The Role of Information in Decision Making

ITFM – Outcome 1

What is information?ITFM – Outcome 1

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What is information?

Information is the end-product of processed data Data: a collection of facts that has been interpreted

and organised in some way Information: data that has ben processed to help

decision-making and planning

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The Data Processing Cycle

Collecting: from various sources inc email, internet etc

Checking: validity of source, currency and sufficiency of data

Organising: sort/group with other information

Analysing: summary calculations, comparisons

Storing: file electronically or manually

Distributing: send via email, publish on website etc

Sources of InformationITFM – Outcome 1

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Sources of Information

Primary: information collected first hand for a specific purpose eg surveys, customer focus groups

Secondary: information collected from existing sources eg newspapers, government statistics

Internal: information from within the company eg sales records

External: information from outwith the company eg information from other companies

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Primary Information

Strengths

Up-to-date

Know the source

Specific for the purpose

Weaknesses

Expensive to collect eg using a market research common

Sample might be too small, or questions ambiguous or misleading

Respondents may lie

Researcher may be biased

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Secondary Information

Strengths

Wide range of potential sources

Relatively cheap to access

Weaknesses

Could be out of date

Competitors have access too

Hasn’t been gathered specifically for the purpose

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Internal Information

Strengths

Easy to access

Shows past performance eg sales (targets and trends)

Benchmark for current performance

Weaknesses

Good systems required for accurate data collection

Information systems need managed (training and salaries)

New companies are at a disadvantage (no info)

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External Information

Strengths

Easy to access

Relatively cheap

Provides information on PESTEC

Weaknesses

May be out-of-date

Takes time to gather

Available to competitors

Potentially biased or unreliable

Types of InformationITFM – Outcome 1

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Qualitative Information

Information which is expressed in words

Involves opinions or judgments

Often used in customer satisfaction surveyseg How do you rate customers service – excellent, good, acceptable, poor, unacceptable

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Quantitative Information

Information can be counted or measured

Usually expressed numerically

Used to identify trends and make forecastseg sales figures, exam results, number of staff

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Written Information

Advantages

Re-read when necessary

Permanent Record

Disadvantages

Takes time to produce (up-to-date?)

Difficult to get clarification

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Oral Information

Advantages

It is instantly received

Allows for discussion

Can ask questions/get clarification

Quick method of spreading information

Disadvantages

Interpretations can be different: “But I thought you said…”

Easily forgotten

Should be backed up with written record

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Numerical Information

Advantages

Allows comparisons to be made

Useful for forecasting/projecting trends

Graphs can be produced

Disadvantages

Many people find figures difficult to understand

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Graphical/Pictorial Information

Advantages

Often easier to remember than full notes

Graphs show trends/comparisons

Organisation charts show the structure of the organisation

Disadvantages

Skill needed to produce an effective chart

Special equipment is needed to produce an image

Training staff can be costly

Features of Good InformationITFM – Outcome 1

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Features of Good Information

Timely

Accurate

Appropriate

Available

Complete

Concise

Cost-effective

Objective

CccOAaaT

Types of Decision MakingITFM – Outcome 1

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Decision Making

Management is about making decisions

The decision can be routine or affect the long-term direction of the company

Decisions should be made to meet the objectives of the business

Decision making is about a

choice from the different

options available

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Strategic Decisions

Made by senior managers for the long-term eg 5-10 years, concerned with strategic aims

The scope of the decisions is wide and far reaching

Most of the information will come from external sources eg competitors activities, financial institutions on investing profits

High risk decisions – takes a long time to implement and costly to correct

Examples: to expand the business or to improve profitability,

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Tactical Decisions

Made by middle managers for the medium term

Tactical decisions are about organising resources to achieve strategic objectives

Use information from weekly or monthly reports to monitor activities and check that targets are being met.

Medium risk decisions – poor decisions take time to change, but won’t jeopardise the organisation

Examples: to train staff to use more effective working practices (in order to improve efficiency)

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Operational Decisions

These are day-to-day decisions

Usually made by Department Managers or Supervisors.

The scope is limited to the immediate resolution of problems.

Information will come from internal sources.

Low risk decisions – wrong decision should be easy to fix, or not take much time

Examples: arranging temporary cover for an absent member of staff

Impact of ICT on WorkflowITFM – Outcome 1