Understand how organizations use business information

Understand How Organizations Use Business Information

Types of information

● Quantitativea. Data or information which are measured numerically

b. Content of arsenic in water

c. Content of sugar in packed coffee

d. Prices of phones of having 1 gb ram

e. Number of attendees on seminar

f. Number of student who secured grade A


● Qualitativea. Not numeric data or information based on quality of an item or object

b. Quality of food in restaurant eg : good, bad, awful etc

c. Forming opinion while testing something is qualitative information


● Primarya. Information that you collect yourself

b. Any organization or person directly involved to gather information

c. More reliable and accurate

d. Obtaining primary information is more expensive

e. Needs to be collect store and analyse yourself

f. Carrying out the survey of your product


● Secondarya. Information that you have collected from secondary source (outside your organization)

b. More risky than primary source as you are relying on external entity

c. Can be collected from reliable source : Governmental entity

d. If you are using web you may get false data or information

Purpose of Information

● Operational Support

● Analysis

● Decision Making

● Gaining Commercial Advantage


● Operational Support○ Organization uses information to support their operations and day to day activity

○ Uses operational support to monitor and control activity within business

○ Company can measure the style of jeans sell in different location

○ If particular item sells is high then it may maximize its supply on that location

○ Sales may change marketing strategy

○ Sales can also affect on stock item which may provide information to produce item


● To find Pattern or Trends○ By identifying patterns and trends companies are able to maximize profit and minimize

losses

○ Using wrapper instead of box while packaging goods may increase profit from every item

○ Suggesting people also buys in Amazon has increased sales a lot


● Decision Making○ Helps in different levels of organization: operation, tactical and strategic

○ Operation : People who involves in day to day activity eg Team Lead

■ Team Lead may approach to provide machine to developers

○ Tactical : Mid level manager eg : Development Managers

■ HOD may provide training to team about Agile Development

■ Decision making may need involvement of Executive Member

○ Strategic: Executive member

■ Long term plan

■ Particular company's goal may be to serve the client rather than going to build

product


● Gaining Commercial Advantage○ A company can merge another company which is going out of business before another

competitor.

○ Stocking a new tech item first by creating a partnership with the manufacturer and the

being the first business to sell in your area.

Sources of Information

● Internal○ Financial

○ Personnel

○ Marketing

○ Purchasing

○ Sales

○ Manufacturing

○ Administration

Internal Sources of Information

● Financial○ Information related to the company's performance, profit and loss

○ To monitor the financial statement need Financial controller(Accountant, Auditor etc)

○ Financial controller provides the information to ensure that the business continues to

operate and generate profit.


● Personnel○ Information related to person inside the organization

○ This should be freely available once any employee has requested

○ Time of performance appraisal, performance of employee, Job description, Insurance

policy, salary range, seminar, recreational events, holidays.

○ Duration of employee has worked in company at any positions

○ Productivity rate of an employee to provide bonus and appraisal

○ Company also need to get proof of qualification from employees to ensure that they are

suitably qualified for certain position on entry to company.

○ Employee can progress within the company after their information is updated with any

internal or external trainings programs that relate to their job.


● Marketing○ Marketing team identifies the success rate of certain product in market by gathering

information whether the user like or dislike the product

○ Marketing team gathers information related to product by the means of surveys or by

external means.

○ Marketing information can be used to streamline or improve your business and keep

customers happy


● Purchasing○ Purchasing department is responsible for keeping records of purchased product to run

day to day business

○ Responsible for the buying product in best deal to maximize the profits

○ Purchasing department needs to monitor the cost and quality of all purchased goods.


● Sales ○ Just like the purchasing information sales information needs to be monitored based on

the products or services offered by the company

○ Financial controllers needs to make sure that the product’s manufactured price should be

less than the sales price

○ If the sales of the certain product is less then, it needs to be notified to marketing team for

maximize the advertisement


● Manufacturing ○ Information about the cost of manufacturing goods within the company.

○ Machinery cost + wages paid to staff + raw materials = Manufacturing cost


● Administration ○ Administration information links very much with personnel information but also involves

communicating with external sources and storing information on customers to build

successful relationships with them

External Sources of Information

● Administration

● Government

● Trade Groupings

● Commercially Provided

● Databases and Research


● Government○ Reliable sources of information

○ Needs to up to date with the government rules and policy

○ Eg Government may have declared to certain wages range to employee then it changed.

Company should be aware of that.

○ If Government may provide business grants to open the manufacturing plants in the

region which have most unemployment rate, then company can install new plant in that

region to maximize the business.


● Government○ Reliable sources of information

○ Needs to up to date with the government rules and policy

○ Eg Government may have declared to certain wages range to employee then it changed.

Company should be aware of that.

○ If Government may provide business grants to open the manufacturing plants in the

region which have most unemployment rate, then company can install new plant in that

region to maximize the business.


● Trade Groupings○ Is a group of businesses that operate within the same sector and not within the same

location.

○ Tech companies would be part of the technical trade association

○ Farmers might be part of the Farming Association

○ As being member of trade groupings enables you to access information that helps you

run your business successfully.


● Commercially Provided○ Companies can use commercially provided information to help them make the correct

business decisions.

○ These decisions are made based on information made available to them from other

companies

○ Eg. Game company can decide which platform to target for new games according to the

sales of smartphone(Samsung S8 sales may be more than the IphoneX. Then Game

company can target game for S8).


● Database and Research○ Many company provides information based on the sector of business

○ Companies can research information that might help them increase the sales and level of

interest in their business.

○ The key things to researching information that helps run your business to ensure it is

accurate and reliable.

○ Some company sales the information related to the current marketing sales in particular

region.

Characteristics of good Information

● Valid

● Reliable

● Timely

● fit -for-purpose

● Accessible

● Cost-effective

● Sufficiently accurate

● Relevant

● Having the right level of detail

● From a source in which user has confidence

● Understandable by the user


● Valid○ Correct and can be used for the purpose that it is needed

○ Information supplied by governing body.

○ Tax rates provided by Inland Revenue Department Nepal is valid information


● Reliable○ Information that you can rely on as being correct

○ Information provided by the company's internal department is reliable source

○ Last month's sales in company provided by sales department

● Timely

○ Information from correct time period

○ If a company wants to analyse current profit and loss then they will need to access current

sales figures and not the sales figures from 10 years ago.

○ If manager needed to check the sales figures for today, timely information would be

information that they could print from a cash register immediately at any time during the

day.


● Fit for Purpose○ It is relevant to what you need it for

○ If any software company is trying to open offshore company where the operating cost is

low. Then the city who has lowest wages rate will be best fit rather than the Silicon Valley.

○ If you were opening a business in London then it would be advisable to look at the

population within the certain area beside where you wanted to open the business. Looking

at information about the population of Papua New Guinea would not really be fit for

purpose in this instance.


● Accessible○ Information that is stored in way that it can be easily accessed at any time.

○ If you need consensus about literacy rate of Nepal, it took 5 days to provide information

then it’s not easily accessible

○ As users needed to have information available to them as and when they need it

● Cost Effective

○ Information that is worth investing the time and money to get help make business

decisions.

○ If it the survey cost $1000 and using that information increased the sales by $1500 next

month would be seen as cost effective rather company invested $50K and next month

sales is increased by $100.


● Sufficiently Accurate○ Accurate information helps businesses make the correct decisions.

○ If the speedometer in your car was out by 20mph then this information may result in you

breaking the law.

○ If a sales department sent inaccurate sales figures to the finance department this might

result in incorrect tax calculations for the company that would put them in danger.

● Relevant

○ Information that is directly related to your business need.

○ If a business was looking to cut costs they might look at their electricity bill and try to see

where they could save money.

○ If a bakery was looking at the price of metal then this would not really be relevant

information to their business. Relevant information for a bakery would be looking at the

price of ingredients to use in their products.


● Having the right level of detail○ If someone requests information from you having the correct level of detail is very

important

○ If a manager wants the summary of sales figures for past 6 months, then the information

that has the right level of detail might show the overall sales figures for each month and

the grand total added together.

○ Giving the manager a complete list of all sales for every product you sold in the six month

period in a 1000 page report would be seen as having not right detail and would not really

be a summary.

○ When presenting information it is important to understand what exactly the person

requesting the information needs.


● From a source in which the user has confidence○ Information must be used from the reliable and trustworthy source.

○ Information about the consensus of Nepal got from wikipedia may not be exactly same

but from the Central Bureau of Statistics would be reliable and trustworthy source.

● Understandable by the user○ If financial person wants the total sales of this month of particular product then total

amount added and presented in tabular form would be understandable by the user.

Business Functional Areas

● Sales

● Purchasing

● Manufacturing

● Marketing

● Finance

● Personnel

● Administration

Information Flows

- Internal information flows

- Information Flows to External Body

Information flows

- Internal information flows- Upward Flows

- Originate at the lower levels of organisation and pass up to the higher levels.

- Downward Flows

- Flows reverse, with information originating at the management level and flowing to

the lower levels. Eg. Instructions from a manager on how a worker should prioritise

the various tasks to be completed

- Flows Across

- Flows across the organization stay at the same level but pass between staff, for

example in different departments.

Technology

Understand how organizations use business information