Rami Gharaibeh
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Principles of Management
AND
Management Information Systems
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Rami Gharaibeh
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Trainer
Rami al-Gharaibeh, Ph.D.
-
Bachelor in Electrical Eng. / computer Eng (Jordan)
Masters in Information Architecture and Knowledge Management (U.S.A)
Ph.D. in Management Information Systems / Knowledge Management (U.S.A)
Certified Knowledge Manager; KM Institute (U.S.A)
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Module I
Principles of Management
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Goals
To develop a framework for understanding
Management
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Decision Making
Decision
Making a choice from two or more alternatives
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Decision Making
Decision
Making a choice from two or more alternatives
Examples
Major in electrical engineering vs. major in computer science
Invest in agriculture vs. invest in manufacturing
Wake up at 7am vs. wake up at 9am
Hire person X vs. hire person Y vs. hire person Z
Produce quantity X vs. quantity Y vs. quantity Z
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Decision Making
Decision vs. Management
Management is equivalent to Decision Making
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Decision Making
Decision vs. Management
If an organization makes an average of 100 decisions per
day, then good organizational management means that in
these 100 decisions the right alternative was successfully
chosen in most times
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Decision Making
Who Makes the Decisions?
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Decision Making
Who Makes the Decisions?
MANAGERS
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Decision Making
What are the Types of Managers?
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Decision Making
What are the Types of Managers?
Three types, organized in a hierarchy
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Decision Making
What are the Types of Managers?
Three types, organized in a hierarchy
Strategic Managers
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Decision Making
What are the Types of Managers?
Three types, organized in a hierarchy
Strategic Managers
Middle Managers
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Decision Making
What are the Types of Managers?
Three types, organized in a hierarchy
Strategic Managers
Middle Managers
Operational Managers
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Decision Making
Where are the Employees?
Strategic Managers
Middle Managers
Operational Managers
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Decision Making
Where are the Employees?
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
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Decision Making
Where are the Departments?
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
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Decision Making
Where are the Departments?
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
FINANCE
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Decision Making
Where are the Departments?
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
FINANCE
DESIGN
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Decision Making
Where are the Departments?
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
FINANCE
DESIGN
SALES
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Decision Making
Managers vs. Decisions
Decide the markets
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
SALES
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Decision Making
Managers vs. Decisions
Decide the products
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
SALES
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Decision Making
Managers vs. Decisions
Decide the delivery
schedule
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
SALES
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Decision Making
Managers vs. Decisions
Carry out the delivery
schedule
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
SALES
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Manager
Definition
Someone who works with and through other people by
coordinating and integrating their work activities in order to
accomplish organizational goals
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Managers’ Job
Two Approaches
Functional (areas for applying decision making)
Skills (qualifications of decision maker)
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Managers’ Job
Functional Approach
Management involves making decisions in four areas
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Managers’ Job
Functional Approach
Planning
Defining goals, establishing strategy, developing
action plans
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Managers’ Job
Functional Approach
Organizing
Determining what needs to be done, how it will be
done, who is to do it
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Managers’ Job
Functional Approach
Leading
Directing, motivating, resolving conflicts
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Managers’ Job
Functional Approach
Controlling
Monitoring activities, comparing with plans, correcting
diversions
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Managers’ Job
Functional Approach
Planning
Setting
GOALS
Organizing
Leading
Controlling
Achieving
RESULTS
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Managers’ Job
Functional Approach
Planning
Setting
GOALS
Organizing
Leading
Controlling
COMPARE
Achieving
RESULTS
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Managers’ Job
Functional Approach
Planning
Setting
GOALS
Organizing
Leading
Controlling
COMPARE
Achieving
RESULTS
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Managers’ Job
Functional Approach
Planning
Setting
GOALS
Organizing
Leading
Controlling
EFFICTIVENESS =
RESULTS
Achieving
RESULTS
GOALS
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Managers’ Job
Skills Approach
Management involves demonstrating three types of skills
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Managers’ Job
Skills Approach
Technical skills
Knowledge and proficiency in a specific field
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Managers’ Job
Skills Approach
Human skills
The ability to work well with other people
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Managers’ Job
Skills Approach
Conceptual skills
The ability to think and conceptualize about abstract and
complex situations concerning the organization
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Decision Making
Skills Approach
Conceptual skills
human skills
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
technical skills
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Decision Making
Decision making is about making a choice from two or
more alternatives
THE TRICK
Is to correctly predict which alternative will provide
the best outcome
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Decision Making
solution
?
A
B
problem
?
C
?
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Decision Making
solution
?
A
B
problem
?
C
alternatives
?
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Decision Making
solution
?
A
B
problem
?
C
?
outcomes
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Approaches to Decision Making
Two Approaches
Decision making
Intuitive
Approach
Scientific
Approach
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Approaches to Decision Making
Decision making
Intuitive
Approach
Making decisions on the basis of
past experience,feelings,
personal values, or subconscious
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Approaches to Decision Making
Decision making
making decision using
scientific methods
Scientific
Approach
(data & information
collection & analysis)
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Approaches to Decision Making
Decision making
Intuitive
Approach
Scientific
Approach
The scientific approach is certainly more dependable
in predicting the outcomes of possible alternatives
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Approaches to Decision Making
Decision making
Intuitive
Approach
Scientific
Approach
We rely on intuition only when data and information
is hard to collect or analyze, or when time is an issue
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Scientific Decision Making
The Decision-Making Process
1
Identifying a problem
2
Identifying decision criteria
3
Allocating weights to the criteria
4
Developing the alternatives
5
Analyzing the alternatives
6
Selecting the best alternative
7
Implementing the selected alternative
8
Evaluating the decision’s effectiveness
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Scientific Decision Making
The Decision-Making Process
1
Identifying a problem
2
Identifying decision criteria
3
Allocating weights to the criteria
4
Developing the alternatives
5
Analyzing the alternatives
6
Selecting the best alternative
7
Implementing the selected alternative
8
Evaluating the decision’s effectiveness
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Scientific Decision Making
The Decision-Making Process
1
Identifying a problem
2
Identifying decision criteria
3
Allocating weights to the criteria
4
Developing the alternatives
5
Analyzing the alternatives
6
Selecting the best alternative
7
Implementing the selected alternative
8
Evaluating the decision’s effectiveness
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Scientific Decision Making
The Decision-Making Process
1
Identifying a problem
2
Identifying decision criteria
3
Allocating weights to the criteria
4
Developing the alternatives
5
Analyzing the alternatives
6
Selecting the best alternative
7
Implementing the selected alternative
8
Evaluating the decision’s effectiveness
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Scientific Decision Making
The Decision-Making Process
1
Identifying a problem
2
Identifying decision criteria
3
Allocating weights to the criteria
4
Developing the alternatives
5
Analyzing the alternatives
6
Selecting the best alternative
7
Implementing the selected alternative
8
Evaluating the decision’s effectiveness
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Scientific Decision Making
The Decision-Making Process
1
Identifying a problem
2
Identifying decision criteria
3
Allocating weights to the criteria
4
Developing the alternatives
5
Analyzing the alternatives
6
Selecting the best alternative
7
Implementing the selected alternative
8
Evaluating the decision’s effectiveness
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Scientific Decision Making
The Decision-Making Process
1
Identifying a problem
2
Identifying decision criteria
3
Allocating weights to the criteria
4
Developing the alternatives
5
Analyzing the alternatives
6
Selecting the best alternative
7
Implementing the selected alternative
8
Evaluating the decision’s effectiveness
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Scientific Decision Making
The Decision-Making Process
1
Identifying a problem
2
Identifying decision criteria
3
Allocating weights to the criteria
4
Developing the alternatives
5
Analyzing the alternatives
6
Selecting the best alternative
7
Implementing the selected alternative
8
Evaluating the decision’s effectiveness
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Decision Making
solution
?
A
B
problem
?
C
?
Steps 1-6
Steps 7-8
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Scientific Decision Making
Identifying a Problem
A problem is a discrepancy between a desired state
and a state of reality
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Decision Making
Desired
state
Discrepancy
State of reality
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Decision Making
Identifying Decision Criteria
Example, deciding which car to buy:
Price
Quality
Gas consumption
Safety
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Decision Making
Allocating Weights to the Criteria
Price
3
Quality
4
Gas consumption
6
Safety
10
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Decision Making
Developing the Alternatives
TOYOTA FORD
VOLVO Mercedes
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Decision Making
Developing the Alternatives
Roles Roes TOYOTA FORD
VOLVO Mercedes
Ferrari
Unfeasible alternatives
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Decision Making
Analyzing the Alternatives
TOYOTA FORD
Price
3
Quality
4
Gas consumption
6
Safety
10
VOLVO Mercedes
8
7
10
6
9
5
8
5
4
8
5
10
6
8
7
8
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145
174
172
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Decision Making
Selecting the Best Alternative
TOYOTA FORD
Price
3
Quality
4
Gas consumption
6
Safety
10
VOLVO Mercedes
8
7
10
6
9
5
8
5
4
8
5
10
6
8
7
8
172
145
174
172
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Decision Making
Implementing the Selected Alternative
Buying the car
Driving the car
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Decision Making
Evaluating the Decision’s Effectiveness
How much are you satisfied with
Price
Quality
Gas consumption
Safety
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Decision Making
Problem Types
Structured vs. Unstructured
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Decision Making
Structured Problems
Routine in nature
Easily defined
Completely defined
Information about problem is available
Information about problem is complete
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Decision Making
Structured Problems
Because of these characteristics, the decisions on structured
problems are programmable
Programmed Decision
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Decision Making
Programmed Decision
A repetitive decision that can be handled by a routine
approach
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Decision Making
Programmed Decisions
Three forms for PD
Policy
Procedure
Rule
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Decision Making
Programmed Decisions
Policy
A general guideline for making a decision
about a structured problem
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Decision Making
Programmed Decisions
Procedure
A series of interrelated steps that
a manager can use to respond
(applying a policy)
to a structured problem.
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Decision Making
Programmed Decisions
Rule
An explicit statement that limits what
a manager or employee can or
cannot do in carrying out the steps
involved in a procedure.
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Decision Making
Policy
Accept all customer-returned merchandise
Procedure
Follow all steps for completing merchandise
return documentation
Rule
Managers must approve all refunds over $50.00
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Types of Problems
Unstructured Problems
New or unusual nature
Uneasily defined
incompletely defined
Information is ambiguous
Information is incomplete
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Types of Problems
Unstructured Problems
Because of these characteristics, the decisions on
structured problems are non-programmable
Non-Programmed Decision
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Types of Problems
Non-Programmed Decisions
Decisions that are unique and nonrecurring. Decisions
that generate unique responses
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Types of Problems
Types of Problems, Types of Decisions, and
Level in the Organization
Unstructured
problems
Non-programmed
Decisions
Top mgm
Middle mgm
Structured
problems
Programmed
Decisions
Low mgm
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Decision Making Conditions
Condition of Uncertainty
Condition of Risk
Condition of Certainty
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Decision Making Conditions
Condition of Uncertainty
The possible outcomes of each alternative is unknown
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Decision Making
Condition of Uncertainty
solution
?
A
B
problem
?
C
?
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Decision Making Conditions
Condition of Risk
The possible outcomes of each alternative could be
predicted with an estimated probability
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Decision Making Conditions
Condition of Risk
%70
solution
%20
A
B
problem
%10
C
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Decision Making Conditions
Condition of Certainty
Each alternative has only one outcome which could be
predicted with %100 probability
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Decision Making Conditions
Condition of Certainty
solution
A
problem
%100
B
C
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Decision Making Conditions
?
?
Information collection & analysis
?
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Influences on Decision Making
Decision making
Intuitive
Approach
Scientific
Approach
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Influences on Decision Making
Intuitive
Approach
?
?
?
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Influences on Decision Making
Errors and Biases
Overconfidence
Holding unrealistically positive views of one’s self and
one’s performance
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Influences on Decision Making
Overconfidence
A
B
A
B
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Influences on Decision Making
Errors and Biases
Anchoring Effect
Fixating on initial information and ignoring
subsequent information
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Influences on Decision Making
Anchoring Effect
A
B
A
B
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Influences on Decision Making
Errors and Biases
Availability Bias
Losing decision-making objectivity by focusing on
the most recent events
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Influences on Decision Making
Availability Bias
A
B
A
B
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Influences on Decision Making
Errors and Biases
Selective Perception
Selecting organizing and interpreting events based on
the decision maker’s biased perceptions
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Influences on Decision Making
Selective Perception
A
B
A
B
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Influences on Decision Making
Errors and Biases
Confirmation Bias
Seeking out information that reaffirms past choices
and discounting contradictory information
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Influences on Decision Making
Confirmation Bias
A
B
A
B
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PLANNING
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Planning
What is Planning
A primary managerial activity that involves
1) Defining the organization’s goals
2) Establishing a strategy for achieving those goals
3) Developing action plans to achieve the strategy
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Planning
What is Planning
Financial action plan
STRATEGY
Sales action plan
GOALS
manufacturing action plan
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Planning
Purpose of Planning
1) Providing direction
3) Minimizing waste and redundancy
4) Setting the standards for controlling
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Planning
Starting
point
STRATEGY
DIRECTION
(what do we want to achieve?)
GOALS
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Planning
MINIMIZE REDUNDANCY & WASTE
(who is supposed to carry out this action?)
(how is he supposed to carry out this action?)
Financial action plan
STRATEGY
Sales action plan
GOALS
manufacturing action plan
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Planning
STANDARD FOR CONTROLLING
(are you following the plan)
Actual performance
Plan
GOALS
Performance
gap
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Managerial Concerns
Effectiveness
The level of attainment of organizational goals
Effectiveness
Actual performance
Plan
GOALS
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Managerial Concerns
Efficiency
The amount of resources consumed in pursuing goals
Required
Resources
Actual performance
GOALS
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Managerial Concerns
Efficiency
Required
Resources
low resources
affects
Actual performance
GOALS
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Managerial Concerns
Efficiency
high resources
Required
Required
Resources
Resources
affects
Actual performance
GOALS
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Managerial Concerns
Types of Resources
~ Financial: debt, equity, and retained earnings
~ Physical: buildings, equipment, and raw materials
~ Human: experiences, skills, knowledge, and competencies
~ Intangible: brand names, patents, reputation, trademarks,
copyrights, and databases
~ Structural/cultural: history, culture, work systems,
working relationships, trust, and policies
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Types of Plans
Strategic Plans
~ Seek to position the organization in terms of its
environment
~ Apply to the entire organization
~ Establish the organization’s overall goals
~ Cover extended periods of time
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Types of Plans
Operational Plans
~ Specify the details of how the overall goals are to be
achieved
~ Cover short time period
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Types of Plans
Strategic Plan
Operational Plans
Financial action plan
STRATEGY
Sales action plan
manufacturing action plan
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Strategic Management
The set of managerial decisions and actions that
determines the long-run performance of an organization
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Strategic Management
Importance
Top managers examine and adapt to business environment changes
Top managers coordinate diverse organizational units
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Strategic Management
Importance
Business environment
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Strategic Management
Importance
Firm
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Strategic Management
Adaptation to Environment
Customers
Suppliers
Political
situation
Top managers
Legislations
Importance
Firm
Rivals
Technology
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Strategic Management
Integration and Coordination
Importance
Firm
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Strategic Management
Strategy Formulation
External Analysis
Mission
statement
Ambitions
SWOT Analysis
Goals
Formulate
strategy
Internal Analysis
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Strategic Management
Mission Statement
It states the firm’s reason for being
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Strategic Management
Mission Statement
The mission statement does not change over time. However, the
goals derived from a mission will change over time
Example
A pharmaceutical firm exists to provide humanity with medicines
that improves their quality of life
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Strategic Management
Components of Mission Statement
~ Customers: Who are the organization’s customers?
~ Products or services: What are the organization’s major products or services?
~ Markets: Where does the organization compete geographically?
~ Technology: How technologically current is the organization?
~ Philosophy: What are the organization’s basic values, aspirations, and ethical priorities?
~ Self-concept: What is the organization’s major competitive advantage and core competencies?
~ Concern for public image: responsiveness to societal and environmental concerns?
~ Concern for employees: Does the organization consider employees a valuable asset?
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ORGANIZING
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Organizing
Organizational Structure
The formal arrangement of jobs within an
organization
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
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Organizing
Organizational Structure
The formal arrangement of jobs within an
organization
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Organizing
Related Concepts
Work Specialization
Departmentalization
Chain of Command
Span of Control
Centralization
Formalization
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Organizing
Work Specialization
The degree to which tasks in the organization are divided into
separate jobs with each step completed by a different person
Overspecialization can result in human diseconomies from
boredom, fatigue, stress, poor quality, increased
absenteeism, and higher turnover
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Organizing
Work Specialization
Complete task
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Organizing
Work Specialization
Complete
Complete
taskComplete
task task
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Organizing
Departmentalization
It is about grouping of jobs
Jobs could be grouped on different basis
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Organizing
Departmentalization
Grouping jobs by functions performed
Grouping jobs by product
Grouping jobs on the basis of geography
Grouping jobs by type of customer
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Organizing
Chain of Command
The continuous line of authority that extends from upper
levels of an organization to the lowest levels of the
organization and clarifies who reports to who
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Organizing
Chain of Command
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Organizing
Span of Control
The number of employees who can be effectively and
efficiently supervised by a manager
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Organizing
Span of Control
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Organizing
Span of Control
Width of span is affected by
Abilities of the manager
Abilities of the employee
Characteristics of the work
Similarity of tasks
Complexity of tasks
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Organizing
Span of Control
narrow span
wide span
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Organizing
Centralization
The degree to which decision-making is concentrated at a
single point in the organizations
Organizations in which top managers make all the
decisions and lower-level employees simply carry out
those orders
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Organizing
Centralization
DM steps
2
3
4
5
6
1
7
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Organizing
Centralization
Environment is stable.
Lower-level managers are not as capable or experienced at making
decisions as upper-level managers.
Lower-level managers do not want to have a say in decisions.
Decisions are significant.
Organization is facing a crisis or the risk of company failure.
Company is large.
Effective implementation of company strategies depends on managers
retaining say over what happens.
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Organizing
Decentralization
Organizations in which decision-making is pushed down to the
managers who are closest to the action.
Employee Empowerment
Increasing the decision-making,
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Organizing
Decentralization
Environment is complex, uncertain.
Lower-level managers are capable and experienced at making decisions.
Lower-level managers want a voice in decisions.
Decisions are relatively minor.
Corporate culture is open to allowing managers to have a say in what
happens.
Company is geographically dispersed.
Effective implementation of company strategies depends on managers
having involvement and flexibility to make decisions.
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Organizing
Formalization
The degree to which jobs within the organization are standardized
and the extent to which employee behavior is guided by rules
and procedures
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LEADING
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Leading
What is Leadership
It is the process of influencing a group to achieve goals
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Leading
What is Motivation
It refers to the process by which a person’s efforts are energized,
directed, and sustained toward attaining a goal
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Leading
Leadership vs. Motivation
Quality of
leadership
+
Level of
Motivation
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Leading
Leadership vs. Motivation vs. Goal
Quality of
leadership
+
Level of
Motivation
+
Level of
Goal
Achievement
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Leading
Theories of Motivation
Goal-Setting Theory
Reinforcement Theory
Job Characteristics Model
Equity Theory
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Leading
Goal-Setting Theory
Specific goals increase performance and difficult goals,
when accepted, result in higher performance than do
easy goals
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Leading
Goal-Setting Theory
Specific goals increase performance and difficult goals,
when accepted, result in higher performance than do
easy goals
“do your best” is not motivating
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Leading
Goal-Setting Theory
Specific goals increase performance and difficult goals,
when accepted, result in higher performance than do
easy goals
“do your best” is not motivating
“You need to score 85 in math” is motivating
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Leading
Reinforcement Theory
Employees will most likely engage in desired behaviors if
they are rewarded for doing so
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Leading
Reinforcement Theory
Employees will most likely engage in desired behaviors if
they are rewarded for doing so
Managers should immediately reinforce actions
they deem desirable and should ignore, not
punish, undesirable behaviors
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Leading
Job Characteristics Model
Core Job Dimensions
Psychological States
High Motivation
Skill Variety
Task Identity
Meaningful Work
Task Significance
Autonomy
Feedback
Work Outcomes
Responsibility
for Outcome
Knowledge
of Results
High Quality of
Work
High Satisfaction
Low Absenteeism
and Turnover
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Leading
Equity Theory
Employees compare what they get from a job situation in
relation to what they put into it,
and then they compare their in/out ratio with the in/out
ratio of relevant others
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Leading
Equity Theory
Employees compare what they get from a job situation in
relation to what they put into it,
and then they compare their in/out ratio with the in/out
ratio of relevant others
When inequities occur, employees attempt to do
something about it
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CONTROLLING
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Controlling
What is Control
The process of monitoring activities to ensure that they are being
accomplished as planned and of correcting any significant
deviations
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Controlling
The Planning-Controlling Link
Planning
Controlling
Organizing
Leading
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Controlling
Planning
Controlling
Organizing
Leading
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Controlling
External Analysis
opportunities & threats
mission
ambitions
goals
strategies
strengths & weaknesses
Internal Analysis
Planning
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Controlling
External Analysis
opportunities & threats
mission
ambitions
goals
strategies
strengths & weaknesses
Internal Analysis
Planning
Controlling
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Controlling
The Control Process
Involves three processes
1) Measuring actual performance
2) Comparing actual performance against standard
3) Taking managerial action
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Controlling
The Control Process
Measuring
performance
Taking
managerial
action
comparing
Performance
Against standard
Controlling
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Controlling
Comparing Performance
Determining the degree of variation between actual performance
and the standard
The standard is the plan
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Controlling
External Analysis
Comparing Performance
opportunities & threats
mission
ambitions
goals
strategies
strengths & weaknesses
Internal Analysis
Action plans
Measuring
performance
Taking
managerial
action
comparing
Performance
Against standard
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Controlling
Comparing Performance
Planning
standard
Controlling
Organizing
Leading
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Controlling
Comparing Performance
deviation from the standard is classified into two categories
Insignificant deviation
Significant deviation
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Controlling
Variation
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Controlling
Taking Correction Actions
Courses of Action
“Doing nothing”
Only if deviation is judged to be insignificant.
Correcting actual (current) performance
Immediate corrective action to correct the problem at once.
Basic corrective action to locate and to correct the source of the
deviation.
Corrective Actions
Change strategy, structure, compensation scheme, or training
programs; redesign jobs; or fire employees
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Controlling
Taking Correction Actions
Revising the standard
Examining the standard to ascertain whether or not the standard is
realistic, fair, and achievable.
Upholding the validity of the standard.
Resetting goals that were initially set too low or too high.
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Controlling
Types of Controlling
Feedforward Control
A control that prevents anticipated problems before actual occurrences of
the problem.
Building in quality through design.
Requiring suppliers conform to ISO 9002.
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Controlling
Types of Controlling
Concurrent Control
A control that takes place while the monitored activity is in progress.
Direct supervision: management by walking around.
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Controlling
Types of Controlling
Feedback Control
A control that takes place after an activity is done.
Corrective action is after-the-fact, when the problem has already
occurred.
Advantages of feedback controls
Feedback provides managers with information on the effectiveness of
their planning efforts.
Feedback enhances employee motivation by providing them with
information on how well they are doing.
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END
MODULE I
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Module II
Management Information Systems
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Goals
To provide the trainees with basic knowledge in how IT is
structured into different types of information systems and
how these systems are supporting businesses
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IS in Business
IT Investment
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IS in Business
Why Invest in Information Systems?
Information systems are instruments for creating value
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IS in Business
Why Invest in Information Systems
Investment in IT should result in superior returns (value)
Financial & Strategic
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IS in Business
Financial Returns
Example
Rising Stock Price
Wider Profit Margin
Bigger Cash Flows
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IS in Business
Strategic Returns
Example
Bigger Market Share
Higher Product Quality
Superior Customer Service
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IS in Business
Variation in Returns on IT Investment
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IS in Business
Variation in Returns on IT Investment
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IS in Business
Variation in Returns on IT Investment
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IS in Business
Variation in Returns on IT Investment
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IS in Business
Returns on IT Investment
Success Factors
Example
Investing in complementary assets
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IS in Business
Complementary Assets
Assets required to derive value from a primary investment.
Firms supporting technology investments with investment in
complementary assets receive superior returns
Example
Invest in technology and training to make it work properly
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Benefits of IS
Achieving Strategic Business Objectives
Operational excellence
Improved decision making
New products, services, and business models
Customer and supplier intimacy
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Benefits of IS
Operational Excellence
Improvement of efficiency to attain higher profitability
Example
Wal-Mart’s RetailLink system links suppliers to stores for superior
replenishment system
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Benefits of IS
Improved Decision-Making
Without accurate information managers would revert to
intuitive DM, which could lead to different types of
problems, such as: overproduction or underproduction of
goods and services, misallocation of resources, poor response
times, etc.
Example
Verizon’s Web-based digital dashboard to provide managers with real-time
data on customer complaints, network performance, line outages, etc.
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Benefits of IS
New Business Models
Definition
Describes how company produces, delivers, and sells product
or service to create wealth
Information systems and technology a major enabling tool for
new products, services, business models
Example
Apple’s iPod, iTunes and Netflix’s Internet-based DVD rentals
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Benefits of IS
Customer and Supplier Intimacy
Serving customers well leads to customers returning, which
raises revenues and profits
Example
High-end hotels that use computers to track customer preferences and
use to monitor and customize environment
Example
Intimacy with suppliers allows them to provide vital inputs, which lowers
costs
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Dimensions of an IS
Information Systems are More Than Computers
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Dimensions of an IS
Organizational Dimension
Several organizational levels
Strategic management
Middle management
Operational management
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Dimensions of an IS
Organizational Dimension
Several organizational functions
Sales and marketing
Human resources
Finance and accounting
Production and manufacturing
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Dimensions of an IS
Management Dimension
Managers are in a continuous adaptation process with their
business environment
Adaptation requires monitoring of the environment sectors: rivals,
suppliers, customers, government regulations, political
situation, economical situation
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Dimensions of an IS
Technology Dimension
Computer hardware and software
Data management technology
Networking and telecommunications technology
Internet services: WWW, email, Chatting
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Business Process
Defining Business
Can be seen as collection of business processes
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Business Process
Defining Business Process
~ Workflows of material, information, knowledge
~ Sets of activities, steps
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Business Process
Business Process
May be tied to only one functional area
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Business Process
Business Process
Or, be cross-functional
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Business Process Example
BP Cross-Functionality
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Classification of IS
Functional Perspective
Sales and marketing systems
Manufacturing and production systems
Finance and accounting systems
Human resources systems
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Classification of IS
Functional-Based Classification
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
FINANCE
Manufacturing
SALES
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Classification of IS
Sales and Marketing Systems
Sales
forecasting
Order processing
Pricing
analysis
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
SALES IS
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Classification of IS
Manufacturing and Production Systems
Facilities
location
Machine control
Strategic Managers
Production
Planning
Middle Managers
Operational Managers
None-managerial Employees
Manufacturing IS
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Classification of IS
Finance and Accounting Systems
Profit
planning
Accounts receivable
Strategic Managers
budgeting
Middle Managers
Operational Managers
None-managerial Employees
Finance IS
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Classification of IS
Human Resource Systems
HR
planning
Training &
Development
Strategic Managers
Compensation
analysis
Middle Managers
Operational Managers
None-managerial Employees
Human Resource IS
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Classification of IS
Technical-Based Classification
Functional-based classification takes a vertical perspective
A horizontal perspective will result in systems supporting
different layers of management and are based on different
technical components
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Classification of IS
Technical-Based Classification
ESS
MIS
DSS
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
TPS
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Classification of IS
Transaction Processing Systems
Support the solution of structured problems by automating the
programmed decisions
Are mainly utilized at the operational level
Have low analytic capabilities
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Classification of IS
Management Information Systems
ATTENTION
The term Management Information Systems
is used in two ways:
~ To refer to all information systems used in management
~ To refer to certain class of information systems
The title of this training course is using the term in the first way
Here, we are using it in the second way
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Classification of IS
Management Information Systems
MIS takes input from TPS and generates routine reports
Are mainly utilized at the middle level
Typically have low analytic capability
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Classification of IS
Decision Support Systems
Support the solution of unstructured problems by automating the
process of non-programmed decisions
DSS takes input from MIS and TPS to provide the information
required to predict the outcomes of each possible alternative
Are mainly utilized at the middle level
have high analytic capability
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Classification of IS
Executive Support Systems
Support the solution of unstructured problems by automating the
process of non-programmed decisions
DSS takes input from external sources as well as internal MIS
and TPS to provide the information required to predict the
outcomes of each possible alternative
Are mainly utilized at the strategic level
have high analytic capability
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Integration of IS
ESS
MIS
DSS
TPS
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Enterprise IS
Enterprise Information Systems
Span several functional areas
Include all levels of management
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Enterprise IS
Enterprise Information Systems
Four Major Classes
Enterprise Systems
Supply Chain Management Systems
Customer Relationship Management Systems
Knowledge Management Systems
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Enterprise IS
Strategic Managers
Middle Managers
Operational Managers
None-managerial Employees
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Enterprise IS
ES
Strategic Managers
Middle Managers
Operational Managers
KMS
None-managerial Employees
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Enterprise IS
suppliers
Customers
Strategic Managers
SCM
Middle Managers
Operational Managers
CRM
None-managerial Employees
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Enterprise IS
Enterprise Information Systems
Separate functional systems result in fragmented and
redundant data
Enterprise systems enables the integration of several
records into one complete record
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Enterprise IS
Supply Chain Management Systems
Right amount of products to destination with least
amount of time and lowest cost
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Enterprise IS
Customer Relationship Management Systems
Provide information to coordinate all of the business
processes that deal with customers in sales, marketing, and
service to optimize revenue, customer satisfaction, and
customer retention
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Enterprise IS
Knowledge Management Systems
Support processes for acquiring, creating, storing,
distributing, applying, integrating knowledge
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Networking
Intranet
~Internal networks built with same tools and standards as Internet
~ Used for internal distribution of information to employees
~ Typically utilize private portal providing single point of access to
several systems
~ May connect to company’s transaction systems
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Networking
Extranet
~ Intranets extended to authorized users outside the company
~ Expedite flow of information between firm and its suppliers and
customers
~ Can be used to allow different firms to collaborate on product
design, marketing, and production
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END
MODULE II
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