Historical data analysis techniques: Historical data is analyzed to discover patterns or
relations that will be useful in projecting the future values of significant variables.
Historical Extrapolation Techniques: Historical data describes the past, but planning
involves the future. Estimating is generally based on analysis of past history combined
with various techniques to generate data for planning purposes.
Financial planning Computations:
Depreciation: It is a significant computation in most financial planning. It affects profit
computations because it is an expense, and it affects cash flow because of its impact on
taxes. There are several methods for computing depreciation, all of which should be
available to the planner. These methods are straight – line, double – declining – balance,
sum – of – the – year’s – digits, and production or use – basis.
Rate of return analysis is a method for computing the profitability of an investment,
taking into account the timing of the investment and the cash flows stemming from the
investment. There are several methods for computing the rate of return which should be a
part of the planning model.
Break – even analysis is a fairly simple but very useful computation for determining the
volume of activity at which there is no loss or profit. In evaluating alternatives, two
situations may have identical expected profits, but the one with a lower break – even
point is to be preferred.
Characteristics of control processes:
Control consists of procedures to determine deviations from plans and indicate corrective
action. Every major organizational function has a set of controls associated with it.
1) Control in Systems: The basic model of a system as inputs, process, and outputs,
didn’t include regulation and control of the system. For control purposes, a
feedback loop is added to the basic model. In its simplest form, outputs from the
systems are compared with the desired output(standard), and any difference
causes an input to be sent to the process to adjust the operations so that output will
be closer to the standard.
System
Input
Control
device
Feed back control for a system
Output
Sensors
Feedback, which seeks to dampen and reduce fluctuations around the standards, is termed
negative feedback. It is used in feedback control loops. Positive feedback reinforces the
direction in which the system is moving. In other words, positive feedback causes the
system to repeat or amplify an adjustment or action.
2) Negative feedback control:
Negative feedback control in a system means keeping the system operating within certain
limits of performance. For example, an automated production system is in control if
inputs of material and energy are converted to output of produced items using a standard
amount of material and energy and with the percentage of defective items falling within
allowable limits.
Input
Processor
Output
Sensor
Activating
unit
Control
Comparision
Standard
Negative Feedback control elements
Feedback control
elements
3) Law of Requisite variety:
The law of requisite variety means that for a system to be controlled, every controller
must be provided with a) enough control responses to cover all possible conditions
the system may face, b) decision rules for generating all possible control responses, c)
the authority to become a self – organizing system in order to generate control
responses.
THE BASIC MODEL OF ORGANIZATIONAL STRUCTURE:
1)Hierarchy of authority: Authority is evidenced by control over resources,
rewards, and tasks, and authorization to make decisions regarding them. As a rule,
authority is distributed according to the level in the hierarchy; i.e., the higher the level
of a position, the greater its authority. Each position has span of control. This
describes the number of immediate subordinates that a manager is to supervise.
Figure – 1
Chief
Executive
Officer
Research
Marketing
Manufactur
ing
Figure – 1 Basic hierarchical organization with functional specialization
In figure – 2 On the top, a “tall” hierarchy results from narrow spans of control at each
level. On the bottom, a “flat” hierarchical structure is shown with the chief executive
having a very wide span of control.
2) Specialization:
Specialization refers to the division of labor within the organization. A typical
organization is divided along functional lines (e.g. marketing, production, accounting,
etc.), which encourages specialization within each function (figure – 1). Generally, there
are two different ways in which tasks can be divided and assigned. The first is to give
broadly trained specialists a comprehensive range of activities to perform;
Effective of span of control on structure.
The second is to subdivide the activities into small, well – specified tasks that
nonspecialists can be easily trained to perform. Examples of the former are professionals
and craft workers; the latter is exemplified by an assembly – line occupation.
There are several important reasons for this functional specialization:
a) The two functions require different training and expertise. An analyst needs
different skills and training than an operator.
b) Segregating the two functions improves internal control because the design of
procedures is separated from their execution. If the person who designs and
implements an application also operates it, there is more opportunity for fraud or
unauthorized changes in executing the procedures.
3) Formalization: The degree of formalization is the extent to which rules
and procedures exist to handle organizational activities. One indication of
formalization is the degree to which decisions for handling various
situations are programmed, i.e., decision rules are specified in advance.
The more formalized the organization, the less discretion individual
organization members have in making decisions.
4) Centralization: Organizational centralization generally refers to the level in the
organization where decision-making occurs. In a highly centralized organization,
most decision-making occurs at the top of the hierarchy; the more decision – making
authority is delegated to lower levels, the greater the decentralization.
A flat hierarchy with a wide span of control is more likely to be associated with
decentralization of authority and decision-making.
In a highly formalized organization, operating personnel at low levels make decisions
based on rules and procedures provided to them; exceptions are referred to higher
levels for decisions.
Lateral Relations: Organizational methods for reconciling the functional
organization with product or service objectives are termed lateral relations.
Organizational Learning: Organizational learning is the process by which an
organization identifies action – outcome relationships, identifies and corrects errors,
stores the experience in organizational personnel who teach new employees, and
stores the experience in procedures, forms, systems, rules, computer programs, and
other forms for transferring experience. In other words, it exhibits adaptive behavior.
For example, a new employee in the data entry function is instructed in entry
procedures plus error control and error handling procedures.
Concepts of sociotechnical design:
A sociotechnical approach to organizational change has been defined as one which
recognizes organizations as purposive entities which have a variety of goals and
which, in order to survive, and have to interact successfully with their surrounding
social and business environments. Viewing organizations as sociotechnical systems
requires making explicitly the interrelationships between the subsystems in the
Leavitt model. Specifically, it focuses on human as well as technical and
organizational objectives in effecting organizational change.
ORGANISATIONAL STRUCTURE IMPLICATIONS FOR INFORMATION
Concept
Hierarchy of authority
Specialization
Formalization
Centralization
Modification of basic model
Information model of organisation
Organizational culture
Implications for information systems
A tall hierarchy with narrow span of
control may mean that more formal
control information is needed by upper
levels than a flat hierarchy with wide
span of control
Information system applications are
specialized to fit the specialization of the
organization.
Information systems are a major method
for increasing formalization.
Information systems can be assigned to
suit any level of centralization.
Information systems can be designed to
support product or service organization,
project organization, lateral relations, and
matrix organization.
Organizational mechanisms reduce the
need for information processing and
communication. Vertical information
systems are an alternative to lateral
relations. Information systems are used to
coordinate lateral activities.
Organizational culture affects
Organizational power
Organizational growth cycle
Goal displacement
Organizational learning
Project model of organizational change
Case for stable systems
Systems that promote organizational
change
Organizations as sociotechnical systems
information requirements and system
acceptance.
Organizational power affects
organizational behavior during
information system planning, resource
allocation, and implementation.
Computer systems can be an instrument
of organizational power through access to
information.
Information systems may need to change
for different stages of growth.
When identifying goals during
requirements determination, care should
be taken to avoid displaced goals.
Suggests need for information system
design for both efficiency measures to
promote single loop learning and
effectiveness measures for double loop
learning.
Describes general concept for managing
change with information system projects.
Establish control over frequency of
information system changes.
Reporting critical change variables or
relationships and use of multiple channels
in a semi confusing system may be useful
for promoting responses to a changing
environment.
Provides approach to requirements
determination and job design when both
social and technical considerations are
involved.