Information and e-Business Chapter Sixteen Information and e-Business Copyright © Cengage Learning. All rights reserved.

Copyright © Cengage Learning. All rights reserved. Introduction To improve the decision-making process, the information used by both individuals and business firms must be Relevant Useful to meet a specific need Using relevant information results in better decisions For businesses, better intelligence and knowledge that lead to better decisions are especially important because they can provide a competitive edge over competitors and improve a firm’s profits Copyright © Cengage Learning. All rights reserved.

How Can Information Reduce Risk When Making a Decision? Information produces knowledge and empowers managers and employees to make better decisions The relationship between information and risk DECISION W NO INFO IS A GAMBLE Copyright © Cengage Learning. All rights reserved.

Copyright © Cengage Learning. All rights reserved. Information rules Information rules based on situational experience provide guidance in handling similar situations or circumstances Business research continuously looks for new rules since business conditions are always changing Copyright © Cengage Learning. All rights reserved.

Copyright © Cengage Learning. All rights reserved. Data vs. Information The difference between data and information Data Numerical or verbal descriptions that usually result from some sort of measurement Information Data presented in a form that is useful for a specific purpose Database A single collection of data stored in one place that can be used by people throughout an organization to make decisions Knowledge management (KM) A firm’s procedures for generating, using, and sharing the data and information contained in the firm’s databases Copyright © Cengage Learning. All rights reserved.

What is a Management Information System? Management information system (MIS) A system that provides managers with the information they need to perform their jobs as effectively as possible Purpose: to distribute timely and useful information to the decision makers who need it 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 Copyright © Cengage Learning. All rights reserved.

What is a Management Information System? (cont’d) Managers’ information requirements Summary of future possibilities Summary of present situation Summary of past performance Information about 5 principal areas of management: finance, operations, marketing, human resources, and administration Size and complexity of the system Must be properly sized to provide sufficient information resources without being simple or too complex to be useful MANAGERS NEED TO OVERLOOK : INVENTORY LEVELS, SALES LEVELS,COSTS AND RESOURCES AS WELL AS MANAGING THE 4 PS Copyright © Cengage Learning. All rights reserved.

Management Information System (MIS) MIS ALLOWS THE COORDINATION OF INFORMATION FROM EACH DEPARTMENTS Source: Ricky W. Griffin, Management, 9/e (Boston: Houghton Mifflin Company, 2008). Reprinted by permission. Copyright © Cengage Learning. All rights reserved.

Five Management Information System Functions Every MIS must be tailored to the organization it serves and must perform five functions EACH COMPANY IS UNIQUE TOWARDS THEIR MIS MODEL Copyright © Cengage Learning. All rights reserved.

Copyright © Cengage Learning. All rights reserved. Collecting Data Collecting data Data should be relevant and accurate Internal sources Managers and employees, company records and reports, minutes of meetings, accounting data, sales data, HR data, production data External sources Customers, suppliers, bankers, trade and financial publications, industry conferences, online computer services, firms specializing in gathering data Cautions The cost of obtaining data from external sources should be weighed against the benefits Outdated data are likely to yield inaccurate information Check data, especially computerized data, for accuracy DATA INCLUDES: SALES REPORTS, HR RECORDS, PAST AND PRESENT PRODUCTION PROJECTIONS, ACCOUNTING AND FINANCE DATA, PRIOR AND UPCOMMING MANAGERIAL DECISIONS Copyright © Cengage Learning. All rights reserved.

Copyright © Cengage Learning. All rights reserved. Storing & Updating Storing data An MIS must be capable of storing data until they are needed Updating data Manual updating—employee inputs fresh data into the database Automatic updating—MIS updates itself as data become available Copyright © Cengage Learning. All rights reserved.

Copyright © Cengage Learning. All rights reserved. Data Processing The transformation of data into a form useful for a specific purpose Statistics A measure that summarizes a particular characteristic of an entire group of numbers Copyright © Cengage Learning. All rights reserved.

Presenting information Verbal information—list or paragraph form A formal report typically includes an introduction, the body of the report, conclusions, and recommendations Visual displays Graphs, bar charts, pie charts Tabular displays Verbal or numerical information presented in columns and rows HOW TO PREPARE AN ESSAY? INTRO BODY CONCLUSION SAME WAY TO PRESENT INFORMATION Copyright © Cengage Learning. All rights reserved.

Typical Visual Displays Used in Business Presentations Copyright © Cengage Learning. All rights reserved.

Typical Visual Displays Used in Business Presentations (cont’d) Copyright © Cengage Learning. All rights reserved.

Typical Three-Column Table Copyright © Cengage Learning. All rights reserved.

Improving Productivity with the Help of Computers and Technology Decision support system (DSS) is a type of computer program that provides relevant data and information to help a firm’s employees make decisions Executive information system (EIS) is a computer-based system that facilitates and supports the decision-making needs of top managers and senior executives An expert system is a type of computer program that uses artificial intelligence Copyright © Cengage Learning. All rights reserved.

Improving Productivity with Computers Helping employees communicate E-mail & Texting—provides virtually instantaneous communication Groupware—software that facilitates the management of large projects among geographically dispersed employees as well as such group activities as problem solving and brainstorming Collaborative learning system—a work environment that allows problem-solving participation by all team members Assisting the firm’s sales force Customer-relationship management programs Sales force automation programs Copyright © Cengage Learning. All rights reserved.

Improving Productivity (cont’d) Training employees Reduced educational and training costs Increased flexibility and availability of training Faster transfer of information about changes in the firm’s policies and procedures Recruiting employees Provides for a global recruiting reach, especially for individuals with unique skills Helps build a database of potential employees Reduces recruiting costs for initial applications and screening interviews Copyright © Cengage Learning. All rights reserved.

Current Business Applications Software Used to Improve Productivity Copyright © Cengage Learning. All rights reserved.

Using Computers and the Internet to Obtain Information Information society A society in which large groups of employees generate or depend on information to perform their jobs The Internet, the Intranet, and Networks Internet A worldwide network of computers linked through telecommunications; used for e-business, communication, information gathering Internet service providers (ISPs) provide customers with a connection to the Internet through various phone plugs and cables Intranet A smaller version of the Internet for use only within a firm Copyright © Cengage Learning. All rights reserved.

Using Computers and the Internet to Obtain Information (cont’d) Networks A group of two or more computers linked together to share data and information WAN (Wide-area network) A network that connects computers over a large geographic area World’s most popular WAN is the Internet LAN (Local-area network) A network that connects computers that are in close proximity Copyright © Cengage Learning. All rights reserved.

Copyright © Cengage Learning. All rights reserved.

Using Computers and the Internet (cont’d) Accessing the Internet Standardization guidelines let products, services, materials, and processes achieve their purposes Website addresses URL—Uniform Resource Locator http—HyperText Transfer Protocol Web search engines www.altavista.com; www.google.com; www.yahoo.com Software for creating web pages Developing a website Hosting a website Copyright © Cengage Learning. All rights reserved.

Tips for Website Development Develop a theme Determine how much information to include on your site Plan the layout of your site Add graphics Outline the material for each page Develop plans to update the site Make sure your site is easy to use Copyright © Cengage Learning. All rights reserved.

Copyright © Cengage Learning. All rights reserved. Defining e-Business e-Business (electronic 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 e-Commerce—Buying/selling activities conducted online—Identifying suppliers, selecting products or services, making purchase commitments, completing financial transactions, and obtaining service Outsourcing—The process of finding outside vendors and suppliers that provide professional help, parts, or materials at a lower cost. Copyright © Cengage Learning. All rights reserved.

Combining e-Business Resources Copyright © Cengage Learning. All rights reserved.

Satisfying Needs Online The Internet has created new customer needs E-business can satisfy those needs as well as traditional ones Global access to information and entertainment Virtually unlimited selections of products Opportunities for interaction Individually custom-tailored content Copyright © Cengage Learning. All rights reserved.

Creating e-Business Profit Revenue growth Revenue stream Source of revenue flowing into a firm Sales of merchandise online Intelligent information systems to suggest purchases to repeat online customers Increased sales in physical stores because of product information available online Advertising on web pages Subscription fees charged for access to online services and content Copyright © Cengage Learning. All rights reserved.

Creating e-Business Profit (cont’d) Expense reduction Offering services that Reduce transaction costs Provide information Provide customer assistance Reduces the costs of dealing with customers Reduces the need for as many physical store locations Copyright © Cengage Learning. All rights reserved.

Fundamental Models of e-Business Business model A group of common characteristics and methods of doing business to generate sales revenues and reduce expenses Business-to-Business (B2B) model Business-to-Consumer (B2C) model Copyright © Cengage Learning. All rights reserved.

Copyright © Cengage Learning. All rights reserved. Planning for a New Internet Business or Building an Online Presence for an Existing Business Copyright © Cengage Learning. All rights reserved.

Internal and External Forces That Affect an e-Business Copyright © Cengage Learning. All rights reserved.