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

2. 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.

3. 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

4. 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.

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

6. …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.

7. Data Versus Information

8. Data Versus Information (cont’d.)

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

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

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

12. 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.

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

14. 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.

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

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

17. 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

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

19. 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

20. 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

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

22. 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

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

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

25. 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

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

27. Figure 14.4: Statistics

28. Figure 14.5: Typical Visual Displays Used in Business Presentations

29. 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

30. 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

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

32. 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

33. Table 14.2: Current Business Application Software

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

35. 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

36. 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,

37. 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

38. 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

39. Table 14.3: Tips for Website Development

40. 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.

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

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

43. Figure 14.6: Combining e-Business Resources

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

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

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

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

48. 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

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

50. Figure 14.8: Internal and External Forces That Affect an eBusiness

51. 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

52. 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:
Fast Company:
The Industry Standard:
CNET News:
ZDNet:

53. 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.

54. 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.

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

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

57. 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.