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MANAGEMENT

• Management comprises of processes and activities like planning, organizing, controlling, directing and initiating.

Decision making is a fundamental prerequisite for management processes

There are two tools for the decision making framework: Highlighting the characteristics of Mission ,Objectives, Goals,

Strategies The other one underlying the policies, programmes and

procedures.

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MISSION

Reflects the scope of its business interests

The organization’s reason for existence

Is dependent on the viewpoint of customer

Is extrapolated with the external environment

The idea is based on setting procedures to identify and implement the perceived and value added benefits to the customers

Is static not static in nature

In nutshell, it is concrete justification and rationale on which the business activities of the organization are based.

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OBJECTIVES

Action orientation of its mission

Segmented into workable objectives and assigned at all levels of management hierarchy

Objectives are manifold and priority levels are to be set for allocation of resources, to meet the objectives within specific timeframe

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GOALS

Are time bound targets a desired future state that the organization attempts to realize Are necessary to move in the direction of achievements of organization

objectives Fulfillment of objectives is dependent on the goals such as allocation of

resources that are specific to objectives

STRATEGY These are the specific methodologies chosen by the organization

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POLICIES

Are the guidelines framed to gear up the internal structure and operational activities of the business enterprise

They provide the backup support to meet the objectives of an organization

Org. efficiency depends directly upon framing up the right guidelines within the purview of the goals of an org.

They are dynamic in nature

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PROGRAMMES

They are concerned with the scheduling and organizing of the repetitive activities

The constitution of the pragramme is based on the policies

PROCEDURES

These are the specifications of the sequence of steps to be undertaken in the activities to be performed.

Are laid down to assist in a proper implementation of the programme by ensuring that the task activities are completed as per the prescribed schedule

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FUNCTIONS OF A MANAGER

To be skilled in functional specialty, such as engineering, marketing, sales, IT, legal or HR

Traditional functions of planning, organizing, controlling, and initiating

To be able to participate in design and utilization of computerized IS

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FUNCTIONING OF MANAGEMENT Planning: includes the strategy to select the course of action

The following processes are needed in the course of planning Forecast Set objectives Develop strategies

Decide programme Set budget Set procedures Develop policies

Organizing: Work is arranged efficiently Staffing : selection of qualified persons Directing : steps associated with getting things done through people Controlling : measures taken to carry out plan effectively and efficiently in pursuit

of satisfactorily implementation of action towards the predetermined goals of an organization.

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INFORMATION

Data that has been organized into a meaningful context. The processes such as collection, summarizing, analysis,

interpretation, presentation of data leads to value addition to data.

Cluster of facts that are meaningful and useful in various processes like decision making

It is data that has been processed to add or create meaning and knowledge for the person who receives it.

USE OF INFORMATION Organize Data into information

Analysis of Information to give knowledge

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Information

Difference Between Data & Information

1) Information is useful for decision making but data has got no value.

2) Information brings clarity and creates an intelligent human response in the mind.

3) Information is like a finished product whereas data is like raw material.

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Types of information

Information could be classified on the basis of the purpose for which it is utilized: Strategic information: required by the managers at the strategic level of management for the formulation of the organizational strategies. these relate to long term planning policies of the organization eg information pertaining to new technologies, new products, competitors etc.

Tactical information: is used at management control level and is a short term planning. eg sales analysis and forecasts, production resource requirement etc

Operational information: applies to short periods which may vary from an hour to few days. It is generally used by decision makers at the operational level. (often required to take immediate actions) eg stock-in-hand, work-in-progress levels, outstanding orders from the customers etc

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INFORMATION QUALITY

Timeliness Accuracy Relevance Adequacy Completeness Explicitness Exception based

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SYSTEM

Is assembly of interrelated elements/components comprising a unified whole

The term “system” means to combine, to set up ,to place together A system typically consists of components that are connected together

in order to facilitate the flow of information , matter or energy A system is set of interrelated components working together to achieve

a common purpose eg Education system, computer system, respiratory system.

System works towards a common goal by accepting inputs and producing outputs

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control

feedback

process output

System

input

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SYSTEMS CONCEPTS IN BUSINESS

The systems approach is a way of analyzing business problems This approach views the business organization as a system of

interrelated parts designed to accomplish goals Each subsystem is a self-contained unit, but is also a part of the

whole system Managers need to understand the goals of the business and

design the functions of the subsystems to achieve these goals

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What is an Information System?

An information system is the set of interrelated components that collect, process, store and distribute information used by/support one or more business process.

Input: The collection of raw data. Processing: The manipulation of data into information. Output: Distributing valuable information.

Also Includes both technology and people

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Market research subsystem

Input

Input

Input

Input

Process Output

Service subsystem

Marketing subsystem

Manufacturing subsystem

Process

Process

Process

Output

Output

Output

Customerneeds

Finishedgoods

Productin use

THE FIRM’S SUBSYSTEMS

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P r o c e s s i n gC l a s s i f yA r r a n g e

C a l c u l a t e

I N P U T O U T P U T

F e e d b a c k

I n f o r m a t i o n S y s t e m

O r g a n i z a t i o n

E n v i r o n m e n t

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Basic Components of Information Systems

Hardware is a device such as a processor, monitor, keyboard or printer

Software is a program or collection of programs that enable hardware to process data.

Database is a collection of related files or tables containing data. Network is a connecting system (wireline or wireless) that permits

different computers to share resources. Procedures are the set of instructions about how to combine the

above components in order to process information and generate the desired output.

People are those individuals who use the hardware and software,

interface with it, or uses its output.

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AN INFORMATION SYSTEM AS A SYSTEM The major purpose of an information system is to convert data

into information The information system is a subsystem of the business system of

an organization Information systems that provide information on day to day

activities of a business are known as operational systems Information systems that provide information to allow the

management to allocate resources effectively are known as tactical systems

Information systems that support the strategic plans of a business are known as strategic planning systems

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INFORMATION SYSTEM – PRIMARY PURPOSE

Collects data, processes it into information then converts information into knowledge for a specific purpose.

• Data: Elementary description of things, events, activities, and transactions that are recorded, classified, and stored, but not organized to convey any specific meeting

• InformationData that has been organized so that they have meaning and value to the recipient

• KnowledgeInformation that has been organized and processed to convey understanding, experience and expertise as they apply to a current problem or activity

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Roles of IS Support daily tasks of line workers

within a business function across business functions knowledge work and production work support effectiveness and efficiency

Support decision making across management levels and functions individual and group strategic, control (e.g., scheduling, resource allocations)

Provide feedback Effectiveness (e.g., conformance), Efficiency (e.g., cost, cycle time),

Adaptability (e.g., response time) Between levels, between functions

Facilitate communication Policy and Goals Coordination and direction

Interact with environment (e.g., Customers, Suppliers).

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IS at the Organisational Level

Operational-level Elementary activities and routine transactions Data current and accurate

Knowledge-level Support knowledge and data workers Integrate new knowledge into the business Office automation

Management-level Periodic monitoring, control, decision-making and administration Is the business working well?

Strategic-level Long-term (e.g. 5 year) planning and strategy Internal and external information

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Examples

What examples can you think of at the different organisational levels?

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MANAGEMENT INFORMATION SYSTEM Its acronym of three words Management Information System It is a set of organized procedures which when executed

provides information to support decision making It’s a combination of human and computer based resources

which result in collection , storage, retrieval, communication, and use of data for the purpose of efficient management of operation and for business planning

A system to convert data from internal and external sources into information to communicate the information in an appropriate form to managers at all levels , in all functions, directing and controlling the activities for which they are responsible.

A set of computer based systems and procedures implemented to help managers in their crucial job of decision making

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CHARACTERISTICS

System approach Management oriented Management directed Need based Exception based Future oriented Integrated Common data flows Long term planning Sub system concept Control database Flexible Reliable Simple

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MIS FUNCTIONS

Data capturing Processing of data Storage of information Retrieval of information Dissemination of management information Confirmation of validity of data and transactions Reactive and proactive response Communication of information

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KINDS OF INFORMATION SYSTEMS

SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN

KIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR MANAGERS

MANAGEMENT LEVEL MIDDLE MANAGERS

OPERATIONAL OPERATIONALLEVEL MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE &DATA WORKERS

RESOURCESMARKETING & ENGINEERING

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TYPES OF IS

Executive Support Systems (ESS) Management Information Systems (MIS) Decision Support Systems (DSS) Knowledge Work Systems (KWS) Office Automation Systems (OAS)

Transaction Processing Systems (TPS)

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Transaction Processing Systems (TPS)Transaction Processing Systems (TPS)

Computerized system that performs and records the daily routine transactions necessary to conduct the business; These systems serve the operational level of the organization

Type: Operational-levelInputs: Transactions, EventsProcessing: UpdatingOutputs: Detailed ReportsUsers: Operations Personnel, SupervisorsDecision-making: Highly StructuredExample Payroll, accounts payable

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A Symbolic Representation for a payroll TPS

P a y r o l l S y s t e mM a n a g e m e n t

R e p o r t s

O n - l i n eq u e r i e s

P a y r o l lm a s t e r

f i l e

E m p l o y e e d a t a ( v a r i o u s d e p a r t m e n t s ) T o g e n e r a l l e d g e r : w a g e s a n d s a l a r i e s

G o v e r n m e n t d o c u m e n t s

E m p l o y e e c h e c k s

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Operational-level Systems

Sales and marketing

Manufacturing Finance Accounting Human Resources

Order tracking

Machine control Securities trading

Payroll Compensation

Order processing

Plant scheduling Cash management

Accounts payable

Training and development

Material movement and control

Accounts receivable

Employee records

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Office Automation Systems (OAS)

Computer system, such as word processing, electronic mail system, and scheduling system, that is designed to increase the productivity of data workers in the office.

Type: Knowledge-level Inputs: Documents, Schedules Processing: Document Management, Scheduling, Communication Outputs: Documents; Schedules Users: Clerical Workers Example: Document Imaging System

Knowledge-level Systems

Word processing Document imaging E-mail / electronic calendars

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Decision Support Systems (DSS)

Information system at the management level of an organization that combines data and sophisticated analytical models or data analysis tools to support semi-structured and unstructured decision making.

Type: Management-levelInputs: Low Volume DataProcessing: Simulations, Analysis Outputs: Decision AnalysisUsers: Professionals, Staff ManagersDecision-making: Semi-structuredExample: : Sales Region Analysis

Management-level Systems

Sales and Marketing Manufacturing Finance Accounting Human Resources

Sales region analysis Production scheduling Cost analysis

Pricing / profitability analysis

Contract cost analysis

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Types of Decisions

1. Unstructured Decisions• Novel, non-routine decisions requiring judgment and insights• Examples: Approve capital budget; decide corporate

objectives

2. Structured Decisions• Routine decisions with definite procedures• Examples: Restock inventory; determine special offers to

customers

3. Semistructured Decisions• Only part of decision has clear-cut answers provided by accepted

procedures • Examples: Allocate resources to managers; develop a

marketing plan

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Characteristics of Decision-Support Systems

1. DSS offer users flexibility, adaptability, and a quick response.

2. DSS operate with little or no assistance from professional programmers.

3. DSS provide support for decisions and problems whose solutions cannot be specified in advance.

4. DSS use sophisticated data analysis and modelling tools.

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Management Information Systems(MIS)

Information system at the management level of an organization that serves the functions of planning, controlling, and decision making by providing routine summary and exception reports.

Type: Management-level Inputs: High volume data Processing: Simple models outputs: Summary reports Users: Middle managers Decision-making: Structured to semi-structured Example: Annual budgeting, Capital investment

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Characteristics of Management Information Systems

1. Support structured decisions at the operational and management control levels. However, they are also useful for planning purposes of senior management staff.

2. Its reporting and control oriented and help provide day-to-day control of operations.

3. It rely an existing corporate data-and data flows.4. It have little analytical capability.5. It generally aid in decision making using past and present data.6. It are relatively inflexible.

7. It have an internal rather than an external orientation.

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Executive Support Systems (ESS))

Information system at the strategic level of an organization that address unstructured decision making through advanced graphics and communications.

Type: Strategic Level Inputs: Aggregate Data; Internal And External Processing: Interactive Outputs: Projections Users: Senior Managers Decision-making: Highly Unstructured Example: 5 year operating plan

Strategic-level Systems

Sales and Marketing

Manufacturing Finance Accounting Human Resources

5-year sales trend forecasting

5-year operating plan

5-year budget forecasting

Profit planning

Personnel planning

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Major Types of Information Systems

S t r a t e g i c L e v e l S y s t e m s5 - y e a r

s a l e s t r e n df o r e c a s t i n g

5 - y e a ro p e r a t i n g

p l a n

5 - y e a rb u d g e t

f o r e c a s t i n g

P r o f i tp l a n n i n g

M a n p o w e rp l a n n i n g

M a n a g e m e n t - L e v e l S y s t e m sS a l e sm a n a g e m e n t

S a l e s r e g i o na n a l y s i s

I n v e n t o r yC o n t r o l

P r o d u c t i o nS c h e d u l i n g

A n n u a lb u d g e t i n g

C o s ta n a l y s i s

C a p i t a lI n v e s t m e n t a n a l y s i s

P r i c i n g / p r o f i t a b i l i t ya n a l y s i s

R e l o c a t i o na n a l y s i s

C o n t r a c t c o s ta n a l y s i s

K n o w l e d g e - L e v e l S y s t e m sE n g i n e e r i n gw o r k s t a t i o n s

W o r dp r o c e s s i n g

G r a p h i c sw o r k s t a t i o n s

D o c u m e n tI m a g i n g

M a n a g e r i a lw o r k s t a t i o n s

E l e c t r o n i cC a l e n d a r s

O p e r a t i o n a l L e v e l S y s t e m s

O r d e r T r a c k i n g

O r d e r p r o c e s s i n g

M a c h i n e c o n t r o l

P l a n t s c h e d u l i n g

M a t e r i a l m o v e m e n tc o n t r o l

S e c u r i t i e st r a d i n g

C a s hm a n a g e m e n t

P a y r o l l

A c c o u n t s p a y a b l e

A c c o u n t s r e c e i v a b l e

C o m p e n s a t i o n

T r a i n i n g & d e v e l o p m e n t

E m p l o y e e r e c o r d k e e p i n g

T Y P E S O F S Y S T E M S

E S S

M I S

D S S

K W S

O A S

T P S

S a l e s a n dm a r k e t i n g

M a n u f a c t u r i n g F i n a n c e A c c o u n t i n g H u m a nR e s o u r c e s

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Expert System

An expert system is a computer program that represents and reasons with knowledge of some specialist subject with a view to solving problems or giving advice.

Possess knowledge

Specific domain

Solving problem or giving advice

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Expert Systems Features

Expertise Capable of making expert level decisions

Deep knowledge Knowledge base contains complex knowledge

Self-knowledge Able to examine own reasoning Explain why conclusion reached

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Major Components of Expert Systems

Three major components

1. Knowledge base Facts Special heuristics to direct use of knowledge the software that represents the knowledge

2. Inference engine Brain Control structure Rule interpreter The reasoning mechanism that draws conclusions (the

interpreter or control structure)

3. User interface

Language processor The hardware and software that provide the dialog between user and

the computer

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LIMITATIONS

Knowledge not always readily available Difficult to extract expertise from humans

Approaches vary Natural cognitive limitations Vocabulary limited Wrong recommendations

Lack of end-user trust Knowledge subject to biases Systems may not be able to arrive at conclusions

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Benefits of Expert Systems

Increased outputs Increased productivity Decreased decision-making time Increased process and product quality Reduced downtime Capture of scarce expertise Flexibility Ease of complex equipment operation Elimination of expensive monitoring equipment Operation in hazardous environments Access to knowledge and help desks

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Ability to work with incomplete, imprecise, uncertain data Provides training Enhanced problem solving and decision-making Rapid feedback Facilitate communications Reliable decision quality Ability to solve complex problems Ease of knowledge transfer to remote locations Provides intelligent capabilities to other information systems

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E.S in Business Applications Finance

Insurance evaluation, credit analysis, tax planning, financial planning and reporting, performance evaluation

Data processing Systems planning, equipment maintenance, vendor

evaluation, network management Marketing

Customer-relationship management, market analysis, product planning

Human resources HR planning, performance evaluation, scheduling,

pension management, legal advising Manufacturing

Production planning, quality management, product design, equipment maintenance and repair

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Functional Examples

Examples of IS by function: Sales and marketing Manufacturing and production Finance and accounting Human resources

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Classification of ISby Functional Area

The accounting information system

The finance information system

The manufacturing (operations, production) information system

The marketing information system

The human resources information system

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Sales & Marketing Systems

Systems that help the firm identify customers for the firm’s products or services, develop products and services to meet customer’s needs, promote products and services, sell the products and services, and provide ongoing customer support.

EXAMPLESSystem Description Organizational LevelOrder processing Enter, process, and track orders OperationalMarket analysis Identify customers and markets using Knowledge

data on demographics, markets,consumer behavior, and trends

Pricing analysis Determine prices for products Managementand services

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Manufacturing and Production Systems

Systems that deal with the planning, development, and production

of products and services and with controlling the flow of production.

ExamplesSystem Description Organizational LevelMachine control Control the actions of machines Operational

and equipmentComputer-aided design (CAD) Design new products using Knowledge

the computerProduction planning Decide when and how many Management

products should be producedFacilities location Decide where to locate new Strategic

production facilities

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Finance and Accounting Systems

Systems that keep track of the firm’s financial assets and fund flows.

ExamplesSystem Description Organizational Level

Accounts receivable Track money owed the firm OperationalPortfolio analysis Design the firm's portfolio of investments KnowledgeBudgeting Prepare short-term budgets ManagementProfit planning Plan long-term profits Strategic

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Human Resources Systems

Systems that maintain employee records; Track employee skills, job performance, and training; And support planning for employee compensation and career development.

ExamplesSystem Description Organizational Level

Training and development Track employae training, skills, Operationaland performance appraisals

Career pathing Design career paths for employees KnowledgeCompensation analysis Monitor the range and distribution Management

ofemployee wages, salaries, and bene6csHuman resources planning Plan the long-term labor force needs Strategic

of the organization