their , many companies link their intranet to those of their business partners intranet to those of their business partners over networks called over networks called extranetsextranets..

Today’s pressure on Today’s pressure on Business EnvironmentBusiness Environment

Pressure on business environment Pressure on business environment is characterized by:is characterized by: Rapid Change and changing work forceRapid Change and changing work force Global competition for trade and laborGlobal competition for trade and labor Business ComplexityBusiness Complexity Global Economy “traditional barriers”Global Economy “traditional barriers” Hyper-competitionHyper-competition Customer orientationCustomer orientation Information overloadInformation overload Innovative technologiesInnovative technologies

Cont……Cont…… Need for the real time operations Need for the real time operations

(Information float) High performance (Information float) High performance telecom services can reduce it.telecom services can reduce it.

Technological innovation and obsolescence Technological innovation and obsolescence (CAD/CAM)(CAD/CAM)

Social responsibility (Issue of regulation Social responsibility (Issue of regulation and deregulation)and deregulation)

Ethical issuesEthical issues Digital divideDigital divide Market researchMarket research Globalization/internationalization.Globalization/internationalization.

Traditional ManagementTraditional ManagementCEO

Finance Marketing Accounting HRM MIS

Layers of middle managers

Customers

Commands

Analyze data

Condensed reports

Collectdata

Types of Business Types of Business pressurespressures

Market Pressure:Market Pressure: The global economy and strong competitionThe global economy and strong competition The changing nature of the workforceThe changing nature of the workforce Market researchMarket research Powerful customers/Customer orientation/Order fulfillment and Powerful customers/Customer orientation/Order fulfillment and

customer services..customer services..

Technology Pressures: Technology Pressures: Technological Innovation and ObsolescenceTechnological Innovation and Obsolescence Information Overload.Information Overload. Need for real time operationsNeed for real time operations

Societal Pressure:Societal Pressure: Social responsibility Social responsibility Government regulation and Deregulation Government regulation and Deregulation De-CentralizationDe-Centralization Spending for social programsSpending for social programs Protection Against Terrorist Attacks.Protection Against Terrorist Attacks. Ethical IssuesEthical Issues Labor pressures.Labor pressures.

Market PressuresMarket Pressures The Global Economy and Hyper competitionThe Global Economy and Hyper competition

Developing Countries are preferred. Traditional Developing Countries are preferred. Traditional barriers.barriers.

Globalization and internationalization/International Globalization and internationalization/International market place.market place.

The Changing Nature of the WorkforceThe Changing Nature of the Workforce Diverse and versatile Workforces, Diverse and versatile Workforces, Increasing no of Increasing no of

females, minorities, and physically challenged persons females, minorities, and physically challenged persons work in all types of the positions.work in all types of the positions.

Changing Traditional Work Environment.Changing Traditional Work Environment. Need for Real Time operations.Need for Real Time operations.

Fast, accurate operations.Fast, accurate operations. Powerful CustomersPowerful Customers

Knowledgeable CustomersKnowledgeable Customers

Technology PressuresTechnology Pressures

Technological Innovation and ObsolescenceTechnological Innovation and Obsolescence Has huge impact ranging from genetic engineering to food Has huge impact ranging from genetic engineering to food

processing.processing. Need for the real time operations,Today's companies don’t have Need for the real time operations,Today's companies don’t have

the luxury of information float.the luxury of information float. Information floatInformation float is the time between when a business event is the time between when a business event

occurs and when the info captured about the event reaches the occurs and when the info captured about the event reaches the necessary decision makers.necessary decision makers.

Information OverloadInformation Overload Huge amount of information available to the consumersHuge amount of information available to the consumers The amount of information doubles every year and most of it is freeThe amount of information doubles every year and most of it is free The information and knowledge generated and stored inside The information and knowledge generated and stored inside

organization are also increasingorganization are also increasing So every one feels the pressure of this huge knowledge ,which So every one feels the pressure of this huge knowledge ,which

becomes sometimes difficult to choose the best among so much becomes sometimes difficult to choose the best among so much knowledgeknowledge

Societal PressuresSocietal Pressures

Social ResponsibilitySocial Responsibility Social Responsibility ActSocial Responsibility Act

Government Regulation and DeregulationGovernment Regulation and Deregulation Deregulation intensifies competition. Deregulation intensifies competition. Issues of health, safety ,environment pollution and equal Issues of health, safety ,environment pollution and equal

opportunity ,licensing, copyright.opportunity ,licensing, copyright. It is a matter of general public interest.It is a matter of general public interest.

Protection Against Terrorist AttacksProtection Against Terrorist Attacks Strong systems for security and attack pattern detection.Strong systems for security and attack pattern detection.

Ethical IssuesEthical Issues Are not cut and driedAre not cut and dried Email monitoring, Sharing Customer data, Revealing personal Email monitoring, Sharing Customer data, Revealing personal

informationinformation Ethics is the business context refers to standards and values for Ethics is the business context refers to standards and values for

judging whether a particular conduct in the workplace is right judging whether a particular conduct in the workplace is right or wrongor wrong

These issues are very important because they can damage the These issues are very important because they can damage the reputation of an organization as well as the persons.reputation of an organization as well as the persons.

The situation is critical when it comes between the countriesThe situation is critical when it comes between the countries

Cont…Cont… Labor pressuresLabor pressures

Labor costs differ from one country to another.Labor costs differ from one country to another. In addition companies pay high fringe and environment In addition companies pay high fringe and environment

protection costs. So that they have difficulty in protection costs. So that they have difficulty in competing in developed countries.competing in developed countries.

For this it requires good communication ,between the For this it requires good communication ,between the languages and cultural issueslanguages and cultural issues

The issue becomes more complex when Govt.involves The issue becomes more complex when Govt.involves through laws of taxes, subsidies, import/export policies.through laws of taxes, subsidies, import/export policies.

DecentralizationDecentralization A social process in which businesses and industry A social process in which businesses and industry

moves from urban centers to outlying districts .It is moves from urban centers to outlying districts .It is spread of power away from the center to local branches spread of power away from the center to local branches or governments .or governments .

Digital DivideDigital Divide

Hierarchical Organizational StructureHierarchical Organizational Structure

Headquarters

Plant 1 Plant 2 Plant 3

Accounting Finance Marketing POM HRM CRMTop

managers

SupervisoryFirst linemanagers

Operating Employees

Division A Division B Division C

Middle managers

Administrative Services

Business EnvironmentBusiness Environment It refers to the combination of all societal, It refers to the combination of all societal,

legal, economic, physical and political legal, economic, physical and political factors that effect business activities in any factors that effect business activities in any way.way.

SOCIETYSOCIETY

THE FIRM

Financial Community

Stakeholders Owners

Suppliers

Government

Global Community

Labot Unions Competit

ors

Customers

BPRBPR

Business process Business process reengineering/re-design reengineering/re-design is to change is to change the technological, human ,managerial and the technological, human ,managerial and processing dimensions of a business. Some processing dimensions of a business. Some restructuring of management realignments, restructuring of management realignments, mergers, consolidations and operational mergers, consolidations and operational integrations take place.integrations take place.

Knowledge Workers: Knowledge Workers: Create Create information and knowledge and integrate information and knowledge and integrate them into the businesses.them into the businesses.

People in OrganizationsPeople in OrganizationsAutomated direction sysAutomated direction sysProduct or operation sysProduct or operation sys

Business Strategic PlanBusiness Strategic Plan Statement of the firms over all mission, the goals Statement of the firms over all mission, the goals

that follow the mission and the broad steps that follow the mission and the broad steps necessary to reach the mission ,for the business necessary to reach the mission ,for the business success and survival. success and survival.

It is a long range goals that describe the IT and It is a long range goals that describe the IT and IS initiatives needed to achieve the goals of IS initiatives needed to achieve the goals of organization.organization.

A typical business strategic plan has following A typical business strategic plan has following missionsmissions• EfficiencyEfficiency• EffectivenessEffectiveness• Competitiveness.Competitiveness.

Examples of Business Processes

Functional Area Business ProcessManufacturing and production Assembling the product

Checking for qualityProducing bills of materials

Sales and marketing Identifying customersMaking customers aware of the productSelling the product

Finance and accounting paying creditorsCreating financial statementsManaging cash accounts

Human resources Hiring employeesEvaluating employees' job performanceEnrolling employees in benefits plans

Operations, Tactics, Operations, Tactics, StrategyStrategy

Sector Operations Tactics Strategy

Production • Machine settings• Worker schedules• Maintenance sch.

• Rearrange work area• Schedule new products• Change inventory method

• New factory• New products• New industry

Accounting • Categorize assets• Assign expenses• Produce reports

• Inventory valuation• Depreciation method• Finance short/long term

• New GL system• Debt vs. equity• International taxes

Marketing • Reward salespeople• Survey customers• Monitor promotions

• Determine pricing• Promotional campaigns• Select marketing media

• Monitor competitors• New products• New markets

Environmental Resource flow

A firm is connected to its environmental elements by environmental resource flow.

Environmental resource flow is the flow of supply chain.

Common flow includes exchange of money flow to stakeholders ,material flow to customer, information flow from customer and raw material flow from suppliers.

Less common flow is money flow from the Gov, material flow to suppliers and personal flow to competitors.

Supply chainSupply chain Flow of materials, information, payments, Flow of materials, information, payments,

and services, from suppliers through and services, from suppliers through factories and warehouses, to end customersfactories and warehouses, to end customers

Includes all Includes all organizationsorganizations and and processes processes that that create and deliver products, information, create and deliver products, information, and services to the end customersand services to the end customers It includes many tasks such as purchasing, It includes many tasks such as purchasing,

payment flow, material handling, production payment flow, material handling, production planning, logistics etc.planning, logistics etc.

Supply chain managementSupply chain management - planning, - planning, organizing, coordinating, and controlling all organizing, coordinating, and controlling all activities in the supply chainactivities in the supply chain

Simplified Supply ChainSimplified Supply Chain

Upstream Internal Downstream

Suppliers

Organization’s production

processes, including materials handling,

inventory management, manufacturing, quality control

Distributorsmaterial

information

moneyRetailers

Customers

material

information

money

Activities of SCM Forecasting the customer demand Scheduling the production Establishing transportation networks Ordering replenishments stock from the suppliers Receiving stock from suppliers Managing inventory (Raw material, work in

process and finished goods) Executing the products Transporting the resources to customers Tracking the flow of resources from suppliers,

through the firm and to the customers. ERP software like SAP/Oracle help flow of supply

chain.

Organizational Organizational ResponsesResponses

Pressures provoke Pressures provoke proactiveproactive and and reactivereactive organizational responses. organizational responses.

Business responses to pressures may Business responses to pressures may involve use of involve use of Information TechnologyInformation Technology and and Information Systems, alsoInformation Systems, also some some strategic business plansstrategic business plans

In some cases, IT is the In some cases, IT is the onlyonly solution to solution to business pressures.business pressures.

Knowledge of IT capabilities is Knowledge of IT capabilities is essential to today’s business people.essential to today’s business people.

Directions of Directions of Organizational Responses Organizational Responses

Business Responses Business Responses

Managerial IT/MISManagerial IT/MIS

-Business Strategic plans-Business Strategic plans-Data/Information/Knowledge -Data/Information/Knowledge

managementmanagement-IT resources-IT resources

Business Pressures and Business Pressures and Organizational ResponsesOrganizational Responses

Organizational responsesOrganizational responses Developing Business strategic plans (SBP) Developing Business strategic plans (SBP)

for systems using IT and IS.for systems using IT and IS. Customer focused services and products Customer focused services and products

and order fulfillment.and order fulfillment. Continuous improvement efforts (JIT and Continuous improvement efforts (JIT and

TQM) E.g. e-commerce, e -business, e-TQM) E.g. e-commerce, e -business, e-marketing.marketing.

Business process reengineering BPRBusiness process reengineering BPR Empowering employees and fostering Empowering employees and fostering

collaborative work and KM.collaborative work and KM. Global marketplace analysisGlobal marketplace analysis Business alliances/MergersBusiness alliances/Mergers

Cont……Cont…… Reviving up employees financial energies Reviving up employees financial energies

(Motivational theories on customer and employee)(Motivational theories on customer and employee) Business alliances (Supply chain management Business alliances (Supply chain management

SCM SCM Using CBIS at different levels of business Using CBIS at different levels of business

processes.processes. E-commerce, Use of computing and E-commerce, Use of computing and

communication in business e.g. Internet ,WWW, E-communication in business e.g. Internet ,WWW, E-commerce and Expert systems, business commerce and Expert systems, business intelligence, E-marketing, E-banking, E-business intelligence, E-marketing, E-banking, E-business etc.etc.

Use of CAD/CAM Use of CAD/CAM Data mining and data warehousingData mining and data warehousing Critical mass /Mass customization. Critical mass /Mass customization.

Cont…Cont… Make-to-OrderMake-to-Order is a strategy of producing is a strategy of producing

customized products and servicescustomized products and services Mass CustomizationMass Customization

In mass production they produce a large quantity of In mass production they produce a large quantity of identical itemsidentical items

In mass customization they produce a large quantity of In mass customization they produce a large quantity of items that fit the desires of each customer.items that fit the desires of each customer.

Business Alliances : Business Alliances : Joining hands with the Joining hands with the competitors /companies to improve services.competitors /companies to improve services.

Electronic Business and E-Commerce Electronic Business and E-Commerce is the is the newest and most promising strategy.newest and most promising strategy.

Business Process Re-Engineering: Business Process Re-Engineering: organization fundamentally and radically re organization fundamentally and radically re designs its business process.designs its business process.

Customer relation ship Customer relation ship marketing in actionmarketing in action

Make it easy for customers to do business with youMake it easy for customers to do business with you Focus on end-customer for your products and servicesFocus on end-customer for your products and services Redesign your customer –facing business processes Redesign your customer –facing business processes

form the end customer’s view.form the end customer’s view. Wire your company for the profit :design a Wire your company for the profit :design a

comprehensive ,evolving electronic business comprehensive ,evolving electronic business architecture.architecture.

Adopt a customers-focused approach and prevent Adopt a customers-focused approach and prevent losing customers to competitors.losing customers to competitors.

To pay more attention to customers and their To pay more attention to customers and their preferencespreferences

Foster customer loyalty. In e-commerce, especially Foster customer loyalty. In e-commerce, especially this is the key to the profitability.this is the key to the profitability.

Continuous improvementContinuous improvement

They also make continuous efforts to They also make continuous efforts to improve their productivity and qualityimprove their productivity and quality Productivity is the ratio of outputs to inputs.Productivity is the ratio of outputs to inputs. They improve this ratio by increasing outputs, They improve this ratio by increasing outputs,

reducing costs, increasing output faster than cost reducing costs, increasing output faster than cost or combination of bothor combination of both

Just in timeJust in time This is inventory approach, it attempts to reduce This is inventory approach, it attempts to reduce

costs by scheduling materials and parts to arrive costs by scheduling materials and parts to arrive at the workstation exactly when they are requiredat the workstation exactly when they are required

It minimizes the space and costIt minimizes the space and cost

TQM( Total Quality TQM( Total Quality Management)Management)

It is organized effort to improve quality It is organized effort to improve quality whenever possiblewhenever possible

IT can enhance it by improving data IT can enhance it by improving data monitoring, collection, analysis, and monitoring, collection, analysis, and reporting,reporting,

Another expect is the decision making Another expect is the decision making power to select the best alternate course of power to select the best alternate course of actionaction

However this task is difficult in large However this task is difficult in large organizations, but there is always survival organizations, but there is always survival to the fittestto the fittest

Empowering employeesEmpowering employees

Giving employees the authority to act Giving employees the authority to act and make decisions on their own is a and make decisions on their own is a strategy used by many companiesstrategy used by many companies

Managers delegate authority to self-Managers delegate authority to self-directed teams who can execute the directed teams who can execute the work faster and with fewer delays work faster and with fewer delays then were possible in the traditional then were possible in the traditional organizations.organizations.

IT supports it but also supports the IT supports it but also supports the centralized controlcentralized control

Using IT StrategicallyUsing IT Strategically

Businesses today must understand how IT Businesses today must understand how IT can reshape and refine business strategycan reshape and refine business strategy Porter’s Strategic Analysis ModelPorter’s Strategic Analysis Model

Helps in understanding strategic forces affecting Helps in understanding strategic forces affecting organizations in particular industriesorganizations in particular industries

IT can be applied to strengthen and support a IT can be applied to strengthen and support a specific business strategyspecific business strategy

Value ChainValue Chain Helps in identifying ways IT can improve the quality Helps in identifying ways IT can improve the quality

and efficiency of organizational processesand efficiency of organizational processes

SIS A system that will provide strategic A system that will provide strategic

advantage in meeting organizational advantage in meeting organizational objectives ,increasing market shares, or objectives ,increasing market shares, or preventing competitors from entering a preventing competitors from entering a market and so will significantly impact an market and so will significantly impact an organization’s operations, success and organization’s operations, success and survival.survival.

Strategic Systems:Strategic Systems: enable organizations to enable organizations to increase market share and/or profits.increase market share and/or profits. To better negotiate with suppliersTo better negotiate with suppliers Prevent competitors from entering their territory, E.g.. Prevent competitors from entering their territory, E.g..

Tracker Systems in cars. Courier ServicesTracker Systems in cars. Courier Services Organizations implement systems that will impact the Organizations implement systems that will impact the

operations, success,survival.operations, success,survival.

Competitive Advantage Firms strive to obtain an advantage Firms strive to obtain an advantage

over their competitors.over their competitors. Firms achieve advantages by providing Firms achieve advantages by providing

services and products at a low price, services and products at a low price, providing high quality products and providing high quality products and providing customized services or providing customized services or products.products.

Firms also achieve competitive Firms also achieve competitive advantages by using their virtual advantages by using their virtual resources as well as using their physical resources as well as using their physical resourcesresources.

Porter’s Value chain Porter believes that firm achieves competitive

advantages by creating Value Chain. He illustrates that the primary and support

activities can contribute to the MARGIN. MARGEN is the value of the firm’s products and

services, as perceived by the firm’s customer, minus their costs.

An increased margin is the objective of the value chain.

Firm creates value by performing Vale Chain activities.

Porter’s Value Chain Model

There are two types of value activities in Value Chain.

1-Primary value chain activities that manage the flow of physical resources through the firm that include Inbound logistics Operations Outbound logistics Marketing and sales operations Service activities.

2-Support value chain activities that influence the primary activities that include. Firm infrastructure HRM Technology development Procurements

Properties of Value Chain activities

Each value activity whether primary or support contains following three essential ingredients

Purchased inputs Human resources Technology

Similarly each activity uses and creates information

For example information specialists in services unit may combine purchased commercial database, leased computing equipment and custom-developed programs to produce decision support information for the executives of the firm.

Strategic plan for business areas

Fully committed executives in strategic plans also see a need for developing respective strategic plans for each business area.

In this approach each area has its independent plan which may have influence with the strategic plans of other areas.

However such approach do not ensure that business areas will work together well.

Strategic Planning for Information Resources

SPIR SPIR involves a concurrent/repetitive

development of strategic plans for information services and the firm, so that the firm’s plan reflects the support to be provided by the information services.

IS plan reflects future demands for the systems support.

SPIR may be different for different organizations ,but all SPIR have following two core elements.

Objectives to be achieved by each category of system during the time period covered by the plan.

The information resources necessary to meet the objectives.

The following figure illustrates the manner in which each planning process influences the other.

EXPANDING VALUE CHAIN

Management must alert to the additional advantages by linkage of firm’s value chain to those of other organizations. Such linkage results in IOS.

Firm can also take advantage of its value chain by linking to those of its suppliers by implementing systems that make input resources available when needed e.g. JIT.

A firm can also link its value chain with those of its distribution channel members, creating a VALUE SYSTEM.

When the buyers of a firm ‘s product are organizations, their value chain can also be linked to those of the firm and its channel members.

Dimensions of Value Chain

Strategic advantage It has a fundamental effect in shaping the firm’s operations.

E.g. conversion of existing data in to standard database and access via web applications, use of custom tailored software instead of proprietary software.

Tactical advantage When a firm implements a strategy in a perfect way than its

competitors , it achieves a tactical advantage. e.g. customer services can be extended to offer customer direct access to the information resulting customer satisfaction.

Operational advantage Operation advantage deals with every day transactions and

processes. this is where the IS interacts directly with the processes. eg a web browser is an IS and it has Cookies in order to have direct interaction with the processes of client.

Challenges from Global Competitors

and MNC MNC is a firm that operates across the

products, markets, nations and culture. It consists of a parent company having a

group of its subsidiaries ,which are geographically dispersed.

It must not be confused with the limit of global competitors.

Developed countries like USA and China are outsourcing some of their operations, India is major destination.

Cont…. Special Need for Information

Processing in an MNC All firms need for information processing

and coordination, but it is crucial for MNC because MNC is an open system that seeks to minimize its uncertainty in its environment.

Uncertainty is a difference between the amount of information required to perform a task and the information already processed by an organization. Hence making good use of IT can cope uncertainty.

Cont…… The special Need for Coordination in an

MNC. Coordination in a key to achieve competitive

advantage in global marketplace. How ever companies are unable to gain

strategic control of their world wide operations and manage them in a globally coordinated manner will not succeed in the international economy.

So MNC faces grater restrictions than a national company eg because of conflicting business practices, cultural differences, governmental policies impositions and currency differences.

However developing a GIS is very effective in competing global challenges.

ADVENTAGES OF MNC There are many advantages of

Coordination in MNCFlexibility in responding to competitors in

different countries and markets.Ability to keep abreast of international

market needs.Knowledge sharing across the globe.Reduced cost of operations.Increased efficiency and effectivenessAbility to achieve and maintain the diversity

in the firms products and in how products are produced and distributed.

WHAT IS A GIS MNC attempts GIS to overcome its problems Term coined are “Global Information System” A system that consists of network hat cross national

boundaries. Constraints of GIS Politically Imposed Constraints

IT infrastructure in owned by governmental authorities, Difference between governmental national policies for data processing, Crossing boundaries barriers for goods, product licensing , Taxes and customs etc.

Cultural and Communication Barriers Business practices, development of cross cultural

products, Language differences, value differences, Color differences, racial differences, Various religious aspects.

Restriction on hardware/Software purchase and Import In case of foreign import and equipment may cause

problem of interoperability / incompatibility.

Cont…. Restrictions on data Processing and communication

Data and information dissemination across the world arises the issue of IPR, Privacy and confidentiality, data protection and security issues etc. Maintenance of TDF (Transborder data flow)

Technological problems Poor Information technology infrastructure, software copy

right and piracy are used in certain countries. Lack of Support from Subsidiary Managers

Managers of subsidiary think that they can run their offices on their own without help of parent company, Similarly foreign office managers consider that the GIS is surveillance. Middle managers are having fear to be by –passed in they will be completely dependent on GIS.So they avoid ant support and feed back to the parent company.

NOTE : However such problems can be minimized by implementation of Good KM and SPIR (Making strategy for enterprise)

Some Key DefinitionsSome Key Definitions Data: raw facts; collected, not organized.Data: raw facts; collected, not organized. Information: data organized in a meaningful way.Information: data organized in a meaningful way. Knowledge Consists of information that has been Knowledge Consists of information that has been

organized to convey understanding, experience, organized to convey understanding, experience, accumulated learning, or expertise as it applies accumulated learning, or expertise as it applies to current business problems or processes.to current business problems or processes.

Knowledge is used to generate new information Knowledge is used to generate new information required for a business solution. required for a business solution.

Knowledge workers create information and Knowledge workers create information and knowledge and integrate it into the businesses.knowledge and integrate it into the businesses.

Data and Information

Data consists of facts and figures that are relatively meaningless to user. E.g. the number of hours worked for each employee in the company

Information is processed data that are more meaningfully. E.g. the hours works for each employee multiplied by the hourly rate, the out put information is the gross earning

Data and informationData and information

Data, Information, and Knowledge

Data Vs Information Vs Knowledge

Valuable information from the human mind: includes reflection, synthesis, context

•Hard to capture electronically

•Hard to structure

•Often tacit

•Hard to transfer

•Highly personal to the source

Data with relevance and purpose:

•Requires unit of analysis

•Needs consensus on meaning

•Human mediation necessary

•Often garbled in transmission

Simple observations of the world:

•Easily captured

•Easily structured

•Easily transferred

•Compact, quantifiable

InformationKnowledgeData

Valuable information from the human mind: includes reflection, synthesis, context

•Hard to capture electronically

•Hard to structure

•Often tacit

•Hard to transfer

•Highly personal to the source

Data with relevance and purpose:

•Requires unit of analysis

•Needs consensus on meaning

•Human mediation necessary

•Often garbled in transmission

Simple observations of the world:

•Easily captured

•Easily structured

•Easily transferred

•Compact, quantifiable

InformationKnowledgeData

More human contribution

Greater value

Knowledge Knowledge is information organized, processed and

analyzed to make derstandable and applicable to problem solving and decision making.

A knowledge consists of concepts, theories, heuristics, methods, procedures and relationships that defines hoe the information is used to solve a problem or make a decision..

Knowledge consists of information that has been organized and processed to convey understanding ,experiences, accumulated learning or expertise as it applies to a current business problem or a process.

The information that is processes to extract critical implications and to reflect past experiences and expertise provides the solution to a business problem.

Knowledge base contains knowledge for understanding ,formulating and solving a specific class of problems in intelligent systems.

Types of Knowledge Tacit knowledge is personal, context-specific and

hard to formalize and communicate A knowledge developed and internalized by the knower

over a long period of time . . . incorporates so much accrued and embedded learning that its rules may be impossible to separate from how an individual acts. ‘knowing how’

Explicit knowledge can be easily collected, organized and transferred through digital means. A theory of the world, conceived of as a set of all of the

conceptual entities describing classes of objects, relationships, processes, and behavioral norms. Often referred to as ‘knowing that’, or declarative knowledge.

What is Knowledge Management?

Knowledge Management is Knowledge Management is process of knowledge base and process of knowledge base and capturing, storing, knowledge capturing, storing, knowledge discovery, Facilitating the discovery, Facilitating the knowledge sharing processing and knowledge sharing processing and integrating for the purpose of integrating for the purpose of problem solving and decision-problem solving and decision-making in businesses.making in businesses.

Knowledge Key Concepts

Knowledge identification – what is important? Knowledge discovery and analysis – finding and organizing

knowledge. Knowledge acquisition – going and getting needed knowledge by

asking or promoting idea generation Establishment of organizational knowledge bases – storing

and organization corporate knowledge Knowledge distribution and use – ensuring that those who need

knowledge can access it Knowledge assets - regarding markets, products,

technologies, and organizations that a business owns or needs to own

Best practices - collection of the most successful solutions and case studies

Intellectual capital – Cumulative/Amassed collection of knowledge by an organization over the years

Knowledge system - collects knowledge, stores it in a database, maintains the database, and disseminates the knowledge to users

Competitive intelligence - collection of competitive information

Implementing Knowledge Management

Reorganize as knowledge-based organizations

Created a new position, chief knowledge officer (CKO) creating knowledge management infrastructure building a knowledge culture making it pay off

Facilitate organizational learning learn from their experiences in order to survive Other officers are CEO,CFO,COO,CIO,CTO

Promoting Idea Generation

Key source of knowledge is creative idea generation by individuals or groups

Software tools (GDSS) can promote productive idea generation for groups

Software tools also available for individuals to help stimulate creative production of ideas

What Makes Information What Makes Information Useful (GIGO)?Useful (GIGO)?

It is It is accurateaccurate Free of errorsFree of errors

It is It is completecomplete Includes everything Includes everything

needed needed It is It is flexibleflexible

Can be viewed in Can be viewed in various waysvarious ways

It is It is reliablereliable Results are always Results are always

consistentconsistent it confirms it confirms validityvalidity

It is It is relevantrelevant Applies to the issue under Applies to the issue under

studystudy It is It is timelytimely

Available when neededAvailable when needed It is It is verifiableverifiable

Basis for results can be Basis for results can be tracedtraced

It is It is accessibleaccessible All those who need the All those who need the

information can get to itinformation can get to it It is It is securesecure

Free from contamination Free from contamination (accidental or deliberate)(accidental or deliberate)

Online analytical processing (OLAP)

Analytical Processing - the activity of analyzing accumulated/aggregated data.

It involves the storage of the data in a multidimensional form to facilitate the presentation of an almost infinite number of data views.

What can we do with the stored data?

Analysis by end users from their desktop, online, using tools like spreadsheets.

Analyze the complex relationships between many types of business elements (Large data sets)

Compare aggregated data over hierarchical time periods (monthly, quarterly, annually)

Present data in different perspectives (Retrospective)

Involve complex calculations between data elements.

Respond quickly to users requests

Features of OLAP

Data mining – intelligent search of data stored in data marts or warehouses Find predictive information Discover unknown patterns

End users perform mining tasks with very powerful tools

Mining tools apply advanced computing techniques (learning, intelligence)

Data warehousing

What can we do with the stored data?

BI Business intelligence refers to the analysis

performed by DSS, ES, EIS, data mining and intelligent systems.

BI describes a verity of activities to pull together all the data required to make a sound business decision, regardless of where the data originate.

One ultimate use of the data gathered and processed in the data life cycle for business intelligence.

An Intelligent system is an IS typically employing AI, whose output resembles the human thought process and is used to support decision making e.g. neural computing, fuzzy logic, speech understanding, robotics, sensory systems and case based reasoning.

Ethical Issues Valuable data-mined information may violate

individual privacy Who is accountable for incorrect decisions

that are based on DSS? Human judgment is fallible Job loss due to automated decision making?

Legal Issues Discrimination based on data mining results Data security from external snooping or

sabotage Data ownership of personal data

Data Mining and Analysis Concerns

Analyzed data can be even more useful if presented using Data Visualization techniques Visual Interactive Modeling – graphic display of

decision consequences Visual Interactive Simulation – simulation model is

animated and can be viewed and modified by decision maker

Geographic Information Systems – display data related to geographic location using digitized maps

Global Information systems: A system that consists of a networks that cross national boundaries.

VR & AR

Data Visualization

Information Specialists Employee who are full time responsible for

developing and operating information systems.

System analyst is an expert who works with user in developing system at defining problems and in preparing written documentation of how the computer will assist in solving the problem.

Database administrator works with user and system analyst in creating the data needed to produce the information needed by users

Information Specialists

Network specialist works with user and system analyst in establishing the data communication network that ties together widespread computing resources

Programmers use the documentation prepared by the system analyst to create the software program that lead the computer to transform data into information needed by users

Operators operates the computing equipment and using software program

Information Infrastructure

Information Infrastructure: The physical facilities, services, and

management that support all organizational computing resources.

Computer hardware General-purpose software Networks and communications facilities Databases Information management personnel

Cont…

Information Infrastructure (continued) Defines integration, operation,

documentation, maintenance, and management of computing resources.

Defines how specific computing resources are arranged, operated, and managed.

Information Architecture

High-level plan that details The organization’s information requirements The way these requirements are being

satisfied. Blueprints for future directions

Information architecture is different from computer architecture which only describes the hardware needs of computer system

Computer architecture involves several processors, whereas the information architecture is just like planning a house.

This architecture includes planning the drawing ,purpose, and building constraints.

It can be divided into 2 major parts Organizational objectives and problems Existing infrastructure

What is Information What is Information processing cycleprocessing cycle

InputInput Procedures/ProcessesProcedures/Processes OutputOutput Disseminate ResultsDisseminate Results

Major Capabilities of Major Capabilities of Information SystemInformation System

Perform high-speed, high-volume, numerical computation.Perform high-speed, high-volume, numerical computation. Provide fast, accurate, and inexpensive communication Provide fast, accurate, and inexpensive communication

within and between organizations.within and between organizations. Automate both semiautomatic business processes and Automate both semiautomatic business processes and

manual tasks.manual tasks. Store huge amounts of information in an easy-to-access, Store huge amounts of information in an easy-to-access,

yet small space.yet small space. Allow quick and inexpensive access to vast amount of Allow quick and inexpensive access to vast amount of

information, worldwide. information, worldwide. Facilitate the interpretation of vast amounts of dataFacilitate the interpretation of vast amounts of data Enable communication and collaboration anywhere, any Enable communication and collaboration anywhere, any

time. time. Increase the effectiveness and efficiency of people Increase the effectiveness and efficiency of people

working in groups in one place or in several locations, working in groups in one place or in several locations, anywhere. anywhere.

Facilitate work in hazardous environment .Facilitate work in hazardous environment .

Capabilities of Information Capabilities of Information SystemsSystems

Fast, intelligent ,accurate processing of Fast, intelligent ,accurate processing of business transactions.business transactions.

Large capacity storage, retrieval, analysis, Large capacity storage, retrieval, analysis, and data and fast access to dataand data and fast access to data

Increase communication Computer to Increase communication Computer to Computer or human to human.Computer or human to human.

Reduce information overloadReduce information overload Span organizational boundariesSpan organizational boundaries Support and improve decision making.Support and improve decision making. Span boundaries in-side organizationSpan boundaries in-side organization Distinctive capabilities for providing Distinctive capabilities for providing

competitive advantage. e.g. airlines, online competitive advantage. e.g. airlines, online bankingbanking

What is an Information What is an Information System?System?

A system that A system that collectscollects, , analyzesanalyzes processesprocesses, , storesstores,, and ,, and disseminatesdisseminates information for a information for a specific purpose..specific purpose..

CollectInputs

ProcessAnd

Transform

ProduceOutputs

Store

Data

Instructions

Calculations

Reports

Information systemInformation system

An ISAn IS Collects, processes, stores, analyses and Collects, processes, stores, analyses and disseminates information for a specific purpose.disseminates information for a specific purpose.

It includes inputs, outputs, mechanism, to control It includes inputs, outputs, mechanism, to control thesethese

Also includes the feedback to control all theseAlso includes the feedback to control all these

A set of interrelated components that collectA set of interrelated components that collect(or (or retrieve), process, store, and distribute retrieve), process, store, and distribute information to support decision making and information to support decision making and control in an organizationcontrol in an organization

What is a system:What is a system: A set of components which A set of components which systematically interact with each other and systematically interact with each other and have same objective.have same objective.

Function of IS

Input – the collection of raw data for processing information system

Processing – the conversion of data into information for more meaningful

Output – the distribution of processed information

Feedback – output that is returned to help evaluate or correct input

Information systems are Information systems are more than computersmore than computers

Functions of an information Functions of an information systemsystem

IS TermsIS Terms

Open system:Open system: Connected to its environment Connected to its environment by means of resource flows.by means of resource flows.

An open system interacts with its environment by An open system interacts with its environment by means of its physical recourses flows.means of its physical recourses flows.

Closed system:Closed system: Not connected to its Not connected to its environment. They usually exist in tightly environment. They usually exist in tightly controlled laboratory systems.controlled laboratory systems.

A closed system does not interact with A closed system does not interact with customers, managers or any one else.customers, managers or any one else.

Information system is a virtual/conceptual Information system is a virtual/conceptual system as well as an open system.system as well as an open system.

A physical system is also an open system.A physical system is also an open system.

Cont…

Open and closed loop systemsOpen and closed loop systems Not all systems are able to control their

own operations. A system without the control mechanism, feedback loop, and objective elements is called an open loop system.

A system with the three control elements is called a closed loop system.

An Open loop System

A Closed Loop System

What is a subsystem & Super Sys?

A subsystem is simply a system within a system. This means that systems exist on more than one level and can be composed of subsystems or elemental parts.

What is a Super System? (not frequently used)

When a system is part of a larger system, the larger system is the super system.

Fig

What is Meant by a (CBIS)What is Meant by a (CBIS)

Computer-based Information Computer-based Information SystemsSystems

An information system using computer An information system using computer and telecommunications technology to and telecommunications technology to perform its intended tasks.perform its intended tasks.

Use computer hardware and software to Use computer hardware and software to process and disseminate informationprocess and disseminate information

Fixed definitions of data and procedures Fixed definitions of data and procedures for collecting, storing, processing, for collecting, storing, processing, disseminating, and using these datadisseminating, and using these data

Can be computer-based or manualCan be computer-based or manual MIS is a first information oriented system.MIS is a first information oriented system.

CBIS MODEL

The Components of CBIS The Components of CBIS are as followsare as follows

HardwareHardware Set of devices such as processor, monitors, keyboards, printers Set of devices such as processor, monitors, keyboards, printers

that will accept the data process them and displays themthat will accept the data process them and displays them SoftwareSoftware

Set of computer programs, that enables the hardware to Set of computer programs, that enables the hardware to function to process datafunction to process data

Data basesData bases An organized collection of related files or records that stores An organized collection of related files or records that stores

data and the associations among themdata and the associations among them NetworkNetwork

A connecting system that permits the sharing or resources A connecting system that permits the sharing or resources among different computersamong different computers

ProceduresProcedures The strategies, policies, methods and rules for using the The strategies, policies, methods and rules for using the

information systeminformation system PeoplePeople

The most important element in information systems, including The most important element in information systems, including who work for it or uses itwho work for it or uses it

Components of CBISComponents of CBIS

Backup dataRestart jobVirus scan

Components of ISComponents of IS

HardwareHardware, Input and output devices, Input and output devices SoftwareSoftware, A set of computer programs , A set of computer programs

that enables to process data.that enables to process data. DatabaseDatabase, Organized collection of files or , Organized collection of files or

records that stores and associate the data.records that stores and associate the data. NetworkNetwork, Connecting systems to share , Connecting systems to share

resources among different computers.resources among different computers. ProceduresProcedures, strategies, methods and rules , strategies, methods and rules

for using ISfor using IS PeoplePeople. Who work with IS or use outputs . Who work with IS or use outputs

of ISof IS

Types of CBISTypes of CBIS MIS: Management Information SystemMIS: Management Information System TPS: Transaction Processing Systems (Priory known as EDP TPS: Transaction Processing Systems (Priory known as EDP

and accounting information system and then AIS accounting and accounting information system and then AIS accounting information system)information system)

EIS: Executive information systemEIS: Executive information system Enterprise-wide system (A network of different information Enterprise-wide system (A network of different information

systems)systems) DSS: Decision Support SystemDSS: Decision Support System GSS: Group support systemGSS: Group support system ESES OAS: Office automation systemOAS: Office automation system GISGIS ERPERP IOS: Inter-organizational information system.IOS: Inter-organizational information system.

Connect two or more organizations having a common interest or Connect two or more organizations having a common interest or business need.business need.

Important in facilitating Important in facilitating e-commercee-commerce.. Intelligent systems/Intelligent agentsIntelligent systems/Intelligent agents SIS: Strategic information system.SIS: Strategic information system.

Cont….Cont….

HRIS: Human resource information HRIS: Human resource information systemsystem

MKIS; Manufacturing information MKIS; Manufacturing information systemsystem

FIS: Financial information system.FIS: Financial information system. ESS: Executive support system.ESS: Executive support system. AIS: Accounts Information systemAIS: Accounts Information system

IS Support Overview IS Support Overview

Moore’s LawMoore’s Law

The term moor’s Law was coined by The term moor’s Law was coined by one of the founder of Intel in 1960.one of the founder of Intel in 1960.

It states the power of computer It states the power of computer doubles about every year with the doubles about every year with the same cost ,which was increased to 18 same cost ,which was increased to 18 months latter on.months latter on.

18 months =1.5 years18 months =1.5 years 15 years=15/1.5=1015 years=15/1.5=10 221010=1024=1024

Moor’s Law ApplicationMoor’s Law Application By same law after 30 By same law after 30

years the power of years the power of computer purchased will computer purchased will be 30/1.5=20be 30/1.5=20

222020=1024*1024=104857=1024*1024=1048576 with same cost and so 6 with same cost and so on…on…

Your friend hired at Your friend hired at $40,000 with 20% $40,000 with 20% increase every yearincrease every year

You hired at $5000 with You hired at $5000 with double salary every 1.5 double salary every 1.5 years.years.

Comparison of salariesComparison of salaries

YeaYearr

FrienFriendd

YouYou

11 $40,000$40,000 $5000$5000

33 $57,600$57,600 $20,000$20,000

66 $99,533$99,533 $80,000$80,000

99 $171,993$171,993 $320,00$320,0000

1212 $297,203$297,203 $1280,0$1280,00000

1515 $513,567$513,567 $5120,0$5120,00000

The General System Model Of The Firm

The figure shows the flow of resources from the environment ,through the firm and back to the environment.

It involves the flow of physical resources and virtual resources for all types of organizational structures.

The physical flow include flow of personal ,material ,machine and money.

Virtual flow involves flow of data, information and decisions.

Firm control mechanism contribute the firm to control its own operations including performance standards to meet its objectives, the firms, management and information processing the transform data into information.

The feed back loop is composed of virtual resources .Data are gathered from the firm and the environment and entered in to the firm processor, which is transformed into the information ,eventually information is provided to managers to make decisions to effect necessary changes in the physical system.

Environment

InputResources

OutputResources

Transformation Process

InformationProcess

Management

Standards

Info &Data

PhysicalResources

PhysicalResources

Decisions

Data

Information

Management Levels High level (strategic)

Long-range view Planning

Middle level (tactical) Carry out the plan

Assemble the material Hire the resources Organize and staff

Low level (operational) Supervisor Directing and controlling

Management Levels Strategic Planning Level

The strategic planning level involves mangers at the top of the organizational

hierarchy. The term strategic indicates the long-term impact of top managers decisions on the entire organization. The term executive is often used to describe a manager on the strategic planning level.

Top level managers eg president, vice president chief executives, MD ,CIO,CKO,MEMBERS OF CORPORATE EXECUTIVE COMMITTEE, IS STEERING COMMITTEE etc.

Management Control Level These managers include middle managers, regional

managers, product directors, and divisional heads. Their level is called “management control level” due to their responsibility of putting plans into action and ensuring the accomplishment of goals.

Cont… Control level managers/Tactical level

managers They are responsible to put strategic plans in to

actions and ensure the goals are met.. Operational Control Level or Lower-level

Lower level managers are persons responsible for carrying out the plans specified by managers on upper levels. Their level is called the “operational control level” because this is where the firm’s operations occur.

These are departmental heads, supervisors and project leaders. they are responsible for plan accomplishment ,specified by managers on upper level

Management Levels

Business Operations

TacticalManagement

Strategic

Mgt.

EIS

ESD

SSTr

ansa

ctio

n

Proc

ess

Con

trol

ERP

IMPLEMENTATION LEVELS OF IS

113

SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN

KIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR MANAGERS

MANAGEMENT LEVEL MIDDLE MANAGERS

OPERATIONAL OPERATIONALLEVEL MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE &DATA WORKERS

RESOURCESMARKETING & ENGINEERING

All managers perform these functions, however with varying emphasis as shown

below.

Where managers are found

Managers on the strategic level place greater emphasis on environmental information than do managers on the lower levels. Managers on the operational control level regard internal information as vital.

The second figure shows that strategic planning-level managers prefer information in a summary format, whereas operational control-level managers prefer detail.

Management level fig 2.1

Environment information

Internal Information

Management level fig 2.2

Summary Information

Role of information in problem solving and

decision making Problem solving Decision making Note :Corporate executive

committee is responsible for strategic business planning and its responses. It also provides the top –level oversight of information recourses to the firm.

It guides the IS steering committee, usually chaired by the CIO.

What managers Do

They plan, What they are to do They organize to meet the plan They staff their organization with the

necessary resources. e.g. IT/IS and managerial resources.

After having the resources they direct the resources to execute the plan.

Finally they control the resources.

Problem solving

A problem is a condition or an event that is harmful or potentially harmful to a firm or that is beneficial or potentially beneficial for the firm.

Problem solving A process of problem identification and

causes and then repetitively analyzing and choosing different alternatives and finally to make some decision to solve the problem.

Classification of problems

A structured problem is a problem if it consists of elements and relationships among the elements which are understood by the problem solver.

A Semi-structured problem is a problem if it consists some of its elements and relation ships among the elements which are understood by the problem solver and some that are not understood by the problem solver.

An un-structured problem is a problem if it consists of elements and relation ships among the elements which are not understood by the problem solver.

Solving Structured and Unstructured problems

Structured problems lend themselves to programmed decisions

Unstructured problems require un-programmed decisions

Problem solving Activities

Identification of problem (where is problem ,what is problem, Definition of problem, Data gathered on scope, Constraints identified. 1-Internal constraints eg limited resources 2-Environmental constraints eg pressures to restrict resource

flow Classification of problem into a standard category Causes evaluation Intelligence activity (brain storming, critical thinking,

creative, thinking, reasoning, argumentation, logic, analysis, forecasting and judgments)

Design Activity Invent ,develop a most plausible course of action towards problem solving). Construct a standard mathematical model eg selecting a model

Choice activity (Involves the selection of best alternative that actually solves the faced problem. Find potential solutions

Reviewing the selected choice for further refinement and recommendation of the solution.

States of problem

Process of problem solving

Current State Desired State

Environmental Constraints

Internal Constraints

Elements of Problem Solving Process

STANDARDS

INFORMATION Constraints

AlternativeSolutions

Problem Solver

PROBLEM

Solution

DesiredState

CurrentState

ProblemIdentify

Solution

Intelligence

Design

Choice

Review

Information

Information

Information

Information

A Framework for Computerized Decision Support Problem Structure

Decision making processes fall along a continuum that ranges from highly structured to highly unstructured decisions

Nature of Decisions Strategic planning decisions - the long-range goals

and policies for resource allocation Management control decisions - the acquisition

and efficient utilization of resources in the accomplishment of organizational goals

Operational control decisions - the efficient and effective execution of specific tasks

Thinking about decisions…

Decision Support Framework

Structured decisions have long been supported by computers

Classes of structured decisions have been addressed mathematically with Management Science models Types of decisions

Programmed decisions: Usually repetitive and routine decisions,also can be automated

Non-Programmed Decisions :Are novel and unstructured, unusually consequential.

Thinking about decisions…

Decision LevelsDecision Level

Description Example Type of Information

Strategic

Competitive advantage, become a market leader. Long-term outlook.

New product that will change the industry.

External events, rivals, sales, costs quality, trends.

Tactical Improving operations without restructuring the company.

New tools to cut costs or improve efficiency.

Expenses, schedules, sales, models, forecasts.

Operations

Day-to-day actions to keep the company functioning.

Scheduling employees, ordering supplies.

Transactions, accounting, human resource management, inventory.

Decision Making Process

Intelligence PhaseIntelligence Phase

Design PhaseDesign Phase

Choice PhaseChoice Phase

REALITY

Implementationof Solution

Implementationof Solution

SUCCESS

FAILURE

Verification, Testing of Proposed Solution

Validation of the Model

Examination

Thank YouThank You