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com
 M: Management
-Business Function,
Organisation Hierarchy

I: Information
-Content- Data, Information,
Knowledge
-Processes- Create, Gather, Store,
Organize, consolidate, filter,
Deliver & Share

S: Systems
-Input- Process- Output- Store
Open Or Close System

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 Data & Information
— Data refers to fact used — Information is the
knowledge derived from
for reference or analysis. study, experience and
— Data may be a number, statistics.
word or image, which — Communication of
intelligence derived from
can be processed by a processed output of
computer. computer.
— Information is a kind of
— Data needs to be knowledge that can be
interpreted by human or exchanged among people ,
machine to derive the about things, facts,
concepts, etc.
meaning

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 Attributes of Information
Time Content Form
Timeliness/Availability Mode & Format Conciseness/ Quality
Frequency Accuracy Economical
Validity Relevance
Complete
Current /Updated

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 What is Information System
— IS can be defined as interrelated components that
— Collects
— Stores
— Process
— Distribute information
— To support decision making
— Control an Organisation

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 Functions of information system

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 In Detail Information Systems
— IS is an integration of man and machine for providing the
information to support the operations, the management
and the decision making.

— The information that MIS provides helps the managers

perform the mangement process.
— Ie: Planning, organising staffing, directing and controlling.

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 Components of Information System
1. People Resource:
a) End User- People who uses IS.
b) IS Specialist – People who develop IS (Software Analyst, Developer,
Operator)
2. Hardware Resource:
a) Computer System- CPU, Laptops, hand help device
b) Computer Peripherals – Input, output and store devices.
3. Software Resource:
a) System Software - Operating Systems
b) Application Software – eg: Payroll system, attendance system
c) Procedure – Instruction to use IS
4. Data Resource: Data is stored, processed analysed using sophisticated
technologies to reveal complex relations between two or more criteria.
a) Database
b) Knowledge base
5. Network Resource:
a) Communication Media – Wired or wireless technology
b) Communication Control software – Network operation systems, internet
browsers.

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 Dimensions of Information system
— Organisation
— Management
— Technology

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 Dimensions of IS
Organisation Management Technology
— Hierarchy • Planning, • Hardware
— Business Organising, • Software
Functions Directing, • Data management
— Business Process
Controlling technology
• Design & Develop
— Culture • Networking
new product &
— Politics • Internet
Services.
• Intranet
• Redesigning
organisation • Extranet

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 Strategic business objective of
IS/Need of IS
1. Operational Excellence
2. New Product, Service, Business model
3. Customer & Supplier intimacy
4. Improved Decision making
5. Competitive advantage
6. Survival

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 Organisation
— Organisation is a stable formal structure that takes
resources from the environment & process them to
produce output.
Technical Definition Behavioural Definition

Organisation is a formal legal entity A collection of rights, privileges,

with internal rules & procedures, obligation & responsibilities that
that must abide laws. are delicately balanced over a period
of time through conflict & conflict
resolution.

— How the above def. is related to IS?

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 Features of Organisation
— Routines & Business Processes.
— Organisation politics
— Organisation culture
— Organisation environment
— Organisation structure

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 Organisation Structure
1. Simple Structure :Medium size Retail Store
2. Machine Bureaucracy: Automobile manufacturer,
steel company
3. Professional Bureaucracy: Universities, Hospitals,
Law firms, CA firm
4. Divisional Bureaucracy: a large conglomerate
(Reliance Industries)
5. Adhocracy: Research & Development firm(NASA)

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 Managers & their Roles
— Manager is regarded in terms of their skill in
managing resources.
— The roles of manages are been classified in two views:
a) Classic Model
a) Planning
b) Organising
c) Staffing
d) Directing
e) Controlling

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 Roles of Managers
INTERPERSONAL INFORMATIONAL ROLE DECISIONAL ROLE
ROLE
— Figure Head — Monitor — Entrepreneur
— Leader — Disseminator — Disturbance
— Liaison — Spokes person handler
— Resource
Allocation
— Negotiator

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 Robert Anthony’s management
hierarchy Theory
An organization can be seen as hierarchy of decision-
making.
Robert N. Anthony has described three levels of
management activities, which are:-
— Strategic planning level
— Management control level
— Operational control level

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 Strategic Planning
— Process of setting or changing the objectives.
— Resources used to obtain these objectives.
— It helps in policy formulation to clear the goals of
organisation.
— The policies that are used in the acquisition, use and
disposition of these resources.
— Summary: Recognising the face that their decision will
affect the organisation for entire year
— DESIGNATIONS: PRESIDENT , VICE
PRESIDENT

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 Management Control
— They are responsible to put plan to action & ensure their
goals are met.
— The resources are obtained and used effectively and
efficiently in order to achieve the organisational goals.
— It keeps a check on the operations and people involved in
operations to avoid any wastage of resources.
— The decisional impact of this level managers would be of
medium term or degree.
— Designations: Regional Directors, Product Head,
Divisional Head

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 Operation Control
— Ensure that tasks are carried out effectively and
efficiently.
— Full utilisation of the resources available without any
wastage.
— It requires proper handling of machines with reduced
costs and depreciation.
— It also helps in managing the workers involved in
operations through proper supervision and directions.
— It helps the organisation to produce quality products in
desirable time.
— Designation : Project Leaders, Supervisors.

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 Levels of Mgt & Informational
Need

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 Management Strategic Management Operational
Function Planning Control Control

Planning Long-range, high Medium range, Short range, low

impact medium impact
impact
Organizing General Departmental Small unit level
framework level

Staffing Key senior people Medium level, Operational level

tactical level

Directing General and long Tactics Routine activities

range
directives
Controlling Aggregate level Periodic control Regular and
and continuous
controlling supervision
exceptions

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 Eg:

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 Anthony’s Framework: DIFFERNET INFROMATION REUIREDFOR THREE
TYPES OF PLANNING AND CONTROLL PROCESS

Information Strategic Management Operation

Characteristic planning Control Control
Volume Low Intermediate High
Level of High Intermediate Low
Aggregation
Frequency to use Low Intermediate High
a particular type
of data

Accuracy Low Intermediate High

Scope Wide Intermediate High
Source Internal+ external Mostly internal Entiresly internal

Predictability Low Fairy high Very High

with data User
Variability With High Intermediate Low
User
Distance of user Fair Fairly close Close
from the source
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 Types of Decisions
1. Structured/ Programmed Decision
2. Unstructured/ Non- Programmed
Decision
3. Semi- Structure Decision

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 Types of Decisions
Structured Unstructured Semi-Structured
• Defined • Decisions are — Require human
methodology poorly judgement &
for finding structured & agreement in
solution. expert solution
• Statically method.
knowledge
determined required. — Made at all the
with acceptable levels of mgt.
probability • Unique
• Routine type decision
• Taken by • Non-routine &
Operation level complex type.

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 Examples of Decision at each level of Mgt
by types of decision structure

Decision Operational Mgt Tactical Mgt Strategic mgt

Structure
Structured Inventory control Program control --------------------

Semi- Production Employee Merger &

structured schedule, performance acquisition,
Credit appraisal, Site location
management Capital budgeting
Unstructured Cash management Business process New business plan,
reengineering Company
reorganisation

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 Hebert Simon’s Decision making model

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 Hebert Simon Model
Intelligent Phase Design Phase Choice Phase
— Problem finding • Selecting the
activity • Support to
understand the alternative from
— Internal & the design phase.
external problem.
comprehensive • Support for
data base.
generating
— Searching &
scanning env. solutions. Limitations:
Ø Societal env. • Support for Model does not
Ø Competitive testing feasibility include
env. of solution. implementation
Ø Organisational
env. & Feedback step.

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 General process of decision
making
1. Identify the existing problem
2. List possible alternatives for solving the problem
3. Select the most beneficial of these alternatives
4. Implement the selected alternative
5. Gather the feedback to find out if the implemented
alternatives is solving the identified problem.

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 Impact of Information system
on the organisation

1. Economic impact/ theories

2. Organisational & Behavioural impact/

theories

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 Economic Impact
— Transactional Theory-
— Agency theory
— The theory state the goal of
an organisation is to
minimise the cost of
exchanging resources in the
environment and the cost of
managing these inside the
organisation.
— Market place:
— cost of locating and
communicating with
suppliers
— Monitoring contract
compliances
— Buying insurance
— Gaining info on product,etc.
— Hiring more employees
own suppliers and agents.
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— Theory that view firm as a
nexus of contracts among
self interested individual
who must be supervised
and managed.
— Principle : owner
— Agent: employees.
— The employees needs
constant supervision and
task become difficult with
the increased size of the
organisation.
— Hence IS reduces the agency
cost as its easier to supervise
the large no. of employees
 Organisational &Behavioural
Impact
— IT Flattens the organisation

— Post Industrial Organisation

— Understanding Organisation resistance to change

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 In order to implement change, all the four component must be
changes simultaneously
structure

Technology People

Task

Unfreeze- change - refreeze

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 Behavioural impact
— This theory includes sociology, psychology,& political
science are more useful for describing the behaviour
of individual firm.
— IT could change the hierarchy of decision making.
— Lower cost of information acquisition
— Broaden the distribution of information
— Increased support of clerical worker.
— Provide networked telecom services.
— Reduction of lower level workers.
— Flattened the shape of the organisation.
— Possibilities for implementation of virtual organisation.

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 Changing Environment & its impact
on business
EXTERNAL BUSINESS INTERNAL BUSINESS
ENVIRONMENT ENVIRONMENT
• Internet economy — From Supply push to
• Global Market place demand Pull
• Separating work locations — Real time working
• Reaching global market — Team Based working
• Decapitalisation — Flattening Organisation
• Faster business cycle hierarchy
• Accountable & Transparent.

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 Porter’s five force model/ Competitive force model

— Developed in 1979.

— By: Michael E. Porter

— Purpose:
— 5 factors that together determine the nature of
competition in industry.
— It determines the attractiveness of the market.

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 Five Competitive Forces
1. Traditional Competitors- Firms share there market place
with their competitors.
2. New Entrant –It’s a free economy so new players always
enters the market place.
3. Substitute Product & Services- More substitute in your
industry, the less you can control the pricing & lowers
your profit margin.
4. Customers-A profitability of co. depends on its ability to
attract & retain the customers & charge higher prices. The
power of co. grows if it can increase the switching cost of
the customers.
5. Suppliers- The market power of suppliers have a
significant impact on the firm. The more different
supplier the market has the more control it can exercise
over the suppliers.

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 New Market
Entrant

Traditional
Customers Suppliers
Competitors

Substitute
Products

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 1. What is the firm to do when it is faced
with these competitive forces???
2. How us Information systems to
counteract these forces?
3. How to prevent substitute & inhibit
new entrants?
4. How to become the most successful
firm in the industry?

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 IS Strategies For Dealing with
Competitive forces
1. Low cost Leadership- Reduce the operational cost so as
to deliver product & services at the optimum price.
2. Product differentiation – Co. tries to produce the
product or service that are different from that of are
available. Changing from mass production to mass
customization.
3. Focus on niche market –Serve the narrow target market
better than the competitors. IS help in data mining, on
the basis of which the decisions are been taken.
4. Strengthen supplier & customer intimacy-Use IS to
tighten the linkages with the customers and develop
intimacy with the customers.

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 The Value chain model

— Porter’s competitive models suggests generic strategies

but doesn’t give methodology to follow for achieving
competitive advantage.
— In order to achieve operational excellence we use value
chain model.
— Value chain views firm as a chain of basic activities
that add a margin of value to a firm’s product or
services.

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 Value chain model
— This model highlights the primary or support activities
of the firm where IS can be best applied to achieve the
competitive advantage.
— The critical leverage point where firm can use IS to
enhance its competitive position.
Primary activities: Support Process
Inbound logistics Organisation infrastructure
Operations HRM
Outbound logistics Technology department
Marketing & sales Procurement of resources
Services

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 Value chain

Supplier’s Firm
Suppliers Distributors Customers
Supplier

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 Primary IS Support Process IS
activities:

Inbound Automated Firm infra Electronic

logistics warehousing scheduling &
system messaging system

Operations Automation HRM Work force

planning system

Outbound Automated Technology Computer Aid

logistics shipment department design system
scheduling system

Marketing & Computerised Procurement of Ordering system

sales ordering system resources

Services Equipment
maintenance
system

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 Value web - Digitally enabled network of a firm and
its supplier and business partners.
A value web is a collection of independent firm that use IT
to coordinate their value chain to collectively produce a
product or service for a market collectively

To attain competitive advantage

Internal value chain External value web activities

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 Amazon Value Chain

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