Management and Functional Areas
1. In the light of the system, describe the decisions to be made in the area of strategic planning, managerial control and operational control? What information would you require to make such decisions? Ans. A management information system (MIS) is an organized combination of people, hardware, communication networks and data sources that collects, transforms and distributes information in an organization. An MIS helps decision making by providing timely, relevant and accurate information to managers. The physical components of an MIS include hardware, software, database, personnel and procedures.
Management information is an important input for efficient performance of various managerial functions at different organization levels. The information system facilitates decision making. Management functions include planning, controlling and decision making. Decision making is the core of management and aims at selecting the best alternative to achieve an objective. The decisions may be strategic, tactical or technical. Strategic decisions are characterized by uncertainty. They are future oriented and relate directly to planning activity. Tactical decisions cover both planning and controlling.
Technical decisions pertain to implementation of specific tasks through appropriate technology. There are 3 areas in the organization. They are strategic, managerial and operational control. Strategic decisions are characterized by uncertainty. The decisions to be made in the area of strategic planning are future oriented and relate directly to planning activity. Here basically planning for future that is budgets, target markets, policies, objectives etc. is done. This is basically a top level where up-to-the minute information on the food items ordered and breaks out percentages showing sales of each item versus total sales is provided.
The top level where strategic planning is done compares the weekly sales totals versus food costs, allowing planning for tighter cost controls. The decisions to be made in the area of managerial control are largely dependent upon the information available to the decision makers. It is basically a middle level where planning of menus is done and whenever an order is voided, the reasons for the void are keyed in which later helps in management decisions, especially if the voids are related to food or service. The managerial control that is middle level also gets customer feedback and is responsible for customer satisfaction.
The decisions to be made in the area of operational control pertain to implementation of specific tasks through appropriate technology. This is basically a lower level where the waiter takes the order and enters it online via one of the six terminals located in the restaurant dining room and the order is routed to a printer in the appropriate preparation area. The item’s ordered list and the respective prices are automatically generated. The cooks send ‘out of stock’ message when the kitchen runs out of a food item, which is basically displayed on the dining room terminals when waiter tries to order that item.
This basically gives the waiters faster feedback, enabling them to give better service to the customers. The information required to make such decision must be such that it highlights the trouble spots and shows the interconnections with the other functions. It must summarize all information relating to the span of control of the manager. The information required to make these decisions can be strategic, tactical or operational information. Advantages of an online computer system: * Eliminates 3-carbon copies * Waiters’ handwriting issues * Out-of-stock message Faster feedback, helps waiters to service the customers Advantages to management * Sales figures and percentages item-wise * Helps in planning the menu * Cost accounting details 2. What would make the system a more complete MIS rather than just doing transaction processing? Ans. If the management provides sufficient incentive for efficiency and results to their customers, it would make the system a more complete MIS and so the MIS should support this culture by providing such information which will aid the promotion of efficiency in the management services and operational system.
It is also necessary to study the keys to successful Executive Information System (EIS) development and operation. Decision support systems would also make the system a complete MIS as it constitutes a class of computer-based information systems including knowledge-based systems that support decision-making activities. DSSs serve the management level of the organization and help to take decisions, which may be rapidly changing and not easily specified in advance.
Improving personal efficiency, expediting problem solving (speed up the progress of problems solving in an organization), facilitating interpersonal communication, promoting learning and training, increasing organizational control, generating new evidence in support of a decision, creating a competitive advantage over competition, encouraging exploration and discovery on the part of the decision maker, revealing new approaches to thinking about the problem space and helping automate the managerial processes would make the system a complete MIS. Information System INTRODUCTION As Information system (IS) can be defined technically as a set of interrelated components that collect (or retrieve), process, store and distribute information to support decision making, coordination, and control in an organization. ’ (Laudon, Laudon,) However, Information System has to go through three basic activities, which include input, processing, and output in order to transform its raw data into essential information. Meanwhile, from the business prospective, IS represents an organizational and management solution based on information technology to a challenge posed by the environment. Laudon, Laudon,) Information System is useful for helping organizations to deal with changes in global economies and business enterprise. Firms use Information System on communication and analytic tools for conducting trade and managing business on a global sale. Information System is the basic of service in knowledge economies; new knowledge based products and help firms manage their knowledge assets. By using Information System, a business can adopt flatter, more decentralized structures and more flexible arrangement of employees and managements. (Laudon, Laudon,)
Nowadays Information System (IS) has become a vital component of successful organisation particularly for manager in order for organisation to grow and survive. With Information System, it can provide companies with require practical and functional information that leads to efficient, operation, competitive advantage and effective management. On the other hand, Information System can critically damage and negatively effect it prospect as well as bring dissatisfaction and unable to fulfill all the requirements for success and survival if Information System appropriately sustain the business objective operation strategy of an organisation. 98 CHAPTER 7TRANSACTION PROCESSING, FUNCTIONAL APPLICATIONS The major functional areas in many companies are the production operations, marketing, human resources, accounting and ? nance departments. Traditionally, information systems were designed within each functional area, to support the area by increasing its internal effectiveness and ef? ciency. However, as we will discuss in Chapter 9, the traditional functional hierarchical structure may not be the best structure for some organizations, because certain business processes involve activities that are performed in several functional areas.
Suppose a cus- tomer wants to buy a particular product. When the customer’s order arrives at the marketing department, the customer’s credit needs to be approved by ? nance. Someone checks to ? nd if the product is in the warehouse (usually in the production/operations area). If it is there, then someone needs to pack the product and forward it to the shipping department, which arranges for deliv- ery. Accounting prepares a bill for the customer, and ? nance may arrange for shipping insurance.
The ? ow of work and information between the different departments may not work well, creating delays or poor customer service. One possible solution is to restructure the organization. For example, the company can create cross-functional teams, each responsible for performing a complete business process. Then, it is necessary to create appropriate informa- tion systems applications for the restructured processes. As we will discuss in Chapter 9, this arrangement can be a dif? ult-to-implement solution. In other cases, the company can use IT to create minor changes in the business processes and organizational structure, but this solution may not solve problems such as lack of coordination or an ineffective supply chain. One other remedy may be an integrated approach that keeps the functional departments as they are, but creates an integrated supportive information system to help communication, coordination, and control. The integrated approach is discussed in Section 7. 8.
But even if the company were to restructure its organization, as suggested in Chapter 9, the functional areas might not disappear completely since they contain the expertise needed to run the business. Therefore, it is necessary to drastically improve operations in the functional areas, increasing productivity, quality, speed, and customer service, as we will see in this chapter. Before we demonstrate how IT facilitates the work of the functional areas, and makes possible their integration, we need to see how they are organized and how they relate to the corporate value chain and the supply chain.
The value chain model, introduced in Chapter 3, views activities in organizations as either primary (re? ecting the ? ow of goods and services) or secondary (sup- porting the primary activities). The organizational structure of ? rms is intended to support both of these types of activities. Figure 7. 2 maps the majorfunctional departmentsonto the value chain structure. As described in Chapter 2, the supply chain is a business process that links all the procurement from suppliers, the transformation activities inside a ? rm, and the distribution of goods or services to customers via wholesalers and retailers.
In this chapter we present innovative applications that increase mainly internal functional ef? ciency, and we provide examples of improved communication and collaboration with customers and business partners as a result of these applica- tions. First, let us examine the characteristics of functional information systems. Functional information systems share the following characteristics: ? Composed of smaller systems. A functional information system consists of several smaller information systems that support speci? c activities performed in the functional area Finance
Integration Integration External Systems Other Internal Systems Customers Partners Government KM Engineering Others I n t e g r a t i o n In te g ra tio n Operators CRM Accounting Marketing TPS HRM FIGURE 7. 1The functional areas, TPS, CRM, and integration connection. Note the ? ow of information from the TPS to the functional systems. Flow of informa- tion between and among functional systems is done via the integration compo- nent. (Not showing in the ?gure are applications dis- cussed in other chapters, such as e-commerce and knowledge management. ) 7. 1FUNCTIO