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Explore how information can mitigate risk, fulfill management's requirements, and enhance e-business potential. Dive into the functions of an information system, the impact of the Internet, and the evolving landscape of e-business models. Learn the distinctions between data and information, the significance of knowledge management, and the role of a Management Information System (MIS). Uncover the essentials of information technology and the critical nature of managerial information requirements. Discover the importance of a comprehensive data bank, cautious data handling, and efficient data processing for effective decision-making.
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Chapter 14 Understanding Informationand e-Business
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 Internet helps in decision making, communications, sales, and recruiting and training. • 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.
Information and Risk • Accurate/complete information = no risk • Decision without information = gamble • Information = better decisions Information Rule: When research confirms the same results each time it studies the same circumstances
Figure 14.1: The Relationship BetweenInformation and Risk When the amount of available information is high, managers tend to make better decisions. When the amount of information is low, managers have a higher risk of making a poor decision.
Data …numerical or verbal descriptionsthat usually result from some sortof measurement.
Information …data presented in a form that is usefulfor a specific purpose.
Knowledge Management …a firm’s procedures for generating, using, and sharing the data and information contained in the firm’s databases.
Database …a single collection of data stored in one place that can be used by people throughout an organization to make decisions.
Management Information System …a system that provides managers and employees with the information they need to perform their jobs as effectively as possible.
Figure 14.2: ManagementInformation System (MIS) After an MIS is installed, a user can get information directly from it without having to go through other people in the organization.
Purpose of MIS/IT • Distribute timely & useful information • From internal & external sources • To managers & employees 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.
Manager’sInformation Requirements • Managers • Plan for future • Implement in present • Evaluate the past • Areas of management needing information • Finance • Operations • Marketing • Human resources • Administration
Administrative Managers Make Sure... • Information used in consistent manner • Managers/employees receive skills training for using MIS • Money available to update MIS when needed
Size/Complexityof System Mistakes • Save on initial costs = system too small or overly simple • Too large/complex = unused capacity and complexity • Increased cost of owning & operating • Probably difficult to use
Figure 14.3: Five Management Information System Functions Every MIS must be tailored to the organization it serves and must perform five functions.
DataBank Should Include... • Past/current data • Relevant data • Accurate data • Internal sources • Managers • Employees • Company records & reports • Minutes of meetings • External Sources • Customers • Suppliers • Bankers • Trade/financial publications • Industry conferences • Online computer services • Government sources • Data-gathering organizations
Data Cautions • Cost of obtaining data from external sources can be high • Outdated/incomplete data usually yield inaccurate information • Computers generally do not make mistakes but people who use them can
Storing Data • Method depends on size of organization • Small: enter information directly to hard drive • Medium to large: larger system through network
Updating Data • Ensure information is accurate, complete, and up to date • Frequency of update depends on speed of change and how often used • May be updated according to predetermined schedule
Data Processing …the transformation of data into a form that is useful for a specific purpose.
Statistic …a measure that summarizes a particular character of an entire group of numbers.
Business Report • Introduction • Sets the stage • Describes problem • Identifies research techniques • Previews material • Body • Objectively describes facts • Is basis for conclusions/recommendations • Conclusions • Statements of fact on findings • Specific, practical, based on evidence • Recommendations • How problem might be solved • Specific, practical, based on evidence
Visual Display …a diagram that represents several items of information in a manner that makes comparison easier.
Figure 14.5: Typical Visual Displays Used in Business Presentations
Making Smart Decisions • Decision-Support SystemProvides relevant data/information to help firm’s employees make decisions • Executive Information SystemFacilitates/supports decision-making needs of top managers by providing easy access to internal and external information • Expert SystemUses artificial intelligence to imitate human’s ability to think
Helping Employees Communicate • GroupwareFacilitates management of large projects among dispersed employees + group activities: problem solving, brainstorming • Collaborative learning systemWork environment that allows problem-solving participation by all team members
Customer- Relationship Management …programs focus on the special informational needs of sales personnel.
Recruiting and Training Employees • Post employee needs on website • Reach potential candidates around the globe • Organize data in way most useful to the firm • Internet education delivery
Information Society …a society in which large groups of employees generate or depend on information to perform their jobs.
Internet, Intranet, and Networks • Internet: worldwide network of linked computers • World Wide Web: Internet’s environment of audio, visual, and text data • Internet Service Providers (ISPs) • Broadband technology • Intranet: small version of Internet used inside firm • Computer network: 2+ computers linked, sharing data/information
Top Ten Countries in Percentage of Internet Users Source: “Top 20 Countries with the Highest Number of Internet Users,” Internet World Stats—Usage and Population Statistics, 6/30/08, www.internetworldstats.com/top20.htm.
Computer Networks • Wide-Area Network (WAN): connects computers over a large geographic area • Local-Area Network (LAN):connects computers in close proximity to each other
Internet Terms • Uniform Resource Locator (URL) • Web Browser • Hypertext Transfer Protocol: words or phrases highlighted or underlined on web page; link to other websites • Search Engine
e-Business …the organized effort of individualsto produce and sell, for a profit, theproducts and services that satisfy society’s needs through the facilities availableon the Internet.
Outsourcing …the process of finding outside vendors and suppliers that provide professional help, parts, or materials at a lower cost.
Assumptions forSatisfying Needs Online • Internet has created new customer needs • E-business can satisfy those needs and more traditional ones
Revenue Stream …a source of revenue flowing into a firm.
Online Revenue Streams • Reaching new customers • Intelligent information systems • Information for comparative shopping • Advertising & subscription fees • Sponsors
Figure 14.7: Planning a New Internet Business or Online Presence for Existing Business
Business Model …represents a group of common characteristics and methods of doing business to generate sales revenues and reduce expenses.
Primary e-Business Models • Business-to-Business (B2B): firms conduct business with other businesses • Sales transactions between businesses • Bidding on products and services • Business-to-Consumer (B2C): firms conduct business with individual buyers
Table 14.4: Other Business Models that Perform Specialized e-Business Activities
Figure 14.8: Internal and External Forces That Affect an eBusiness