Understanding Information and e-Business Chapter 14 Understanding Information and e-Business

Learning Objectives Examine how information can reduce risk when making a decision. Discuss management’s information requirements. Outline the five functions of an information system. Describe how the Internet helps in decision making, communications, sales, and recruiting and training. Analyze how computers and technology change the way information is acquired, organized, and used. Explain the meaning of e-business.  Describe the fundamental models of e-business. Explore the factors that will affect the future of e-business.

Information and Risk Accurate/complete information = no risk Decision without information = gamble Information  = better decisions Information Rule: When research confirms the same results each time it studies the same circumstances

Figure 14.1: The Relationship Between Information and Risk When the amount of available information is high, managers tend to make better decisions. When the amount of information is low, managers have a higher risk of making a poor decision.

Data …numerical or verbal descriptions that usually result from some sort of measurement.

…data presented in a form that is useful for a specific purpose. Information …data presented in a form that is useful for a specific purpose.

Data Versus Information

Data Versus Information (cont’d.)

Knowledge Management …a firm’s procedures for generating, using, and sharing the data and information contained in the firm’s databases.

Database …a single collection of data stored in one place that can be used by people throughout an organization to make decisions.

Management Information System …a system that provides managers and employees with the information they need to perform their jobs as effectively as possible.

Figure 14.2: Management Information System (MIS) After an MIS is installed, a user can get information directly from it without having to go through other people in the organization.

Purpose of MIS/IT Distribute timely & useful information From internal & external sources To managers & employees who need it

Information Technology Officer …a manager at the executive level who is responsible for ensuring that a firm has the equipment necessary to provide the information the firm’s employees and managers need to make effective decisions.

Manager’s Information Requirements Plan for future Implement in present Evaluate the past Areas of management needing information Finance Operations Marketing Human resources Administration

Administrative Managers Make Sure... Information used in consistent manner Managers/employees receive skills training for using MIS Money available to update MIS when needed

Size/Complexity of System Mistakes Save on initial costs = system too small or overly simple Too large/complex = unused capacity and complexity Increased cost of owning & operating Probably difficult to use

Figure 14.3: Five Management Information System Functions Every MIS must be tailored to the organization it serves and must perform five functions.

Data Bank Should Include... Past/current data Relevant data Accurate data Internal sources Managers Employees Company records & reports Minutes of meetings External Sources Customers Suppliers Bankers Trade/financial publications Industry conferences Online computer services Government sources Data-gathering organizations

Data Cautions Cost of obtaining data from external sources can be high Outdated/incomplete data usually yield inaccurate information Computers generally do not make mistakes but people who use them can

Storing Data Method depends on size of organization Small: enter information directly to hard drive Medium to large: larger system through network

Updating Data Ensure information is accurate, complete, and up to date Frequency of update depends on speed of change and how often used May be updated according to predetermined schedule

Data Processing …the transformation of data into a form that is useful for a specific purpose.

Statistic …a measure that summarizes a particular character of an entire group of numbers.

Business Report Introduction Body Conclusions Recommendations Sets the stage Describes problem Identifies research techniques Previews material Body Objectively describes facts Is basis for conclusions/recommendations Conclusions Statements of fact on findings Specific, practical, based on evidence Recommendations How problem might be solved

Visual Display …a diagram that represents several items of information in a manner that makes comparison easier.

Figure 14.4: Statistics

Figure 14.5: Typical Visual Displays Used in Business Presentations

Making Smart Decisions Decision-Support System Provides relevant data/information to help firm’s employees make decisions Executive Information System Facilitates/supports decision-making needs of top managers by providing easy access to internal and external information Expert System Uses artificial intelligence to imitate human’s ability to think

Helping Employees Communicate Groupware Facilitates management of large projects among dispersed employees + group activities: problem solving, brainstorming Collaborative learning system Work environment that allows problem-solving participation by all team members

Customer- Relationship Management …programs focus on the special informational needs of sales personnel.

Recruiting and Training Employees Post employee needs on website Reach potential candidates around the globe Organize data in way most useful to the firm Internet education delivery

Table 14.2: Current Business Application Software

Information Society …a society in which large groups of employees generate or depend on information to perform their jobs.

Internet, Intranet, and Networks Internet: worldwide network of linked computers World Wide Web: Internet’s environment of audio, visual, and text data Internet Service Providers (ISPs) Broadband technology Intranet: small version of Internet used inside firm Computer network: 2+ computers linked, sharing data/information

in Percentage of Internet Users Top Ten Countries in Percentage of Internet Users Source: “Top 20 Countries with the Highest Number of Internet Users,” Internet World Stats—Usage and Population Statistics, 6/30/08, www.internetworldstats.com/top20.htm.

Computer Networks Wide-Area Network (WAN): connects computers over a large geographic area Local-Area Network (LAN): connects computers in close proximity to each other

Internet Terms Uniform Resource Locator (URL) Web Browser Hypertext Transfer Protocol: words or phrases highlighted or underlined on web page; link to other websites Search Engine

Table 14.3: Tips for Website Development

e-Business …the organized effort of individuals to produce and sell, for a profit, the products and services that satisfy society’s needs through the facilities available on the Internet.

Outsourcing …the process of finding outside vendors and suppliers that provide professional help, parts, or materials at a lower cost.

Assumptions for Satisfying Needs Online Internet has created new customer needs E-business can satisfy those needs and more traditional ones

Figure 14.6: Combining e-Business Resources

…a source of revenue flowing into a firm. Revenue Stream …a source of revenue flowing into a firm.

Online Revenue Streams Reaching new customers Intelligent information systems Information for comparative shopping Advertising & subscription fees Sponsors

Figure 14.7: Planning a New Internet Business or Online Presence for Existing Business

Business Model …represents a group of common characteristics and methods of doing business to generate sales revenues and reduce expenses.

Primary e-Business Models Business-to-Business (B2B): firms conduct business with other businesses Sales transactions between businesses Bidding on products and services Business-to-Consumer (B2C): firms conduct business with individual buyers

Table 14.4: Other Business Models that Perform Specialized e-Business Activities

Figure 14.8: Internal and External Forces That Affect an eBusiness

The Future of e-Business: Growth, Opportunities, and Challenges Internet, related technologies will continue to expand Opportunity: only 1.2 billion people of world’s nearly 7 billion are online U.S. = 17 percent of all users = largest group online Of 300 million U.S. population, 210 million use Internet; 140 million actively 70% of Americans using Internet; growth potential limited Projections: worldwide users to exceed 2 billion by 2012

Fast Company: www.fastcompany.com Using the Internet What do e-business players read to keep up to date on people, ideas, and trends in this fast-paced world? Wired: www.wired.com Fast Company: www.fastcompany.com The Industry Standard: www.thestandard.com CNET News: www.news.com ZDNet: www.zdnet.com

Chapter Quiz Data presented in a form useful for a specific purpose is factual data. information. statistical data. a computer information base. a computer network.

Chapter Quiz A type of software that facilitates the management of large projects among geographically dispersed employees is called database management. a spreadsheet. CIM. groupware. networking.

Chapter Quiz A(n)____________ is a smaller version of the Internet for use within a firm. WAN LAN Intranet Broadband ISP

Chapter Quiz The term that refers to buying and selling online is Internet business. e-business. online sales. e-marketing. e-sales.

Chapter Quiz Business firms that conduct business with other business firms are using a(n) B2B approach. B2C approach. profit revenue stream. marketing revenue stream. economic benefit revenue stream.