MBA SEM 1

SUB: MANAGEMENT INFORMATION SYSTEM

MODULE:1
 OVERVIEW OF MIS (MANAGEMENT INFORMATION SYSTEM)

 MIS stands for Management Information System. An MIS is a system designed to manage information within a company
or organization. This includes employees, departments, projects, clients, finances and other type of data.
 At its most general level, an MIS may include non-computer based elements, such as the structural hierarchy of an
organization. However, in the computing world, an MIS typically refers to the hardware and software used to manage
information.
 Definition:- “A system which collects, processes, stores and distributes information to help in decision making for
managerial functions.”
MAIN AREAS OF MIS: COMPONENTS OF MIS:

 Right information - People

 To the right person - Data
 At the right place - Business Procedures
 At the right time - Hardware
 In the right form - Software
 At the right cost
 CHAPTER:1 ORGANIZATION AND INFORMATION
SYSTEM:

• Topic:
• The organization:
 Structure, Managers and Activities.
 The level of People and Types of Decisions and their Information
Needs.
 Changing Environment and its Impact on Business – The IT/IS and
its Influence.
 WHAT IS ORGANIZATION?

 an organized group of people with a particular purpose, such as a business or government department.

 Organization is the process of identifying and grouping work to be performed, defining ad delegating responsibility and
authority and establishing relationships for the purpose of enabling people to work most effectively together in
accomplishing objectives.” In the words of Allen, organization is an instrument for achieving organizational goals. The
work of each and every person is defined and authority and responsibility is fixed for accomplishing the same.
 Organizing is the establishing of effective authority relationships among selected work, persons and work places in order
for the group to work together efficiently”. According to Terry organization is the creation of relationship among persons
and work so that it may be carried on in a better and efficient way.
 TYPES OF ORGANIZATIONAL STRUCTURES

There are certain shape or structure of each organization. There are five fundamental types of organizational structure
described by Mintzberg’s classification:
1. Entrepreneurial structure

2. Machine Bureaucracy

3. Divisonalized Bureaucracy

4. Professional Bureaucracy

5. Adhocracy
 RELATIONSHIP BETWEEN ORGANIZATION AND INFORMATION
SYSTEM

 An information system provides procedures to record make available information, concerning part of the organization, to
assist organization related activities. Information systems are more then the computers. Effective usage of information
system requires a thorough understanding of the organization, its management and the information technology it implies.
Information system is defined as the “combination of hardware, software, infrastructure and trained personnel organized
to facilitate planning, control, coordination, and decision making.” Three activities; Input, Processing, and Output in the
information system produce the information that are needed to make decision making, Analyzing the problems,
controlling operation, and in launching new products. Input collects the raw data, which is manifested into meaning form
by the Processor and Output transfers the processed data to the relevant person.
 Super market check-out is one of the most common examples of uses of information system used by the retail industry. It
holds loads of valued information. It keeps millions of data, such as product cost and the details, product identification
number and number of product sold out. On the basis of the information collected, companies analyze the total number of
the items sold out, items left in the stock, items that sell most, the stuff that need to ordered, and the most analyze its
sales.
 MANAGERS AND ACTIVITIES

 Managers:

a person responsible for controlling or administering an organization or group of staff.

Managerial Levels and its Business Areas:
Management Levels
1. Top-Level Managers

2. Middle-Level Managers

3. Lower-Level Managers

Business Areas:
4. Strategic Planning Level

5. Management control Level

6. Operational Control Level

Activities of Managers
1. Management Functions
i. Plan
ii. Organise
iii. Staff
iv. Direct
v. Control
2. Managerial Roles
THE LEVEL OF PEOPLE AND TYPES OF DECISIONS AND THEIR
INFORMATION NEEDS.
 CHANGING ENVIRONMENT AND ITS IMPACT ON BUSINESS

External Business Environment

 Internet Economy
 Global Marketplace
 Business Ecosystem
 Decapitalization
 Faster business cycle
 Accountability and transparency

Internal Organizational Environment

 Self-service
 Real-time working
 Team work
 Anytime, anyplace information work
 Outsourcing and strategic alliances
THE IT/IS AND ITS INFLUENCE
 Information technology means the use of technology to collect, construct, interchange and utilized information in its
many forms.
 According to Information Technology Association of America(ITAA),” IT is the study, design, development,
implementation, support or management of computer – based information systems, particularly software applications and
computer hardware.”
 Figure shows the surrounding environment of an organization
 INFLUENCE OF IT MANAGERS

 Using technology for designing and structuring the company.

 Creation of Business alliances including Electronic Linkages

 Choosing Systems for supporting varied workers

 Accepting groupware or group- decision support systems for people carrying out common works

 Defining a Global Strategy

 Handling routine transaction

 Personal Support System

 Reporting and control

 Automated production processes

 Embedded Products
 INFORMATION SYSTEM CONCEPTS
 Introduction:
 Following are the core concepts of information system:
 1) DATA: Data are the collection of facts and collected as the outcome of the experiment, experience, or process in a computer.
 2) Information: Information is a potential function of data. It is derived from the data and very helpful to solve a problem. Information known
as a processed data.
 What is Data?
 Data is a raw and unorganized fact that required to be processed to make it meaningful. Data can be simple at the same time unorganized
unless it is organized. Generally, data comprises facts, observations, perceptions numbers, characters, symbols, image, etc.
 Data is always interpreted, by a human or machine, to derive meaning. So, data is meaningless. Data contains numbers, statements, and
characters in a raw form.
 What is Information?
 Information is a set of data which is processed in a meaningful way according to the given requirement. Information is processed, structured,
or presented in a given context to make it meaningful and useful.
 It is processed data which includes data that possess context, relevance, and purpose. It also involves manipulation of raw data.
 Information assigns meaning and improves the reliability of the data. It helps to ensure undesirability and reduces uncertainty. So, when the
data is transformed into information, it never has any useless details.
 According to David and Olson,” Information is data that has been processed into a form that is meaningful to the recipient and id of real or
perceived value in current or prospective actions or decisions.”
Need for information
 Identification
 Collection
 Controlling
 Measuring
 Decision making
 Information, Knowledge and Business Intelligence
 Professor Ray R. Larson of the School of Information at the University of California, Berkeley, provides an Information Hierarchy, which is −
• Data − The raw material of information.
• Information − Data organized and presented by someone.
• Knowledge − Information read, heard, or seen, and understood.
• Wisdom − Distilled and integrated knowledge and understanding.
 Information/Data Collection Techniques
 The most popular data collection techniques include −

• Surveys − A questionnaires is prepared to collect the data from the field.

• Secondary data sources or archival data: Data is collected through old records, magazines, company website etc.
• Objective measures or tests − An experimental test is conducted on the subject and the data is collected.
• Interviews − Data is collected by the system analyst by following a rigid procedure and collecting the answers to a set of
pre-conceived questions through personal interviews.
 DATA VS. INFORMATION
Parameters Data Information

Qualitative Or QuantitativeVariables which helps

Description It is a group of data which carries news and meaning.
to develop ideas or conclusions.

Data comes from a Latin word, datum, which Information word has old French and middle English origins. It
Etymology(Origin) means "To give something." Over a time "data" has referred to the "act of informing.". It is mostly used for
has become the plural of datum(specific). education or other known communication.

Data is in the form of numbers, letters, or a set of

Format Ideas and inferences
characters.
It can be structured, tabular data, graph, data tree,
Represented in Language, ideas, and thoughts based on the given data.
etc.

Meaning Data does not have any specific purpose. It carries meaning that has been assigned by interpreting data.

Dependence It never depends on Information It depended on Data.

Support for Decision making It can't be used for decision making It is widely used for decision making.

Contains Unprocessed raw factors Processed in a meaningful way

Parameters Data Information

Knowledge level It is low-level knowledge. It is the second level of knowledge.

Data is based on records and observations and,

Information is considered more reliable than data. It helps the
Meaning which are stored in computers or remembered by
researcher to conduct a proper analysis.
a person.

The data collected by the researcher, may or may Information is useful and valuable as it is readily available to
Usefulness
not be useful. the researcher for use.
Information is always specific to the requirements and
Data is never designed to the specific need of the
Dependency expectations because all the irrelevant facts and figures are
user.
removed, during the transformation process.
An example of data is a student’s test score The average score of a class is the information derived from the
Example
given data.
 CHARACTERISTICS/ATTRIBUTES OF INFORMATION

1. Timeless

2. Appropriateness

3. Accuracy

4. Conciseness

5. Understandability

6. Relevant

7. Complete

8. Recent

9. Economical
 FUNCTIONS OF IS
 1. Provide fast and accurate transaction processing

 2. Provide large capacity , fast access storage

 3. Provide fast communication

 4. Reduced information overload

 5. Span boundaries

 6. Provide support for decision making

 7. Provide a competitive weapon

INFORMATION SYSTEM CYCLE

 TYPES OF INFORMATION

Classification by Characteristics
 Action verses Non-Action Information
 Recurring Verses Non-Recurring Information
 Internal Verses External Information
Classification by Application
 Planning Information
 Control Information
 Knowledge Information

Classification By Management Hierarchy

 Strategic Information
 Tactical Information
 Operational Information
DIMENSION OF IS

 Information systems have the following key dimensions:

1. Organization
 i) People
 ii) Structure
 iii) Business Processes
 iv) Polities and
 v) Culture
2. Management
3. Information Technology
 Computer Hardware
 Computer Software
 Data Management Technology
 Networking and Telecommunications Technology
 Categorization of organizational information systems –
hierarchical and functional perspective.

1. Hierarchical Perspective:
 Decision making and activities in organizations occur at different levels.
 Having the correct information is important
 Individual:
 Have different responsivities
 Make different types of decisions
 Carry out different types of activities
Activity Time Horizon Hierarchical Level Characteristics

Strategic Long Term General Management • Externally focused

Functional Management • Ad-hoc
• Highly unstructured

Tactical Mid Term Middle Management • Repeatable

• Semi – structured
• Recurrent

Operational Short Term Front Line employees • Low Discretion

• Highly Structured
• Transaction focused
2. Functional Perspective
 Functional systems are expressly designed to support the specific need of individuals in the same functional area
 Functional systems are based that information processing needs are unique and homogeneous within a functional area
 Optimal systems are tailored to those highly specific needs and use a language that is familiar to the professionals in that
area.
Some of the main functional systems that are being used in most of the firms are as follows:
 Marketing Information system(MkIS)
 Manufacturing Information system
 Human resource information system(HRIS)
 Account information system(AIS)
 Financial Information system
3. Process Perspective:
 The activates of an organization determine the type of information system which may be any of the following three types:
 1. Strategic Planning System
 2. Tactical Systems
 3. Operational Systems
 Other perspective:
 1. Expert System (ES)
 2. Knowledge Management System (KMS)
 Set of activities and processes used to create, codify, gather and disseminate knowledge within the organization.
 Creating Knowledge
 Capturing and Storing Knowledge
 Disseminating Knowledge
 3. Strategic Information System (SIS)
 4. Business Information System (BIS)
 5. Office Automation System (OAS)

Ref: https://slideplayer.com/slide/5815175/
 INTERDEPENDENCE BETWEEN ORGANIZATION AND IS

 Recently, there is an increasing interdependency between business strategy, organizational structure,

operation rules and procedures and production at one end and IT infrastructure, IT strategy and
information system management on the other.
 Sometimes, the current information systems put a restraint on businesses. This is so because the
organization future planning is determined by what the information systems will allow to do it.
Development of new products and service, increasing market share, becoming a high – quality but
low-cost producer, providing better customer service and growth in employee productivity is largely
dependent on the scope and quality of information systems within the organization.
 STRATEGIC BUSINESS USE OF IS

 Information systems provide the base on which the present day business are run. There are some industries whose
existence is highly dependent on information technology. The companies are able to operate in the global arena with the
help of the information system.
 These days the organizations are trying to be more efficient and competitive by converting their core activities into
digitally enabled ones. The relationship with the employees, suppliers and customers are also being maintained with the
help of the digital media.
1. Operational Excellence

2. New products, Services and business models

3. Customers / Supplier Intimacy

4. Improved Decision Making

5. Competitive Advantage

6. Day – to – day survival

 INFORMATION SYSTEM AND BUSINESS STRATEGY

 The word ‘strategy’ has been derived from the Greek word ‘strategos’ meaning ‘generalship’. Strategy is different from
the governing policy of the military force as it means the ‘direction of the military force’.
 Alfred D. Chandler defines strategy as, “Strategy is the determination of the basic long-term purpose and objectives of an
enterprise and the adoption of courses of action and allocation of resources necessary for carrying out thses goals.”
 Business strategy can be said to be a group of activates and decisions that a firm makes which influences the following:
 Products and services that the firm produces.
 Industries in which the firm competes.
 Competitors, suppliers and customers of the firm.
 Long – term objectives of the firm.
 BUSINESS – LEVEL STRATEGY : THE VALUE CHAIN MODEL

 Understanding Porter’s Value Chain Model

 In his 1985 book Competitive Advantage, Porter explains that a value chain is a collection of processes that a
company performs to create value for its consumers. As a result, he asserts that value chain analysis is directly
linked to competitive advantage.
 Competitive advantage occurs when a business systematically examines its internal processes and how they
interact with each other. Each process in the value chain should create value that exceeds the cost of creating
that value. In other words, it should be profitable.
 The strength of Porter’s model lies in its focus on customers through value chain systems. This is in contrast to
other value chain models that focus on departmental and accounting expenses, for example. 
 The primary activities of Porter’s Value Chain Model

 Porter breaks down his value chain model into five primary processes, or activities.

1. Inbound logistics
 This includes the warehousing and associated inventory control of raw materials. This also includes the nature of the relationship with
suppliers.

2. Operations
 Operations encompass any process that turns raw materials into a finished product ready for sale, including labelling, branding, and
packaging.

3. Outbound logistics
 Outbound logistics concern any process where the product is distributed to a customer. This includes the storage and distribution of products
and the processes involved in fulfilling customer orders.

4. Marketing and sales

 Any processes that attempt to enhance product visibility among a target audience are included in marketing and sales. This activity is also
heavily reliant on customer relationships.

5. Services
 Services include any processes that occur after a purchase has been made, including customer service, repairs, refunds, and warranty
acknowledgement.
 Secondary activities

 Within Porter’s Value Chain Model there are also four secondary activities which support the foundational primary
activities common to most businesses. Here is a brief look at each.
1. Company infrastructure
 Company infrastructure entails any process that supports daily business operations. Administration, clerical, financial, and
line management are all value-creating infrastructure processes.
2. Human resource management
 Human resource management (HRM) covers any process related to the training, acquisition, or termination of employees.
HRM departments and their ability to hire talented and motivated staff are crucial to a company’s competitive advantage.
3. Research and development
 Technology can create a competitive advantage in Porter’s value chain because it can streamline important processes.
These include payroll automation software, customer service procedures, and distribution networks.
4. Procurement
 Procurement is simply the acquisition of necessary goods or services. The most typical example is the procurement of raw
materials and the negotiation of pricing and product purchase contracts. It may also include the purchase of equipment,
offices, buildings, and machinery.
https://www.investopedia.com/articles/investing/103114/starbucks-example-value-chain-model.asp
 COMPETITIVE ADVANTAGE OF FIRM THROUGH VALUE CHAIN ANALYSIS

 A company's value chain allows it to create a competitive advantage over its competitors. A strong 

value chain management team helps a company create high value and a strong competitive advantage in any or all of
the value chain's five steps.
 The value chain is made up of five interrelated activities that allow a company to create value that exceeds the cost of
providing its good or service. A strong value chain management team maximizes the value of each one of the five
interrelated activities: inbound logistics, operations, outbound logistics, marketing, and sales and service.1
 Inbound logistics include the receiving, warehousing and inventory control of raw input materials. Operations
include the value-adding activities that turn inputs into a final product. Outbound logistics include activities required
to get the finished product to a customer. Marketing and sales are the activities associated with getting a potential
buyer to purchase a product, including channel selection, advertising and pricing. Service includes activities that
maintain and enhance a product's value, such as customer service.1
 Any or all of these five areas are vital for a company to create a competitive advantage. To improve a company's value
chain, its value chain management team identifies each part of its production process and where improvements can
be made. These improvements can either reduce costs or improve production capacity. The additional value creation
results in a company's customers deriving the most benefit from the company's product or service for the lowest cost.
 INDUSTRY – LEVEL STRATEGY : INFORMATION SYSTEMS

 A number of firms together make an industry like automotive, telephone, television broadcasting and forest products industries.
 The main question which is dealt with at this level of analysis is,” How and when should we compete with as opposed to cooperate with others in
the industry?”
 Competition is most emphasized by strategic analysis but a huge amount of money can also be made by way of cooperation with other firms in the
same or aliened industries. For example, firms may cooperation for development of industry standards, building customer awareness and working
together with suppliers for lowering costs.
 Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first
time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing
them through five forces:
• Competition in the industry
• Potential of new entrants into the industry
• Power of suppliers
• Power of customers
• The threat of substitute products
 Porter’s five forces is a business framework that can provide a qualitative assessment and come up with a corporate strategy.   
 KEY TAKEAWAYS

• Porter's Five Forces is a framework for

analyzing a company's competitive
environment.
• The number and power of a company's
competitive rivals, potential new market
entrants, suppliers, customers, and
substitute products influence a company's
profitability.
• Five Forces analysis can be used to guide
business strategy to increase competitive
advantage.
 Competition in the Industry

The first of the five forces refers to the number of competitors and their ability to undercut a company. The larger the
number of competitors, along with the number of equivalent products and services they offer, the lesser the power of a
company. Suppliers and buyers seek out a company's competition if they are able to offer a better deal or lower prices.
Conversely, when competitive rivalry is low, a company has greater power to charge higher prices and set the terms of deals to
achieve higher sales and profits.
 Potential of New Entrants Into an Industry

A company's power is also affected by the force of new entrants into its market. The less time and money it costs for a
competitor to enter a company's market and be an effective competitor, the more an established company's position could be
significantly weakened. An industry with strong barriers to entry is ideal for existing companies within that industry since the
company would be able to charge higher prices and negotiate better terms.
 Power of Suppliers

The next factor in the five forces model addresses how easily suppliers can drive up the cost of inputs. It is affected by
the number of suppliers of key inputs of a good or service, how unique these inputs are, and how much it would cost a
company to switch to another supplier. The fewer suppliers to an industry, the more a company would depend on a supplier. As
a result, the supplier has more power and can drive up input costs and push for other advantages in trade. On the other hand,
when there are many suppliers or low switching costs between rival suppliers, a company can keep its input costs lower and
enhance its profits.
 Power of Customers

The ability that customers have to drive prices lower or their level of power is one of the five forces. It is affected by
how many buyers or customers a company has, how significant each customer is, and how much it would cost a company to
find new customers or markets for its output. A smaller and more powerful client base means that each customer has more
power to negotiate for lower prices and better deals. A company that has many, smaller, independent customers will have an
easier time charging higher prices to increase profitability.
 Threat of Substitutes

The last of the five forces focuses on substitutes. Substitute goods or services that can be used in place of a company's
products or services pose a threat. Companies that produce goods or services for which there are no close substitutes will
have more power to increase prices and lock in favorable terms. When close substitutes are available, customers will have
the option to forgo buying a company's product, and a company's power can be weakened.
Understanding Porter's Five Forces and how they apply to an industry, can enable a company to adjust its business
strategy to better use its resources to generate higher earnings for its investors.