presentation-7

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Who am I?
The Presenter
Group 6
Mr. Chida Jones
Bsc (Hons) Accountancy
Question:
The goal of any part of the information system is to help the
decision-making process. Robert Anthony developed an
approach for categorizing the decision-making activities within
an organization. Having identified three levels of such
activities, he stated that decision making differs so significantly
between these levels that different information systems are
needed at each level. Give these levels and the decision
problems for each level, a tabular presentation is encouraged
and a write up of the information needs an accounting
information system should provide for such decisions to be
made.
 Decision makers are found at all levels in an
organization, and this is a central aspect of all
management roles. All managerial activities
revolve around decision making.
 In attempting to categorize how and where
information is used in an organization to
support decision making, it is useful to define
a taxonomy of terms. One good starting point
for building a framework is the Anthony
Triangle, which diagrams operational
activities, management control, and strategic
planning.
Goals,
policies
middle
management
Strategic
Tactical/
management
control
Execution
Operational
1. Strategic Planning activities
A priority for top management
The process involves:
Definition of goals, policies
Determination of organizational objectives.
 formulating strategic organizational goals and
undertaking
Allocating task assignments and providing
resources to those employees (execution)
Testing realization of the goals (evaluation)
Undertaking corrective/ preventive measures if
goals are not insufficiently realized (adjusting)
2. Management Control
Activities are primarily the concern of an
organization's middle management.
It refers to the acquisition and efficient use of
resources in the accomplishment of organizational
goals
Managers assure that resources are obtained and
used effectively and efficiently to accomplish
organizational goals and objectives identified by
top management.
The decisions made by middle management are
sometimes called tactical decisions.
3. Operational control
Activities are implemented by department
heads and supervisors, the lowest level
managers in an organization.
It refers to the effective and efficient use
of existing facilities and resources to carry
out activities within budget constraints.
Their aim is to achieve those specific tasks
assigned to them by middle managers.
Decision problems
There are three types of decision
problems which management at the
three levels face namely:
1. Unstructured problems
2. Structured problems
3. Semi-structured problems
Unstructured problems
Problems for which there are no precise solution
techniques.
Either the data requirements are uncertain, the
procedures are not specified, or the solution objectives
have not been fully developed. Top management
usually face these problems.
Many alternatives are available but there is little
guidance concerning the best one to pursue, for
example, among all the possible new markets or new
products top management must choose those that the
organization can deliver successfully within the
existing human and financial constraints
Structured problems
Problems in which data, procedures and
objectives are known with certainty. They
are well suited for traditional data
processing techniques.
These are usually faced at the operational
level.
Semi-structured problems
 Usually faced by middle managers and
cannot be easily classified as structured or
unstructured.
 Middle managers receive a set of objectives
but have some freedom in choosing how to
attain them.
Decision Problems and managerial
activities levels
structured
Operational
control
Management
control
Strategic
planning
Accounts payable
Responsibility
accounting
Tanker fleet mix
Cash disbursement
Semi-structured
Inventory control
Warehouse and
factory location
Budget preparation Mergers and
acquisitions
Production
scheduling
unstructured
Cash management
Personnel
management
New products
R&D planning
Characteristic
Levels
Anthony’s
Taxonomy
Operational
Tactical
Strategic
Information users
Operational staff and Middle managers,
supervisors
business analysts
Executives, senior
analysts
Nature of
decisions
Structured
Semi-structured
Unstructured
Scope
Narrow
Intermediate
Broad
Term focus /
Time Horizon
Day-to-day, usually
with immediate
ramifications
Within the current
12-month plan
Future-oriented
(2 year +), with trend
analysis over time
Characteristc
Levels
Anthony’s
Taxonomy
Operational
Tactical
Strategic
Information
systems
Transaction oriented
(OLTP)
Online analytical
systems (OLAP),
Decision Support
Systems (DSS)
Online analytical
systems (OLAP),
Executive
Information
Systems (EIS)
Data relationships,
source
Within datamart/
subject area, internal
Includes some
related
datamarts, internal
Cross enterprise
integration plus
external
Data refresh rate
Daily or more often
By relevant business
period or cycle
Annually or by event
Characteristic
Levels
Anthony’s
Taxonomy
Operational
Tactical
Strategic
Summarization
Detailed
Exception and
detailed
Multidimensional with
drill-down to detail
Examples
Managing expenses,
cash flow, student
interaction, fee
collection, resource
allocation
Choosing
instructional
technologies,
recruiting,
personnel
development,
strategy
implementation,
project
management
New programs,
markets, restructuring,
strategic planning and
prioritization
Information needs provided by AIS
for each decision problem at each
managerial level.
Unstructured problems
 Information systems that solve unstructured problems
are largely predictive, long term forecasts about
technology, demographics and market demand and
that it consists of estimates that are relatively
inaccurate and highly summarized.
 Information system that are used to solve unstructured
problems are called Decision Support Systems.
 Information systems developed at the strategic level
often decision specific, once a decision is made,
information system used for it is no longer applicable
in its current form.
 For subsequent decisions, the system must be
modified or discarded.
Structured problems
 The information systems needed for structured
problems are different because they concentrate
on processing historical data from within the
organization. These systems are highly detailed
and in that, they are both historical and internal
and are usually inaccurate.
Structured problems (cont…)
 Examples of information systems used in solving
structured problems are transaction processing
systems and the responsibility reporting system.
Transaction Processing System
 It provides information needed by clerical managerial
personnel at the operational level. Because it is
structured, the organization can describe standard
processes for these systems which are structured.
Responsibility Reporting System
 It summarizes historical data on a periodic basis and
provides the bottom-up information flows
Semi-structured problems
 Information systems used for semi-
structured decisions tend to combine the
characteristics of systems used for
structured and unstructured decision.
 The budgeting system is an example of a
system used to solve semi-structured
systems.
Semi-structured problems (cont…..)
Budgeting System
 It allows top management to communicate
corporate objectives to all managers in the
organization. It provides for the top-down
information flows.
 A budgeting system utilizes both internal and
external data, is predictive in nature, and
involves estimates that are frequently
imprecise thus, it is used in semi-structured
decision processes involving management
control activities.
Conclusion
 while it is difficult to come up with a
satisfactory taxonomy of knowledge types,
“the question of how we are to arrive at a
taxonomy of our problem domain that
would be satisfactory” is even more difficult.
Therefore, for a specific problem domain,
such as managerial problem solving, one
approach is to use Anthony’s taxonomy.
Questions
For this Presentation
Collect the soft
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THANK YOU
TATENDA
SIYABONGA
REFERENCES
Boockholdt, J. L (1999) Accounting Information Systems:
Transactions Processing and Controls, New York:
McGraw-Hill.
Hall, J. A (2008) Accounting Information Systems, 6th
Edition, Ohio: Cengage Learning.
Vaassen E.H.J (2002) Accounting Information Systems:
A Managerial Approach, West Sussex: John Wiley& Sons
Ltd.
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