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Chapter Six

PRIDE HUGHES KAPOOR INTRODUCTION TO BUSINESS ELEVENTH EDITION. Chapter Six. Understanding Information and e-Business. 6 | 1. Learning Objectives. Examine how information can reduce risk when making a decision. Discuss management’s information requirements.

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Chapter Six

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  1. PRIDE HUGHES KAPOOR INTRODUCTION TO BUSINESS ELEVENTH EDITION Chapter Six Understanding Information and e-Business 6 | 1

  2. Learning Objectives • Examine how information can reduce risk when making a decision. • Discuss management’s information requirements. • Outline the five functions of an information system. • Describe how the computers and technology help improve productivity, in decision making, communications, sales, and recruiting and training. 6 | 2

  3. Learning Objectives (cont’d) • Analyze how computers and technology change the way information is acquired, organized, and used. • Explain the meaning of e-business. • Describe the fundamental models of e-business. • Explore the factors that will affect the future of e-business. 6 | 3

  4. Introduction • To improve the decision-making process, the information used by both individuals and business firms must be • Relevant • Useful to meet a specific need • Using relevant information results in better decisions • For businesses, better intelligence and knowledge that lead to better decisions are especially important because they can provide a competitive edge over competitors and improve a firm’s profits 6 | 4

  5. How Can Information Reduce Risk When Making a Decision? The Relationship Between Information and Risk Figure 6.1 6 | 5

  6. How Can Information Reduce Risk When Making a Decision? (cont’d) • Information rules • Information rules based on situational experience provide guidance in handling similar situations or circumstances • Business research continuously looks for new rules since business conditions are always changing 6 | 6

  7. How Can Information Reduce Risk When Making a Decision? (cont’d) • The difference between data and information • Data • Numerical or verbal descriptions that usually result from some sort of measurement • Information • Data presented in a form that is useful for a specific purpose • Database • A single collection of data and information stored in one place that can be used by people throughout an organization to make decisions • Knowledge management (KM) • A firm’s procedures for generating, using, and sharing the data and information 6 | 7

  8. What is a Management Information System? • Management information system (MIS) • A system that provides managers and employees with the information they need to perform their jobs as effectively as possible • Purpose: to distribute timely and useful information to the decision makers who need it • Information technology officer • A manager at the executive level who is responsible for ensuring that a firm has the equipment necessary to provide the information the firm’s employees and managers need to make effective decisions 6 | 8

  9. Management Information System (MIS) Figure 6.2 Source: Ricky W. Griffin, Management, 10/e (Mason, OH: Cengage Learning, 2011). Reprinted by permission. 6 | 9

  10. What is a Management Information System? (cont’d) • A firm’s information requirements • Summary of future possibilities • Summary of present situation • Summary of past performance • Information about five areas of management: finance, operations, marketing, human resources, and administration • Size and complexity of the system • Must be properly sized to provide sufficient information resources without being simple or too complex to be useful 6 | 10

  11. Five Management Information System Functions Every MIS must be tailored to the organization it serves and must perform five functions Figure 6.3 6 | 11

  12. How Do Employees Use a Management Information System? • Collecting data • Data should be relevant and accurate • Internal sources • Managers and employees, company records and reports, minutes of meetings, accounting data, sales data, HR data, production data • External sources • Customers, suppliers, bankers, trade and business publications, industry conferences, online computer services, government sources, firms specializing in gathering data • Cautions • The cost of obtaining data from some external sources can be quite high • Outdated or incomplete data usually yield inaccurate information • Check computer data (or information) if you disagree with it 6 | 12

  13. More Computers in Record Numbers Source: The Computer Industry Almanac, Inc. Web site at www.c-i-a.com, accessed May 25, 2010. 6 | 13

  14. How Do Employees Use a Management Information System? (cont’d) • Storing data • An MIS must be capable of storing data until they are needed • Updating data • Manual updating—employee inputs fresh data into the database • Automatic updating—MIS updates itself as data become available 6 | 14

  15. How Do Employees Use a Management Information System? (cont’d) • Processing data • The transformation of data into a form useful for a specific purpose • Statistics • A measure that summarizes a particular characteristic of an entire group of numbers 6 | 15

  16. How Do Employees Use a Management Information System? (cont’d) • Presenting information • Verbal information—list or paragraph form • A formal business report typically includes an introduction, the body of the report, conclusions, and recommendations • Visual displays • Graphs, bar charts, pie charts • Tabular displays • Verbal or numerical information presented in columns and rows 6 | 16

  17. Typical Visual Displays Used in Business Presentations Figure 6.4 6 | 17

  18. Typical Visual Displays Used in Business Presentations (cont’d) Figure 6.4 6 | 18

  19. Typical Three-Column Table Used in Business Presentations Table 6.1 6 | 19

  20. Improving Productivity with the Help of Computers and Technology • Areas of concern for a business include decision making, communications, sales, recruiting and training employees, business software applications, and virtual offices • Making smart decisions • Three different applications can help to improve and speed the decision-making process for people at different levels within an organization • Decision support system (DSS) is a type of computer program that provides relevant data and information to help a firm’s employees make decisions • Executive information system (EIS) is a computer-based system that facilitates and supports the decision-making needs of top managers and senior executives • An expert system is a type of computer program that uses artificial intelligence 6 | 20

  21. Improving Productivity with the Help of Computers and Technology (cont’d) • Helping employees communicate • E-mail—provides virtually instantaneous communication with other employees and customers • Seven tips for effective use of e-mail • Most important: Think about what you say, message may be read by more people than the original recipient(s), don’t include anything you wouldn’t say face-to-face • Write perfect subject lines • One email, one subject • Keep emails short • Only use ALL CAPS for emphasis, represents shouting • Limit use of the “reply all” option, only reply to those who need to know • Reread the message before sending it 6 | 21

  22. Improving Productivity with the Help of Computers and Technology (cont’d) • Helping employees communicate (cont’d) • Groupware—software that facilitates the management of large projects among geographically dispersed employees as well as such group activities as problem solving and brainstorming • Collaborative learning system—a work environment that allows problem-solving participation by all team members • Assisting the firm’s sales force • Customer-relationship management programs • Sales force automation programs 6 | 22

  23. Improving Productivity with the Help of Computers and Technology (cont’d) • Training employees • Reduced educational and training costs • Increased flexibility and availability of training • Faster transfer of information about changes in the firm’s policies and procedures • Recruiting employees • Provides for a global recruiting reach, especially for individuals with unique skills • Helps build a database of potential employees • Reduces recruiting costs for initial applications and screening interviews 6 | 23

  24. Improving Productivity with the Help of Computers and Technology (cont’d) • Telecommuting, Virtual Offices, and Technology • Virtual office–allows employees to work any place where they have access to computers, software, and other technology that enables them to perform their normal work activities • Benefits: • Higher job satisfaction and increased productivity • Greater independence and flexible work hours • No commuting saves costs and time • Lower employee turnover • New employment opportunities for people who can’t/won’t commute • Challenges: • Feelings of isolation/exploitation • Working too many hours • Lack of support from managers • Inability to access needed information 6 | 24

  25. Improving Productivity with the Help of Computers and Technology (cont’d) • Business Applications Software • Integrated software combines many applications (functions) in a single package • Allows the easy linking of text, numerical data, graphs, photos, audiovisual clips • Data entered into one application can be used in other applications within without having to re-enter it • Once one application is learned, it’s much easier to learn the other applications 6 | 25

  26. Current Business Application Software Used to Improve Productivity Table 6.2 6 | 26

  27. Improving Productivity with the Help of Computers and Technology (cont’d) • Computer Backup and Disaster Recovery • Lost data and information can threaten the existence of a firm and its ability to operate on a day-to-day basis • Computer backup–process of storing data, information, and computer systems on secondary computer systems that can be accessed if a firm’s main computer system fails • Schedule data and information backups • Backup the computer system needed to access data • Keep backups offsite • Test backup systems • May be performed by employees or outside vendors 6 | 27

  28. Using Computers and the Internet to Obtain Information • Information society • A society in which large groups of employees generate or depend on information to perform their jobs • The Internet and Networks • Internet • A worldwide network of computers linked through telecommunications; used for e-business, communication, information gathering • World Wide Web (the Web) • The Internet’s multimedia environment of audio, visual, and text data • Broadband technology • General term referring to higher-speed Internet connections that deliver data, voice, and video material 6 | 28

  29. Using Computers and the Internet to Obtain Information (cont’d) • The Internet and Networks • Network • A group of two or more computers linked together to share data and information • Wide-area network (WAN) • A network that connects computers over a large geographic area • World’s most popular WAN is the Internet • Local-area network (LAN) • A network that connects computers that are in close proximity; within a company, less commonly referred to as an Intranet 6 | 29

  30. Using Computers and the Internet to Obtain Information (cont’d) • Accessing the Internet • Computers and software must be standardized so different systems can “talk” to each other in order to search for and obtain information • Web site addresses • URL—Uniform Resource Locator • http—HyperText Transfer Protocol • Web search engines • www.altavista.com; www.google.com; www.yahoo.com • Creating web sites • Reflects the company image • Should be kept current • Most companies manage their sites internally but some pay an outside hosting service to provide site management 6 | 30

  31. Tips for Web Site Development • Develop a theme • Determine how much information to include on your site • Plan the layout of your site • Add graphics • Outline the material for each page • Develop plans to update the site • Make sure your site is easy to use 6 | 31

  32. Defining e-Business • e-Business (electronic business)—The organized effort of individuals to produce and sell, for a profit, the products and services that satisfy society’s needs through the facilities available on the Internet • Organizing e-Business Resources • Resources may be more specialized than in a typical business • Outsourcing—The process of finding outside vendors and suppliers that provide professional help, parts, or materials at a lower cost. 6 | 32

  33. Combining e-Business Resources Figure 6.5 6 | 33

  34. Defining e-Business (cont’d) • Satisfying Needs Online • The Internet has created new customer needs • E-business can satisfy those needs, as well as traditional ones • Global access to information and entertainment • Virtually unlimited selections of products • Opportunities for interaction • Individually custom-tailored content 6 | 34

  35. Defining e-Business (cont’d) • Creating e-Business Profit • Increasing Sales Revenue • Revenue stream–source of revenue flowing into a firm • Sales of merchandise online • Intelligent information systems to suggest purchases to repeat online customers • Increased sales in physical stores because of product information available online • Advertising on web pages • Subscription fees charged for access to online services and content 6 | 35

  36. Defining e-Business (cont’d) • Creating e-Business Profit (cont’d) • Reducing expenses • Offering online services that • Reduce transaction costs • Provide information • Provide customer assistance • Reduces the costs of dealing with customers • Reduces the need for as many physical store locations 6 | 36

  37. Fundamental Models of e-Business • Business model • A group of common characteristics and methods of doing business to generate sales revenues and reduce expenses • Business-to-Business (B2B) model • Firms that use the Internet mainly to conduct business with other businesses • Facilitating sales transactions between businesses • Elicit bids and offers from suppliers and potential suppliers; learning about the customer’s rules and procedures. Expensive to start and maintain but savings are significant 6 | 37

  38. Fundamental Models of e-Business (cont’d) • Business-to-Consumer (B2C) model • Firms that focus on conducting business with individual buyers • Success comes from understanding how the customer behaves online to build good customer relationships 6 | 38

  39. Planning for a New Internet Business or Building an Online Presence for an Existing Business Figure 6.6 6 | 39

  40. Other Business Models That Perform Specialized e-Business Activities Table 6.4 6 | 40

  41. The Future of Computer Technology, the Internet, and e-Business • The Internet and e-business will continue to expand along with related computer technologies • Internet Growth Potential • Opportunity: only about 1.8 billion of the world’s nearly 7 billion people in the world use the Web • Americans comprise 12 percent of all users • Internet growth potential in the U.S. is limited since 73 percent of Americans already use it • Projections indicate worldwide users will exceed 2.1 billion by 2012 • Social network site–a Web site that functions like an online community of Internet users who share personal information, messages, photos, friends 6 | 41

  42. The Future of Computer Technology, the Internet, and e-Business (cont’d) • Ethical and Legal Concerns • Essentially the Internet is a new “frontier” without borders and without much control by governments or other organizations • Ethics and Social Responsibility • Spamming • Log-file records • Data mining • Internet Crime • Malware • Computer virus 6 | 42

  43. The Future of Computer Technology, the Internet, and e-Business (cont’d) • Future Challenges for Computer Technology and E-Business • More information is now available than ever before, its amount will only increase • Businesses must consider more than the cost factors in using technology • Internal, more controllable by management: planning, organization structure, human resources, management decisions, information database, financing • Green IT: activities to support a healthy environment and sustain the planet • External: less controllable or not at all: globalization, economy, competition, politics 6 | 43

  44. Internal and External Forces That Affect an e-Business Figure 6.7 6 | 44

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