Winter 2011 Master of Computer Application (MCA) Semester 4 MC0076 Management Information Systems 4 Credits (Book ID: B0901)

1) Assignment Set 1 (60 Marks)

Answer all Questions Each question carries TEN marks

1. Discuss the following with respect to information concepts: a. Meaning of Information b. Uses of Information c. The Cost of Information Ans: a. Meaning of Information

Information is a complex concept that has a variety of meanings depending on its context and the perspective in which it is studied. It could be described in three ways 1) as processed data, 2) as the opposite of uncertainty, and 3) as a meaningful signal-to illustrate the richness of the concept of information. Information as Processed Data: Data are generally considered to be raw facts that have undefined uses and application; information is considered to be processed data that influences choices, that is, data that have somehow been formatted, filtered, and summarized; and knowledge is considered to be an understanding derived from information distinctions among data, information, and knowledge may be derived from scientific terminology. The researcher collects data to test hypotheses; thus, data refer to unprocessed and unanalyzed numbers. When the data are analyzed, scientists talk about the information contained in the data and the knowledge acquired from their analyses. The confusion often extends to the information systems context, and the three terms maybe used interchangeably. Information as the Opposite of Uncertainty: A different perspective on information derives from economic theory and defines information as the negative measure of uncertainty; that is, the less information is available, the more uncertainty exists, and conversely, the more information is available, the less uncertainty exists? In microeconomic theory the equilibrium of supply and demand depends on a market known as a perfect market, where all buyers and sellers have complete knowledge about one another and where uncertainty does not exist. Information makes a market perfect by eliminating uncertainties about supply and demand. In macroeconomic
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theory, firms behave according to how they read the economic climate. Economic signals that measure and predict the direction of the economy provide information about the economic climate. The firm reduces its uncertainty by decoding these signals. Taking an example of Federal Express in USA, each incoming aircraft has a scheduled arrival time. However, its actual arrival depends on unforeseen conditions. Data about when an aircraft departed from its destination is information in the economic sense because it reduces uncertainty about the aircrafts arrival time, thereby increasing Federal Expresss ability to handle arriving packages. Managers also define information in terms of its reducing uncertainty. Because managers must project the outcomes of alternatives in making decisions, the reduction of uncertainty about the outcomes of various alternatives improves the effectiveness of the decision- making process and the quality of the decision. Information as a Meaningful Signal: Information theory, a branch of statistics concerned with measuring the efficiency of communication between people and/or machines, defines information as the inputs and outputs of communication. Electronic, auditory, visual, or other signals that a sender and receiver interpret similarly convey information. For example, in the recruitment scenario about, the resumes and applications for the open positions are information because they are signals sent by the applicants, and interpreted similarly by both. The Managers in their roles as communicators both generate and receive information. They receive reports that organize signals or data in a way that conveys their meaning. Reports of sales trends become information; so do reports about hazardous waste sites. Managers derive meaning from the information they see and hear as part of communication and use it to make decisions. This definition of information requires a manager to interpret a given signal as it was intended. For example, a managers incorrect interpretation of body language in a negotiation would not be considered to be information from this perspective, although we know that managers use both correct and incorrect perceptions as information in decision making and other managerial functions. Again, this view of information suggests the complexity of the concept and the value of a multifaceted definition.

b. Uses of Information

Organizations may use information as a resource, as an asset, or as a commodity. Information as a Resource: We generally think of organizations using money, people, raw materials, machinery, or even time as resources-inputs to the production of outputs. Information can also be viewed as a resource. Social workers use information about clients in helping them become more functional. Physicians use case histories of patients as inputs to diagnosis and prescription. Resources can also substitute for one another to some degree. Capital in the form of automated equipment can reduce labor required for production. Similarly, information can replace either
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capital or labor. Organizational members may also use information to decrease the cost or increase the quality of the final product or service. Information as an Asset: An asset is the property of a person or an organization that is used to produce a companys output and does not get used up as a resource does. Some resources are converted to assets that can be used over an extended period, such as the use of capital to purchase equipment that, in turn, becomes an asset. The information resource is similar, but not identical, to other resources in this respect. Information, even if used immediately, is rarely actually consumer. For example, when managers use data about a Department Store sale to determine whether inventory should be replenished, the sales data remain available as a resource for use in other analyses. In some cases, such as the Federal Express aircraft departures, the information quickly loses some value after its use, although it may have subsequent value as a resource for historical analyses. As a corporate asset, then, information is comparable to plant, equipment, and goodwill. It can even be viewed as inventory, with information considered as a raw material, work in process, or finished goods. The asset model of information encourages management to view information as an investment that managers can use strategically. Unlike resources, which managers seek to use efficiently to produce output, managers view assets as giving the organization an advantage over its competitors. For example, the information collected by Department Store about its sales may be extremely valuable to its suppliers and competitors. Information as a Commodity: Like corn, automobiles, washing machines, or other commodities, information is a saleable product. Some companies use information primarily to sell it. For example, credit bureaus collect information on your credit history to sell to your potential creditors. In our service-oriented economy, an increasing number of organizations are adopting a commodity view of information viewing it as a saleable product.

c. The Cost of Information

Although information can be valuable, it is costly to use. Acquiring, processing, storing, retrieving, and communicating information each have costs. Acquiring Information : The acquisition of information is a first step in its use. We can obtain information from either formal or informal sources. Formal sources provide information in a relatively organized and predictable fashion, for example, business forms; electronic monitoring equipment such as digital thermometers; and machine-readable purchased data such as an encyclopedia (Personal records, corporate annual reports, summarized transaction histories) on a compact disc. Informal sources provide information in a less structured way and include conversations with customers, suppliers, and other employees, as well as general observations of personal and organizational activities. Generally, acquiring information through informal sources costs less, but the information acquired may be harder to organize and use effectively.
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Data acquisition can occur manually or electronically. Managers often hand-write evaluation reports or salespeople maintain written records of customer orders. Increasingly, managers can enter evaluation data directly into the computer, and salespeople can use point-ofsale terminals to record detailed sales information electronically. Experts estimate that electronic forms for capturing data cost at least 70 percent less to design, purchase, use, carry, and revise than the equivalent paper forms. Processing Information: Processing information describes transforming it into a usable form. Processing typically occurs at two times: first, between the acquisition and storage of information, and second, between its retrieval and communication. The processing that occurs between acquisition and storage generally requires a large amount of personal labor. Manual processing, involves duplicating, sorting, and filing data. Electronic processing, such as with electronic scanners, involves transforming and entering the data into an electronic form. Although both manual and computerized processing may require significant clerical time and incur high costs, electronic processing can reduce these costs. Processing occurs between storing and communicating information for both manual and computerized systems. In manual systems, filing clerks typically perform the processes of retrieval, formatting, and display. When summaries or special analyses are required, analysts with special skills, such as skills in finance or accounting, may process the data. Manual information processing involves high labour and time costs but low equipment costs. Storing Information : The primary cost of storing information is the cost of the storage medium and space on computerized storage uses paper, microform, or both. These media require much more physical storage space than electronic media and typically incur a greater cost for leasing or buying space than do electronic media. Computerized storage uses a variety of media, including hard disks, diskettes, pen drives and CD-ROM, depending on the amount of information to be stored and the desired speed of retrieval. The organizational overhead to monitor and control information storage, including staff salaries and physical equipment, adds to the cost of information storage. Most large companies keep duplicates of their electronically stored information at a secure site remote from their processing facilities to ensure that the data can be retrieved in the event of a disaster such as a fire or flood or terrorist strikes. In addition, most companies keep duplicate paper or microform copies of much of their data. The cost of the media, physical facilities, and staff for these backup systems also contributes to the storage costs. Both document and electronic storage have an ancillary cost for storing the documentation needed to locate information. Storing large amounts of data calls for simultaneously developing and storing an index or map that assists in locating the data. Retrieving Information: Retrieving desired data from manual systems can be time consuming and expensive executives spend approximately six weeks a year on average looking for misplaced material. Secretaries may spend as much as 30 percent of their time looking for paper documents and approximately 20 percent of that time searching for misfiled items. Because paper files require large amounts of space, managers may store the data on a different floor or even in a different building. The labour costs of retrieving even small amounts of information
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exceed those for retrieving information electronically unless the organization can create small and compact storage for its paper records. Electronic systems provide rapid and inexpensive access to information stored electronically in an organized fashion. The costs incurred are only those of using the computer equipment for a fraction of a second, particularly when retrieval is part of ongoing processing. If an individual requests the retrieval, it may require additional processing to translate the retrieval request from a form understood by the person to a form understood by the computer. Then the information is stored in a different place from where it is requested, the request must be transmitted electronically to where the data are stored, and the retrieved data must be transmitted back. Communication costs are relatively low for small amounts of information, but the communication equipment and infrastructure can be expensive unless amortized over a sufficiently large volume of data communication. Communicating Information: Manual transmission of information occurs frequently and easily in most organizations. Most organizational members rely on face-to-face communication in formal or informal setting or on written publications for much of the information they require to do their jobs. But face-to-face communication requires extensive amounts of time, a scarce resource in most organizations. Written media, such as memos, reports, advertisements, or other document can effectively transmit small amounts of information to large numbers of people. Transmitting information long distance or exchanging large volumes of data can occur more effectively by electronic communication. Telephone, television, videoconferencing, fax or other electronic data transmission can instantaneously establish communication in among individuals, groups, organizations, or data repositories or each unit of information transmitted, electronic media are much less expensive than written or oral media.

2. Discuss the following with respect to information needs: a. Development of Organizational Computing b. Demands on Organizations in an Information Society

Ans: a. Development of Organizational Computing

The role played by information systems in organizations has evolved over time. This evolution has not led to wholesale discarding of the early types of systems this would be quite expensive, and in many cases the older systems are still useful after suitable modifications. The progressive retargeting of MIS can be summarized as moving "up and out": progressive support of higher levels of management in increasingly individualized fashion, and aiming MIS at competitors to achieve strategic advantage. From the mid-1950s to the mid-1970s, companies generally had a single data processing department (later to be renamed MIS department). All application systems were developed
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within this department and largely at its discretion. Thus, end-user access to computer technology was mediated: professional computer expertise was required to obtain information from the system. The backlog of applications judged worthy of development yet having to wait for the availability of professional time ran two to three years in most organizations. Access to computing was thus severely restricted. The primary target of data processing departments was operational support, although management support was emerging toward the end of this period in the form of voluminous reports. Raising the efficiency of company operations was the main objective of most applications. The second era in organizational computing began in the late 1970s and was made possible by a number of technological developments spanning a decade. The development of time-sharing operating systems made it possible for a user on a terminal to access the computer directly. Specialists devised information systems directly supporting the decision-making process and organized company data in databases, making the data far more accessible and usable. Minicomputers made it not only possible but justifiable to break up the monopoly of a single MIS department. The greatest impact was made by the personal computer, which emerged on an industrial scale in 1977 as Apple II. Propelled by the broadly used spreadsheet programs (initially, VisiCalc), personal computers and end-user oriented software empowered the users themselves. End-user computing had begun: in many cases, instead of requesting that a system be developed by the MIS department, knowledge workers themselves began using a productivity software package (a database management system or a spreadsheet, for example), customizing it for their needs, and even developing systems of their own. Many information systems were brought under control of their users. Organizations now entered a new stage in their reliance on information systems, which included extensive operational and management support systems developed during the two earlier stages. During the current, third era of MIS development, firms expect information systems to carry them beyond increased operational efficiencies and managerial effectiveness: systems are now geared to help a company to compete in the marketplace. Business functions are reengineered and extensively supported with information technology. This requires close interaction between developers and users; the sharp divide between the two groups often disappears when application systems are concerned. End users initiate and participate in the development of many systems. They also control some of the systems they use. In leading corporations, end-user computing is an important contribution to overall MIS development and maintenance. Systems integration is a vital concern.

b. Demands on Organizations in an Information Society

Transportation and communication networks spanning the globe have removed the protective space and time buffers shielding companies from competition. This calls for constant innovation. Complexity, turbulence, and a high volume of knowledge with potential impact on the companys operations characterize the operational environment of todays organization.
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An infrastructure is the structure of facilities and services necessary for organizations and economies to function and grow. Fast and relatively inexpensive means of transportation, telecommunications networks, and global financial markets are all components of the infrastructure of the information society. These means of rapidly moving goods, information, and money have shrunk the world. They have removed the advantages provided by the remoteness of potential business competitors in the early industrial economy. Largely, firms no longer compete solely against a known handful of other companies: they must develop a general competitive capability. Runners may appreciate the analogy to the difficulty of achieving a record result running alone as compared with running against others in a race. Not only has the space buffer that formerly shielded companies from their remote competitors been removed, but paced by computerized information systems, life cycles for product development have been shortened dramatically. With the use of CAD/CAM (computer-aided design/computer-aided engineering) technology, a new car model is developed in nine months instead of three years; financial software and global securities markets make it possible to develop and bring to the market a new financial product, such as a new type of bond, within ten days. Companies used to be able to rely on "cash cows" products, which in mature markets bring significant profits without a need for innovation. Now that time-related protection has also disappeared. A highly dynamic information society requires constant innovation-both in marketed products and services, and in the continual restructuring of organizations to adapt to changing market demands. Moreover, successful organizations must not only react, but also proactively anticipate new developments and changes in their markets. Mergers, acquisitions, and organizational restructuring have indeed been the order of the day during the past two decades. The stability and stolidity that were the hallmark of successful industrial corporations have given way to constant corporate renewal. Robert Waterman, a well-known management consultant, quotes the chief executive officer of IBM, John Akers, who "says they never reorganize except for a good business reason, but if they havent reorganized in a while, thats a good business reason." However, this dynamism has to be combined with a stable, "producing" environment. The art of balancing in corporate renewal requires that an organization ensure a sufficient degree of organizational stability to successfully carry out change. Perhaps the best way to state it is to say that an information society requires an organization to maintain a constant trait of adaptability, rather than adaptation; in other words, a firm must possess the capability to keep changing rather than to make a single change. Management information systems must be vehicles built to facilitate rather than to put the brakes on change, as unfortunately frequently occurs.

3. Discuss the following with respect to information needs for strategic planning: a. Value Streams b. Major issues to consider in situational analysis

Ans:
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a. Value Streams

Value Stream is an end-to-end set of activities, which collectively create value for a customer. Value streams are often cross-functional. For example: Insurance Industry Value Stream: Customer Engagement Processes: Settle claims, Bill and collect, Satisfy customer inquiry Basis for value added or differentiation strategies Who is our customer? What is valued by customer? Who are our competitors? How difficult is our product to imitate? Problems with value chains No owner for value stream Nobody focuses on customer satisfaction Long time delays Pass on problems to each other Seepages through the cracks Considerable rework Michael Porters Value Chains Value chains help in developing leverage points where the costs needs to be contained and the value can be enhanced. Value activities do not operate independently. They have linkages amongst themselves. IS can add value by supporting the linkages. Michael Porters Competitive Force Model

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Fig. Illustrations for overcoming threats Reduce bargaining power of customers e.g. putting terminals into customers offices Reduce bargaining power of suppliers e.g. having alternative sources of supply Threat of new entrants e.g. putting in a high cost of IS support system Threat of substitute products e.g. putting up flexible manufacturing facilities Michael Porters Generic Strategies for Competitive Advantage Strategy 1: Perform value activities at lower costs Example: Automating a manual process to reduce costs Reducing inventory carrying cost
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Strategy 2: Differentiate own products by value activities Example: Putting terminals in customers offices (for locking the customer) Providing name for each adopted doll Strategy 3: Fill niche markets by value activities Example: Special plans for luxury car buyers Home PC sales (additional market) to network customers (existing customers)

b. Major issues to consider in situational analysis

Potential Internal Strengths A distinctive competence Adequate financial resources Good competitive skill Well thought of by buyers An acknowledged market leader Well-conceived functional area strategies Access to economies of scale Insulated (at least somewhat) from strong competitive pressures Proprietary technology Cost advantages Better advertising campaigns Product innovation skills Proven management Ahead on experience curve
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 Better manufacturing capability Superior technological skills Potential External Opportunities Serve additional customer groups Enter new markets or segments Expand product line to meet broader range of customer needs Diversify into related products Vertical integration Falling trade barriers in attractive foreign markets Complacency among rival firms Faster market growth Potential Internal Weaknesses No clear strategic direction Obsolete facilities Lack of managerial depth and talent Missing key skills or competence Poor track record in implementing strategy Plagued with internal operating problems Falling behind in R&D Too narrow a product line Weak market image Weaker distribution network Below-average marketing skills
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 Unable to finance needed changes in strategy Higher overall unit costs relative to key competitors Potential External Threats Entry of lower-cost foreign competitors Rising sales of substitute products Slower market growth Adverse shifts in foreign exchange rates and trade policies of foreign governments Costly regulatory requirements Vulnerability to recession and business cycle Growing bargaining power of customers or suppliers Changing buyer needs and tastes Adverse demographic changes Situational analysis requires extensive internal and external data. To evaluate internal strengths and weaknesses, for example, reputation for quality or above-average costs, a company must compare data on its internal condition with industry and competitor averages. Some firms go to extensive lengths to obtain information about the market and their competitors, including hiring employees from competitors, suppliers, and customers, and even buying competitors garbage. Quality information systems can assist organizations in securing comprehensive information for the SWOT analysis. Organizations can use them to maintain, update, or access environmental and organizational data, such as demographic trends, potential customer lists, financial data, or staffing patterns.

4. Discuss the following with respect to Quality and Privacy Issues: a. Business Decisions and Information Assurance b. Ethical and social issues with networks

Ans:

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