Chapter Sixteen. Learning Objectives
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1 Chapter Sixteen Understanding Information and e Business Learning Objectives 1. Examine how information can reduce risk when making a decision. 2. Discuss management s information requirements. 3. Outline the five functions of an information system. 4. Describe how the Internet helps in decision making, communications, sales, and recruiting and training. 16 2
2 Learning Objectives (cont d) 5. Analyze how computers and technology change the way information is acquired, organized, and used. 6. Explain the meaning of e business. 7. Describe the fundamental models of e business. 8. Explore the factors that will affect the future of e business Chapter 16 Outline How Can Information Reduce Risk When Making a Decision? Information and Risk Information Rules The Difference Between Data and Information What Is an Information System? Managers Information Requirements Size and Complexity of the System How Do Employees Use an Information System? Collecting Data Storing Data Updating Data Processing Data Presenting Information Using Business Research to Obtain Information Qualitative Research Quantitative Research Which Research Method to Choose 16 4
3 Chapter 16 Outline (cont d) Improving Productivity with the Help of Computers and Technology Making Smart Decisions i Helping Employees Communicate Assisting the Firm s Sales Force Recruiting and Training Employees Using Computers and the Internet to Obtain information The Internet, the Intranet, and Networks Accessing the Internet Creating Web Pages Defining e Business Organizing e Business Resources Satisfying Needs Online Creating e Business Profit 16 5 Chapter 16 Outline (cont d) Fundamental Models of e Business Business to Business B i (B2B)M Model Business to Consumer (B2C) Model The Future of e Business: Growth, Opportunities, and Challenges Internet Growth Potential Environmental Forces Affecting e Business 16 6
4 Introduction To improve the decision making process, the information used by both individuals and business firms must be Relevant Useful to meet a specific need Using relevant information results in better decisions For businesses, better intelligence and knowledge that lead to better decisions are especially important because they can provide a competitive edge over competitors and improve a firm sprofits 16 7 How Can Information Reduce Risk When Making a Decision? Information produces knowledge and empowers managers and employees to make better decisions The relationship between information and risk 16 8
5 How Can Information Reduce Risk When Making a Decision? (cont d) Information rules Information rules based on situational experience provide guidance in handling similar situations or circumstances Business research continuously looks for new rules since business conditions are always changing 16 9 How Can Information Reduce Risk When Making a Decision? (cont d) The difference between data and information Data Numerical or verbal descriptions that usually result from some sort of measurement Information Data presented in a form that is useful for a specific purpose Database A single collection of data stored in one place that can be used by people throughout an organization to make decisions Knowledge management (KM) A firm s procedures for generating, using, and sharing the data and information contained in the firm s databases 16 10
6 What Is a Management Information System? Management information system (MIS) Information technology officer What Is a Management Information System? (cont d) Managers information requirements Size and complexity of the system 16 12
7 How Do Employees Use an Information System? Collecting data Data should be relevant and accurate Internal sources External sources Cautions The cost of obtaining data from external sources should be weighed against the benefits Outdated data are likely to yield inaccurate information Check data, especially computerized data, for accuracy How Do Employees Use an Information System? (cont d) Storing data An MIS must be capable of storing data until they are needed Updating data Manual updating employee inputs fresh data into the database Automatic updating MIS updates itself as data become available 16 14
8 How Do Employees Use an Information System? (cont d) Processing data The transformation of data into a form useful for a specific purpose Statistics A measure that summarizes a particular characteristic of an entire group of numbers How Do Employees Use an Information System? (cont d) Presenting information Verbal information list or paragraph p form Visual displays Tabular displays 16 16
9 Improving Productivity with the Help of Computers and Technology Areas of concern for a business include decision making, communications, sales, recruiting and training employees, and business software applications Making smart decisions Three different applications can help to improve and speed the decisionmaking process for people at different levels within an organization Improving Productivity with Computers Helping employees communicate E mail Groupware Collaborative learning system Assisting the firm s sales force 16 18
10 Improving Productivity (cont d) Training employees Recruiting employees Business Applications Software Integrated software combines many functions in one package Database management Graphics Spreadsheets Word processing Desktop publishing Accounting Computer aided design (CAD) Computer aided manufacturing (CAM) Computer integrated manufacturing (CIM) 16 20
11 Using Computers and the Internet to Obtain Information Information society The Internet, the Intranet, and Networks Internet Intranet Networks Using Computers and the Internet to Obtain Information (cont d) WAN (Wide area network) LAN (Local area network) 16 22
12 Using Computers and the Internet (cont d) Accessing the Internet Website addresses URL Uniform Resource Locator http HyperText Transfer Protocol Web search engines Software for creating web pages Developing a website Hosting a website Tips for Website Development Develop a theme Determine how much information to include on your site Plan the layout of your site Add graphics Outline the material for each page Develop plans to update the site Make sure your site is easy to use 16 24
13 Defining e Business e Business (electronic business) e Commerce Outsourcing Satisfying Needs Online The Internet has created new customer needs E business can satisfy those needs as well as traditional ones 16 26
14 Creating e Business Profit Revenue growth Expense reduction Fundamental Models of e Business Business model A group of common characteristics and methods of doing business to generate sales revenues and reduce expenses Business to Business (B2B) model Business to Consumer (B2C) model 16 28
15 The Future of e Business: Growth, Opportunities, and Challenges The Internet will continue to expand along with related technologies Opportunity: Only 1.2 billion of the world s nearly 7 billion people are online Americans comprise 17 percent of all users the largest group online. Of the 300 million people making up the American population, 210 million use the Internet 140 million actively With approximately 70% of Americans already using the Internet, growth potential in the U.S. is limited Projections indicate worldwide users will exceed 2 billion by 2011 or Environmental Forces Affecting e Business Globalization Positive: Drawing people of the world together Negative: A threat to national cultures, identities, languages, ways of life Convergence of technologies The overlapping capabilities and the merging of products and services into one fully integrated interactive system 16 30
16 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.1 The Relationship Between Information and Risk 217 The Relationship Between Information and Risk More risk Less Information More Less risk 3768X_16_ch16_p indd 217 3/6/09 8:57:52 PM
17 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.2 Management Information System (MIS) 218 Management Information System (MIS) MANAGEMENT INFORMATION SYSTEM Integrated database capable of receiving, organizing, summarizing, and calculating data and information from functional areas, and providing information to managers from functional areas networked into the system Finance Operations Marketing Human resources Administration Source: Ricky W. Griffin, Management, 9/e (Boston: Houghton Mifflin Company, 2008). Reprinted by permission. 3768X_16_ch16_p indd 218 3/6/09 8:57:52 PM
18 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.3 Five Management Information System Functions Five Management Information System Functions Collects data 2 Stores data 3 Updates data 4 Processes data into information 5 Presents information to users 3768X_16_ch16_p indd 219 3/6/09 8:57:53 PM
19 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.4 Statistics 220 Statistics Sky Cloud Manufacturing Employee Salaries for April 2008 Employee Monthly Salary Thomas P. Ouimet Marina Ruiz Ronald F. Washington Sarah H. Abrams Kathleen L. Norton Martin C. Hess Jane Chang Margaret S. Fernandez John F. O Malley Robert Miller William G. Dorfmann Total $ 3,500 3,500 3,000 3,000 3,000 2,800 2,500 2,400 2,000 2,000 1,800 $29, X_16_ch16_p indd 220 3/6/09 8:57:53 PM
20 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.5 Typical Visual Displays Used in Business Presentations 221 Typical Visual Displays Used in Business Presentations $700,000 GRAPH 600, ,000 Sales 400, , , , (est.) BAR CHART Profits for the period , in millions $4.5 PIE CHART Sales figures for selected products of Martin Manufacturing $3.1 $2.0 $2.6 $1.7 Answering machines 40% Hair dryers 35% $1.2 Lamps 10% Radios 15% (est.) 3768X_16_ch16_p indd 221 3/6/09 8:57:53 PM
21 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.6 Combining e-business Resources 222 Combining e-business Resources HUMAN RESOURCES Website designers Programmers Web masters INFORMATIONAL RESOURCES Customer tracking systems Order fulfillment and tracking systems Online content-monitoring systems BUSINESS MATERIAL RESOURCES FINANCIAL RESOURCES Computers Software High-speed Internet connection lines Investors interested in supporting e-business firms Electronic payment from customers 3768X_16_ch16_p indd 222 3/6/09 8:57:54 PM
22 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.7 Planning for a New Internet Business or Building an Online Presence for an Existing Business 223 Planning for a New Internet Business or Building an Online Presence for an Existing Business Will the new e-business provide a product or service that meets customer needs? Who are the new firm s potential customers? How do promotion, pricing, and distribution affect the new e-business? Will the potential market generate enough sales and profits to justify the risk of starting an e-business? Is going online a logical way to increase sales and profits for the existing business? Are potential online customers different from the firm s traditional customers? Will the new e-business activities complement the firm s traditional activities? Does the firm have the time, talent, and financial resources to develop an online presence? Starting a new Internet business Building an online presence for an existing business SUCCESSFUL E-BUSINESS PLANNING 3768X_16_ch16_p indd 223 3/6/09 8:57:54 PM
23 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.8 Internal and External Forces That Affect an e-business 224 Internal and External Forces That Affect an e-business External forces Globalization Legal issues Available financing Internal forces Planning activities Organizational structure Demographic factors Political forces Information database Successful e-business Human resources Society Technology Management decisions The economy Competition 3768X_16_ch16_p indd 224 3/6/09 8:57:54 PM
24 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.A Chapter Outline 225 Chapter 16 Outline Understanding Information and e-business How Can Information Reduce Risk When Making a Decision? Information and Risk Information Rules The Difference Between Data and Information What Is an Information System? Managers Information Requirements Size and Complexity of the System How Do Employees Use an Information System? Collecting Data Storing Data Updating Data Processing Data Presenting Information Using Business Research to Obtain Information Qualitative Research Quantitative Research Which Research Method to Choose Improving Productivity with the Help of Computers and Technology Making Smart Decisions Helping Employees Communicate Assisting the Firm s Sales Force Recruiting and Training Employees Using Computers and the Internet to Obtain information The Internet, the Intranet, and Networks Accessing the Internet Creating Web Pages Defining e-business Organizing e-business Resources Satisfying Needs Online Creating e-business Profit Fundamental Models of e-business Business-to-Business (B2B) Model Business-to-Consumer (B2C) Model The Future of e-business: Growth, Opportunities, and Challenges Internet Growth Potential Environmental Forces Affecting e-business 3768X_16_ch16_p indd 225 3/6/09 8:57:55 PM
25 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.B Class Exercise Class Exercise 226 When using a management information system, the first step is to collect the data needed to establish the firm s database. What is the most appropriate source that could be used to answer the following questions? 1. How successful has a new promotional campaign been? 2. How much does a competitor charge for a particular product? 3. What is the current population of the state of Arizona? 4. How do customers view the new pricing policy? 5. What is the average salary for employees in the shipping department? 3768X_16_ch16_p indd 226 3/6/09 8:57:55 PM
26 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.C Debate Issue 227 Debate Issue Should computers monitor employee performance? YES NO Some employees view computer monitoring as an unbiased appraisal of their work for which they will be paid accordingly. Computer monitoring is an improvement over a human s subjective evaluation. Good or bad, computer monitoring is here to stay. Employees view computer monitoring as an invasion of privacy. Firms that use computer monitoring experience higher turnover. A computer cannot measure courtesy, carefulness, personal attention, and quality. 3768X_16_ch16_p indd 227 3/6/09 8:57:55 PM
27 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.D Chapter Quiz Chapter Quiz Data presented in a form useful for a specific purpose is a. factual data. b. information. c. statistical data. d. a computer information base. e. a computer network. 2. A type of software that facilities the management of large projects among geographically dispersed employees is called a. database management. b. a spreadsheet. c. CIM. d. groupware. e. networking. 3. A(n) is a smaller version of the Internet for use within a firm. a. WAN b. LAN c. Intranet d. broadband e. ISP 4. The term that refers to buying and selling activities conducted online is a. Internet business. b. e-commerce. c. online sales. d. e-marketing. e. e-sales. 5. Business firms that conduct business with other business firms are using a a. B2B approach. b. B2C approach. c. profit revenue stream. d. marketing revenue stream. e. economic benefit revenue stream. 3768X_16_ch16_p indd 228 3/6/09 8:57:55 PM
28 Pride/Hughes/Kapoor, BUSINESS, 10th edition 229 Figure 16.E The Results of Installing a Management Information System The Results of Installing a Management Information System 3768X_16_ch16_p indd 229 3/6/09 8:57:55 PM
29 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.F Sources of Data Sources of Data 230 INTERNAL Managers and employees Company records Company reports Minutes of meetings Accounting data and sales reports Present and past production forecasts EXTERNAL Customers Suppliers Bankers Trade publications Industry conferences Online computer services Other firms that specialize in gathering data 3768X_16_ch16_p indd 230 3/6/09 8:58:00 PM
30 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.G Managing Internet Activities 231 Improving Productivity with Internet Activities Typical areas of concern for a business using the Internet include Making smart decisions Helping employees communicate Assisting the firm s sales force Training employees Recruiting employees Tracking employee expenses 3768X_16_ch16_p indd 231 3/6/09 8:58:00 PM
31 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.H A Description of Current Business Application Software 232 Current Business Application Software DATABASE MANAGEMENT programs allow users to electronically store large amounts of data and to transform the data into information. GRAPHICS programs enable users to display and print pictures, drawings, charts, and diagrams. SPREADSHEET programs allow users to organize numerical data into a grid of rows and columns. WORD PROCESSING programs allow users to prepare and edit written documents and to store them in the computer or on a disk. DESKTOP PUBLISHING programs enable users to combine text and graphics in reports, newsletters, and pamphlets. ACCOUNTING programs enable users to record, process, and report financial information. 3768X_16_ch16_p indd 232 3/6/09 8:58:00 PM
32 Pride/Hughes/Kapoor, BUSINESS, 10th edition Figure 16.I The Three Primary Groups of e-businesses 233 The Three Primary Groups of e-businesses 3768X_16_ch16_p indd 233 3/9/09 9:17:20 PM
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