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Before solving the problem, a manager is expected to weigh, how the overall
system will respond to changes in its components part. The system approach to
management is more of a thought process that helps manager solve a problem.
To solve a problem, managers must view the organization as a dynamic
integrated unit and should anticipate the intended as well as unintended impacts
of their decisions.
Illustration:
Problem: Long delays between receipts of orders and delivery.
Every organization needs effective decision making to reach its objective and
goals. Problem solving is the critical activity for any business organization. A
well-known model developed by Herbert Simon divides decision making phase of
the problem solving into three stages: intelligence, design and choice. George
Huber later incorporated this model into the entire problem solving process.
• Monitoring Stage: is the final stage of problem solving process, during which
decision maker evaluate the implementation.
Intelligence
Choice
Problem Solving
Implementation
Monitoring
CLASSIFICATION OF DECISIONS
• Individual and Group Decisions: individual decisions are the decisions taken
by the managers, who assume full responsibility for the consequences of
such decisions. They may get information, factual analytical report, pros and
cons of alternatives and suggested course of actions from sub-ordinates or at
times from exclusive committees. However, the responsibility and the
authority or the onus of making final decision rests with the concerned
individual. S/he cannot delegate or abdicate this authority.
On the other hand, in the case of group decisions, several of the managers
jointly deliberate on the problem, information & alternatives and hammer out a
decision for which they assume collective responsibility. The decision-making
function and process get rich enrichment by pooling of the diverse expertise,
knowledge authority and perspectives represented by the group. Elaborate
group deliberation and consideration of alternative course of action with
varied point of views tend to ensure that decisions are of high quality and also
their implementation becomes easier. The disadvantages of group decision-
making are – delays in decision-making, lack of rationality and responsibility
among group members, dilution of the quality of decisions due to compromise
and conformity among members of the group.
STRUCTURE OF MIS
• Top down approach: The top down approach assumes a high degree of top
management involvement in the planning process and focuses on
organizational goals, objectives and strategies. The top management
develops a corporate plan as a guide for designing information system. The
various stages in top down approach are –
a) Analyze the objectives and goals of the organization to formulate policies
and plan and communicate them down the line to middle and supervisory
management for translating them into reality. The analyses may be in the
area of profits and growth, expansion of product lines and services,
diversification, increased market share etc. It also determines the
availability of resources in terms of capital, equipment and raw material.
b) Identify the functions of the departments (Marketing, production, human
resource, finance, research and development) and explain how they
support the organization.
c) Ascertain the major activities, decisions and functions of the managers at
various levels of hierarchy. Determine what, who and when the decisions
should be made.
d) Identify and supply models that guide managerial decision processes.
Provide with the information required for various activities and decisions.
e) Prepare specific information processing modules and identify files and
database for application.
A system, as we all know, is simply a set of components that interact to accomplish the
desired purpose. A business is also a system. It comprises of marketing, manufacturing,
sales, research, shipping, accounting, and personnel – all working together towards
achieving the business targets. Each of these can itself be classified as subsystem.
The purposes of the business information system are to process, input, maintain files and
produce information, reports and other outputs. Depending upon the mangers need the
business information system can be classified into –
• Transaction Processing System (TPS)
• Management Information System (MIS)
• Decision Support System (DSS)
• Office Automation System (OAS)
• Executive Information System (EIS)
TRANSACTION PROCESSING SYSTEMS
• Addresses routine questions
- How many inventory items are there in the inventory?
- What is the total payroll?
• Keeps track of flow of transaction – operations oriented
• Spans the boundary between the organization and its environment
Review questions:
Readings:
Management Information Systems – James O’Brien
Management Information Systems – Jerome Kanter
Introduction to Business Information System – Rolf T Wigand and others – chapter7
Analysis and Design of Information System – V. Raja Raman
Information Systems – Hussain and Hussain