Chapter Seventeen Acquiring, Organizing, and Using Information

Copyright © Houghton Mifflin Company. All rights reserved.17 | 2 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.Explain how different research methods can be used to obtain information.

Copyright © Houghton Mifflin Company. All rights reserved.17 | 3 Learning Objectives (cont’d) 6.Analyze how computers and technology change the way information is acquired, organized, and used. 7.Discuss how the Internet helps employees communicate, assists a firm’s sales force, trains and recruits employees, and tracks employee expenses 8.Understand how software can be used to collect and distribute information.

Copyright © Houghton Mifflin Company. All rights reserved.17 | 4 How Information Reduces Risk Information produces knowledge and empowers managers and employees to make better decisions The relationship between information and risk

Copyright © Houghton Mifflin Company. All rights reserved.17 | 5 How Information Reduces Risk (cont’d) 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 © Houghton Mifflin Company. All rights reserved.17 | 6 How Information Reduces Rick (cont’d) 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

Copyright © Houghton Mifflin Company. All rights reserved.17 | 7 Data Versus Information

Copyright © Houghton Mifflin Company. All rights reserved.17 | 8 Data Versus Information (cont’d)

Copyright © Houghton Mifflin Company. All rights reserved.17 | 9 The 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 © Houghton Mifflin Company. All rights reserved.17 | 10 The 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

Copyright © Houghton Mifflin Company. All rights reserved.17 | 11 Management Information System (MIS) Source: Management, 8 th ed., by Ricky W. Griffin. Copyright © 2005 by Houghton Mifflin Company. Adapted with permission.

Copyright © Houghton Mifflin Company. All rights reserved.17 | 12 Five Management Information System Functions

Copyright © Houghton Mifflin Company. All rights reserved.17 | 13 How Employees Use an MIS 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 Check data, especially computerized data, for accuracy Outdated data are likely to yield inaccurate information

Copyright © Houghton Mifflin Company. All rights reserved.17 | 14 How Employees Use an MIS (cont’d) 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 © Houghton Mifflin Company. All rights reserved.17 | 15 Functions of an MIS (cont’d) Processing data –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 Frequency distribution—a listing of the number of times each value appears in a set of data Arithmetic mean—the sum of all the values of a data set divided by the number of items in the data set Median—the value at the exact middle of a set of data when the data are arranged in order Mode—the value that appears most frequently in a set of data Range—the difference between the highest and lowest value in a set of data

Copyright © Houghton Mifflin Company. All rights reserved.17 | 16 Statistics Frequency of $3,500 = 2 Arithmetic mean = $2, Median = $2,800 Mode = $3,000 Range = $1,700

Copyright © Houghton Mifflin Company. All rights reserved.17 | 17 How Employees Use an MIS (cont’d) 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

Copyright © Houghton Mifflin Company. All rights reserved.17 | 18 Typical Visual Displays Used in Business Presentations

Copyright © Houghton Mifflin Company. All rights reserved.17 | 19 Typical Visual Displays Used in Business Presentations (cont’d)

Copyright © Houghton Mifflin Company. All rights reserved.17 | 20 Typical Three-Column Table

Copyright © Houghton Mifflin Company. All rights reserved.17 | 21 Using Business Research Qualitative research –Involves the descriptive or subjective reporting of information discovered by the researcher Quantitative research –Involves the collection of numerical data for analysis through a survey, experiment, or content analysis

Copyright © Houghton Mifflin Company. All rights reserved.17 | 22 Methods Used by Researchers

Copyright © Houghton Mifflin Company. All rights reserved.17 | 23 Which Research Method to Choose Decision factors –Limitations on time and money –The need for accuracy and validity Managers rely on the results of proven methods until those methods no longer work well

Copyright © Houghton Mifflin Company. All rights reserved.17 | 24 Using Computers and the Internet 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 –Intranet A smaller version of the Internet for use only within a firm –Networks A group of two or more computers linked together to share data and information

Copyright © Houghton Mifflin Company. All rights reserved.17 | 25 Using Computers and the Internet (cont’d) 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 © Houghton Mifflin Company. All rights reserved.17 | 26 Information Sources

Copyright © Houghton Mifflin Company. All rights reserved.17 | 27 Insert Table 17.3 (second half) Information Sources (cont’d)

Copyright © Houghton Mifflin Company. All rights reserved.17 | 28 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 Software for creating web pages –Developing a website –Hosting a website

Copyright © Houghton Mifflin Company. All rights reserved.17 | 29 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 © Houghton Mifflin Company. All rights reserved.17 | 30 Improving Productivity with Computers Helping employees communicate – —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 © Houghton Mifflin Company. All rights reserved.17 | 31 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 © Houghton Mifflin Company. All rights reserved.17 | 32 Improving Productivity (cont’d) Tracking employee expenses –Employees can input their expenses for reimbursement through software programs that process employee expense reports

Copyright © Houghton Mifflin Company. All rights reserved.17 | 33 Business Applications Software Integrated software combines many functions in one package –Database management –Graphics –Spreadsheets –Word processing –Desktop publishing –Accounting –Computer-aided design (CAD) –Computer-aided manufacturing (CAM) –Computer-integrated manufacturing (CIM)