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Explain Management information system.

1.Explain the basic elements of Management Information System.


MIS  is  an integrated  information  system, which is  used to provide
management  with  needed information on a  regular basis .

The term  system in  MIS  implies  ORDER, ARRANGEMENT, and

The information  can be  used  for   various  purposes,

-strategic planning
-delivering increased  productivity
-reducing  service cycles
-reducing  product development  cycles
-reducing  marketing life cycles
-increasing  the  understanding  of  customers' needs
-facilitating business and  process re-engineering.

MIS   can  also  be used across the  organization  as an  information
utility  to

-support  policy making
-meet  regulatory  and  legislative requirements
-support  research  and  development
-support  consistent and  rapid  decision  making
-enable  effective  and efficient  utilization  of resources
-provide evidence of  business transactions
-identify  and  manage  risks
-evaluate  and document quality, performance and achievements.

The  availability  of  information is  fundamental  to  the  decision making
process. Decisions  are  made within the organization at

The  information  needs and decision making  activities  of the  
various  levels of  management

Strategic business  direction

-information  for  strategically positioning  the  organization
-competitive  analysis and  performance evaluation,
-strategic  planning and policy,
-external factors that  influence  the  direction

Organizational and operational functions

-information  for  coordination  of  work units
-information  for  delivery  programmes
-evaluation  of  resources usage
-budget control
-problem  solving
-operational  planning

Programme  management within units

-information  for  implementing programmes
-information  for  managing   programmes
-management   of  resources usage
-project scheduling
-problem  solving
-operational  planning

Activity management

-information for  routine  decision  making
-information  for  problem solving
-information  for  service delivery


The  management  oriented  support  systems   provide support
to  various  levels  of  management.

Executive  Information  Systems  allow  executives to see where  a
problem  or  opportunity  exists.

Decision  Support  Systems are  used  by  mid-level management  
to support  the  solution  of  problems that  require judgement
by  the  problem solver.

Line  Managers   use Management  Reporting Systems  for  
routine operational  information.

IN  ''MIS''

These  include

-Accounting  Information  Systems

-Marketing  Information  Systems

-Enterprise  Information  Systems

-Decision  Support  Information  Systems

-Executive    Information  Systems

-Quality  Management   Information  Systems

-Manufacturing   Information  Systems

-Financial   Information  Systems

-Human resource   Information  Systems



-PROVIDE  INFORMATION  FOR  Identifying strategic shifts and positioning  WITH   clients in anticipation of several possible outcomes scenario planning --is a core part of our strategic and tactical planning.

-PROVIDE  INFORMATION  TO  SEE  Changes in market conditions, technical advances, and economic issues will all affect THE  INDUSTRY /  BUSINESS  in the future.
-PROVIDE  INFORMATION  TO   find the most effective marketing strategies in order to succeed in these challenging times.
-PROVIDE  INFORMATION  THAT  enables  to provide  valuable understanding of the opportunities, challenges, potential pitfalls and market implications

-PROVIDE  INFORMATION  WHICH   helps organizations realize the most value from their  assets.

portfolio management, remarketing assistance, sale and lease negotiations, asset sourcing and acquisition, appraisal and valuation,  auditS and management and expert testimony.
-PROVIDE  THE  RIGHT INFORMATION for  a clear and disciplined approach to
financial planning is vital to ensure success.
-PROVIDE  INFORMATION   FOR the execution of effective business planning and sound management usually defines these differences in profitability.
-PROVIDE   INFORMATION  TO   analyze and prioritize the  BUSINESS  drivers to help to  achieve a superior competitive position. Vital to this process is an understanding of the economic advantages of scale and scope.
-PROVIDES   INFORMATION  FOR  Operational excellence results in the attainment of world-class quality and productivity in the delivery of services to customers
-PROVIDES  INFORMATION  to develop a clear understanding of their operating practices and associated costs, particularly relative to competitors.
When  running a  BUSINESS, the right information systems can have a critical impact operating costs, operating effectiveness, and customer satisfaction.
Business Intelligence
Business Performance Management
Business rules
Data Mining
Predictive analytics
Purchase order request
Enterprise Architecture
Information technology management
Knowledge Base
Online analytical processing

The major  EXPECTATIONS   of MIS are to:
reach an understanding of the relevant processes on the basis of the available historic information. This element forms the basis for the development of models, required for forecasting and simulation.
provide information on the current situation, especially for early warning purposes, for instance related to issues impacting on business,  resources or business status.
forecast changes and impacts, either natural or man-made, as an element in vulnerability assessments.
forecast the consequences of policy decisions and measures before they are implemented in reality. This implies evaluating options for several given scenarios based on the possible results and predicted consequences, and selecting the most acceptable alternative.

These  include

1.Accounting  Information  Systems

-debtors  listing / monitoring/controlling.
-creditors listing / monitoring/controlling
-payroll  administration /management.
-profit / loss  statements
-balance  sheet
etc etc
2.Marketing  Information  Systems
-product group  sales
-customer    total  sales
-territory  sales
-regional sales
-national  sales
-channel  sales
- Average value and/or volume of sale by CUSTOMER
- Average value and/or volume of sale by type of CHANNELt
- Average value and/or volume of sale by  COUNTRY
2A].Your  promotional  activities  by  individual  territories /  total  promotional  spend.
2C]  MONTHLY  IMPORTS  into  the  country
2O] TECHNOLOGICAL  CHANGES [  that  could   affect  the  sales]
2P]  Economic - rate of growth of GNP, level of inflation, incomes
2Q]  Social - people, demographics, culture, subculture
2R]  Political - risk, instability, attitudes to "foreigners"
2S]  Technology - current, rate of change, infrastructure
2T]  Resources - money, manpower, materials, acquisitions, joint ventures
2U ] Fiscal - taxes, exchange rates
2V]  Institutions - money markets
2X] Managerial - funds
-customer  attitudes/behavior
-spending  power
-per  capita income
-channels  of  distribution /effectiveness
-market  potential
-media  potential/effectiveness
-Economic - rate of growth, structure, conduct, capital, economic blocs, (SADC), GNP, GDP, Nl
-Political/Legal - laws, regulations, investment, "climate", government ideology, stability
-Competition - type, structure, operations, strategy plans, programmes, acquisitions, mergers
-Terms of access - quotas, tariffs, duties etc
-Inflation   rate
3.Enterprise  Information  Systems
4.Decision  Support  Information  Systems
5.Executive    Information  Systems

6.Quality  Management   Information  Systems

-Quality  planning  system.
-Quality  control  system
-quality  action planning
etc etc
7.Manufacturing   Information  Systems

-procurement  planning
-raw  material  planning/ inventory
-production  planning
-warehousing / finished goods  inventory  planning
-order processing/ order  servicing.
etc etc
8.Financial   Information  Systems

-financial  planning
-investment  planning
-Return  on  investment  planning
-cashflow  planning
etc etc
9.Human resource   Information  Systems

*human resource planning data
*manpower  planning data

*job analyses data
*job description
*job specification

*recruitment  data
*selection  data

*performance appraisal  data
*performance management  system  data

*training  programs  data
*development  programs  data

*career  planning  data
*job rostering  data

*promotions  data
*career development  plan  data

*succession  planning  data
*job rotation  data

*job enrichment  data
*job multiskilling  data

*compensation  plans
*compensation  package development  plans

*staff leave management  record
*termination  records  management  record

*international  staff records
etc etc


2.Explain the basic composition of MIS that can be explained in terms of different approaches.


"An integrated user-machine system for providing information to support operations, management and decision making functions in an organization. The system utilizes computerized and manual procedures; models for analysis, planning, control and decision making; and a database."
MIS principal concerns
Facilitate decision making by supplying the information needed in an up-to-date and accurate form
to the people who need it
on time
in a usable form
Management functions
Decision making
Information system
Management information

1. Selecting objectives
2. Identifying activities required to achieve the stipulated objectives
3. Describing the resources or skills, or both, necessary to perform the activities
4. Defining the duration of each activity to be undertaken
5. Determining the sequence of the activities


1. Supplying the information needed by the planner at each step
2. Establishing procedures for procuring the information at each step (including the means to view alternatives)
3. Arranging for storage of the approved plans as information for the control process
4. Devising an efficient method for communicating the plans to other members in the organization
Controlling involves
1. Establishing standards of performance in order to reach the objective
2. Measuring actual performance against the set standards
3. Correcting deviations to ensure that actions remain on course
1. Defining expectations in terms of information attributes
2. Developing the logic for reporting deviations to all levels of management prior to the actual occurrence of the deviation
Levels of decision making
Elements of decision making
"A set of elements forming an activity or a procedure/scheme seeking a common goal or goals by operating on data and/or energy and/or matter in a time reference to yield information and/or energy and/or matter."
1. Some components, functions and processes performed by these various components
2. Relationships among the components that uniquely bind them together into a conceptual assembly which is called a system
3. An organizing principle which is an overall concept that gives it a purpose
4. The fundamental approach of the system is the interrelationship of the sub-systems of the organization
1.   The individual
2.   The formal and informal organization
3.   Patterns of behaviour arising out of role demands of the organization
4.   The role perception of the individual
5.   The physical environment in which individuals work
Developing and managing operating systems (e.g., money flows, manpower systems)
Designing an information system for decision making
Systems approach and MIS
MIS aims at interrelating, coordinating and integrating different sub-systems by providing information required to facilitate and enhance the working of the sub-systems and achieve synergistic effects
'A set of classified and interpreted data used in the decision making process"

Information has also been defined as some tangible entity which serves to reduce uncertainty about future state or events
In the context of different levels of decision making, information can be described as:
inference and predictions drawn from the data
value and choices (evaluation of inferences with regard to the objectives, and then choosing courses of action)
action which involves a course of action
The value of management information lies in its content, form and timing of presentation

1. Concepts of organization
2. Organizational theories, principles, structure, behaviour and processes such as communication, power and decision making
3. Motivation and leadership behaviour
Hierarchy of authority
Modification of the basic model
Information model of organization
Organizational culture
Organizational power
Organizational growth cycle
Goal displacement
Organizational learning
Project model of organizational change
Case for stable system
Systems that promote organizational change
Organizations as socio-technical systems
1. Assessing information requirements
2. Levels of information requirements
Organizational level
Application level
1. Asking
2. Deriving from an existing information system
3. Synthesizing from characteristics of the utilizing system
4. Discovering from experimentation with an involving information system
1. Identify elements in the development process utilizing system:
Information systems or applications
2. Identify process uncertainties:
Existence and availability of a set of usable requirements
Ability of users to specify requirements
Ability of analysts to elicit and evaluate requirements
3. Evaluate the effects of elements in the development process over process uncertainties
4. Evaluate the combined effects of the process uncertainties on overall requirements uncertainty
5. Select a primary strategy for requirements determination based on the overall requirements uncertainty
Uncertainty level    Strategy
Low     Asking or deriving from an existing system
   Synthesis from characteristics of utilizing systems
High     Discovering from experimentation
6. Select one or more from the set of methods to implement the primary strategy
1. Databank information system
2. Predictive information system
3. Decision making information system
4. Decision taking information system
1. Understand the organization
2. Analyse the organization's information requirements
3. Plan overall strategy
4. Review
5. Preliminary analysis
6. Feasibility assessment
7. Detailed fact finding
8. Analysis
9. Design
10. Development
11. Cutover
12. Obtain conceptual schema
13. Recruit database administrator
14. Obtain logical schema
15. Create data dictionary
16. Obtain physical schema
17. Create database
18. Modify data dictionary
19. Develop sub-schemas
20. Modify database
21. Amend database
Management by exception
Organization-chart approach
Integrate-later approach
Data-collection approach
Database approach
Top-down approach

Information and the MIS concept
Information is a set of classified and interpreted data used in decision making. It has also been defined as 'some tangible or intangible entity which serves to reduce uncertainty about future state or events' . A management information system (MIS) is 'an integrated user-machine system for providing information to support operations, management and decision making functions in an organization. The system utilizes computers, manual procedures, models for analysis, planning, control and decision making, and a database' . MIS facilitates managerial functioning. Management information is an important input at every level in the organization for decision making, planning, organizing, implementing, and monitoring and controlling. MIS is valuable because of its content, form and timing of presentation. In the context of different levels of decision making, information can be described as:
inferences and predictions drawn from data,
value and choices (evaluation of inferences with regard to the objectives and then choosing a course of action), and
action which involves course of action.
The MIS concept comprises three interrelated and interdependent key elements: management, system and information
Management and the MIS process
An MIS is directed towards the managerial functions of planning, controlling and monitoring, and decision making.
Planning consists of five sequential and interactive steps . These are:
selecting objectives;
identification of the activities which are required to achieve the stipulated objectives;
detailing the resources - including the various skills - required to undertake the activities;
determining the duration of each activity to be performed; and
defining the sequence of the activities.
The basic requirements during the planning process of most importance in designing and implementing an MIS for an organization are :
providing the information required by the planner at each step of planning;
establishing procedures for obtaining the information;
arranging for storage of the approved plans, as these will provide the information requisite to monitoring and controlling; and
evolving methods for communicating the plans to employees in the organization.
Monitoring and controlling
Controlling 'compels events to conform to plans' . It involves:
establishing standards of performance in order to reach the objective;
measuring actual performance against the set standards; and
keeping actions on course by correcting deviations as they appear (mid-course corrections).
The requirements for successful development of a control system are:
defining expectations in terms of information attributes; and
developing the logic for reporting deviations to all levels of management prior to the actual occurrence of the deviation.
Decision making
Decision making is the process of selecting the most desirable or optimum alternative to solve a problem or achieve an objective. The quality and soundness of managerial decisions is largely contingent upon the information available to the decision-maker. decision making on three levels of a continuum:
Strategic decisions are future-oriented because of uncertainty. They are part of the planning activity.
Tactical decision making combines planning activities with controlling. It is for short-term activities and associated allocation of resources to them to achieve the objectives.
Technical decision making is a process of ensuring efficient and effective implementation of specific tasks.
Elements of decision making
The four components of the decision making process are :
Model A model is an abstract description of the decision problem. The model may be quantitative or qualitative.
Criteria The criteria must state how goals or objectives of the decision problem can be achieved. When there is a conflict between different criteria, a choice has to be made through compromise.
Constraints. Constraints are limiting factors which define outer limits and have to be respected while making a decision. For example, limited availability of funds is a constraint with which most decision makers have to live.
Optimization Once the decision problem is fully described in a model, criteria for decision making stipulated and constraints identified, the decision-maker can select the best possible solution.

Systems approach
Modern management is based upon a systems approach to the organization. The systems approach views an organization as a set of interrelated sub-systems in which variables are mutually dependent. A system can be perceived as having:
some components, functions and the processes performed by these various components;
relationships among the components that uniquely bind them together into a conceptual assembly which is called a system; and
an organizing principle that gives it a purpose .
The organizing system has five basic parts, which are interdependent . They are:
the individual;
the formal and informal organization;
patterns of behaviour arising out of role demands of the organization;
the role perception of the individuals; and
the physical environment in which individuals work.
The interrelationship of the sub-systems within an organization is fundamental to the systems approach. The different components of the organization have to operate in a coordinated manner to attain common organizational goals. This results in synergic effects. The term synergy means that when different sub-systems work together they tend to be more efficient than if they work in isolation . Thus, the output of a system with well integrated sub-systems would be much more than the sum of the outputs of the independent sub-systems working in isolation.
The systems approach provides a total view of the organization. It enables analysis of an organization in a scientific manner, so that operating management systems can be developed and an appropriate MIS designed .
By providing the required information, an MIS can help interrelate, coordinate and integrate different sub-systems within an organization, thus facilitating and increasing coordinated working of the sub-systems, with consequent synergism. The interaction between different components of the organization depends upon integration, communication and decision making. Together they create a linking process in the organization.
Integration ensures that different sub-systems work towards the common goal. Coordination and integration are useful controlling mechanisms which ensure smooth functioning in the organization, particularly as organizations become large and increasingly complex. As organizations face environmental complexity, diversity and change, they need more and more internal differentiation, and specialization becomes complex and diverse. The need for integration also increases as structural dimensions increase.
Communication integrates different sub-systems (specialized units) at different levels in an organization. It is thus a basic element of the organizational structure necessary for achieving the organization's goals.
Organizational structure and MIS
MIS has been described as a pyramidal structure, with four levels of information resources. The levels of information would depend upon the organizational structure. The top level supports strategic planning and policy making at the highest level of management. The second level of information resources aid tactical planning and decision making for management control. The third level supports day-to-day operations and control. The bottom level consists of information for transaction processing. It then follows that since decision making is specific to hierarchical levels in an organization, the information requirements at each level vary accordingly.
Thus, MIS as a support system draws upon:
concepts of organization;
organizational theories, principles, structure, behaviour and processes such as communication, power and decision making; and
motivation and leadership behaviour.
Information requirements for MIS
Assessing information needs
A first step in designing and developing an MIS is to assess the information needs for decision making of management at different hierarchical levels, so that the requisite information can be made available in both timely and usable form to the people who need it. Such assessment of information needs is usually based on personality, positions, levels and functions of management. These determine the various levels of information requirements.
Table 1 Organizational structural implications for information systems
Concept   Implications for Information Systems
Hierarchy of authority   A tall hierarchy with narrow span of control requires more formal control information at upper levels than a flat hierarchy with wide span of control.
Specialization   Information system applications have to fit the specialization of the organization.
Formalization   Information systems are a major method for increasing formalization.
Centralization   Information systems can be designed to suit any level of centralization.
Modification of basic model   Information systems can be designed to support product or service organizations, project organizations, lateral relations and matrix organizations.
Information model of organization   Organizational mechanisms reduce the need for information processing and communication. Vertical information systems are an alternative to lateral relations. Information systems are used to coordinate lateral activities.
Organizational culture   Organizational culture affects information requirements and system acceptance.
Organizational power   Organizational power affects organizational behaviour during information system planning, resource allocation and implementation. Computer systems can be an instrument of organizational power through access to information.
Organizational growth   The information system may need to change at different stages of growth.
Goal displacement   When identifying goals during requirements determination, care should be taken to avoid displaced goals.
Organizational learning   Suggests need for information system design for efficiency measures to promote single loop learning and effectiveness measures for double loop learning.
Project model of organizational change   Describes general concepts for managing change with information system projects.
Case for stable system   Establish control over frequency of information system changes.
Systems that promote organizational change   Reporting critical change variables, organizational change, or relationships, and use of multiple channels in a semi-confusing system may be useful for promoting responses to a changing environment.
Organizations as socio-technical systems   Provides approach to requirements determination and job design when both social and technical considerations are involved.

Levels of information requirements
There are three levels of information requirements for designing an MIS . They are:
At the organizational level, information requirements define an overall structure for the information system and specific applications and database.
Application level requirements include social or behavioural - covering work organization objectives, individual roles and responsibility assumptions, and organizational policies - and technical, which are based on the information needed for the job to be performed. A significant part of the technical requirement is related to outputs, inputs, stored data, structure and format of data and information processes.
At the user level, database requirements can be classified as perceived by the user or as required for physical design of the database.
Strategies for determining information requirements
six steps in selecting a strategy and method for determining information requirements ).
Table 2 Strategies for determining information requirements
1. Identify elements in the development process
Utilizing systems
Information system or application
2. Identify characteristics of the four elements (in 1, above) in the development process which could affect uncertainty in the information requirements.
3. Identify the process uncertainties
Existence and availability of a set of usable requirements.
Ability of users to specify requirements.
Ability of the analyst to elicit and evaluate information requirements.
Assess how the characteristics of the four elements in the development process (listed under 1, above) will affect the these process uncertainties.
4. Determine how the overall requirements uncertainties would be affected by the combined effects of the process uncertainties.
5. Considering the overall requirements uncertainty, choose a primary strategy for information requirements.
If uncertainty is low, then the strategy should be to:
Ask the users what their requirements are. This presupposes that the users are able to structure their requirements and express them objectively. Asking can be done through
- questions, which may be closed or open,
- brainstorming sessions, totally open or guided, and
- group consensus as aimed at in Delphi methods and group norming.
Wherever there are close similarities in the organization and easy replication is possible, information requirements can be derived from the existing system.
Characteristics of the utilizing system should be analysed and synthesized. This is particularly useful if the utilizing system is undergoing change.
If uncertainty is high, discover from experimentation by instituting an information system and learning through that the additional information requirements. This is 'prototyping' or 'heuristic development' of an information system.
6. Select an appropriate method.
Types of MIS
MIS can be categorized  as follows:
Databank information systems refer to creation of a database by classifying and storing data which might be potentially useful to the decision-maker. The information provided by the databank is merely suggestive. The decision-maker has to determine contextually the cause and effect relationships. MIS designs based on the databank information system are better suited for unstructured decisions.
Predictive information systems provide source and data along with predictions and inferences. The decision-maker can also enquire as to 'what if a certain action is taken?' and whether the underlying assumptions are true. This type of MIS is useful for semi-structured decisions.
Decision-making information systems provide expert advice to the decision-maker either in the form of a single recommended course of action or as criteria for choice, given the value system prevailing in the organization. The decision-maker has just to approve, disapprove or modify the recommendation. Decision-making information systems are suitable for structured decisions. Operations research and cost-effectiveness studies are examples of decision-making information systems.
Decision-taking information systems integrate predictive information and decision-making systems.
.Explain the functions aiding MIS with respect to Production, Marketing, Finance and Personnel?

The principal business functions in a business firm are:
1. Marketing and sales
2. Production
3. Accounting and finance
4. Human resources
Figure 12.1: Outlines a general view of information systems supporting a company's operations and management. Emphasize that management support systems (MRS), decision support systems (DSS), and executive information systems (EIS), rest on the foundation of transaction processing systems (TPS) that support business operations. TPSs are the major source of data used by the higher-level systems to derive information. Professional support systems (PSS) and office information systems (OIS), which support individual and group knowledge work, are also a part of this foundation.
12.2 Marketing Information Systems [Figure 12.2 & Figure 12.3]
Marketing activities are directed toward planning, promoting, and selling goods and services to satisfy the needs of customers and the objectives of the organization.
Marketing information systems support decision making regarding the marketing mix. These include:
1. Product
2. Price
3. Place
4. Promotion
Figure 12.3 illustrates the structure of the entire marketing information system. In order to support decision making on the marketing mix, a marketing information system draws on several sources of data and information.
Sources of Data and Information for Marketing: Boundary-Spanning and Transaction Processing Subsystems
A marketing information system relies on external information to a far greater degree than other organizational information systems. It includes two subsystems designed for boundary spanning - bringing into the firm data and information about the marketplace.
The objective of marketing research is to collect data on the actual customers and the potential customers, known as prospects. The identification of the needs of the customer is a fundamental starting point for total quality management (TQM). Electronic commerce on the WEB makes it easy to compile statistics on actual buyer behaviour.
Marketing research software supports statistical analysis of data. It enables the firm to correlate buyer behaviour with very detailed geographic variables, demographic variables, and psychographic variables.
Marketing (competitive) intelligence is responsible for the gathering and interpretation of data regarding the firm's competitors, and for the dissemination of the competitive information to the appropriate users. Most of the competitor information comes from corporate annual reports, media-tracking services, and from reports purchased from external providers, including on-line database services. The Internet has become a major source of competitive intelligence.
Marketing Mix Subsystems
The marketing mix subsystems support decision making regarding product introduction, pricing, promotion (advertising and personal selling), and distribution. These decisions are integrated into the sales forecast and marketing plans against which the ongoing sales results are compared.
Marketing mix subsystems include:
1. Product subsystem
2. Place subsystem
3. Promotion subsystem
4. Price subsystem
5. Sales forecasting
Product Subsystem
The product subsystem helps to plan the introduction of new products. Continually bringing new products to market is vital in today's competitive environment of rapid change. The product subsystem should support balancing the degree of risk in the overall new-product portfolio, with more aggressive competitors assuming higher degrees of risk for a potentially higher payoff.
Although decisions regarding the introduction of new products are unstructured, information systems support this process in several ways:
1. Professional support systems assist designers in their knowledge work
2. DSSs are used to evaluate proposed new products
3. With a DSS, a marketing manager can score the desirability of a new product.
4. Electronic meeting systems help bring the expertise of people dispersed in space and time to bear on the problem
5. Information derived from marketing intelligence and research is vital in evaluating new product ideas.
Place Subsystem
The place subsystem assists the decision makers in making the product available to the customer at the right place at the right time. The place subsystem helps plan the distribution channels for the product and track their performance.
The use of information technology has dramatically increased the availability of information on product movement in the distribution channel. Examples include:
1. Bar-coded Universal Product Code (UPC)
2. Point-of-sale (POS) scanning
3. Electronic data interchange (EDI)
4. Supports just-in-time product delivery and customized delivery
Promotion Subsystem
The promotion subsystem is often the most elaborate in the marketing information system, since it supports both personal selling and advertising. Media selection packages assist in selecting a mix of avenues to persuade the potential purchaser, including direct mail, television, print media, and the electronic media such as the Internet and the WEB in particular. The effectiveness of the selected media mix is monitored and its composition is continually adjusted.
Database marketing relies on the accumulation and use of extensive databases to segment potential customers and reach tem with personalized promotional information.
The role of telemarketing, marketing over the telephone, has increased. Telemarketing calls are well supported by information technology.
Sales management is thoroughly supported with information technology. Customer profitability analysis help identify high-profit and high-growth customers and target marketing efforts in order to retain and develop these accounts.
Sales force automation, involves equipping salespeople with portable computers tied into the corporate information systems. This gives the salespeople instantaneous access to information and frees them from the reporting paperwork. This increases selling time and the level of performance. Access to corporate databases is sometimes accompanied by access to corporate expertise, either by being able to contact the experts or by using expert systems that help specify the product meeting customer requirements.
Price Subsystem
Pricing decisions find a degree of support from DSSs and access to databases that contain industry prices. These highly unstructured decisions are made in pursuit of the companys pricing objectives. General strategies range from profit maximization to forgoing a part of the profit in order to increase a market share.
Information systems provide an opportunity to finely segment customer groups, and charge different prices depending on the combination of products and services provided, as well as the circumstances of the sale transaction.
Sales Forecasting
Based on the planned marketing mix and outstanding orders, sales are forecast and a full marketing plan is developed. Sale forecasting is an area where any quantitative methods employed must be tempered with human insight and experience. The actual sales will depend to a large degree on the dynamics of the environment.
Qualitative techniques are generally used for environmental forecasting - an attempt to predict the social, economic, legal, and technological environment in which the company will try to realize its plans. Sales forecasting uses numerous techniques, which include:
1. Group decision making techniques are used to elicit broad expert opinion
2. Scenario analysis in which each scenario in this process is a plausible future environment
3. Extrapolation of trends and cycles through a time-series analysis.
12.3 Manufacturing Information Systems
Global competitive pressures of the information society have been highly pronounced in manufacturing and have radically changed it. The new marketplace calls for manufacturing that are:
1. Lean - highly efficient, using fewer input resources in production through better engineering and through production processes that rely on low inventories and result in less waste.
2. Agile - fit for time-based competition. Both the new product design and order fulfilment are drastically shortened.
3. Flexible - able to adjust the product to a customer's preferences rapidly and cost effectively.
4. Managed for quality - by measuring quality throughout the production process and following world standards, manufacturers treat quality as a necessity and not a high-price option.
Structure of Manufacturing Information Systems [Figure 12.5]
Information technology must play a vital role in the design and manufacturing processes. Manufacturing information systems are among the most difficult both to develop and to implement.
TPSs are embedded in the production process or in other company processes. The data provided by the transaction processing systems are used by management support subsystems, which are tightly integrated and interdependent.
Manufacturing information subsystems include:
1. Product design and engineering
2. Product scheduling
3. Quality control
4. Facilities planning, production costing, logistics and inventory subsystems
Product Design and Engineering
Product design and engineering are widely supported today by computer-aided design (CAD) and computer-aided engineering (CAE) systems. CAD systems assist the designer with automatic calculations and display of surfaces while storing the design information in databases. The produced designs are subject to processing with CAE systems to ensure their quality, safety, manufacturability, and cost-effectiveness. CAD/CAE systems increasingly eliminate paperwork from the design process, while speeding up the process itself. As well, the combined techniques of CAD/CAE and rapid prototyping cut time to market.
Product Scheduling
Production scheduling is the heart of the manufacturing information system. This complex subsystem has to ensure that an appropriate combination of human, machinery, and material resources will be provided at an appropriate time in order to manufacture the goods.
Production scheduling and the ancillary processes are today frequently controlled with a manufacturing resource planning system as the main informational tool. This elaborate software converts the sales forecast for the plants products into a detailed production plan and further into a master schedule of production.
Computer integrated manufacturing (CIM) is a strategy through which a manufacturer takes control of the entire manufacturing process. The process starts with CAD and CAE and continues on the factory floor where robots and numerically controlled machinery are installed - and thus computer-aided manufacturing (CAM) is implemented. A manufacturing system based on this concept can turn out very small batches of a particular product as cost-effectively as a traditional production line can turn out millions of identical products. A full-fledged CIM is extremely difficult to implement; indeed, many firms have failed in their attempts to do so.
Quality Control
The quality control subsystem of a manufacturing information system relies on the data collected on the shop floor by the sensors embedded in the process control systems.
Total quality management (TQM) is a management technique for continuously improving the performance of all members and units of a firm to ensure customer satisfaction. In particular, the principles of TQM state that quality comes from improving the design and manufacturing process, rather than Ainspecting out@ defective products. The foundation of quality is also understanding and reducing variation in the overall manufacturing process.
Facilities Planning, Production Costing, Logistics and Inventory Subsystems
Among the higher-level decision making supported by manufacturing information systems are facilities planning - locating the sites for manufacturing plants, deciding on their production capacities, and laying out the plant floors.
Manufacturing management requires a cost control program, relying on the information systems. Among the informational outputs of the production costing subsystem are labor and equipment productivity reports, performance of plants as cost centers, and schedules for equipment maintenance and replacement.
Managing the raw-materials, packaging, and the work in progress inventory is a responsibility of the manufacturing function. In some cases, inventory management is combined with the general logistics systems, which plan and control the arrival of purchased goods into the firm as well as shipments to the customers.
12.4 Accounting and Financial Information Systems [Figure 12.9]
The financial function of the enterprise consists in taking stock of the flows of money and other assets into and out of an organization, ensuring that its available resources are properly used and that the organization is financially fit. The components of the accounting system include:
1. Accounts receivable records
2. Accounts payable records
3. Payroll records
4. Inventory control records
5. General ledgers
Financial information systems rely on external sources, such as on-line databases and custom produced reports, particularly in the areas of financial forecasting and funds management. The essential functions that financial information systems perform include:
1. Financial forecasting and planning
2. Financial control
3. Funds management
4. Internal auditing
Financial Forecasting
Financial forecasting is the process of predicting the inflows of funds into the company and the outflows of funds from it for a long term into the future. Outflows of funds must be balanced over the long term with the inflows. With the globalization of business, the function of financial forecasting has become more complex, since the activities in multiple national markets have to be consolidated, taking into consideration the vagaries of multiple national currencies. Scenario analysis is frequently employed in order to prepare the firm for various contingencies.
Financial forecasts are based on computerized models known as cash-flow models. They range from rather simple spreadsheet templates to sophisticated models developed for the given industry and customized for the firm or, in the case of large corporations to specify modeling of their financial operations. Financial forecasting serves to identify the need for funds and their sources.
Financial Control
The primary tools of financial control are budgets. A budget specifies the resources committed to a plan for a given project or time period. Fixed budgets are independent of the level of activity of the unit for which the budget is drawn up. Flexible budgets commit resources depending on the level of activity.
Spreadsheet programs are the main budgeting tools. Spreadsheets are the personal productivity tools in use today in budget preparation.
In the systems-theoretic view, budgets serve as the standard against which managers can compare the actual results by using information systems. Performance reports are used to monitor budgets of various managerial levels. A performance report states the actual financial results achieved by the unit and compares them with the planned results.
Along with budgets and performance reports, financial control employs a number of financial ratios indicating the performance of the business unit. A widely employed financial ratio is return on investment (ROI). ROS shows how well a business unit uses its resources. Its value is obtained by dividing the earnings of the business unit by its total assets.
Funds Management
Financial information systems help to manage the organization's liquid assets, such as cash or securities, for high yields with the lowest degree of loss risk. Some firms deploy computerized systems to manage their securities portfolios and automatically generate buy or sell orders.
Internal Auditing
The audit function provides an independent appraisal of an organization's accounting, financial, and operational procedures and information. All large firms have internal auditors, answerable only to the audit committee of the board of directors. The staff of the chief financial officer of the company performs financial and operational audits. During a financial audit, an appraisal is made of the reliability and integrity of the company's financial information and of the means used to process it. An operational audit is an appraisal of how well management utilizes company resources and how well corporate plans are being carried out.
12.5 Human Resource Information Systems
A human resource information system (HRIS) supports the human resources function of an organization with information. The name of this function reflects the recognition that people who work in a firm are frequently its most valuable resources. The complexity of human resource management has grown immensely over recent years, primary due to the need to conform with new laws and regulations.
A HRIS has to ensure the appropriate degree of access to a great variety of internal stakeholders, including:
1. The employees of the Human Resources department in performance of their duties
2. All the employees of the firm wishing ti inspect their own records
3. All the employees of the firm seeking information regarding open positions or available benefit plans
4. Employees availing themselves of the computer-assisted training and evaluation opportunities
5. Managers throughout the firm in the process of evaluating their subordinates and making personnel decisions
6. Corporate executives involved in tactical and strategic planning and control
Transaction Processing Subsystems and Databases of Human Resource Information Systems
At the heart of HRIS are its databases, which are in some cases integrated into a single human resource database. The record of each employee in a sophisticated employee database may contain 150 to 200 data items, including the personal data, educational history and skills, occupational background, and the history of occupied positions, salary, and performance in the firm. Richer multimedia databases are not assembled by some firms in order to facilitate fast formation of compatible teams of people with complementary skills.
Other HRIS databases include:
1. Applicant databases
2. Position inventory
3. Skills inventory
4. Benefit databases
5. External databases
Information Subsystems for Human Resource Management
The information subsystems of HRIS reflect the flow of human resources through the firm, from planning and recruitment to termination. A sophisticated HRIS includes the following subsystems:
1. Human resource planning
2. Recruiting and workforce management
3. Compensation and benefits
4. Government reporting and labour relations support
Human Resource Planning
To identify the human resources necessary to accomplish the long-term objectives of a firm, we need to project the skills, knowledge, and experience of the future employees.
Recruiting and Workforce Management
Based on the long-term resource plan, a recruitment plan is developed. The plan lists the currently unfilled positions and those expected to become vacant due to turnover.
The life-cycle transitions of the firm's workforce - hiring, promotion and transfer, and termination - have to be supported with the appropriate information system components.
Compensation and Benefits
Two principal external stakeholders have an abiding interest in the human resource policies of organizations. These are:
1. Various levels of government
2. Labor unions
12.6 Integrating Functional Systems for Superior Organizational Performance
Functional information systems rarely stand alone. This reflects the fact that the functions they support should, as much as possible, connect with each other seamlessly in order to serve the firms customers. Customers expect timely order delivery, often on a just-in-time schedule; quality inspection to their own standards; flexible credit terms; post-delivery service; and often, participation in the product design process.
Information technology provides vital support for integrating  for integrating operations with the firm's business partners, its customers and suppliers.


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