Acquiring, Organizing, and Using Information Chapter Seventeen Acquiring, Organizing, and Using Information

Understand how information is organized to help people make decisions. Learning Objectives Understand how information is organized to help people make decisions. Describe how business research is conducted. Discuss management’s information requirements. Describe the five functions of an information system. Copyright © Houghton Mifflin Company. All rights reserved.

Learning Objectives (cont’d) Explain how the Internet, intranet, standards for communications, and web pages affect business today. Discuss how the Internet helps employees communicate, assists a firm’s sales force, trains and recruits employees, and conducts financial activities. Understand how business application software can be used to collect and distribute information. Copyright © Houghton Mifflin Company. All rights reserved.

The Nature of Information 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.

The Nature of Information (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.

The Nature of Information (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.

Data versus Information Copyright © Houghton Mifflin Company. All rights reserved.

Data versus Information Copyright © Houghton Mifflin Company. All rights reserved.

Business Research Secondary research Primary research Gathering information from sources where the original research was done by someone else Primary research Developing and gathering information firsthand 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.

Copyright © Houghton Mifflin Company. All rights reserved.

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.

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.

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.

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

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

Functions of 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.

Functions of 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.

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.

Statistics Frequency of $3,500 = 2 Arithmetic mean = $2,681.82 Median = $2,800 Mode = $3,000 Range = $1,700 Copyright © Houghton Mifflin Company. All rights reserved.

Functions of 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.

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

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

Copyright © Houghton Mifflin Company. All rights reserved.

The Internet and New Telecommunication Technologies Information society A society in which large groups of employees generate or depend on information to perform their jobs The Internet and the intranet 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 Copyright © Houghton Mifflin Company. All rights reserved.

Copyright © Houghton Mifflin Company. All rights reserved.

Copyright © Houghton Mifflin Company. All rights reserved.

The Internet and New Telecommunication Technologies (cont’d) Internet standards for communications Standardization guidelines let products, services, materials, and processes achieve their purposes TCP/IP—Transmission Control Protocols and Internet Protocols Allow computers to communicate with each other URL —Uniform Resource Locator Acts as the “address” of a particular website http—hypertext transfer protocol Allows for proper transfer of information between one computer and another on the Internet Web search engines Software for creating web pages Developing a website Hosting a website Copyright © Houghton Mifflin Company. All rights reserved.

Managing Internet Activities Helping employees communicate E-mail—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.

Managing Internet Activities (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.

Managing Internet Activities (cont’d) Conducting financial activities Completing e-business transactions Requires a secure electronic transaction encryption process Online banking services Allows direct customer access to accounts; reduces transaction costs, provides increased security by reducing theft and potential mistakes due to human error 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.

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) Copyright © Houghton Mifflin Company. All rights reserved.