Unit 1: INTRODUCTION TO MANAGEMENT

INFORMATION SYSTEMS
Management Information System (MIS): Concept
The elementary convictions of MIS were to process data from the organization and
present it in the form of reports at regular intervals. This conviction was altered when a
distinction was fabricated between data and information. Information is an outcome of
processed data, data being a set of values. This conviction was further altered, thats the
system should present the information in such a form and format that is creates an impact
on its user, provoking decision, an action and an investigation. It was later realized that
some sort of selective approach was necessary for analyzing and reporting, hence the
concept of eception reporting was imbibed in MIS. !lso, the need arose, for keeping all
data together so that it can be accessed by anybody and can be processed according to
their needs in different ways. This gave rise to the concept of "!T!#!S$, which proved
to be much effectual.
%ver a span of time, the concept of end&user computing using multiple databases
emerged, which unveiled a fundamental transition in MIS. This transition was the
decentralization of the system. 'hen this became actuality, the notion of MIS changed to
decision&making system.
The foundation of MIS is the principle of management and its practices. MIS uses the
concept of management control in its design and relies heavily on the fact that the
decision&maker or manager is a human processor of information. It relies on the system
theory that offers solutions to handle comple situations of the input and put flows using
theories of communication.
I()%*M!TI%(
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,S$ %) "!T!#!S$ !(" 1(%'.$"-$ #!S$
0%M/,T$*S !(" I()%*M!TI%( T$0(%.%-+
FIG: CONCEPTUAL VIEW OF AN MIS
$IS
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FIG: PHYSICAL VIEW OF AN MIS
Therefore, MIS is an art and science of gathering, collecting, storing, analyzing and
disseminating information for managerial decision making with due regard to the people
of the organization.
MIS: Definition
MIS is prevalently demystified as the Information System, the Information and "ecision
System, the 0omputer&based Information System.
The MIS has more than one definition, some of which are given below3
The MIS is defined s the s!ste" tht #$%&ides inf%$"ti%n s'##%$t f%$ de(isi%n
")in* in the %$*ni+ti%n,
The MIS is defined s n inte*$ted s!ste" %f "n nd "(hine f%$ #$%&idin*
the inf%$"ti%n t% s'##%$t the %#e$ti%ns- the "n*e"ent nd the de(isi%n
")in* f'n(ti%n in the %$*ni+ti%n,
The MIS is defines s the s!ste" .sed %n the dt .se %f the %$*ni+ti%n
e&%/&ed f%$ the #'$#%se %f #$%&idin* inf%$"ti%n t% the #e%#/e in the
%$*ni+ti%n,
The MIS is defines s C%"#'te$0.sed Inf%$"ti%n S!ste",
Role of Management Information System
The role of MIS is an organization that can be compared to the role of heart in the body.
The system ensures that an appropriate data is collected from various sources
processed, and then further sent to individuals, group of individuals or the
management functionaries3 the managers and the top management.
It satisfies diverse needs through a variety of systems such as 4uery Systems,
!nalysis Systems, Modeling Systems and "ecision Support System. MIS contributes
to Strategic /lanning, Management 0ontrol, %perational 0ontrol and Transaction
/rocessing.
It helps 0lerical personnel in the transaction processing and answers the 5ueries on
the data pertaining to the transaction, the status of a particular record and references
on a variety of documents.
It helps 6unior management personnel by providing the operational data for planning,
scheduling and control, and helps in decision making at an operational level to correct
an out of control situation.
It helps Middle&.evel management in short term planning, target setting and
controlling the business functions.
It helps Top management in goal setting, strategic planning and evolving the business
plans and their implementation.
It plays an important role in information generation, communication, problem
identification and helps in the process of decision making
Thus, MIS plays a vital role in the management, administration and operations of an
organization.
Impact of Management Information System
Mn*e"ent F'n(ti%ns
MIS facilitates effective management of marketing, finance, production and
personnel. It eases the tracking and monitoring of the functional targets. The
functional management is informed about the progress, achievements and shortfalls in
the activity and the targets. It helps in forecasting and long&term perspective planning.
The manager7s attention is brought to a situation that is in eception in nature,
inducing him8her to take an action or a decision in the matter.
Unde$stndin* 1'siness
MIS uses the dictionary of data, entity and attributes. *espectively, designed for
information generation in the organization. Since all Information Systems use the
dictionary, there is common understanding terms and terminology in the organization
delivering clarity in the communication and a similar understanding of an event in the
organization.
S!ste"i+ti%n %f .'siness %#e$ti%ns
MIS leads to streamlining the operations, which complicate the system design. It
improves the administration of business by bringing a discipline in its operations, as
everybody is re5uired to follow and use systems and procedures. This brings a high
notch of professionalism in the business operation.
Di$e(tin* t%2$ds *%/s
It helps indirectly to pull the organization in one direction towards the corporate goals
and ob9ectives by providing relevant information to the people in the organization.
Mn*e"ent Effi(ien(!
The fund of information motivates an enlightened manager to use a variety of tools of
the management. It helps him to resort to such eercises as eperimentation and
modeling.
Red'(ti%n %f "n#%2e$ %&e$hed
Since MIS works on the basic systems such as transaction processing and databases,
the drudgery of clerical work is transferred to the computerized system, relieving the
human mind for better work.
MIS and the User
$very person in the organization is the user of MIS. The people in the organization
operate at all levels in the hierarchy. MIS caters to the needs of all.
C/e$)
The main task of a clerk is to search the data, make a statement and submit it to the
higher level. ! clerk can use the MIS for 5uick search and reporting the same to the
higher level.
Assistnt
!ssistant has the task of collecting and organizing data, and conducting a rudimentary
analysis of it. MIS offers user tools to perform such tasks.
Offi(e$
%fficer has a role of integrating the data in different systems and disciplines to analyze it
and make a critical comment if necessary.
E3e('ti&e
$ecutive plays the role of decision&maker and a planner. :e is responsible for
achievement of targets and goals of an organization. MIS provides facility to analyze the
data and offers the decision support system to perform the task of eecution. MIS
provides an action&oriented information.
Mn*e$
Manager has the responsibility and accountability for business results. :e8She is a
strategist and a long&term planner, a person of foresight and analytical. MIS provides
information in a structured or unstructured format to take actions. MIS caters to his
changing needs of information.
Through MIS, the information can be implemented as a strategic weapon to ledge the
threats to business, making business more competitive, bringing about the organizational
transformation through integration. ! good MIS also erects an organization seamless by
removing communication barriers.
Management as a Control System
! definition of control is the process through which managers assure that actual activities
conform to the planned activities, leading to the achievement of the stated common goals.
The control process measures a progress towards those goals, and enables the manager to
detect the deviation from the original plan in time to take corrective actions before it is
too late. *obert 6 Mockler defines the points out the essential elements of the control
process. The basic steps of the control process are given in the figure,


The management is a systematic effort,
& To set the performance standards in line with the performance ob9ectives
& To design the information feedback systems
& To compare the actual performance with the predetermined standards
& To identify the deviations from the standards
& To measure its significance and to take corrective actions in case of significant
deviations.
This systematic effort is undertaken through the management control system.
! reliable and effective control system has the following features.
EARLY WARNING MECHANISM
This is a mechanism of predicting the possibility of achieving the goals and the standards
before it is too late and the allowing the manager to take corrective actions.
$stablish
Standards of
/erformance
Measure
/erformance
0orrective
!ction
!ctua
l 2s
Std
(o !ction
PERFORMANCE STANDARDS
The performance standard must be measurable and acceptable to all the organization. The
system should have meaningful standards relating to the work areas, responsibility,
managerial functions and so on.
STRATEGIC CONTROLS
In every business these are strategic areas of control known as the critical success factors.
The system should recognize them and have controls instituted on them.
FEED1AC4
The control system would be effective, if it continuously monitors of the performance
and sends the information to the control center for action.
ACCURATE AND TIMELY
The feedback should be accurate in terms of results and should be communicated in time
for corrective action.
REALISTIC
The system should be realistic to that the cost of control is far less than benefits.
Sufficient incentive and rewards are to be provided to motivate the people.
THE INFORMATION FLOW
The system should have the information flow aligned with the organization. Structure and
the decision&makers should ensure that the right people get the right information for
action and decision making.
E5CEPTION PRINCIPLE
The system should selectively approve some significant deviations from the performance
standards on the principle of management by eception.
MIS: A support to the Management
The management process is eecuted through a variery of decisions taken at each step of
planning, organising, staffing, directing, coordinating and control. The MIS aids deciion
making suitably.
De(isi%ns in Mn*e"ent
Steps in Management Decision
/lanning ! selection from various alternatives&strategies, resources,
methods, etc.,
%rganization ! selection of a combination out of several combinations of
the goals, people, resources, method, and authority
Staffing /roviding a proper manpower complement
"irecting 0hoosing a method from the various methods of directing the
efforts in the organization
0oordinating 0hoice of the tools and the techni5ues for coordinating the
efforts for optimum results
0ontrolling ! selection of the eceptional conditions and the decision
guidelines
Management Effectieness ! MIS
7(egandhi $stafen7 provides a good model ;)ig a< for the analysis of management
effectiveness, which generates an enterprise effectiveness in achieving goals and
ob9ectives. The model is puts a lot of emphasis on the management philosophy and the
environment factors on which the effective ness is dependent. The environment factors
provide the opportunities to survive and grow with certain constraints, while the
management philosophy sets the guidelines for deciding the management practices to run
the enterprise.
'hile environment factors are difficult to control, it is left to the management to change
its philosophy towards the various players in the business, viz., the employees, the
consumers, the suppliers, the government, the community and the shareholders. If the
attitude is to treat the employees as business partners, we empower them and create a
sense of belonging to the organization. Such an attitude will have an impact on the
management practices where the employee will play a decisive role. It will affect the
organization structure by reducing its size and the reporting levels.

$nvironment
-oal Setting
Management
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Information Support
MIS
If the attitude towards the consumer is changed to fulfill the epectations giving rise to a
higher satisfaction, then the management practices in the product design, manufacturing
and marketing will undergo a significant change. The product life cycle will be then a
short, and more features and functions will be added to the product fulfilling not only the
functional needs but also the service needs of the consumer.
The management practices therefore emerge out of the management philosophy and the
environment in which it operates. The management effectiveness will largely depend on
both these factors. The MIS design would, therefore, be different depending upon the
management practices followed by several organizations in the same industry. Such
design improves the management effectiveness leading to an improvement in the
enterprise effectiveness.
"rocess of Management:
=. P/nnin* is the most important and basic management function. Its purpose is the define
where the organization wants to go, what goals it wants to achieve, who is responsible for
what, and how it will be performed. /lanning increases the likelihood of success.
a. %rganizational goals should be derived from its mission statement, and the
ob9ectives should be based on the goals ;both long&term and short&term<
b. The strategy can be created once the ob9ectives are set in place. It is a plan or
guide for using the resources to meet the ob9ectives. The plans may be different
types ;strategic, tactical, operational, contingency<.
c. Standing&use plans and single&use plans are used to prepare for problems or
emergencies.
d. 0oordinate and integrate resources needed for success including people,
e5uipment, budgets, and facilities. Many factors should be considered in each area
to optimize the situation
>. O$*ni+in* is a necessary as a result of planning? the ob9ective is to achieve maimum
efficiency toward organizational goals.
a. The process establishes work groups, materials, and activities necessary to
achieve the organizations goals.
b. /rinciples include unity of command ;no one should report to more than one
superior<, chain of command ;authority should be delegated in a chain from top to
bottom<, and span of control ;limited time and ability of each manager<
c. !uthority and responsibility are really two different things3 !uthority is the right
to command, while authority is the obligation to perform any assigned duties.
d. %rganization charts are graphic representations of the chain of command and
levels in the organization? they are developed as a result of the process.
@. Ledin* is the use of communication by a manager to guide, motivate, influence, and
direct peoples efforts toward achievement.
a. $arly approaches were focused on traits of an effective leader? however studies
have not found any specific trait;s< that are universally effective for all leaders.
Review the studies in the text.
b. 0ontingency theories analyze situational differences and the realization that
effective leadership involves more than specific traits or behaviors. )red )iedler
suggested that the match between the leaders style and the needs of the follower
play was important for effective leadership. /aul :ersey and 1en #lanchard
developed Situational .eadership Theory which focuses on the readiness of the
followers.
c. %ther leadership approaches include3
Transformational leaders make drastic changes
Transactional leaders clarify roles and task re5uirements
Self&leadership uses work teams
d. $ffective leadership can be associated with certain characteristics like those listed
in the tet. :owever, the approaches vary by level.
.egitimate power and authority
0oercive power
*eward power
$pert power
*eferent power
e. Theories of motivation have evolved from studies of what causes people to act in
certain ways.
$arly theorists include !braham Maslow ;:ierarchy of (eeds<, "ouglas
Mc-regor ;Theory A and +<, and )rederick :erzberg ;:ygiene factors,
Motivational factors, dissatisfiers, and satisfiers<
0ontemporary Theories are broken down into three schools3 0ontent theories
focus on what causes people to act in certain ways? process theories focus on
choosing actions? and reinforcement theories look at conse5uences.
B. C%nt$%//in* focuses on evaluating performance according to the plans that have been
established. It includes four steps3
a. "efine and specify critical goals to be measured at all levels. This is a critical
step because, if they are not stated clearly, confusion and failure will follow.
b. !ppropriate standards must be set for goals to be accomplished. ! standard is an
epected level of performance? it may be specific and measurable.
c. 0ompare performance with standards and identify areas where the standards have
not been met.
d. Make corrections related to differences between the standard and actual
performance.
C. C%""'ni(ti%n links all managerial functionsDno other functions can be fulfilled
without communication. It is the process of sharing ideas so that they can be understood and
used.
a. 0hannels include downward, upward, lateral, and diagonal.
b. /olicies are general guidelines and limits? procedures specify behaviors for
specific situations.
c. Meetings are a popular means of communicating? managers can spend =8@ of
their time in meetings each week. Review the different types of meetings.
Meetings are also discussed in the Office Administration text.
#oals$ %&'ecties ! (argets
The process of management begins with setting of goals, ob9ectives and targets. The
goals are long&term aims to be achieved by the organization? ob9ectives are relatively
short&term milestones to be accomplished, while targets generally refer to physical
achievements in the organization7s business.
The setting of goals, ob9ectives and targets is a top management function. It has its
implications on the business operations and profits.
It considers social, technological, political, educational, economical changes epected
to occur in five to si years.
The setting of goals, ob9ectives and targets helps to pull the resources of the
organization in one direction and solve.
It helps build strategies, frame policies and set the rules of conducting the business.
It provides an effective measure to monitor the managerial process.
The people in the organization can have a common understanding of the purpose of
managerial process and business operations.
The goals, ob9ectives and targets become reference points for strategic planning and
operation planning.
It further helps the management to identify key areas of business and management
attention.
The performance appraisal of the manager become impersonal and unbiased as it is
done with reference to achievement of goals, ob9ectives and targets.
Its advantage is that it stimulates the development of people and provides motivation
MIS s T%%/ f%$ Mn*e"ent
MIS as a Tool Management /rocess3
The process of management re5uires a lot of dt nd inf%$"ti%n for eecution
of the plan. This re5uirement arises on account of that in each step of management, a
variety of decisions are taken to correct the course of development.
The decisions or actions are prompted due to the feed.() given by the control
system incorporated in the management system. The control of overall performance is
made possible by way of budget s'""$ies nd $e#%$ts. The summary showing sales,
costs, profit and return on investment throws light on the direction the organization is
moving to. The eception reports identify the weaknesses in the system of management.
If effective management system is to be assured, it has to rest on .'siness
inf%$"ti%n. The management performance improves if the business risk and
uncertainties are handled effectively. If the information provided is ade5uate, one can
deal with these factors s5uarely. The information support improves the lack of
knowledge, enriches eperience and improves analytical abilities leading to better
business 9udgment.
So, if efficient information support is to be provided, it calls for a system with the
goals of generating management information. ! good MIS must furnish information to
the managers to epand their knowledge base.
:e must know the adverse trends in business, the shortfalls and failures in the
management process.The MIS should provide the support to act and decisively. It
should support management in terms of basic business information at the corporate level
and meet the specific needs of the managers. It should highlight on the critical success
factors and support key areas of management.
MIS should have, wherever possible, support systems to help the manager in
decision making.Modern management systems rely on MIS. The compleity of business
operations with skill and foresight to avert the crisis. Modern business management
re5uires shift from the traditional controls to managerial control. The shift re5uires the
manager to become more efficient in handling the he is entrusted with.
The manager becomes more efficient if he is well informed, made richer in
knowledge, eperience and analytical skills and is able to face the uncertainties and the
risk of business. This is possible only if he is supported by MIS in his specific task of
management of business.
Modern business has business has become more technology& oriented wherein
the manager is re5uired to be up& to& date on technological advancement not only in his
field of operations but also in the other technologies . The emerging new technologies
are posing threats to current business and are opening new opportunities for new
business ventures.
The manager has to keep himself abreast on the information of how
these technologies affect his business prospects. ! good MIS designed for such a
support is absolutely essential. MIS therefore, is a tool for effective eecution of the
management process.
Ch$(te$isti(s %f n MIS
! management information system performs the following functions3
/rovides reports with fied and standard formats3
!ll reports are produced in an easy&to&read and standard format, so managers in
various functional areas find consistencies in reports.
/roduces hard&copy and soft&copy reports3
Standard reports are typically printed on papers and they are termed as hard copy
Soft copy reports are displayed on computer screens.
,ses internal data stored in the computer system3
MIS reports use primarily internal sources of data that are contained in computer
databases ;through T/Ss<.
$nd users are able to develop their own custom reports3
!lthough most of the standard reports are designed by and analyst, the users should
be able to develop reports on an ad&hoc basis.
*e5uires formal re5uests from users
'henever an information system personnel ;analyst, programmer< develops a report,
a formal re5uest is necessary. This is not re5uired for ad&hoc reports.
MIS f%$ C%"#etiti&e Ad&nt*e
/rovides support to managers as they work to achieve corporate goals.
$nables managers to compare results to established company goals and identify
problem areas and opportunities for improvement.
MIS nd We. Te(hn%/%*!
"ata may be made available from management information systems on a companys
intranet.
$mployees can use browsers and their /0 to gain access to the data.
F'n(ti%n/ As#e(ts %f the MIS
! management information system is organized according to the business
functionality of an organization.
Thus an MIS contains systems in areas of accounting, human resources, marketing,
manufacturing, research and development, legal services, operations8support, and
finance. See figure net page.
$ach functional system uses its own set of function&specific subsystems, all of which
interface with both the T/S and the MIS.
$ach functional system re5uires different information and support for decision
making? but they share some common information needs.
An organizations MIS is an integration of various functional systems