UNIT 3.3

How do businesses use information?

What is Information

Data is a collection of raw facts and figures which have not been processed in any way. Data in its raw form is not particularly useful.

“Information is a collection of facts or data which has

been organised in such a way as to be useful to the user.”

Where does Information come from

The information available all around us comes from many different sources, e.g.:

RADIO TELEVISION CD’S

NEWSPAPERS PEOPLE COMPUTERS

LETTERS CD-ROMS INTERNET

PHONES VIDEOS

Information is used to help decision making in businessPetrol has gone up in price -> Delivery charges must increase

Five staff are off ill -> Temporary staff must be brought inPhone bills have increased -> Calls must be monitored

Using IT Helps Businesses To Manage Information And Make

Decisions Wide range of software programs which help process information, e.g.:

Word Processor - used for producing letters, reports, notices, and any other pieces of written information.

Spreadsheet - mainly used for financial control e.g. cash flow, budgeting, simple accounts.

Database - often used in business to store customer records, employee records, stock records

Graphics - Graphics programs allow charts, graphs, diagrams and pictures to be produced by computers.

Desktop Publishing - used to produce leaflets, newsletters, magazines, and sometimes newspapers.

ELECTRONIC SOURCES OF INFORMATION:

•The Internet•Electronic mail•World Wide Web•CD ROM

The Internet - The Internet is a world-wide network of computers. The Internet is also referred to as the

“Information Superhighway”.

The World Wide Web- The ‘Web’ is an electronic source of information. It contains millions of pages of information from

many different sources.

Electronic Methods For Sending Information:•Video conferencing•Fax•Electronic mail

Information technology helps businesses to make decisions by:

•Generating information very quickly;•Providing accurate information;•Storing large amounts of useful information.

Some examples of the type of decisions that can be made using the information produced electronically are:

Report by department head -> Employ more office staffList of stock items running low -> Order more stockNumber of products sold -> Increase advertisingAmount of profits made -> Increase sales

Businesses must also take account of EXTERNAL INFORMATION.

Some examples of external information which can be useful to businesses include:

•What products do our customers want?•How many other firms produce similar products?•What help can the business get from the government?•What financial help can the business get from banks?•What laws affect our business?•What changes are taking place in technology?•What changes are taking place in fashion?

These types of external information can be obtained in different ways, e.g.:

Market ResearchMagazines, newspapersThe World Wide WebTelevision and radioGovernment reports

A 2-way process;Accurate;Understandable;Complete;On time.

Communication (Features And Methods)

FEATURES OF GOOD COMMUNICATION:

Good communication also relies on selecting the best method of communication.

Communication (Features And Methods)

MAIN METHODS OF COMMUNICATION:

Written; (Letters; Reports; Memos; Minutes)

Visual; (Notices, Posters, Leaflets, Adverts)

Oral (Spoken); (Telephone, Face-to-face, Meetings, Interviews, Video-Conferencing)

Electronic; (E-mail, Fax)

Body Language; (Making Faces, Hand Signals, Head Movements)

How Can Businesses Communicate Successfully

For communication to be successful it should go through the following stages:

Send -> Receive -> Understand -> Action

SENDING COMMUNICATIONS

Businesses must choose the correct method for communicating information. For example:

A phone call for a short message.A letter for a long complicated and detailed message.A fax for an urgent message which involves figures.An e-mail message to USA.A face-to-face meeting to provide some bad news.

RECEIVING COMMUNICATIONSMany communications are never received. This may happen when, for example:Phone messages are not passed on.Letters get lost in the post.Fax messages are not delivered to the correct department.E-mail messages are not read.People do not turn up for meetings.

UNDERSTANDING COMMUNICATIONS

Many communications are received but are not understood. This may happen when, for example:

The telephone line is too noisy.Letters are too complicated.Fax messages are blurred, faint or not received in full.E-mail messages are too brief or are full of jargon.People do not express themselves clearly.

ACTING ON COMMUNICATIONThe key to effective communication is that the sender provides accurate, timely and complete information so that the recipient can use the information to take appropriate action.

How do businesses use information?

E-Notes

All employees in a business organisation require to use information in order to help them make decisions. This decision-making process can be seen as a ‘process’ or ‘system’ which has 3 parts:

OUTPUT

PROCESS

INPUT

Raw data is collected and input into the system.

Data is processed to make it meaningful.

Output is information which is used to make decisions.

Information is a key resource in business.

How do businesses evaluate information?

E-Notes

It is important that managers are not given information which is irrelevant or unnecessary. The QUALITY of information is therefore just as important as the QUANTITY.

In order to make proper use of any information provided the information must possess certain ‘qualities’. These are:

ACCURACY - Information must be accurate and reliable for management to be able to use it with confidence.

RELEVANCE - The information provided must be relevant. COMPLETE - Information must be complete. If a decision is made on the basis of incomplete information problems can arise.

TIMELY - Information should be available on time. For example a report which arrives a day after an important meeting will not be useful.

SUFFICIENTLY DETAILED - All information should have the details required to make the information useful. However too much irrelevant detail can cause confusion.

COMPREHENSIVE - All information presented for decision making should be comprehensive in its detail but must also be easily understood. It is important therefore that a range of techniques are used to present the information e.g. figures, tables, graphs, as well as textual information.

COST EFFECTIVE - Information has no value in itself. It is only useful when it can be used to monitor and control the business. It is important therefore that time, effort and money is not tied up in producing information which is of limited use.

How do businesses evaluate information?

E-Notes

How Do Businesses Use Computer Generated Information To Help Decision Making?

E-Notes

The use of IT has dramatically changed the ways in which businesses produce and use information.

The challenge which faces business is to gain the maximum benefit from the use of information technology without experiencing ‘information overload’.

If businesses use information technology in a structured way many benefits can be experienced.

•Routine tasks can be computerised and results produced more quickly.

•Employees can be involved in a range of other tasks which will develop their skills and make their work more interesting.

•Employees have access to more information which will allow them to make their own decisions and increase their responsibility.

•Customer service will improve as information is more readily available and can be acted upon quickly.

•Employees can be more flexible and are able to respond quickly to changes in the business e.g. through staff absence.

These benefits include:

E-Notes

How Do Businesses Use Computer Generated Information To Monitor And Control Functional Activities?

E-Notes

Each functional area of business (marketing, human resources, operations, finance) requires information in order to monitor and control both activities and performance. Furthermore the type, amount and frequency of the information required will vary.

Some of the ways in which IT can be used to support the monitoring and controlling of performance are outlined on the following pages.

MARKETING

ACTIVITY HOW CAN “IT” HELP?

Sales analysis Use of spreadsheet for analysing figures.Produce graphs from spreadsheet figures.

Sales forecasting Use of spreadsheet for ‘what if’ scenario.Produce graphs to show future trends.

Market Research Customer information held on database.Selective reports produced depending on type of product, age of customer etc.

Competitors Database of competitors and their products.

Population trends Spreadsheet and database files with population information.

Advertising Graphics and desk top publishing to produce professional and attractive advertising

materials. Use of Internet/Word Wide Web to advertise products and services.

E-Notes

E-NotesHUMAN RESOURCES ACTIVITY HOW CAN ’IT’ HELP?

Recruitment Word processing of job applications, interview letters, job descriptions etc.Database of applicants for previous

posts can produce suitable candidates.

Selection Practical IT tasks such as word processing, ‘in-tray’ exercises etc to assess

competence.Computer based aptitude tests, profiling

tests can be stored and transferred into database files.

Record Keeping Database of employee information. Records all basic information - name,

address etc as well as appraisal reports, absence, extra qualifications, training courses etc.

Salaries/Wages Analysis of salaries/wages throughout the organisation can be done on

spreadsheet with quick calculations of the effects of increases in salary for groups of employees.

E-NotesOPERATIONS ACTIVITY HOW CAN ‘IT’ HELP?

Manufacturing Automated systems, robotics are all used to produce and manufacture a range of products.

Design Computer aided design (CAD) software has revolutionised the way architects and designers work. Drawings and plans can be produced and altered quickly.

Quality Control Computers can be used to measure the exact sizes of components which have to be within certain tolerances e.g. electronics.

R&D (Research and Development) Computer controlled experiments can produce

results which are not possible by manual activity.

Stock/control Databases of stock items can produce lists for warehousing, distribution, buying department.

E-Notes

ACTIVITY HOW CAN ‘IT’ HELP?

Payroll Computerised payroll systems perform repetitive calculations and produce payslips.

Invoices Database or invoice systems record all customer details and products purchased. System performs all calculations and produces invoices.

Cheques/Payments Spreadsheet or accounting package records all cheques paid and payments received. Calculations are performed quickly and

accurately.

Final Accounts Spreadsheet or accounting package brings together financial information for all aspects of the organisation and produces final accounts.

Budgets/Cash Flow Figures can be altered and spreadsheet re-calculates automatically. Reduces times spent

on repetitive calculations.

FINANCE

E-Notes

A number of different types of communication are used in business. These include:

Formal e.g., committee meetings, interviews;

Informal e.g., talking to colleagues over coffee;

Internal within the organisation only;

External outwith the organisation, including customers, suppliers, general

public.

What are the main types of communication?

E-Notes

Effective communication relies on the 4 main elements of communication being complete.

Transmitter

Message

Channel

Receiver

The transmitter is the person sending the message.The message is the information being sent.The channel is the method being used e.g. letter, telephone call.The receiver is the person to whom the message is being sent.

It is up to the receiver to provide some form of feedback. This will enable the transmitter to check that the message has been received and understood.

E-NotesWhat Are The Key Barriers To Effective Communication In Business?Physical barriers presented by the nature of the

environment, e.g.:•Staff at different locations or buildings.•Old equipment or technology which is not up to the job.•Noisy backgrounds, poor lighting, extreme heat or cold can affect concentration and the ability to absorb important communications.

People’s attitudes are often the cause of misrepresentation, e.g.:•Lack of trust in the management.•Lack of consultation with employees.•Personality conflicts and refusal to communicate with certain people.•Lack of motivation or training.

Other common barriers to communication include:•Poorly expressed messages.•Lack of concentration and jumping to conclusions based on wrong information.•Different languages and cultures can lead to misunderstandings.•Health difficulties of employees either physical or emotional.•The means of communication was not suitable.