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MC0076 Management Information Systems Roll No. XXXXXXXXX

Winter 2011

Master of Computer Application (MCA) Semester 4

MC0076 Management Information Systems 4 Credits

(Book ID: B0901)

Assignment Set 1 (60 Marks)

Answer all Questions Each question carries TEN marks

1. Discuss the following with respect to information concepts:a. Meaning of Informationb. Uses of Informationc. The Cost of Information

Ans:

a. Meaning of Information

Information is a complex concept that has a variety of meanings depending on its context and theperspective in which it is studied. It could be described in three ways

1) as processed data,

2) as the opposite of uncertainty, and

3) as a meaningful signal-to illustrate the richness of the concept of information.

Information as Processed Data: Data are generally considered to be raw facts that have undefineduses and application; information is considered to be processed data that influences choices, thatis, data that have somehow been formatted, filtered, and summarized; and knowledge is

considered to be an understanding derived from information distinctions among data,

information, and knowledge may be derived from scientific terminology. The researcher collects

data to test hypotheses; thus, data refer to unprocessed and unanalyzed numbers. When the dataare analyzed, scientists talk about the information contained in the data and the knowledge

acquired from their analyses. The confusion often extends to the information systems context,

and the three terms maybe used interchangeably.

Information as the Opposite of Uncertainty: A different perspective on information derives from

economic theory and defines information as the negative measure of uncertainty; that is, the lessinformation is available, the more uncertainty exists, and conversely, the more information is

available, the less uncertainty exists? In microeconomic theory the equilibrium of supply and

demand depends on a market known as a perfect market, where all buyers and sellers havecomplete knowledge about one another and where uncertainty does not exist. Information makes

a market perfect by eliminating uncertainties about supply and demand. In macroeconomic

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theory, firms behave according to how they read the economic climate. Economic signals that

measure and predict the direction of the economy provide information about the economicclimate. The firm reduces its uncertainty by decoding these signals.

Taking an example of Federal Express in USA, each incoming aircraft has a scheduled arrival

time. However, its actual arrival depends on unforeseen conditions. Data about when an aircraftdeparted from its destination is information in the economic sense because it reduces uncertaintyabout the aircrafts arrival time, thereby increasing Federal Expresss ability to handle arriving

packages. Managers also define information in terms of its reducing uncertainty. Because

managers must project the outcomes of alternatives in making decisions, the reduction of

uncertainty about the outcomes of various alternatives improves the effectiveness of thedecision- making process and the quality of the decision.

Information as a Meaningful Signal: Information theory, a branch of statistics concerned withmeasuring the efficiency of communication between people and/or machines, defines

information as the inputs and outputs of communication. Electronic, auditory, visual, or other

signals that a sender and receiver interpret similarly convey information. For example, in therecruitment scenario about, the resumes and applications for the open positions are information

because they are signals sent by the applicants, and interpreted similarly by both.

The Managers in their roles as communicators both generate and receive information. They

receive reports that organize signals or data in a way that conveys their meaning. Reports of sales

trends become information; so do reports about hazardous waste sites. Managers derive meaningfrom the information they see and hear as part of communication and use it to make decisions.

This definition of information requires a manager to interpret a given signal as it was intended.

For example, a managers incorrect interpretation of body language in a negotiation would not beconsidered to be information from this perspective, although we know that managers use both

correct and incorrect perceptions as information in decision making and other managerialfunctions. Again, this view of information suggests the complexity of the concept and the valueof a multifaceted definition.

b. Uses of Information

Organizations may use information as a resource, as an asset, or as a commodity.

Information as a Resource: We generally think of organizations using money, people, rawmaterials, machinery, or even time as resources-inputs to the production of outputs. Information

can also be viewed as a resource. Social workers use information about clients in helping thembecome more functional. Physicians use case histories of patients as inputs to diagnosis and

prescription.

Resources can also substitute for one another to some degree. Capital in the form of automatedequipment can reduce labor required for production. Similarly, information can replace either

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capital or labor. Organizational members may also use information to decrease the cost or

increase the quality of the final product or service.

Information as an Asset: An asset is the property of a person or an organization that is used toproduce a companys output and does not get used up as a resource does. Some resources are

converted to assets that can be used over an extended period, such as the use of capital topurchase equipment that, in turn, becomes an asset. The information resource is similar, but notidentical, to other resources in this respect. Information, even if used immediately, is rarely

actually consumer. For example, when managers use data about a Department Store sale to

determine whether inventory should be replenished, the sales data remain available as a resource

for use in other analyses. In some cases, such as the Federal Express aircraft departures, theinformation quickly loses some value after its use, although it may have subsequent value as a

resource for historical analyses. As a corporate asset, then, information is comparable to plant,

equipment, and goodwill. It can even be viewed as inventory, with information considered as araw material, work in process, or finished goods.

The asset model of information encourages management to view information as an investmentthat managers can use strategically. Unlike resources, which managers seek to use efficiently to

produce output, managers view assets as giving the organization an advantage over its

competitors. For example, the information collected by Department Store about its sales may beextremely valuable to its suppliers and competitors.

Information as a Commodity: Like corn, automobiles, washing machines, or other commodities,information is a saleable product. Some companies use information primarily to sell it. For

example, credit bureaus collect information on your credit history to sell to your potential

creditors. In our service-oriented economy, an increasing number of organizations are adopting acommodity view of information viewing it as a saleable product.

c. The Cost of Information

Although information can be valuable, it is costly to use. Acquiring, processing, storing,retrieving, and communicating information each have costs.

Acquiring Information : The acquisition of information is a first step in its use. We can obtain

information from either formal or informal sources. Formal sources provide information in a

relatively organized and predictable fashion, for example, business forms; electronic monitoringequipment such as digital thermometers; and machine-readable purchased data such as an

encyclopedia (Personal records, corporate annual reports, summarized transaction histories) on acompact disc. Informal sources provide information in a less structured way and include

conversations with customers, suppliers, and other employees, as well as general observations ofpersonal and organizational activities. Generally, acquiring information through informal sources

costs less, but the information acquired may be harder to organize and use effectively.

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Data acquisition can occur manually or electronically. Managers often hand-write evaluation

reports or salespeople maintain written records of customer orders. Increasingly, managers canenter evaluation data directly into the computer, and salespeople can use point-ofsale terminals to

record detailed sales information electronically. Experts estimate that electronic forms for

capturing data cost at least 70 percent less to design, purchase, use, carry, and revise than the

equivalent paper forms.

Processing Information: Processing information describes transforming it into a usable form.

Processing typically occurs at two times: first, between the acquisition and storage of

information, and second, between its retrieval and communication. The processing that occurs

between acquisition and storage generally requires a large amount of personal labor. Manualprocessing, involves duplicating, sorting, and filing data. Electronic processing, such as with

electronic scanners, involves transforming and entering the data into an electronic form.

Although both manual and computerized processing may require significant clerical time andincur high costs, electronic processing can reduce these costs. Processing occurs between storing

and communicating information for both manual and computerized systems. In manual systems,

filing clerks typically perform the processes of retrieval, formatting, and display. Whensummaries or special analyses are required, analysts with special skills, such as skills in finance

or accounting, may process the data. Manual information processing involves high labour andtime costs but low equipment costs.

Storing Information : The primary cost of storing information is the cost of the storage medium

and space on computerized storage uses paper, microform, or both. These media require muchmore physical storage space than electronic media and typically incur a greater cost for leasing

or buying space than do electronic media. Computerized storage uses a variety of media,

including hard disks, diskettes, pen drives and CD-ROM, depending on the amount of

information to be stored and the desired speed of retrieval. The organizational overhead tomonitor and control information storage, including staff salaries and physical equipment, adds to

the cost of information storage. Most large companies keep duplicates of their electronically

stored information at a secure site remote from their processing facilities to ensure that the datacan be retrieved in the event of a disaster such as a fire or flood or terrorist strikes. In addition,

most companies keep duplicate paper or microform copies of much of their data. The cost of the

media, physical facilities, and staff for these backup systems also contributes to the storage costs.

Both document and electronic storage have an ancillary cost for storing the documentation

needed to locate information. Storing large amounts of data calls for simultaneously developingand storing an index or map that assists in locating the data.

Retrieving Information: Retrieving desired data from manual systems can be time consumingand expensive executives spend approximately six weeks a year on average looking for

misplaced material. Secretaries may spend as much as 30 percent of their time looking for paper

documents and approximately 20 percent of that time searching for misfiled items. Becausepaper files require large amounts of space, managers may store the data on a different floor or

even in a different building. The labour costs of retrieving even small amounts of information

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exceed those for retrieving information electronically unless the organization can create small

and compact storage for its paper records.

Electronic systems provide rapid and inexpensive access to information stored electronically inan organized fashion. The costs incurred are only those of using the computer equipment for a

fraction of a second, particularly when retrieval is part of ongoing processing. If an individualrequests the retrieval, it may require additional processing to translate the retrieval request from aform understood by the person to a form understood by the computer. Then the information is

stored in a different place from where it is requested, the request must be transmitted

electronically to where the data are stored, and the retrieved data must be transmitted back.

Communication costs are relatively low for small amounts of information, but thecommunication equipment and infrastructure can be expensive unless amortized over a

sufficiently large volume of data communication.

Communicating Information: Manual transmission of information occurs frequently and easily in

most organizations. Most organizational members rely on face-to-face communication in formal

or informal setting or on written publications for much of the information they require to do their jobs. But face-to-face communication requires extensive amounts of time, a scarce resource in

most organizations. Written media, such as memos, reports, advertisements, or other document

can effectively transmit small amounts of information to large numbers of people. Transmittinginformation long distance or exchanging large volumes of data can occur more effectively by

electronic communication. Telephone, television, videoconferencing, fax or other electronic data

transmission can instantaneously establish communication in among individuals, groups,organizations, or data repositories or each unit of information transmitted, electronic media are

much less expensive than written or oral media.

2. Discuss the following with respect to information needs:a. Development of Organizational Computingb. Demands on Organizations in an Information Society

Ans:

a. Development of Organizational Computing

The role played by information systems in organizations has evolved over time. This evolutionhas not led to wholesale discarding of the early types of systems this would be quite expensive,

and in many cases the older systems are still useful after suitable modifications. The progressiveretargeting of MIS can be summarized as moving "up and out": progressive support of higherlevels of management in increasingly individualized fashion, and aiming MIS at competitors to

achieve strategic advantage.

From the mid-1950s to the mid-1970s, companies generally had a single data processing

department (later to be renamed MIS department). All application systems were developed

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within this department and largely at its discretion. Thus, end-user access to computer

technology was mediated: professional computer expertise was required to obtain informationfrom the system. The backlog of applications judged worthy of development yet having to wait

for the availability of professional time ran two to three years in most organizations. Access to

computing was thus severely restricted. The primary target of data processing departments was

operational support, although management support was emerging toward the end of this period inthe form of voluminous reports. Raising the efficiency of company operations was the main

objective of most applications.

The second era in organizational computing began in the late 1970s and was made possible by a

number of technological developments spanning a decade. The development of time-sharingoperating systems made it possible for a user on a terminal to access the computer directly.

Specialists devised information systems directly supporting the decision-making process and

organized company data in databases, making the data far more accessible and usable. Mini-computers made it not only possible but justifiable to break up the monopoly of a single MIS

department. The greatest impact was made by the personal computer, which emerged on an

industrial scale in 1977 as Apple II. Propelled by the broadly used spreadsheet programs(initially, VisiCalc), personal computers and end-user oriented software empowered the users

themselves. End-user computing had begun: in many cases, instead of requesting that a systembe developed by the MIS department, knowledge workers themselves began using a productivity

software package (a database management system or a spreadsheet, for example), customizing itfor their needs, and even developing systems of their own. Many information systems were

brought under control of their users.

Organizations now entered a new stage in their reliance on information systems, which included

extensive operational and management support systems developed during the two earlier stages.

During the current, third era of MIS development, firms expect information systems to carrythem beyond increased operational efficiencies and managerial effectiveness: systems are now

geared to help a company to compete in the marketplace. Business functions are reengineered

and extensively supported with information technology. This requires close interaction betweendevelopers and users; the sharp divide between the two groups often disappears when application

systems are concerned. End users initiate and participate in the development of many systems.

They also control some of the systems they use. In leading corporations, end-user computing isan important contribution to overall MIS development and maintenance. Systems integration is a

vital concern.

b. Demands on Organizations in an Information Society

Transportation and communication networks spanning the globe have removed the protectivespace and time buffers shielding companies from competition. This calls for constant innovation.

Complexity, turbulence, and a high volume of knowledge with potential impact on the

companys operations characterize the operational environment of todays organization.

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An infrastructure is the structure of facilities and services necessary for organizations and

economies to function and grow. Fast and relatively inexpensive means of transportation,telecommunications networks, and global financial markets are all components of the

infrastructure of the information society. These means of rapidly moving goods, information, and

money have shrunk the world. They have removed the advantages provided by the remoteness of

potential business competitors in the early industrial economy. Largely, firms no longer competesolely against a known handful of other companies: they must develop a general competitive

capability. Runners may appreciate the analogy to the difficulty of achieving a record resultrunning alone as compared with running against others in a race. Not only has the space buffer

that formerly shielded companies from their remote competitors been removed, but paced by

computerized information systems, life cycles for product development have been shorteneddramatically. With the use of CAD/CAM (computer-aided design/computer-aided engineering)

technology, a new car model is developed in nine months instead of three years; financial

software and global securities markets make it possible to develop and bring to the market a new

financial product, such as a new type of bond, within ten days. Companies used to be able to relyon "cash cows" products, which in mature markets bring significant profits without a need for

innovation. Now that time-related protection has also disappeared.

A highly dynamic information society requires constant innovation-both in marketed productsand services, and in the continual restructuring of organizations to adapt to changing market

demands. Moreover, successful organizations must not only react, but also proactively anticipatenew developments and changes in their markets. Mergers, acquisitions, and organizational

restructuring have indeed been the order of the day during the past two decades. The stability and

stolidity that were the hallmark of successful industrial corporations have given way to constantcorporate renewal. Robert Waterman, a well-known management consultant, quotes the chief

executive officer of IBM, John Akers, who "says they never reorganize except for a good

business reason, but if they havent reorganized in a while, thats a good business reason."However, this dynamism has to be combined with a stable, "producing" environment. The art of

balancing in corporate renewal requires that an organization ensure a sufficient degree of

organizational stability to successfully carry out change. Perhaps the best way to state it is to say

that an information society requires an organization to maintain a constant trait ofadaptability,rather than adaptation; in other words, a firm must possess the capability to keep changing rather

than to make a single change. Management information systems must be vehicles built to

facilitate rather than to put the brakes on change, as unfortunately frequently occurs.

3. Discuss the following with respect to information needs for strategic planning:a. Value Streamsb. Major issues to consider in situational analysis

Ans:

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a. Value Streams

Value Stream is an end-to-end set of activities, which collectively create value for a customer.Value streams are often cross-functional. For example: Insurance Industry

Value Stream: Customer Engagement

Processes: Settle claims, Bill and collect, Satisfy customer inquiry

Basis for value added or differentiation strategies

Who is our customer?

What is valued by customer?

Who are our competitors?

How difficult is our product to imitate?

Problems with value chains

No owner for value stream

Nobody focuses on customer satisfaction

Long time delays

Pass on problems to each other

Seepages through the cracks

Considerable rework

Michael Porters Value Chains

Value chains help in developing leverage points where the costs needs to be contained and thevalue can be enhanced. Value activities do not operate independently. They have linkages

amongst themselves. IS can add value by supporting the linkages.

Michael Porters Competitive Force Model

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Fig.

Illustrations for overcoming threats

Reduce bargaining power of customers

e.g. putting terminals into customers offices

Reduce bargaining power of suppliers

e.g. having alternative sources of supply

Threat of new entrants

e.g. putting in a high cost of IS support system

Threat of substitute products

e.g. putting up flexible manufacturing facilities

Michael Porters Generic Strategies for Competitive Advantage

Strategy 1: Perform value activities at lower costs

Example: Automating a manual process to reduce costs

Reducing inventory carrying cost

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Strategy 2: Differentiate own products by value activities

Example: Putting terminals in customers offices (for locking the customer)

Providing name for each adopteddoll

Strategy 3: Fill niche markets by value activities

Example: Special plans for luxury car buyers

Home PC sales (additional market) to network customers (existing customers)

b. Major issues to consider in situational analysis

Potential Internal Strengths

A distinctive competence

Adequate financial resources

Good competitive skill

Well thought of by buyers

An acknowledged market leader

Well-conceived functional area strategies

Access to economies of scale

Insulated (at least somewhat) from strong competitive pressures

Proprietary technology

Cost advantages

Better advertising campaigns

Product innovation skills

Proven management

Ahead on experience curve

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Better manufacturing capability

Superior technological skills

Potential External Opportunities

Serve additional customer groups

Enter new markets or segments

Expand product line to meet broader range of customer needs

Diversify into related products

Vertical integration

Falling trade barriers in attractive foreign markets

Complacency among rival firms

Faster market growth

Potential Internal Weaknesses

No clear strategic direction

Obsolete facilities

Lack of managerial depth and talent

Missing key skills or competence

Poor track record in implementing strategy

Plagued with internal operating problems

Falling behind in R&D

Too narrow a product line

Weak market image

Weaker distribution network

Below-average marketing skills

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Unable to finance needed changes in strategy

Higher overall unit costs relative to key competitors

Potential External Threats

Entry of lower-cost foreign competitors

Rising sales of substitute products Slower market growth

Adverse shifts in foreign exchange rates and trade policies of foreign governments

Costly regulatory requirements

Vulnerability to recession and business cycle

Growing bargaining power of customers or suppliers

Changing buyer needs and tastes

Adverse demographic changes

Situational analysis requires extensive internal and external data. To evaluate internal strengths

and weaknesses, for example, reputation for quality or above-average costs, a company mustcompare data on its internal condition with industry and competitor averages. Some firms go to

extensive lengths to obtain information about the market and their competitors, including hiring

employees from competitors, suppliers, and customers, and even buying competitors garbage.

Quality information systems can assist organizations in securing comprehensive information forthe SWOT analysis. Organizations can use them to maintain, update, or access environmental

and organizational data, such as demographic trends, potential customer lists, financial data, or

staffing patterns.

4. Discuss the following with respect to Quality and Privacy Issues:a. Business Decisions and Information Assuranceb. Ethical and social issues with networks

Ans:

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