Transcript
Management Information System Unit 1
Sikkim Manipal University Page No. 1
Unit 1 Understanding MIS
Structure:
1.1 Introduction
Objectives
1.2 Basics of MIS
History of MIS
Impact of MIS
1.3 Role and Importance
MIS characteristics
Functions of MIS
Disadvantages of MIS
Role of IS in business
Importance of MIS in business
1.4 MIS Categories
Classification
Relationships
1.5 Managers and Activities in IS
View of structure of MIS
1.6 Types of Computers Used by Organisation in Setting up MIS
Desktop personal computer
Notebook computers
Personal Digital Assistant (PDA)
1.7 Hardware Support for MIS
Advantages of a personal computer
Classification of computers
1.8 Summary
1.9 Glossary
1.10 Terminal Questions
1.11 Answers
1.12 Case let
1.1 Introduction
Information is a vital resource for any organisation. It has to be available at
the right time and in right form to support the management in decision-
making. Within organisations, the information is generated and
disseminated using Management Information Systems.
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Management Information System (MIS) is an integrated system, which
provides information support for decision making in the organisation. There
may be various definitions of MIS, but you can see all of them defining MIS
as a means of transforming data into information for managerial decision-
making.
To appreciate this unit you must have knowledge about the different
functional areas of the organisation. In addition, you must be familiar with
using a computer, basic computer software suite like MS- Office or i-Work or
OpenOffice.Org and internet.
In this unit, you will study about the role of MIS, its significance in the
organisation, the classification of MIS on any business and the structure of
MIS. Finally, you will learn about the various computers used in setting up of
MIS.
Objectives:
After going through this unit, you should be able to
explain the basics of MIS
describe the role and importance of MIS in business
list the types of MIS and its classification
analyse the concepts of MIS in various businesses
elaborate the phases of development in MIS
explain the manager’s view of the information system
describe the computers used in setting up of MIS
1.2 Basics of MIS
The industrial revolution has replaced manual labour with machines, thus
paving way for the use of computers for data processing.
1.2.1 History of MIS
Between 1936 and 1940, computers were used to handle scientific
calculations. From 1940 to 1960, computers were largely used to process
large amount of census and payroll data.
In the 1960’s and the 1970’s computers could generate information in the
form of reports like daily sales reports, weekly production and accounts
payable/receivable reports. These reports assisted the management to take
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decisions on number of units to produce, how to improve operations and
potential problems in payment of money by customers.
For the organization’s managers these reports were a tactical resource.
That is the information described in the reports was essential to ensure the
effective operation of the organization. The term Management Information
Systems (MIS) came into existence during this period.
Later, in 1980’s information was viewed as a strategic resource i.e.
information generated in form of reports was utilized to create unique value
and differentiate the organisation from its competition.
MIS is a critical organizational resource, in this age of internet, user-friendly
devices and applications and declining computing costs. It provides
accurate trends and analysis, enables quick response to customers,
supports the integration of organizational functions and provides solutions to
business problems. Thus, MIS enables organizations to prosper and survive
Today we define MIS an organized combination of people, databases,
hardware, and software and communication networks to store and transform
data into information to expedite decision-making, control activities and
operations.
1.2.2 Impact of MIS
MIS plays a vital role in the organization and has an impact on the following:
Functional areas of the organization: MIS provides structured
information to track and monitor organizational functions like marketing,
finance, production and HR. It indicates trends in each function which
can be used for forecasting and long term planning. Further exception
reports generated by MIS aid in taking corrective action.
Understanding of business: To generate information MIS makes use
of a dictionary of entities, attributes and data. This leads to the usage of
standard terminology and processes within the organization. It results in
MIS bringing in clarity to communication and events that happen within
an organization.
Organisation goals and objectives: The business goals and objectives
are embedded within the MIS that the organisation implements. Hence,
the information generated aids people within the organisation to
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streamline operations and procedures to realize the goals and
objectives.
Managerial efficiency: MIS supports analysis, simulation and modeling
of business situations to improve managerial decision-making capacity.
The manager can make use of the information made available by MIS or
he/she can further blend or analyse it for the required purpose.
MIS finds application in the following areas.
When you go to any vendor and ask for catalogues of the product, the
smart catalogues and databases help you in buying the right product.
The smart catalogue enables the marketing team to update information
without changing the design of catalogue. The information to be updated
such as price, offer description and product features is stored in a text
file, a database or a XML (Extensible Mark-up Language) file. This
arrangement allows managers to speed up the broadcast of latest
information to the customer.
When you are travelling or driving, the transponder-equipped vehicle or
Global Positioning System (GPS) can guide you in real time to reach
your destination faster. For a logistics manager it helps in finding the
shortest distribution routes and track consignments.
Voice-recognition systems can bring about easy warehouse inventory
control. The system directs the human operator in the warehouse
through commands. The operator responds verbally instead of typing or
scanning. This reduces errors when picking quantities of products and
sorting them according to customer orders.
When you use your credit cards or ATM cards or smart cards, you
generate transactional data. This data is stored and later analysed by
managers to find usage patterns to drive revenues.
A computerised MIS in a hospital or a doctor’s clinic enables listing and
retrieval of information on all registered patients, number of counselling
sessions conducted, treatment and medicines administered and all visits
of the patients.
An educational MIS system allows the management to manage day-to-
day operations such as admissions, staff recruitment, timetable and
payroll. It also allows the management to find trends in demand for
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various courses, analyse student results, prepare budgets for the
academic year and track actual expenditures
In the traffic control system, an Intelligent Transportation System (ITS)
disseminates real-time traffic information to traffic Inspectors. It assists
traffic police officers to decide routes for commuters based on the traffic
congestion information and reduce travel time.
In the field of travel and tourism, customers use an electronic
reservation system to book tickets, hotel rooms and plan the itinerary by
considering the different modes of transportation. Here MIS aids the
managers in manpower planning, analysing arrival and departure data to
predict occupancy rates, visiting frequency and tourist spending
patterns.
Office automation systems enable managers to send and receive emails
to or from subordinates. When employees are in different geographic
locations videoconferencing helps the manager to conduct team
meetings.
Fig. 1.1: Application of MIS in Different Areas
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Figure 1.1 depicts the application of MIS in different areas. MIS has become
so important that you cannot view MIS in isolation or any function of
management without MIS.
Self Assessment Questions
1. In the 1960’s and the 1970’s computers could generate information in
the form of ___________________ .
2. __________________ provides structured information to track and
monitor organizational functions like marketing, finance, productions
and HR.
3. _________ systems enable managers to send and receive emails to or
from subordinates.
1.3 Role and Importance
In the previous section, we discussed the basics of MIS. Let us now learn
the role and importance of MIS. You will find a host of factors contributing to
the role of MIS. You need to study about the characteristics, functions, and
disadvantages of MIS to know the role of MIS in a business.
1.3.1 MIS characteristics
The characteristics of MIS are:
Transaction handling and record keeping.
Major functional areas are taken care of by IDMS (Integrated Database
Management System).
It supports decision making an important role of MIS. A greater access
is provided by MIS to the operational, tactical and strategic level
managers.
Adaptability to distinct organisational needs. For example MIS can be
used to integrate supply chain, production, and marketing to deliver
goods and services to customers
Only authorised and authenticated users are allowed to access MIS as
it generates vital business information.
MIS can be used as a MBO (Management by Objectives) tool to
measure the performance level of people and projects.
Since MIS integrates information across functions, during the crisis it is
possible for managers to take necessary corrective action.
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MIS data is stored in a centralised or distributed database and made
available to all functions. This type of storage reduces data duplication
and redundancy (unnecessary duplication of data).
MIS is divided in subsystems. Each sub system is easier to handle in
comparison to the entire system. The subsystems provide easy access
to data, ensures accuracy and better information processing and
generation.
MIS assembles, processes, stores, retrieves, evaluates, and
disseminates information.
1.3.2 Functions of MIS
Figure 1.2 depicts the main functions of MIS and they are explained as
follows:
Data Capturing
Data capturing is process of gathering data from various sources like.
o Customer touch points (interaction point between the customer and
companies products/services through e-commerce, store visits,
mobile shopping, self check out etc),
o Output of one system. For example closed orders of sales
department billed by finance,
o From third party such as social media and
o Data from stakeholders such as suppliers or vendors
Data Storage
Data Storage is the process of storing the gathered data in a database
or data file. Further, it is stored on various storage media (hardware
devices) such as hard disks, magnetic tape and magnetic disks.
Data Processing
Data Processing is task of gathering, storing, transmitting and
processing data into meaningful information. This is this most important
function of MIS. Intelligent processing of data into information allows a
business to achieve competitive advantage.
Data and information Distribution
Data and information distribution is the process of delivering timely data
and information to the right person within the organisation. The
information may be in the form of a report, image, message, file, form,
video or audio. To facilitate comparison information is represented in the
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form of charts or tables. Increases and decreases such as units sold are
represented as percentages
Prediction
With the help of modern arithmetic, statistics or simulation, MIS can
predict business trends using historical data as a base.
Planning
Reports are generated based on the enterprise’s need for planning to
enable each functional department to work efficiently.
Control
MIS helps in monitoring and tracking operations against organisational
plans. The deviation between operation and plan, in terms of the data
pertaining to different functional departments, is analysed for exercising
control.
Fig. 1.2: MIS Function
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1.3.3 Disadvantages of MIS
MIS does also have some disadvantages, which are discussed below:
MIS provides information only to managerial level for decision making
and not to all employees.
MIS implementation requires commitment from top management.
MIS does not solve all management problems.
MIS cannot update itself for the changes unless the current inputs are
fed in time to analyse a subject.
1.3.4 Roles of IS in Business
Figure 1.3 is a graphical representation to show the history of roles of IS.
Adapted from: O'Brien J. A., Marakas, G. M., & Behl, R. (2010), Management Information Systems, New
Delhi: Tata McGraw Hill.
Fig. 1.3: History of Roles of IS
From the figure 1.3, you will observe that the business applications of
information systems have expanded significantly over the years. Also, you
will notice that information systems have transformed from simple data
processing systems to ERP (Enterprise Resource Planning) and
BI (Business Intelligence) systems.
2000 and beyond
ERP and
BI
Enterprise wide
applications, data
mining, CRM& SCM.
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Data processing: 1950s-1960s
In this age, the role of IS was to process data electronically for record
keeping, transaction processing and accounting.
Management reporting: 1960s-1970s
During this decade the role of IS was to prepare pre-specified reports by
processing necessary data. The reports aided in managerial decision-
making. The notion of Management Information System(MIS) came into
existence in this decade.
Decision support: 1970s-1980s
The role of IS in this decade was to provide managers with interactive and
adhoc support to the decision making process. This meant that managers
could get customised reports for solving specific business related problems.
In this decade, the term Decision Support Systems (DSS) was commonly
used to represent these IS.
Strategic and end user support: 1980s-1990s
In this decade, end user (person who utilises the IS) computing systems
gave direct computing support to end user productivity and work group
collaboration. These included:
Executive Information Systems (EIS): EIS helped in providing top
management with critical information at the right time in the right format.
Expert systems: Gave expert advice to the users by asking a series of
questions and then searching for answers in its knowledge base.
Strategic information systems: Provided support to the organisation
in shaping its competitive strategy.
Electronic business and commerce: 1990s - 2000s
The role of IS was to support the organisations objectives on the internet
through e-business and e-commerce systems.
The capability of the IS dramatically changed due to the rapid growth of
internet, extranet (network that allows controlled access from outside) and
intranet (network used within the organisation). In addition, customers could
access the IS of the organisation without having to interact with the
organisations employees.
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For example, Web 2.0 technology an advanced internet technology
encompasses applications like
Blogs: A blog (short form of Weblog) is an online journal that a person
stores, posts and publishes on the internet. To set up your own blog you
can use web publishing tools such as blogger, blogspot and word press.
Wikis: Wiki is a website that enables online collaboration for adding
editing and deleting content within it. Ward Cunningham developed this
technology in the year 1994. A very good example of a wiki is Wikipedia.
RSS (Real Simple Syndication): RSS is used by organisations to
distribute web content through feeds to subscribed users with a link to
the full content as soon as it is published.
Enterprise resource planning and business Intelligence: 2000 and
beyond
The role of IS now is to integrate the functional areas of the organisation.
Enterprise resource planning (ERP) system serves this purpose and
presents a common interface to computerised functional areas of the
organisation. It has one logical database at its core and enables the firm to
extend IS capabilities.
In addition, organisations want to increase the understanding of their
business. Business Intelligence (BI) enables managers to gain this insight.
BI is a set of applications that have the ability to gather, manage, and
analyse large amount of data in order to mine them for relationships.
The components of BI are data warehouse, data mining, online analytical
processing, querying, and reporting tools.
1.3.5 Importance of MIS in business
The importance of MIS in business is due to the following reasons:
Globalisation of businesses: Today most organisations compete
globally with other firms in the industry. The management operating
such businesses need to get a snap shot of the business in real time to
take timely decisions that increases their competitiveness. MIS provides
this support to businesses. For example, McDonald’s earns more than
40% of its revenue from overseas operations. In order to sustain its
revenue the top management at McDonald’s will have the task of finding
the drivers of customer demand. In India McDonalds has found a new
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source of revenue in senior citizens and has come up with a new menu
satisfy this segment.
Humongous amount of data processing: Currently organisations
generate huge of amount of data, which will be added year on year to
the historical data. It is a superhuman task to find patterns and
relationships in this data manually while market is still providing the
stimulus for demand. MIS can cater to this need; provide the necessary
associations, trends, and forecast of demand.
Self Assessment Questions
4. _________________________ gives direct computing support for end
user productivity and work group collaboration.
5. ____________ gives advice to the end users based on the knowledge.
6. _______ technology is an advanced internet technology encompassing
applications like blogs, wikis and RSS.
1.4 MIS Categories
In the previous section, we discussed the role and importance of MIS. Let us
now learn the different categories of MIS.
1.4.1 Classification
The classification of MIS, is based on following aspects:
Functionality
Utility
Area of application
Processing type
Frequency of usage
The activities of management in the areas of planning, scheduling,
allocating resources, processing and bringing competitive strategies will
come under functional classification of MIS
MIS, based on its utility value can be classified as (a) artificial intelligence,
(b) generating management related information, (c) providing aid in
decision-making, (d) giving necessary supports and (e) executive
information system.
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MIS is also classified according to the areas where it functions such as
Banking Information Systems, Insurance Information Systems, Production
Information Systems, Data Warehouse Information Systems, and Public
Information Systems.
According to the type data processing MIS is classified as Online
Transaction processing system (transactions are processed as they occur),
Batch Processing system(transactions are gathered and stored and
executed together e.g. payroll), distributed processing system(transactions
are processed using more than one processor).
An MIS system needs a constant review of its working. To achieve this, a
mechanism is built into the system. The outcome of its performance is
assessed accordingly. This is periodically done at fixed intervals. This MIS
category is classified under frequency of usage.
1.4.2 Relationships
Using MIS, it is possible to relate the data input with each related
department directly or indirectly through a different types of information
systems that exist within an organisation. This creates an integrated system
IS.
Self Assessment Questions
7. In MIS, there is no constant need for review of the system. (True/False)
8. The information generated in one department cannot be used by
another department to create further information that can be used by
other departments. (True/False)
1.5 Managers and Activities in IS
In the previous section, we discussed the different categories of MIS. Let us
now learn about managers and their activities in IS.
To manage IS activities in your organization as a manager you need to
know how IT works in general. Most importantly, you should be able to
identify how MIS provides opportunities for new ways of doing business.
Finally, you should be able to understand how MIS can enhance productivity
levels of the organization.
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1.5.1 View of structure of MIS
Management information systems are used at various levels in an
organisation.
Operational-level systems
These MIS systems keep a track on the daily regular business
transactions of the organisation. For example, recording daily sales and
placing orders.
Management-level systems
These MIS systems aid in administrative activities and in decision-
making.
For example, gathering monthly sales figures and its related
information.
Strategic-level systems
This helps the senior executives in your organisation to address issues
like planning and decision-making.
For example, predicting the profit trend for the next 5 years.
Self Assessment Questions
9. To keep a track on the daily regular activities _________________
systems will help.
10. __________________ systems help the senior executives in your
organisation to address issues like planning and decision making.
11. _________ systems aid in administrative activities and in decision-
making.
1.6 Types of Computers Used by Organisations in Setting up MIS
In the previous section, we discussed managers and their activities in IS. Let
us now learn about types of computers used by organisations in setting up
MIS.
Computers are electronic devices used for processing data. They help
ingenerating the desired information based on certain input data. The output
in the form of information is used for making various decisions. An
organisation uses various types of computers such as desktop computer,
notebook computer and PDA to implement MIS.
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1.6.1 Desktop personal computer
These are systems, kept on desks in various offices, residences,
classrooms, departmental stores, showrooms, etc. A person sitting in front
of the desktop computer operates it.
1.6.2 Notebook computers
These are small when compared to desktop computers. The screen size is
approximately 11”x8”. It is possible for a person to carry it in a bag. Since it
is similar to the size of a notebook, it is called as a notebook computer. It is
also called as a laptop as you operate it by placing it on your lap. It is very
convenient to use for day-to-day applications especially when you are on
the move.
1.6.3 Personal Digital Assistant (PDA)
This is a small hand held device. It has simple applications like notes,
phone, calendar, camera etc. You can even access the Internet from a PDA,
thus bringing the entire World Wide Web on your fingertips.
Self Assessment Questions
12. PDAs are systems which are kept on desks in various offices,
residences, class rooms, departmental stores, showrooms, etc.
(True/False)
13. It is possible to carry a notebook computer in pockets and hence, it is
very convenient to use. (True/False)
1.7 Hardware Support for MIS
In the previous section, we discussed about types of computers used by
organisations in setting up MIS. Let us now learn about the hardware
support for MIS.
Generally, hardware in the form of personal computers and peripherals like
printers, fax machines, copier, and scanners are used in organisations to
support various MIS activities.
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1.7.1 Advantages of personal computers
A personal computer offers the following advantage
Speed – A Personal computer (PC) is capable of processing data at a
very high speed. It can also process millions of instructions within
fraction of a second.
Storage – A PC can store huge quantity of data in its hard disk. It gets
rid of the conventional office flat files and box files by storing information
digitally. This information can be transferred from one place to another
place in electronic form via the internet, pen drive and CD.
Communication – A PC on the network can offer great support in
communicating information in the form of text and images. Today a PC
with Internet connectivity is a powerful support tool for communicating
every business activity.
Accuracy – A PC is highly reliable and is used to compute data
continuously with more accuracy than humans.
Conferencing – A PC with Internet access offers worldwide video
conferencing opportunity. Thus, it saves traveling across the globe for
business people to meet their business partners, colleagues, and
customers. Through video conferencing, cost and time can be saved.
A block diagram of a computer is depicted in figure 1.4.
Fig. 1.4: Block Diagram of a Computer
The processor gets inputs from the input unit such as keyboard, scanner,
mouse or bar code reader.
The processor refers to the unit which processes the input received as per
the instructions given. In a computer, the processor is the CPU (Central
Processing Unit). It takes care of all arithmetic calculations, logical tasks and
storage of details in the memory.
The output unit displays the output from the computer. Monitor, printer,
speakers etc. are output units.
Input Unit Output Unit Processor
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1.7.2 Classification of computers
Computers are classified as follows
1. Depending upon the processor used – e.g., Pentium Dual Core, Intel
PI, PII, PIII, PIV, AMD, Celerons, etc.
2. Depending upon the purpose for which it is used – A computer may be
a general purpose computer or a specific purpose computer. General
purpose computers are the ones used for general tasks such as
business analysis, typing letter, generating reports for management
decisions, scheduling activities, preparing balance sheets and invoices.
Specific purpose computers are custom-built for specific tasks like
space research, weather forecasting, satellite sensing. Specific purpose
computers are designed to perform tasks for which they are intended
for. For example, the systems used in pathology labs.
3. Depending upon the size: A computer may be classified based upon its
size and speed of computing as microcomputers, mini computers,
mainframes, and supercomputers. Super computer is the largest in size
and the fastest in computing speed.
Self Assessment Questions
14. Personal computers can________ data at a very high speed.
15. A PC with ______ offers facility of video conferencing worldwide.
16. A processor refers to a unit which processes the ______ received in
the way it has been instructed.
1.8 Summary
Let us recapitulate the important concepts discussed in this unit.
The industrial revolution has replaced manual labour with the use of
machines, thus paving way for use of computer for data processing.
The term Management Information Systems (MIS) came into existence
during the 1960s- 1970s.
MIS has an impact on the functional areas of the organisation, and on
the organisation goals and objectives.
Some of the characteristics of MIS are transaction handling, record
keeping, supporting decision making and disseminating information.
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The main functions of MIS are data capturing, data storage, data
processing, prediction and planning.
Information systems have transformed from simple data processing
systems to ERP (Enterprise Resource Planning) and BI (Business
Intelligence) systems.
MIS are classified based on functionality, utility, area of application,
processing type and frequency of usage.
Different types of IS exist in an organisation and these may be related
to each other directly or indirectly.
Computers are electronic devices used for processing data. It helps in
generating the desired information output based on certain input data.
Computers are classified depending upon the processor used and the
purpose for which it is used.
1.9 Glossary
Automated: Controlled through computers
Catalogues: Products for sale arranged according to categories with
price details, product features, and specifications.
Redundancy: Inconsistency in same data stored in different locations.
E.g. phone numbers of the customer in the customer table of database is
not updated when it is inserted in the orders table.
Transponder: An electrical device designed to receive a specific signal
and automatically transmit a specific reply.
1.10 Terminal Questions
1. Write a note on the origin and impact of MIS?
2. What are the characteristics of MIS?
3. Explain the functions of MIS.
4. Explain how MIS could be classified.
Activity 1:
Visit the site: http://eng.hi138.com/? i91761 and find out how
MIS helps in systematic material procurement.
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5. Explain the manager’s activity in IS.
6. What are the various types of input and output devices used in MIS?
7. Explain the advantages of using a personal computer in business.
1.11 Answers
Self Assessment Questions
1. Reports
2. MIS
3. Office automation systems
4. End user computing systems
5. Expert systems
6. Web 2.0
7. False
8. False
9. Operational-level
10. Strategic-level
11. Management- level
12. False
13. False
14. Process
15. Internet
16. Input
Terminal Questions
1. The industrial revolution has replaced manual labour with the use of
machines, thus paving way for use of computer for data processing –
For more details refer 1.2.
2. Some of the characteristics of MIS are transaction handling, record
keeping, supporting decision making and disseminating information –
For more details refer 1.3.1.
3. The main functions of MIS are data capturing, data storage, data
processing, prediction and planning – For more details refer 1.3.2.
4. MIS can be classified based on functionality, utility, area of application,
processing type and frequency of usage – For more details refer 1.4.1.
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5. To manage IS activities in your organization as a manager you need to
know how IT works in general – For more details refer 1.5.
6. Computers are electronic devices used for processing data. It helps in
generating the desired information output based on certain input data –
For more details refer 1.6.
7. A personal computer offers the advantages of speed, accuracy and
conferencing – For more details refer 1.7.1.
1.12 Case let
Select and Carry – Sales Issues
A department store “Select and Carry” with several outlets in Bangalore is
trying to increase its sales. The top management thinks that the answers lie
in the historical data of sales (last 24 months), current (transactional) data,
promotion expenses and response and the feedback from the customers.
The problem for the management is how do we use this data to increase
sales?
To understand this they call you, the IS manager.
You propose that to find the answer to the question the data has to be
organised more meaningfully in various forms like equations, percentages,
charts, figures and tables. This kind of representation will allow the
managers to find the relationships among the data points. Further, proper
models can be prepared using statistics or simulation or mathematics to
analyse customer buying patterns, seasonality of certain products and
customer loyalty to the store.
You also recommend that the management procure an information system
like a BI system or an expert system to automate the process of analysis
and find alternative ways to increase sales. Such a system enables the
users to query the system to get responses on the current trends in sales,
and forecast of demand. Further it highlights the potential problems in
selling products, strategy to overcome the problems, models for the strategy
and the way to implement the models by the use of appropriate technology.
Once the analysis is done the management can use the information to direct
outlet managers on various promotional activities, loyalty programs and
reorganising the layout (shelves) of the store to improve sales.
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Discussion Questions:
1. What are the basic concepts of information management that you got
from this case let.
Hint: How to organise the data...
2. In what way does the IS facilitate solving the management’s problem?
Hint: Depicting current trends in sales, forecast of demand…
3. How will the management use the information for increasing sales?
Hint: Promotional activities, loyalty programs…
References:
Sadagopan S. Management Information Systems, Prentice Hall.
Robert S. and Mary, S. Management Information Systems – The
Manager’s View, Tata McGraw Hill.
Jwadekar. Management Information Systems: Texts and Cases. Tata
McGraw Hill.
Josheph, S. J., & Mohapatra. Management Information System in
Knowledge Economy. Prentice Hall.
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