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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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1 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Six Understanding Information and e-Business 6 | 1 PRIDE HUGHES KAPOOR INTRODUCTION TO BUSINESS ELEVENTH EDITION

2 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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 computers and technology help improve productivity, in decision making, communications, sales, and recruiting and training. 6 | 2

3 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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. 6 | 3

4 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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’s profits 6 | 4

5 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. How Can Information Reduce Risk When Making a Decision? The Relationship Between Information and Risk 6 | 5 Figure 6.1

6 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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 6 | 6

7 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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 and information 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 6 | 7

8 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What is a Management Information System?  Management information system (MIS) A system that provides managers and employees with the information they need to perform their jobs as effectively as possible Purpose: to distribute timely and useful information to the decision makers 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 6 | 8

9 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Management Information System (MIS) Source: Ricky W. Griffin, Management, 10/e (Mason, OH: Cengage Learning, 2011). Reprinted by permission. 6 | 9 Figure 6.2

10 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What is a Management Information System? (cont’d)  A firm’s information requirements Summary of future possibilities Summary of present situation Summary of past performance Information about five areas of management: finance, operations, marketing, human resources, and administration  Size and complexity of the system Must be properly sized to provide sufficient information resources without being simple or too complex to be useful 6 | 10

11 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Five Management Information System Functions Every MIS must be tailored to the organization it serves and must perform five functions 6 | 11 Figure 6.3

12 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. How Do Employees Use a Management Information System?  Collecting data Data should be relevant and accurate Internal sources -Managers and employees, company records and reports, minutes of meetings, accounting data, sales data, HR data, production data External sources -Customers, suppliers, bankers, trade and business publications, industry conferences, online computer services, government sources, firms specializing in gathering data Cautions -The cost of obtaining data from some external sources can be quite high -Outdated or incomplete data usually yield inaccurate information -Check computer data (or information) if you disagree with it 6 | 12

13 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. More Computers in Record Numbers Source: The Computer Industry Almanac, Inc. Web site at www.c-i-a.com, accessed May 25, 2010. 6 | 13

14 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. How Do Employees Use a Management 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 6 | 14

15 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. How Do Employees Use a Management 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 6 | 15

16 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. How Do Employees Use a Management Information System? (cont’d)  Presenting information Verbal information —list or paragraph form -A formal business report typically includes an introduction, the body of the report, conclusions, and recommendations Visual displays -Graphs, bar charts, pie charts Tabular displays -Verbal or numerical information presented in columns and rows 6 | 16

17 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Typical Visual Displays Used in Business Presentations 6 | 17 Figure 6.4

18 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Typical Visual Displays Used in Business Presentations (cont’d) 6 | 18 Figure 6.4

19 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Typical Three-Column Table Used in Business Presentations 6 | 19 Table 6.1

20 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Improving Productivity with the Help of Computers and Technology  Areas of concern for a business include decision making, communications, sales, recruiting and training employees, business software applications, and virtual offices  Making smart decisions Three different applications can help to improve and speed the decision-making process for people at different levels within an organization -Decision support system (DSS) is a type of computer program that provides relevant data and information to help a firm’s employees make decisions -Executive information system (EIS) is a computer-based system that facilitates and supports the decision-making needs of top managers and senior executives -An expert system is a type of computer program that uses artificial intelligence 6 | 20

21 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Improving Productivity with the Help of Computers and Technology (cont’d)  Helping employees communicate E-mail—provides virtually instantaneous communication with other employees and customers Seven tips for effective use of e-mail -Most important: Think about what you say, message may be read by more people than the original recipient(s), don’t include anything you wouldn’t say face-to-face -Write perfect subject lines -One email, one subject -Keep emails short -Only use ALL CAPS for emphasis, represents shouting -Limit use of the “reply all” option, only reply to those who need to know -Reread the message before sending it 6 | 21

22 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Improving Productivity with the Help of Computers and Technology (cont’d)  Helping employees communicate (cont’d) Groupware—software that facilitates the management of large projects among geographically dispersed employees as well as such group activities as problem solving and brainstorming Collaborative learning system—a work environment that allows problem-solving participation by all team members  Assisting the firm’s sales force Customer-relationship management programs Sales force automation programs 6 | 22

23 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Improving Productivity with the Help of Computers and Technology (cont’d)  Training employees Reduced educational and training costs Increased flexibility and availability of training Faster transfer of information about changes in the firm’s policies and procedures  Recruiting employees Provides for a global recruiting reach, especially for individuals with unique skills Helps build a database of potential employees Reduces recruiting costs for initial applications and screening interviews 6 | 23

24 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Improving Productivity with the Help of Computers and Technology (cont’d)  Telecommuting, Virtual Offices, and Technology  Virtual office–allows employees to work any place where they have access to computers, software, and other technology that enables them to perform their normal work activities Benefits: -Higher job satisfaction and increased productivity -Greater independence and flexible work hours -No commuting saves costs and time -Lower employee turnover -New employment opportunities for people who can’t/won’t commute Challenges: -Feelings of isolation/exploitation -Working too many hours -Lack of support from managers -Inability to access needed information 6 | 24

25 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Improving Productivity with the Help of Computers and Technology (cont’d)  Business Applications Software Integrated software combines many applications (functions) in a single package -Allows the easy linking of text, numerical data, graphs, photos, audiovisual clips -Data entered into one application can be used in other applications within without having to re-enter it -Once one application is learned, it’s much easier to learn the other applications 6 | 25

26 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Current Business Application Software Used to Improve Productivity 6 | 26 Table 6.2

27 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Improving Productivity with the Help of Computers and Technology (cont’d)  Computer Backup and Disaster Recovery Lost data and information can threaten the existence of a firm and its ability to operate on a day-to-day basis Computer backup–process of storing data, information, and computer systems on secondary computer systems that can be accessed if a firm’s main computer system fails -Schedule data and information backups -Backup the computer system needed to access data -Keep backups offsite -Test backup systems -May be performed by employees or outside vendors 6 | 27

28 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Using Computers and the Internet to Obtain Information  Information society A society in which large groups of employees generate or depend on information to perform their jobs  The Internet and Networks Internet -A worldwide network of computers linked through telecommunications; used for e-business, communication, information gathering World Wide Web (the Web) -The Internet’s multimedia environment of audio, visual, and text data Broadband technology -General term referring to higher-speed Internet connections that deliver data, voice, and video material 6 | 28

29 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Using Computers and the Internet to Obtain Information (cont’d)  The Internet and Networks Network -A group of two or more computers linked together to share data and information Wide-area network (WAN) -A network that connects computers over a large geographic area -World’s most popular WAN is the Internet Local-area network (LAN) -A network that connects computers that are in close proximity; within a company, less commonly referred to as an Intranet 6 | 29

30 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Using Computers and the Internet to Obtain Information (cont’d)  Accessing the Internet Computers and software must be standardized so different systems can “talk” to each other in order to search for and obtain information Web site addresses -URL—Uniform Resource Locator -http—HyperText Transfer Protocol Web search engines -www.altavista.com; www.google.com; www.yahoo.com  Creating web sites Reflects the company image Should be kept current Most companies manage their sites internally but some pay an outside hosting service to provide site management 6 | 30

31 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Tips for Web Site 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 6 | 31

32 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Defining e-Business  e-Business (electronic 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  Organizing e-Business Resources Resources may be more specialized than in a typical business Outsourcing—The process of finding outside vendors and suppliers that provide professional help, parts, or materials at a lower cost. 6 | 32

33 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Combining e-Business Resources 6 | 33 Figure 6.5

34 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Defining e-Business (cont’d)  Satisfying Needs Online The Internet has created new customer needs E-business can satisfy those needs, as well as traditional ones -Global access to information and entertainment -Virtually unlimited selections of products -Opportunities for interaction -Individually custom-tailored content 6 | 34

35 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Defining e-Business (cont’d)  Creating e-Business Profit Increasing Sales Revenue Revenue stream–source of revenue flowing into a firm -Sales of merchandise online -Intelligent information systems to suggest purchases to repeat online customers -Increased sales in physical stores because of product information available online -Advertising on web pages -Subscription fees charged for access to online services and content 6 | 35

36 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Defining e-Business (cont’d)  Creating e-Business Profit (cont’d) Reducing expenses -Offering online services that -Reduce transaction costs -Provide information -Provide customer assistance -Reduces the costs of dealing with customers -Reduces the need for as many physical store locations 6 | 36

37 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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 Firms that use the Internet mainly to conduct business with other businesses -Facilitating sales transactions between businesses -Elicit bids and offers from suppliers and potential suppliers; learning about the customer’s rules and procedures. Expensive to start and maintain but savings are significant 6 | 37

38 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Fundamental Models of e-Business (cont’d)  Business-to-Consumer (B2C) model Firms that focus on conducting business with individual buyers Success comes from understanding how the customer behaves online to build good customer relationships 6 | 38

39 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Planning for a New Internet Business or Building an Online Presence for an Existing Business 6 | 39 Figure 6.6

40 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Other Business Models That Perform Specialized e-Business Activities 6 | 40 Table 6.4

41 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Future of Computer Technology, the Internet, and e-Business  The Internet and e-business will continue to expand along with related computer technologies  Internet Growth Potential Opportunity: only about 1.8 billion of the world’s nearly 7 billion people in the world use the Web Americans comprise 12 percent of all users Internet growth potential in the U.S. is limited since 73 percent of Americans already use it Projections indicate worldwide users will exceed 2.1 billion by 2012 Social network site–a Web site that functions like an online community of Internet users who share personal information, messages, photos, friends 6 | 41

42 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Future of Computer Technology, the Internet, and e-Business (cont’d)  Ethical and Legal Concerns Essentially the Internet is a new “frontier” without borders and without much control by governments or other organizations Ethics and Social Responsibility -Spamming -Log-file records -Data mining Internet Crime -Malware -Computer virus 6 | 42

43 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Future of Computer Technology, the Internet, and e-Business (cont’d)  Future Challenges for Computer Technology and E-Business More information is now available than ever before, its amount will only increase Businesses must consider more than the cost factors in using technology -Internal, more controllable by management: planning, organization structure, human resources, management decisions, information database, financing -Green IT: activities to support a healthy environment and sustain the planet -External: less controllable or not at all: globalization, economy, competition, politics 6 | 43

44 © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Internal and External Forces That Affect an e-Business 6 | 44 Figure 6.7


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