MANAGEMENT INFORMATION SYSTEM

Information as a corporate resource has the following features:

1. Information is a value added resource. Just as value is added to a product as it moves from raw
material stage to final product, the same is true of conversion of data into information.

2. Information has a specific cost associated with it just as if it were acquired from market.
Therefore, it is as essential to acquire and utilise information efficiently as it would be for any other
resource.

3. Information is meant to be shared by all associated with the attainment of company’s common
goals and they, in turn, contribute to the corporate stock of information.

4. Information is exposed to a variety of security risks. Therefore, it has to be protected by

implementing appropriate security policies and procedures without hindering its seamless flow
across its users.

5. Most of the information is organisation specific and its value depends upon its use by the
decision maker.
TYPES OF INFORMATION
6 types of information
There are six types of information. Here we inspect each one in depth to help you better understand
them all:
1. Conceptual information
Conceptual information comes from ideas, theories, concepts, hypotheses and more. With
conceptual information, an abstract idea is not always rooted in a scientific foundation and rather is
the fundamental creation of beliefs, thoughts, philosophies and preferences. You can form or share
conceptual information through comparison and reflection, creating philosophies that cannot be
proven or seen.
Here are some examples of conceptual information:
Charles Darwin's theory of evolution
Copernican concept of astronomy
Conceptual art, where the method of producing it is more important than the finished product
Related: Conceptual Skills: Definition, Overview and Examples
2. Procedural information
Procedural information, or imperative knowledge, is the method of how someone knows to do
something and is used by performing a task. You can refer to it as muscle memory since it is
knowledge that is hard to explain and stored deeply in your mind.
Here are two examples of procedural information:
Riding a bicycle: Riding a bike takes physical practice to comprehend, regardless of the amount or
type of instructions given.
Driving a car: You can pass your written driving test or get a perfect score, though have little
knowledge of the procedural information it takes to operate and drive a vehicle.
Tying a shoelace: Because the concept is hard to explain, it may take a child several attempts to first
learn how to tie a shoelace, even with visual examples and descriptive words.
Related: A Guide To Procedural Knowledge in the Workplace
3. Policy information
Policy information focuses on decision-making and the design, formation and selection of policies.
It comprises laws, guidelines, regulations, rules and oversight for an organization, group of people
or place. You can gain policy information through pictures, diagrams, descriptions and other visual,
audio or written messages.
Here are some examples of policy information:
Food pyramid diagram
Periodic table of elements
Organizational charts
Employee handbooks
The United States Constitution
Government restrictive, regulatory or facilitating policies
4. Stimulatory information
Stimulatory information is information that creates a response or stimulation amongst a person or
group of people. Stimulation encourages the cause of activity and you can gain stimulatory
information in a variety of ways, like in person through observation, through word-of-mouth
communication or through outlets like the news.
One example may be a person observing the nonverbal communication of someone passing by. If
the stimulation is positive, they may say hello and start a conversation perhaps or, if the stimulation
is not positive, they may respond by moving in the other direction, running away or creating more
distance between them.
Here are other examples of stimulatory information:
Victory day celebrations after a sports team wins a championship
The physiological fight-or-flight reaction response to perceived harm
Related: Communicating with Nonverbal Cues
5. Empirical information
Empirical information means information gained through human senses, observation,
experimentation and the testing of a hypothesis by establishing documentation of patterns or
behavior. It almost always has a scientific foundation and verifies the truth or falsehood of a claim
through qualitative and quantitative factors.
Here are several examples of empirical information, rooted in science:
Electricity
Atomic theory
Theory of gravity
Kinetic theory of matter
Genetics and DNA
Empirical evidence and information are the opposite of anecdotal information and evidence, which
is a conclusion based on informal collection methods, most often a personal experience and
testimony.
6. Directive information
Directive and descriptive information is about providing directions to a person or group of people to
achieve a particular result and outcome. You can use directive information with or without dictating
the means to achieve the desired result. Directive information often comes in verbal or written form
and can apply to leadership at work, in the military or government and with everyday experiences,
like legal, life and safety matters.
Here are some examples of directive and descriptive information:
Medical do not resuscitate (DNR) orders
Organ donation paperwork
Living wills
Coaching
Mode of operations in any organization
Employment performance reviews
Military commands
Directive leadership
Factual information: Factual information deals only with truthful and proven concepts, like the
scientific fact the freezing point of water is 32 degrees Fahrenheit.
Analytical information: Analytical information is the interpretation of factual information,
determining what is implied or inferred, like you can make ice cubes by storing them in freezers
colder than 32 degrees.
Subjective information: Subjective information is that from one point of view, like opinions.
Objective information: Objective information is that from several points of view that offer all sides
of an argument, like scientific or medical journal articles and publications.
LEVELS OF INFORMATION
1. Operational information:
Operational information relates to the day-to-day operations of the organisation and thus, is useful
in exercising control over the operations that are repetitive in nature. Since such activities are
controlled at lower levels of management, operational information is needed by the lower
management.
For example, the information regarding the cash position on day-to-day basis is monitored and
controlled at the lower levels of management. Similarly, in marketing function, daily and weekly
sales information is used by lower level manager to monitor the performance of the sales force.
It may be noted that operational information pertains to activities that are easily measurable by
specific standards. The operational information mainly relates to current and historical performance,
and is based primarily on internal sources of data. The predictive element in operational information
is quite low and if at all it is there, it has a short term horizon.
2. Tactical information:
Tactical information helps middle level managers allocating resources and establishing controls to
implement the top level plans of the organisation. For example, information regarding the
alternative sources of funds and their uses in the short run, opportunities for deployment of surplus
funds in short- term securities, etc. may be required at the middle levels of management.
The tactical information is generally predictive, focusing on short-term trends. It may be partly
current and partly historical, and may come from internal as well as external sources.
3. Strategic information:
While the operational information is needed to find out how the given activity can be performed
better, strategic information is needed for making choices among the business options.
The strategic information helps in identifying and evaluating these options so that a manager makes
informed choices which are different from the competitors and the limitations of what the rivals are
doing or planning to do. Such choices are made by leaders only.
Strategic information is used by managers to define goals and priorities, initiate new programmes
and develop policies for acquisition and use of corporate resources. For example, information
regarding the long-term needs of funds for on-going and future projects of the company may be
used by top level managers in taking decision regarding going public or approaching financial
institutions for term loan.

Strategic information is predictive in nature, relies heavily on external sources of data, has a long-
term perspective, and is mostly in summary form. It may sometimes include ‘what if’ scenarios.
However, the strategic information is not only external information.

For long, it was believed that strategic information are basically information regarding the external
environment. However, it is now well recognised that the internal factors are equally responsible for
success or failures of strategies and thus, internal information is also required for strategic decision
making.

MIS Need for Information Systems

Managers make decisions. Decision-making generally takes a four-fold path −

• Understanding the need for decision or the opportunity,

• Preparing alternative course of actions,
 • Evaluating all alternative course of actions,
• Deciding the right path for implementation.
MIS is an information system that provides information in the form of standardized reports and
displays for the managers. MIS is a broad class of information systems designed to provide
information needed for effective decision making.

Data and information created from an accounting information system and the reports generated
thereon are used to provide accurate, timely and relevant information needed for effective decision
making by managers.

Management information systems provide information to support management decision making,

with the following goals −

• Pre-specified and preplanned reporting to managers.

• Interactive and ad-hoc support for decision making.
• Critical information for top management.
MIS is of vital importance to any organization, because −

• It emphasizes on the management decision making, not only processing of data generated by
business operations.
• It emphasizes on the systems framework that should be used for organizing information
systems applications.

MIS AND DECISION MAKING CONCEPTS

DECISION-MAKING CONCEPT:
A decision is a choice out of several alternatives (options) made by the decision maker to achieve
some objective s in a given situation. Business decisions are those, which are made in the process of
conducting business to achieve its objective in a given environment. Managerial decision-making is
a control point for every managerial activity may be planning, organizing, staffing, directing,
controlling and communicating. Decision-making is the art of reasoned and judicious choice out of
many alternatives. Once the decision is taken, it implies the commitment of resources.
The business managers have to take a variety of decision. Some are routine and others are long-term
implementation decision. Thus managerial decisions are grouped as:
(a) Strategic decision
(b) Tactical decision
(c) Operation decision
1. Strategic Decision: these are known as the major decision to influence the whole or major
part of the organization. Such decisions contribute directly to the achievement of common goals of
the organization; have a long-range effect upon the organization.
Generally, strategic decision is unstructured and thus, a manager has to apply his business
judgment, evaluation and intuition into the definition of the problem. These decisions are based on
partial knowledge of the environmental factors which are uncertain and dynamic, therefore such
decision is taken at the higher level of management.
2. Tactical Decision: tactical decision relates to the implementation of strategic decisions,
directed towards developing divisional plans, structuring workflows, establishing distribution
channels, acquisition of resources such as men, materials, and money. These decisions are taken at
the middle level of management.
3. Operational Decision: operational decisions relate to day-to-day operations of the enterprise
having a short-term horizon and are always repeated. These decisions are based on facts regarding
the events and do not require much of business judgments. Operational decisions are taken at a
lower level of management.
Programmed Decisions
Programmed decisions are those that are repeated over time and for which an existing set of rules
can be developed to guide the process. These decisions might be simple, or they could be fairly
complex, but the criteria that go into making the decision are all known or can at least be estimated
with a reasonable degree of accuracy. For example, deciding how many raw materials to order
should be a programmed decision based on anticipated production, existing stock, and anticipated
length of time for the delivery of the final product. As another example, consider a retail store
manager developing the weekly work schedule for part-time employees. The manager must
consider how busy the store is likely to be, taking into account seasonal fluctuations in business.
Then, they must consider the availability of the workers by taking into account requests for vacation
and for other obligations that employees might have (such as school). Establishing the schedule
might be complex, but it is still a programmed decision: it is made on a regular basis based on well-
understood criteria, so structure can be applied to the process. For programmed decisions, managers
often develop heuristics, or mental shortcuts, to help reach a decision. For example, the retail store
manager may not know how busy the store will be the week of a big sale, but might routinely
increase staff by 30% every time there is a big sale (because this has been fairly effective in the
past). Heuristics are efficient—they save time for the decision maker by generating an adequate
solution quickly. Heuristics don’t necessarily yield the optimal solution—deeper cognitive
processing may be required for that. However, they generally yield a good solution. Heuristics are
often used for programmed decisions, because experience in making the decision over and over
helps the decision maker know what to expect and how to react. Programmed decision-making can
also be taught fairly easily to another person. The rules and criteria, and how they relate to
outcomes, can be clearly laid out so that a good decision can be reached by the new decision maker.
Programmed decisions are also sometimes referred to as routine or low-involvement decisions
because they don’t require in-depth mental processing to reach a decision.

nonprogrammed decisions are novel, unstructured decisions that are generally based on criteria
that are not well-defined. With nonprogrammed decisions, information is more likely to be
ambiguous or incomplete, and the decision maker may need to exercise some thoughtful judgment
and creative thinking to reach a good solution. These are also sometimes referred to as nonroutine
decisions or as high-involvement decisions because they require greater involvement and thought
on the part of the decision maker. For example, consider a manager trying to decide whether or not
to adopt a new technology. There will always be unknowns in situations of this nature. Will the new
technology really be better than the existing technology? Will it become widely accepted over time,
or will some other technology become the standard? The best the manager can do in this situation is
to gather as much relevant information as possible and make an educated guess as to whether the
new technology will be worthwhile. Clearly, nonprogrammed decisions present the greater
challenge.
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