the role of information in decision making itfm – outcome 1
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The Role of Information in Decision Making
ITFM – Outcome 1
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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
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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Could be out of date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
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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
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Features of Good InformationITFM – Outcome 1
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Features of Good Information
Timely
Accurate
Appropriate
Available
Complete
Concise
Cost-effective
Objective
CccOAaaT
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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
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Impact of ICT on WorkflowITFM – Outcome 1