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HL: Chapter 43 - Management

Information systems (5.9)
Data analytics [AO1]
Database [AO1]
Cybersecurity and cybercrime [AO1]
Critical infrastructures [AO2]
Virtual reality [AO2]
The internet of things [AO2]
Artificial intelligence [AO2]
Big Data [AO2]
Customer loyalty programs [AO3]
The use of data to manage and monitor employees (digital Taylorism) [AO3]
The use of data mining to inform decision making [AO3]
The benefits, risks and ethical implications of advanced computer technologies and technological
innovation on business decision making and stakeholders [AO3]

Data analytics [AO1]

Data analytics: the process of transforming raw data into usable information for businesses

it involves examining raw data to draw conclusions such as determining trends and
answering questions

Determining trends and other measures form a mass of data so information is more user
friendly to improve overall efficiency

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 Having large amounts of data and relevant information enables businesses to improve the
quality of goods and services by identifying consumer trends and raising customer
satisfaction

Types of data analytics:

Descriptive data analytics: keep track of business successes and failures and providing
essential insights into past business performance.

Diagnostic data analytics: focuses on and answers questions about why something has
happened

Predictive data analytics: projects and answers questions about what is likely to happen in
the foreseeable future

Prescriptive data analytics: supports strategic planning and appropriate course of action by
answering questions about what should be done

Data analytics is important because it helps business improve efficiency, cut costs and gain
competitive advantages in order to increase profits.
Database [AO1]

Database: computerized system that makes it easy to store, search and select data and
information by storing a large volume of data and information

businesses can use databases to input, organize, save, protect and retrieve data in an efficient
way

(+) increases efficiency

(-) initial set up cost, maintenance cost, hiring managers

(-) risks of cyber security

Cybersecurity and cybercrime [AO1]

Cybersecurity: the protection of computer systems and networks from unwanted information
disclosure from theft or

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 Cybercrime: Any illegal activity carried out using computers or the internet by deliberately and
maliciously targeting computers

Examples:

phishing: use of fraudulent messages designed by the attacker to trick victims into revealing
sensitive information

Ransomware: malicious softwares that threaten to publish the victim’s personal data

Email and internet fraud: use of enticing messages “tap on this link!”

Identity theft

Account hijacking

Intellectual property theft

→ Businesses can protect themselves against cybercrimes by impoverish their cybersecurity

systems including methods such as:

Keeping computer softwares updated

Using anti-virus software to prevent or limit the volume of cyber attacks

Training staff about the importance of cybersecurity

Critical infrastructures including artificial neural networks, data centers and cloud computing
[AO2]
Critical infrastructure: the essential and interrelated physicals structures and facilities needed
for the effective functioning of the business.

1. Artificial neural networks (ANN)

A form of machine-leaning that uses learning algorithms that can independently make
adjustments as they receive new inputs.

used for business applications such as: natural language processing in chat bots and
predictive analysis for detecting spam emails and phishing

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 ANN are used to make computers or machines more human like in terms of their reasoning,
intuition and imagination

2. Data centers

A physical facility or space of networked computers and component resources that supports
businesses in housing their critical applications of data.

The main components of data centers include: routers, firewalls, secured storage systems,
mainframe servers and application-delivery controllers.

data centers enable a large volume of data to be stored, organized, processed and distributed
by a business

Services provided by data centers to help with business applications include:

Data backup and archiving of important files

Email and file sharing

Database systems

Big data, AI and machine learning

Virtual communication and collaboration services

3. Cloud computing

Virtual resource or online space that enables businesses to store, organize and retrieve data in a
safe and efficient way

cloud computing requires the use of computer networks and remote servers

Data Centers Cloud computing

Virtual resource that helps businesses store,

Physical resource that helps business store, organize
organise and retrieve data in an efficient and safe
and retrieve data in an efficient and safe way
way

Investment costs are significant compared with cloud Investment costs are insignificant compared with
computing data centers

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 Data Centers Cloud computing

Maintenance costs are high (hardware engineers,

Maintenance and costs are relatively low (software
developers, security and temperature monitoring
engineers and fees to cloud service providers)
systems)

Requires stable internet or WiFi connection to

Does not rely on having internet or wifi-conditions
provide the function

Virtual reality [AO2]

Virtual reality: artificial three-dimensional environment that is created with software and
presented to the user in a near-reality way that people can explore and interact with

(-) set up costs can be expensive, especially when content needs to be customized and engaging

The internet of things [AO2]

The internet of things (IoT): a broad system of physical objects embedded with electronics,
software and sensors that connect to the internet that could share information to other devices.

These devices are able to collect, transfer and store huge volumes of data over the Internet in
real time.

“Things” or physical objects are also referred to connected devices as well as wearable
technologies

the IoT helps businesses to operate in a more lean and efficient way and can generate
significant competitive advantages as it reduces the dependence on human intervention to
collect data

→ However, due to the vast amount of data involves with the IoT, businesses also need to
operate within the law governing the collection, storage and transfer of sharing data
(+) improves efficiency (minimizing human effort and saving time to get tasks done)

(+) enhanced data collection and access to real-time information which helps with rational
decision making

(-) concerns involving the issue of data security and privacy concerns
(-) Concerns with the growing dependency on the Internet and hence the inability for businesses
to function efficiently without it

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 Artificial intelligence [AO2]

Artificial intelligence (AI): an aspect of computer science that focuses on the ability of smart
machines to perform tasks that typically require human intelligence

AI has the ability to boost operational efficiency and complete highly complex tasks that
cannot be easily managed by human beings in a cost-effective way

Machine learning: a subset of AI that includes algorithms that can memorize on their own
and anticipate results

Use of AI in the business world:

Human resource management: used for hiring workers by filtering out resumes and shortlist
candidates

Cybersecurity: use of AI to understand, detect and remove unwanted cyber threats

Data analysis: collect and process a huge amount of data to provide feedback and
predictions about changing consumer needs and preferences

Financial management: automating billing and invoicing systems and the subsequent
recording of financial data

Automated customer services: improve customer engagement and improve the quality of
services without having to hire so many workers.

(-) expensive investment and could face problems of the potential misuse of AI
(-) impact on employment

Big data [AO2]

Big data: the process of collecting and analyzing large amounts of data sets in order to identify
trends and patterns that can be used in strategic planning and business decision-making

Businesses can use big data to understand customers better and enhance their marketing
strategies

Help businesses offer more personalized services to meet the needs and preferences of
clients

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 Significant for the growth and development of a business by optimizing its performance

Data is gathered from:

e-commerce : data collected from shopping carts and online purchases

Use of logistics and transportation system: use of electronic ticketing systems and location
data using GPS

Social media data

The Internet of Things: data generating from smart fines, apps, smart appliances

How businesses use big data :

Generating market insights: revolutionizing the traditional methods of market research

Tracking and monitoring: have better control over its operations

Improved decision making: analyse information in real-time to aid decision making

Customer loyalty programs [AO3]

Customer loyalty program: any customer retention strategy that incentivizes customers to
continue to buy the same products and brands instead of switching to those provided by
competitors by offering a reward system.

Encourage repeat purchases by using different reward programs

A marketing approach designed to improve customer relationships so customers provide

their ongoing support

In return for loyalty, customers receive loyalty rewards

(+) spending to retain customers is far cheaper then attracting new customers
→ For customer loyalty programmes to work, a huge amount of data is needed to ensure the
rewards reflect what customers actually want and for the costs of operating the rewards program
to not outweigh the benefits

This requires the business to collect, process and store data about customer spending habits
and gathering regular feedback

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 The data enables businesses to determine the best marketing strategy to target and retain
customers.

→ Listening to customers is important not only to be able to develop sustainable loyalty

programs but also to improve the overall customer experience and establishing a loyal customer
base

The use of data to manage and monitor employees; Digital Taylorism [AO3]
Digital Taylorism: a modern approach to F.W. Taylor’s scientific management method of
management and motivation by boosting productivity through managing staff and tasks in a
methodical way.

Suggested that the best way to boost productivity in the workplace is a combination of three
strategies:

1. Specialization and division of labour: breaking down complex tasks into simpler ones

2. Measure everything that workers do so tasks and productivity can be measured

3. Link pay to performance using a differentiated payment system : awarding more

productive workers with bonuses and pay rise and sanctioning those who do not meet
targets)

→ Taylorism is based on developing policies and practices that maximize efficiency and
productivity by standardizing work processes and each task.

Digital Taylorism is found in organizations that use data and surveillance systems to monitor
employees to ensure thay remain on tasks at all times

argument of “what gets measured, gets managed”

common methods of staff monitoring systems include: software monitoring and location
monitoring

The gathered data provide managers with the ability to continuously evaluate and measure
performance of employees despite whether they are in the office or working from home

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 (+) recorded telephone conversations to use for training purposes and improve the level of
customer services
(+) freeing up management time: it is hard for individual managers to have complete oversight
of every employee

(+) Improved coordination and control: employers know everything that is going on in their
business at all times. This could help identifying areas of improvements and spotting company
policy violations

(+) Training and development: data used to monitor employees can be used to fix mistakes and
improve performance
(+) Improved productivity and efficiency: employees will be more productive if they know
they are being watched upon
(+) To reward employees: rewarding more productive workers who meet and exceed targets
(+) Improve the appraisal process: managers can gain a better understanding of a worker’s
strengths and weaknesses to give effective feedback which can increase staff motivation and
desire to succeed.
(+) To prevent illegal behavior in the workplace: monitoring computers in the workplace to
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protect the business from legal issues that could arise from employees e ng i áng in illegal
activities online.
(-) There are laws that protect employees from the misuse of data and surveillance in the
workplace (such as privacy laws)

*Monitoring employees in secret without their knowledge or consent is unethical and illegal

The use of data mining to inform decision making [AO3]

Data mining: the process of extracting raw data from large amounts of different data sets and
summarizing them into usable information in a coherent structure.

This enables businesses to solve problems, minimize risks and make the most out of new
opportunities.

Can create competitive advantages for a business to learn more about customers, develop
effective marketing strategies, increase revenue and decrease costs.

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 Data mining relies on the use of powerful computers and sophisticated algorithms to execute a
range of statistical techniques to extract data that are of real value. This is then analyzed in
various ways to identify patterns, trends and relationships.
Data mining covers all the topic of: big data, data analytics, artificial intelligence, machine
learning and database systems

Ultimately, data mining is used to help managers to make more informed business decisions.

the business applications of data mining:

Customer profiling: examine customer purchase patterns and make connections of data to
consumer demographics for better marketing decisions

Marketing planning: using data to inform a business about market segmentation, targeting
and positioning strategies

Sales forecasting: identify sales trends and make accurate sales predictions based on
customer habit data

Market research: develop and improve marketing campaigns by predicting what customers
might want to purchase in the future.

Developing customer loyalty schemes

Market basket analysis: understating customer habits by purchasing patterns (items

purchased and items placed in baskets)

Production planning: support smart inventory control systems, identifying gaps and errors in
the production process

Research and development: inform R&D expenditure, product development and innovation
strategies based on predicated needs and preferences

(-) the selling, sharing or redistribution of personal information without prior knowledge is
unethical and illegal

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 The benefits, risks and ethical implications of advanced computer teachnologies (collectively
referred to as MIS) and technological innovation and business decision making and share holders
[AO3]

Management Information Systems (MIS): the study of advanced computer technologies and
their impact on people, organizations and the relationships between them

MIS covers the entire contents of this chapter

(+) if set-up and used appropriately a MIS enables businesses to have better coordination,
control, analysis and visualization of data and information relevant to the operations of the
organization

(+) Ultimately, MIS allows managers to make better informed decisions by having flexible and
speedy access to accurate data to achieve goals and objectives of the organization

(-) Overreliance, Hardware and software failure, cyber crime, data and privacy
(-) monitoring of employees can be controversial and cause conflict between employers and
employees (both stakeholder groups try to protect their personal interests)

→ To minimize potential conflicts, businesses can ensure their MIS such as staff managing
policies are implemented in transparent, indiscriminate and ethical ways.

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