Chapter 14
Understanding
Information
and e-Business
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 Internet helps in decision making,
communications, sales, and recruiting and training.
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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Chapter 14 | Slide 2
Information and Risk
 Accurate/complete information = no risk
 Decision without information = gamble
 Information  = better decisions
Information Rule: When research confirms the
same results each time it studies the same
circumstances
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Chapter 14 | Slide 3
Figure 14.1: The Relationship Between
Information and Risk
When the amount of available information is high,
managers tend to make better decisions. When the
amount of information is low, managers have a higher
risk of making a poor decision.
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Chapter 14 | Slide 4
Data
…numerical or verbal descriptions
that usually result from some sort
of measurement.
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Chapter 14 | Slide 5
Information
…data presented in a form that is useful
for a specific purpose.
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Chapter 14 | Slide 6
Data Versus Information
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Chapter 14 | Slide 7
Data Versus Information (cont’d.)
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Chapter 14 | Slide 8
Knowledge Management
…a firm’s procedures for generating, using,
and sharing the data and information
contained in the firm’s databases.
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Chapter 14 | Slide 9
Database
…a single collection of data stored in one
place that can be used by people throughout
an organization to make decisions.
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Chapter 14 | Slide 10
Management Information System
…a system that provides managers and
employees with the information they need to
perform their jobs as effectively as possible.
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Chapter 14 | Slide 11
Figure 14.2: Management
Information System (MIS)
After an MIS is installed, a user can get information directly from it
without having to go through other people in the organization.
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Chapter 14 | Slide 12
Purpose of MIS/IT
 Distribute timely &
useful information
 From internal &
external sources
 To managers &
employees who
need it
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Chapter 14 | Slide 13
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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Chapter 14 | Slide 14
Manager’s Information Requirements
 Managers
• Plan for future
• Implement in present
• Evaluate the past
 Areas of management needing information
•
•
•
•
•
Finance
Operations
Marketing
Human resources
Administration
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Chapter 14 | Slide 15
Administrative Managers Make Sure...
 Information used in
consistent manner
 Managers/employees
receive skills training
for using MIS
 Money available to
update MIS when
needed
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Chapter 14 | Slide 16
Size/Complexity of System Mistakes
 Save on initial costs = system too small
or overly simple
 Too large/complex = unused capacity and
complexity
• Increased cost of owning & operating
• Probably difficult to use
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Chapter 14 | Slide 17
Figure 14.3: Five Management
Information System Functions
Every MIS must be tailored to the
organization it serves and must
perform five functions.
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Chapter 14 | Slide 18
Data Bank
Should Include...
 Past/current data
 Relevant data
 Accurate data
 External Sources
 Internal sources
• Managers
• Employees
• Company records
& reports
• Minutes of meetings
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•
•
•
•
•
•
•
•
Customers
Suppliers
Bankers
Trade/financial publications
Industry conferences
Online computer services
Government sources
Data-gathering
organizations
Chapter 14 | Slide 19
Data Cautions
 Cost of obtaining data from external
sources can be high
 Outdated/incomplete data usually yield
inaccurate information
 Computers generally do not make mistakes
but people who use them can
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Chapter 14 | Slide 20
Storing Data
 Method depends on size of organization
 Small: enter information directly to hard drive
 Medium to large: larger system through network
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Chapter 14 | Slide 21
Updating Data
 Ensure information is accurate, complete,
and up to date
 Frequency of update depends on speed
of change and how often used
 May be updated according to
predetermined schedule
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Chapter 14 | Slide 22
Data Processing
…the transformation of data into a form that
is useful for a specific purpose.
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Chapter 14 | Slide 23
Statistic
…a measure that summarizes a particular
character of an entire group of numbers.
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Chapter 14 | Slide 24
Business Report
 Introduction
•
•
•
•
Sets the stage
Describes problem
Identifies research techniques
Previews material
 Body
•
•
Objectively describes facts
Is basis for conclusions/recommendations
 Conclusions
•
•
Statements of fact on findings
Specific, practical, based on evidence
 Recommendations
•
•
How problem might be solved
Specific, practical, based on evidence
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Chapter 14 | Slide 25
Visual Display
…a diagram that represents several items of
information in a manner that makes
comparison easier.
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Chapter 14 | Slide 26
Figure 14.4: Statistics
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Chapter 14 | Slide 27
Figure 14.5: Typical Visual Displays Used in
Business Presentations
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Chapter 14 | Slide 28
Making Smart Decisions
 Decision-Support System
Provides relevant data/information to help firm’s
employees make decisions
 Executive Information System
Facilitates/supports decision-making needs of top
managers by providing easy access to internal and
external information
 Expert System
Uses artificial intelligence to imitate human’s ability
to think
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Chapter 14 | Slide 29
Helping Employees Communicate
 Groupware
Facilitates management of large projects among
dispersed employees + group activities: problem solving,
brainstorming
 Collaborative learning system
Work environment that allows problem-solving
participation by all team members
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Chapter 14 | Slide 30
Customer- Relationship Management
…programs focus on the special
informational needs of sales personnel.
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Chapter 14 | Slide 31
Recruiting and Training Employees
 Post employee needs
on website
 Reach potential
candidates around
the globe
 Organize data in way
most useful to the firm
 Internet education
delivery
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Chapter 14 | Slide 32
Table 14.2: Current Business
Application Software
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Chapter 14 | Slide 33
Information Society
…a society in which large groups of
employees generate or depend on
information to perform their jobs.
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Chapter 14 | Slide 34
Internet, Intranet, and Networks
 Internet: worldwide network of linked computers
 World Wide Web: Internet’s environment
of audio, visual, and text data
• Internet Service Providers (ISPs)
• Broadband technology
 Intranet: small version of Internet used inside
firm
 Computer network: 2+ computers linked,
sharing data/information
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Chapter 14 | Slide 35
Top Ten Countries
in Percentage of Internet Users
Italy
South Korea
France
UK
Brazil
Germany
India
Japan
USA
China
0.0%
5.0%
10.0%
15.0%
20.0%
Source: “Top 20 Countries with the Highest Number of Internet Users,” Internet World Stats—Usage
and Population Statistics, 6/30/08, www.internetworldstats.com/top20.htm.
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Chapter 14 | Slide 36
Computer Networks
 Wide-Area Network (WAN): connects
computers over a large geographic area
 Local-Area Network (LAN): connects
computers in close proximity to each other
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Chapter 14 | Slide 37
Internet Terms
 Uniform Resource Locator (URL)
 Web Browser
 Hypertext Transfer Protocol: words or phrases
highlighted or underlined on web page; link to
other websites
 Search Engine
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Chapter 14 | Slide 38
Table 14.3: Tips for Website Development
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Chapter 14 | Slide 39
e-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.
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Chapter 14 | Slide 40
Outsourcing
…the process of finding outside vendors and
suppliers that provide professional help,
parts, or materials at a lower cost.
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Chapter 14 | Slide 41
Assumptions for
Satisfying Needs Online
 Internet has created new customer needs
 E-business can satisfy those needs and more
traditional ones
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Chapter 14 | Slide 42
Figure 14.6: Combining
e-Business Resources
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Chapter 14 | Slide 43
Revenue Stream
…a source of revenue flowing into a firm.
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Chapter 14 | Slide 44
Online Revenue Streams
 Reaching new customers
 Intelligent information systems
 Information for comparative shopping
 Advertising & subscription fees
 Sponsors
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Chapter 14 | Slide 45
Figure 14.7: Planning a New Internet Business or
Online Presence for Existing Business
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Chapter 14 | Slide 46
Business Model
…represents a group of common characteristics
and methods of doing business to generate
sales revenues and reduce expenses.
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Chapter 14 | Slide 47
Primary e-Business Models
 Business-to-Business (B2B): firms conduct
business with other businesses
• Sales transactions between businesses
• Bidding on products and services
 Business-to-Consumer (B2C): firms conduct
business with individual buyers
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Chapter 14 | Slide 48
Table 14.4: Other Business Models that
Perform Specialized e-Business Activities
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Chapter 14 | Slide 49
Figure 14.8: Internal and External Forces
That Affect an eBusiness
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Chapter 14 | Slide 50
The Future of e-Business: Growth,
Opportunities, and Challenges
 Internet, related technologies will continue to expand
 Opportunity: only 1.2 billion people of world’s nearly
7 billion are online
 U.S. = 17 percent of all users = largest group online
 Of 300 million U.S. population, 210 million use Internet;
140 million actively
 70% of Americans using Internet; growth potential limited
 Projections: worldwide users to exceed 2 billion by 2012
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Chapter 14 | Slide 51
Using the Internet
• What do e-business players read to keep up
to date on people, ideas, and trends in this
fast-paced world?
Wired: www.wired.com
Fast Company: www.fastcompany.com
The Industry Standard: www.thestandard.com
CNET News: www.news.com
ZDNet: www.zdnet.com
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Chapter 14 | Slide 52
Chapter Quiz
1. Data presented in a form useful for a specific
purpose is
a)
b)
c)
d)
e)
factual data.
information.
statistical data.
a computer information base.
a computer network.
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Chapter 14 | Slide 53
Chapter Quiz
2. A type of software that facilitates the management of large
projects among geographically dispersed employees is called
a)
b)
c)
d)
e)
database management.
a spreadsheet.
CIM.
groupware.
networking.
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Chapter 14 | Slide 54
Chapter Quiz
3.
A(n)____________ is a smaller version of the
Internet for use within a firm.
a) WAN
b) LAN
c) Intranet
d) Broadband
e) ISP
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Chapter 14 | Slide 55
Chapter Quiz
4. The term that refers to buying and selling
online is
a)
b)
c)
d)
e)
Internet business.
e-business.
online sales.
e-marketing.
e-sales.
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Chapter 14 | Slide 56
Chapter Quiz
5. Business firms that conduct business with other
business firms are using a(n)
a)
b)
c)
d)
e)
B2B approach.
B2C approach.
profit revenue stream.
marketing revenue stream.
economic benefit revenue stream.
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Chapter 14 | Slide 57