HERCOR COLLEGE

Km. 1 Lawaan, Roxas City, Capiz 5800

ACADEMIC YEAR 2021-2022

Department: College of Business Administration Course Code: OME305

Name of Instructor: John Khevin V. Limpoco, CPA Schedule:
Course Descriptive Title: Management Information System Semester: 1st Semester

Name of Student: ________________________________________ Year and Section: BSBA 3A and 3B

Student ID Number: ______________________________________ Contact Number: _________________________
Email Address: __________________________________________ Alternate Contact Number:
__________________

OME305: MANAGEMENT INFORMATION SYSTEM LEARNING MODULE

Course Description:
This course emphasizes on the importance of managing information through information systems
provided by advancement in technology. It gives a vivid reason why information technology matters in a
fast and pacing global market and shows the opportunities of growth, stability, and collaboration within
and outside the territory.

CH
APTER 1 BUSINESS INFORMATION SYSTEMS: AN
OVERVIEW

LEARNING OBJECTIVES
By the end of this chapter, you will be able to:

1. Explain why information systems are essential to business.

2. Describe how computers process data into useful information for problem solving and decision
making.
3. Identify the functions of different types of information systems in business.
4. Explain what business strategy and strategic moves are.
5. Identify basic initiatives for gaining a competitive advantage.

SCHEDULE
In this chapter, we will utilize blended learning method. Upon receiving this learning module, you
shall be guided with the lessons, discussions, and tasks need to be completed. The “DISCUSSIONS”

Source: Oz, E. (2007). Management Information Systems – 5th Edition. Singapore: Thomson Learning.

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part of this module is for your reading, make sure to read and understand the provided notes and feel free
to use books or online references provided therein.

In addition, the quizzes and outputs will due ONE WEEK AFTER THE RELEASE SCHEDULE
OF LEARNING MODULES. For inquiries and questions regarding the activity and tasks, you may post it
in our Google classroom with the classroom code (tuuriic). Please post other concerns and queries in the
Google Classroom or email me thru <johnkhevin.limpoco@hercorcollege.edu.ph>.

DISCUSSIONS
LESSON 1: The Purpose of Information System

In business, people and organizations seek and use information specifically to make a sound
decisions and to solve problems. A problem is any undesirable situation. If you know that some
customers do not pay their debts on time, but you don’t know who or how much they owe, you have a
problem. Thus, a simple accounting software can help.

An organization or individual that finds more than one way to solve a problem or a dilemma must
make a decision. Both problem solving and decision making require information. Gathering the right
information efficiently, storing it so that it can be used and manipulated as necessary, and using it to help
an organization achieve its business goals are the keys to success in business today. Thus, the purpose
of information system is to support these activities.

LESSON 2: Data, Information, and Information System

The word data is derived from the Latin “datum”, literally a given or fact, which might take the
form of a number, a statement, or a picture. Data is the raw material in the production of information.

Information is facts or conclusions that have meaning within a context. Raw data is rarely
meaningful or useful as information. To become information, data is manipulated through tabulation,
addition, subtraction, division, or any other processes/operation that leads to greater understanding of a
situation. A process is any manipulation of data, usually with the goal of producing information. To be
useful, information must be relevant, complete, accurate, and current. And in business, information must
also be obtained economically, that is, cost effectively.

A system is an array of components that work together to achieve a common goal, or multiple
goals by accepting input, processing it, and producing output in an organized manner. Systems may be:
a. Open System. It interfaces and interacts with other systems or subsystems.
b. Closed System. It stands alone with no connection to another system: nothing flows in from
another system, nothing flows out to another system. The system might be isolated for security
purposes.

An information system (IS) consists of all components that work together to process data and
produce information. An information system consists of data, hardware, software, telecommunications,
people, and procedure. There are four main operation of an information system, namely:

Source: Oz, E. (2007). Management Information Systems – 5th Edition. Singapore: Thomson Learning.

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 Data Processing
Input Output
changing and Storage
entering data into getting information
manipulating the storing data and
the information out of the
data in the informatio
system information system
information system

LESSON 3: Types of Information System

Managers and other professionals plan, control and make decisions. As long as a system
supports one or more of these activities, it may be referred to as a management information system. The
following are types of information systems:

a. Transaction Processing Systems (TPSs). TPSs are the most widely used information systems.
Its predominant function is to record data collected at the boundaries of the organizations or at
the point where the organization transacts business with other parties. It include cash registers,
automatic teller machines, and purchase order systems.

b. Supply Chain Management (SCM) Systems. The term “supply chain” refers to the sequence of
activities involved in producing a product or service. In industries that produce goods, the
activities include marketing, purchasing raw materials, manufacturing and assembly, packing and
shipping, billing, collection, and after-the-sale services. In service industries, the sequence might
include marketing, document management, and monitoring customer portfolios. Information
systems that support these activities and are linked to become one large IS providing information
on any stage of a business process is called SCM systems. They eliminate the need to reenter
data that has already been captured somewhere else in the organization.

Source: Oz, E. (2007). Management Information Systems – 5th Edition. Singapore: Thomson Learning.

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 c. Customer Relationship Management (CRM) Systems. CRM systems help manage an
organization’s relationship with its customers that help maintain customer records and
dynamically analyze and detect buying patterns and predict when a specific customer is about to
switch to a competitor. Many CRM systems are used by service representatives in combination
with a telephone. CRM systems are often linked to web applications that track online shopping
and process online transactions.

The main goal of CRM systems are to increase the quality of customer service, reduce the
amount of labor involved in serving customers, and learn as much as possible about the
preferences of individual customers.

Source: Oz, E. (2007). Management Information Systems – 5th Edition. Singapore: Thomson Learning.

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 d. Business Intelligence (BI) Systems. BI systems discover peculiar buying patterns of
consumers, such as combinations of products purchased by a certain demographic group or on
certain days; products that are sold at greater cycles than others; reasons for customer’s churns,
that is, customers leaving a service provider for a competitor; and other valuable business
intelligence that helps managers quickly decide to change a strategy. Its main purpose is to glean
from raw data relationships and trends that might help organizations compete better.

e. Decision Support (DSSs) and Expert (ESs) Systems. DSSs are programmed to process raw
data, make comparisons, and generate information to help professionals glean the best
alternative for financial investment, marketing strategy, credit approval, and the like. It is
important to understand that DSS is only a decision aid, not an absolute alternative to human
decision making.

While DSSs rely on models and formulas to produce concise tables or a single number that
determines a decision, ESs rely on artificial intelligence techniques to support knowledge-
intensive decision-making processes. After gathering expertise from experts and building a
program, the program can be distributed and used repeatedly.

f. Geographic Information Systems (GISs). Sometimes, the information decision makers need is
related to a map to tie data to physical locations – thus, GISs. It accesses a database that
contains data about a neighborhood, city, county, state, country, or even the entire world.

LESSON 4: Information Systems in Business Functions

In accounting, information systems help record business transactions, produce periodic financial
statements, and create reports required by law such as financial position and profit and loss statements.
ISs also help create reports that help managers understand changes in an organization’s finances.

In finance, ISs help organize budgets, manage cash flows, analyze investments, and make
decisions that could reduce interest payments and increase revenues from financial transactions.

In marketing, ISs help analyze demand for various products in different regions and population
groups in order to more accurately market the right product to the right consumers.

In human resources, ISs mainly help in record-keeping and employee evaluation. HR

management systems have evolved to serve many purposes: recruiting, selection, placement, benefits
analysis, online benefits information for employees to access through an intranet, requirement
projections, and other services.

LESSON 5: Web-Empowered Enterprises

The most
exciting intersection
of IT and business in
recent years is
networked commerce
– buying and selling
goods and services
via a
telecommunications
network – or as it is
popularly called e-
commerce. Through
web and internet,
Source: Oz, E. (2007). Management Information Systems – 5th Edition. Singapore: Thomson Learning.

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commercial activities spawned a huge surge in business-to-business and business-to-consumer
electronic trade.

LESSON 6: Careers in Information Systems

The IT trade is made up of people engaged in a wide variety of activities. Demand for IT
professionals such as systems analyst, database administrator, network administrator, webmaster, chief
security officer, chief information officer, and chief technology officer continue to grow.

LESSON 7: Strategy and Strategic Moves

Source: Oz, E. (2007). Management Information Systems – 5th Edition. Singapore: Thomson Learning.

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 In business, a strategy is a plan designed to help an organization outperform its competitors.
Business strategy often takes the form of creating new opportunities rather than beating rivals. Although
many ISs are built to solve problems, many others are built to seize opportunities; thus strategic
information systems (SISs). They can be developed from scratch or they can evolve from an
organization’s existing ISs.
Better information gives corporations a competitive advantage in the marketplace. A company
achieves strategic advantage by using strategy to maximize its strengths, resulting in a competitive
advantage. When a business uses a strategy with the intent to create a market for new products or
services, it does not aim to compete with other organizations, because the market does not yet exist.
Therefore, a strategic move is not always a competitive move. However, in a free-enterprise society, a
market rarely remains the domain of one organization for long; thus, competition ensues almost
immediately.

LESSON 8: Achieving Competitive Advantage

Initiative #1: Reduce cost

Customers like to pay as little as possible while still receiving the quality of service or product they
need. One way to increase market share is to lower prices and the best way to lower prices is to
reduce costs.

Initiative #2: Raise barriers to market entrants

The smaller number of companies competing within an industry, the better off each company is.
Therefore, an organization might gain competitive advantage by making it difficult, or impossible
for other organizations to produce the product or service it provides. Using expertise or
technology that is unavailable to competitors or prohibitively expensive is one way to bar new
entrants.

Initiative #3: Establish high switching costs

Switching costs are expenses incurred when a customer stops buying a product or service from
one business and starts buying it from another. It may be explicit (such as charges the seller
levies on a customer for switching) or implicit (such as the indirect costs in time and money spent
adjusting to a new product that does the same job as the old). Penalties a buyer must pay for
terminating a deal early is an example of an explicit switching cost.

Initiative #4: Create new products or services

Creating a new and unique product or service that many organizations and individuals need gives
an organization a great competitive advantage. Unfortunately, the advantage lasts only until other
organization in the industry start offering an identical or similar product or service for a
comparable or lower price.

Initiative #5: Differentiate products or services

By persuading consumers that its product or service is better than its competitors, companies
achieve a competitive advantage. Product differentiation is usually achieved through advertising.

Initiative #6: Enhance products or services

Enhancing existing product or service to is actually adding to the product or service to increase its
value to the consumers.

Initiative #7: Establish alliances

Companies can gain competitive advantage by combining services to make them more attractive
(and usually less expensive) than purchasing services separately. These alliances provide two
draws for customers: (1) combined service is cheaper; and (2) one-stop shopping is more
convenient.

Initiative #8: Lock in suppliers or buyers

Source: Oz, E. (2007). Management Information Systems – 5th Edition. Singapore: Thomson Learning.

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 Organizations can achieve competitive advantage if they are powerful enough to lock in wither
suppliers to their mode of operation or buyers to their product. Possessing bargaining power – the
leverage to influence buyers and suppliers – is the key to this approach.

Source: Oz, E. (2007). Management Information Systems – 5th Edition. Singapore: Thomson Learning.

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