Management Information Systems Overview

CHAPTER ONE: MANAGEMENT INFORMATION SYSTEMS BUSINESS DRIVEN MIS

SECTION 1.1: BUSINESS DRIVEN MIS

Overview

  • Competing in the Information Age

  • The Challenge of Departmental Companies and the MIS Solution

Learning Outcomes

  1. Describe the Information Age and the differences between data, information, business intelligence, and knowledge.

  2. Explain systems thinking and how management information systems enable business communications.

COMPETING IN THE INFORMATION AGE

Interesting Facts

  • Avatar, the movie, took over 4 years to make and cost $450 million.

  • Lady Gaga’s real name is Joanne Angelina Germanotta.

  • It costs $3.7 million for a 30-second advertising slot during the Super Bowl.

Definitions

  • Fact: The confirmation or validation of an event or object.

  • Information Age: The present time, during which infinite quantities of facts are widely available to anyone who can use a computer.

Examples of Business and Technology Power

  • Amazon: Originally focused on selling books.

  • Netflix: Initially focused on renting videos via mail.

  • Zappos: Initially focused on selling shoes.

Core Drivers of the Information Age

  1. Data

  2. Information

  3. Business Intelligence

  4. Knowledge

CORE DRIVER 1: DATA

  1. Data: Raw facts that describe the characteristics of an event or object.

    • Big Data: Large volumes of data (both structured and unstructured) characterized by:

      • Variety: Different forms of structured and unstructured data.

      • Veracity: The uncertainty of data, including biases, noise, and abnormalities.

      • Volume: The scale of data.

      • Velocity: The analysis of streaming data as it travels around the internet.

Big Data Statistics

  • 4.4 Million Global MIS Jobs expected to be created due to Big Data.

  • 40 Zettabytes of data created by 2020.

  • 2.5 Quintillion Bytes of data created daily (equivalent to 10 million Blu-rays).

  • Average of 100 Terabytes of data created per company.

  • 6 Billion Cell Phones generating data.

Data Creation Statistics

  • 90% of data created daily is unstructured data.

  • 400 Million wireless monitors in use.

  • 4 Billion Hours of video created monthly.

  • 400 Million Tweets generated monthly.

  • 30 Billion Pieces of content shared on Facebook each month.

  • 72 Hours of YouTube video created every minute.

  • 200,000 Instagram posts generated every minute.

  • 205 Million Emails sent every minute.

Veracity of Data

  • 1 in 3 business leaders do not trust data for decision-making.

  • $3.1 Trillion in annual costs due to poor data.

Data Categories

  1. Structured Data: Defined length, type, and format (e.g., customer address).

    • Machine-generated structured data: Created by machines.

    • Human-generated structured data: Produced by humans in interaction with computers.

  2. Unstructured Data: Undefined, does not follow a specific format (e.g., emails, tweets).

    • Machine-generated unstructured data: Includes satellite images.

    • Human-generated unstructured data: Includes social media data and emails.

Examples of Structured and Unstructured Data

  • Structured Data Examples: Sensor data, weblog data, financial data, clickstream data, point-of-sale data, accounting data.

  • Unstructured Data Examples: Satellite images, photographic data, video data, social media data, text messages, voicemail data.

Role of Management in Data Analysis

  • Business managers must analyze data to find information essential for making informed business decisions.

Example Table for Data Analysis

Order Date

Customer

Sales Representative

Product

Qty

Unit Price

Total Sales

Unit Cost

Total Cost

Profit

4-Jan

Walmart

PJ Helgoth

Doritos

41

$24

$984

$18

$738

$246

4-Jan

Walmart

Roberta Cross

Ruffles

90

$15

$1,350

$10

$900

$450

…

…

…

…

…

…

…

…

…

…

CORE DRIVER 2: INFORMATION

  1. Information: Data transformed into a meaningful context.

  2. Variable: A data characteristic indicating a value that changes over time.

Example of Business Information

  • Best Customer by Total Sales: Walmart - $560,789

  • Least-valuable Customer by Total Sales: Walgreens - $45,673

  • Best-selling Product by Total Sales: Ruffles - $232,500

  • Remaining information regarding product performance and representative performance…

Types of Reports

  • Report: Document containing organized data for user comprehension.

  • Dynamic Report: Changes automatically during creation.

  • Static Report: Created once based on unchanging data.

CORE DRIVER 3: BUSINESS INTELLIGENCE

  1. Business Intelligence: Information collected from various sources for strategic decision-making.

  2. Business Analytics: The process of transforming data into information.

Types of Analytics

  1. Descriptive Analytics: Shares past performance data.

    • Example: Report detailing past sales figures.

  2. Diagnostic Analytics: Answers why something happened.

    • Example: Analyzes reasons for sales fluctuations.

  3. Predictive Analytics: Uses historical data to predict future trends.

    • Example: Forecasts potential sales for the next quarter.

  4. Prescriptive Analytics: Provides recommendations based on data models.

    • Example: Advising on best pricing strategies for flights.

CORE DRIVER 4: KNOWLEDGE

  1. Knowledge: Combination of skills, experience, intelligence, and information.

  2. Knowledge Assets: Human, structural, and recorded resources within an organization.

  3. Knowledge Worker: Individual valued for their ability to interpret and analyze information.

SYSTEMS THINKING AND MANAGEMENT INFORMATION SYSTEMS

  1. Systems Thinking: Monitoring a system via multiple inputs to continuously gather feedback.

  2. Management Information Systems (MIS): A business function that moves information across the organization for decision-making.

Common Departments and Data Silos

  • Data Silos: Occur when departments do not communicate effectively, hindering cross-functional operations.

THE MIS SOLUTION

  1. Democratization: Making data and information accessible to all users within an organization.

  2. Data Democratization: Ensuring the collection, analysis, and accessibility of data across all departments.

Understanding Goods and Services

  • Goods: Material items/products that customers buy (e.g., cars, groceries).

  • Services: Tasks that people perform that customers buy (e.g., teaching, waiting).

Production Process

  1. Input: Raw materials (e.g., lettuce, tomatoes).

  2. Process: Transformation of inputs into finished products (e.g., cooking hamburger patties).

  3. Output: Finished product (e.g., hamburger).

SYSTEMS THINKING IN MANAGEMENT

  • Different functions within a business:

    • Accounting: Records transactions.

    • Finance: Manages financial strategy.

    • Human Resources: Oversees employee management.

    • Marketing: Plans and promotes products.

    • Operations Management: Manages production processes.

SECTION 1.2: BUSINESS STRATEGY

Learning Outcomes

  1. Explain why competitive advantages are temporary.

  2. Identify the four key areas of a SWOT analysis.

  3. Describe Porter's Five Forces Model and explain each of the five forces.

  4. Compare Porter's three generic strategies.

Identifying Competitive Advantages

  1. Business Strategy: A leadership plan to achieve goals such as product development or increasing sales.

  2. Competitive Advantage: A product/service valued more by customers than similar offerings by competitors.

  3. First-Mover Advantage: Impacting market share by being the first in the market with an innovative product.

Stakeholder's Interests

  • Government: Adherence to laws, employment, ethical taxation.

  • Partners/Suppliers: Reliable contracts, ethical materials handling.

  • Shareholders/Investors: Profit maximization, market share growth.

  • Organization/Customers: Exceptional service, high-quality products.

  • Employees: Fair compensation, job security.

  • Community: Ethical recycling, increased employment.

SWOT Analysis

  • Evaluates Strengths, Weaknesses, Opportunities, and Threats to inform strategies.

Porter’s Five Forces Model

  1. Buyer Power: The ability of buyers to influence prices.

    • Switching Costs: Costs that deter customers from changing products.

    • Loyalty Programs: Reward systems to encourage customer retention.

  2. Supplier Power: Ability of suppliers to affect prices charged for supplies.

    • Supply Chain: All parties involved in the procurement of products.

  3. Threat of Substitute Products/Services: High when many alternatives exist.

  4. Threat of New Entrants: High when it’s easy for new competitors to enter.

    • Entry Barriers: Standards that new competitors must meet.

  5. Rivalry Among Existing Competitors: Intensity of competition in the market.

    • Product Differentiation: Unique features that influence customer demand.

Examples of Strong and Weak Forces

  • Strong Buyer Power: International hotel chain.

  • Weak Buyer Power: Individual customers.

  • Comparative examples in all categories of Porter’s model discussed.

Analyzing the Airline Industry

  • Conduct a thorough analysis of the commercial airline industry using the Five Forces model.

Porter’s Three Generic Strategies

  1. Cost Leadership: Provide low-cost alternatives with wide market scope (e.g., Walmart).

  2. Differentiation: High-cost, unique products (e.g., Neiman Marcus).

  3. Focused Strategy: Targeting a narrow market with specific low to high-cost strategies (e.g., Payless Shoes, Tiffany & Co.).

LEARNING OUTCOME REVIEW

  • Review learning outcomes at the end of the chapter for comprehensive understanding.