chapter 06 understanding information and e business

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Chapter SixUnderstanding Information

and e-Business

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PRIDE HUGHES KAPOOR

INTRODUCTION TOBUSINESS

ELEVENTH EDITION

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Learning Objectives

1. Examine how information can reduce risk when making a decision.

2. Discuss management’s information requirements.

3. Outline the five functions of an information system.

4. Describe how the computers and technology help improve productivity, in decision making, communications, sales, and recruiting and training.

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Learning Objectives (cont’d)

5. Analyze how computers and technology change the way information is acquired, organized, and used.

6. Explain the meaning of e-business.

7. Describe the fundamental models of e-business.

8. Explore the factors that will affect the future of e-business.

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Introduction

To improve the decision-making process, the information used by both individuals and business firms must be• Relevant

• Useful to meet a specific need

Using relevant information results in better decisions

For businesses, better intelligence and knowledge that lead to better decisions are especially important because they can provide a competitive edge over competitors and improve a firm’s profits

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

How Can Information Reduce Risk When

Making a Decision?

The Relationship Between Information and Risk

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Figure 6.1

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How Can Information Reduce Risk When

Making a Decision? (cont’d)

Information rules• Information rules based on situational experience

provide guidance in handling similar situations or circumstances

• Business research continuously looks for new rules since business conditions are always changing

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How Can Information Reduce Risk When

Making a Decision? (cont’d)

The difference between data and information• Data

- Numerical or verbal descriptions that usually result from some sort of measurement

• Information- Data presented in a form that is useful for a specific purpose

• Database- A single collection of data and information stored in one

place that can be used by people throughout an organization to make decisions

• Knowledge management (KM)- A firm’s procedures for generating, using, and sharing the

data and information

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What is a Management Information System?

Management information system (MIS)• A system that provides managers and employees with

the information they need to perform their jobs as effectively as possible

• Purpose: to distribute timely and useful information to the decision makers who need it

Information technology officer• A manager at the executive level who is responsible for

ensuring that a firm has the equipment necessary to provide the information the firm’s employees and managers need to make effective decisions

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Management Information System (MIS)

Source: Ricky W. Griffin, Management, 10/e (Mason, OH: Cengage Learning, 2011). Reprinted by permission.

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Figure 6.2

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What is a Management Information System? (cont’d)

A firm’s information requirements• Summary of future possibilities

• Summary of present situation

• Summary of past performance

• Information about five areas of management: finance, operations, marketing, human resources, and administration

Size and complexity of the system• Must be properly sized to provide sufficient information

resources without being simple or too complex to be useful

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Five Management

Information System Functions

Every MIS must be

tailored to the

organization it serves

and must perform

five functions

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Figure 6.3

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How Do Employees Use a Management

Information System?

Collecting data• Data should be relevant and accurate

• Internal sources- Managers and employees, company records and reports, minutes

of meetings, accounting data, sales data, HR data, production data

• External sources- Customers, suppliers, bankers, trade and business publications,

industry conferences, online computer services, government sources, firms specializing in gathering data

• Cautions- The cost of obtaining data from some external sources can be

quite high

- Outdated or incomplete data usually yield inaccurate information

- Check computer data (or information) if you disagree with it

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More Computers in Record Numbers

Source: The Computer Industry Almanac, Inc. Web site at www.c-i-a.com, accessed May 25, 2010.

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

How Do Employees Use a Management

Information System? (cont’d)

Storing data• An MIS must be capable of storing data until they are

needed

Updating data• Manual updating—employee inputs fresh data into

the database

• Automatic updating—MIS updates itself as data become available

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

How Do Employees Use a Management

Information System? (cont’d)

Processing data• The transformation of data into a form useful for a

specific purpose

• Statistics- A measure that summarizes a particular characteristic

of an entire group of numbers

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

How Do Employees Use a Management

Information System? (cont’d)

Presenting information

• Verbal information—list or paragraph form- A formal business report typically includes an

introduction, the body of the report, conclusions, and recommendations

• Visual displays

- Graphs, bar charts, pie charts

• Tabular displays

- Verbal or numerical information presented in columns and rows

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Defining e-Business

e-Business (electronic business)—The organized effort of individuals to produce and sell, for a profit, the products and services that satisfy society’s needs through the facilities available on the Internet

Organizing e-Business Resources

• Resources may be more specialized than in a typical business

• Outsourcing—The process of finding outside vendors and suppliers that provide professional help, parts, or materials at a lower cost.

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Combining e-Business Resources

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Figure 6.5

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Defining e-Business (cont’d)

Satisfying Needs Online

• The Internet has created new customer needs

• E-business can satisfy those needs, as well as traditional ones

- Global access to information and entertainment

- Virtually unlimited selections of products

- Opportunities for interaction

- Individually custom-tailored content

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Defining e-Business (cont’d)

Creating e-Business Profit

• Increasing Sales Revenue

• Revenue stream–source of revenue flowing into a firm

- Sales of merchandise online

- Intelligent information systems to suggest purchases to repeat online customers

- Increased sales in physical stores because of product information available online

- Advertising on web pages

- Subscription fees charged for access to online services and content

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Defining e-Business (cont’d)

Creating e-Business Profit (cont’d)

• Reducing expenses

- Offering online services that- Reduce transaction costs

- Provide information

- Provide customer assistance

- Reduces the costs of dealing with customers

- Reduces the need for as many physical store locations

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