Characteristics of MIS:
These are desirable characteristics of an MIS:
- An MIS supports transaction handling and record keeping.
- An MIS uses an integrated database and supports a variety of functional areas.
- An MIS provides operational-, tactical-, and strategic-level managers with east access to timely but, for the most, structured information.
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An MIS is somewhat flexible and can be adapted to meet the changing information needs of the organization.
An MIS can boost system security by limiting access to authorized personnel.
The functional support role of MIS:
The business process and operations support function is the most basic. It involves collecting, recording, storing, and basic processing of data. Information systems support business processes and operations by:
- Recording and storing sales data, purchase data, investment data, payroll data and other accounting records.
- Processing these accounting records into income statements, balance sheets, ledgers, management reports, and other forms of financial information.
- Recording and storing inventory data, work in process data, equipment repair and maintenance data, supply chain data, and other production/operations records.
- Processing these operations records into production schedules, production controllers, inventory systems, and production monitoring systems.
- Recording and storing personnel data, salary data, employee expense reports, and performance based reports.
- Recording and storing market data, customer profiles, customer purchase histories, marketing research data, advertising data, and other marketing records.
- Processing these marketing records into advertising elasticity reports, marketing plans, and sales activity reports.
- Recording and storing business intelligence data, competitor analysis data, industry data, corporate objectives, and other strategic management records.
- Processing these strategic management records into industry trends reports, market share reports, mission statements, and portfolio models.
- Use all of the above to implement, control, and monitor plans, strategies, tactics, new products, new business models or new business ventures.
The decision support role of MIS:
The business decision making support function goes one step further. It is an integral part of making decision. It allows users to ask "What if …?" questions. What if we increase the price by 5%? What if we increase price by 10%? What if we decrease price by 5%? ; What if we increase price by 10% now, then decrease it by 5% in three months? It also allows users to deal with contingencies: If Inflation increases by 5% (instead of 2% as we are assuming), then what do we do? What do we do if we are faced with a strike or a new competitive threat?
The most basic and most versatile business decision making tool is the spreadsheet, but spreadsheets are not user friendly. More sophisticated programs often seamlessly incorporate statistical decision making tools like sensitivity analysis, Monte Carlo analysis, risk analysis, break even analysis and Bayesian analysis. If, for example, you are using the information system to decide about a new product introduction, the program should incorporate tools like logit analysis, B.C.G. Analysis, conjoint analysis, contribution margin analysis, multi dimensional scaling, G.E. Multi Factoral analysis, factor analysis, cluster analysis, discriminant analysis, Quality function Deployment, preference regressions and preference-rank translations.
The strategic support role of MIS:
Information systems can support a company's competitive positioning. Here are three levels of analysis:
- The supports for help in piloting the chain of internal value. They are the most recent and the most pragmatic systems within the reach of the manager. They are the solutions to reductions of costs and management of performance. They are typically named "Business Workflow Analysis" (BWA) or of "Business Management Systems p2p ". Tool networks, they ensure control over piloting the set functions of a company. The real-time mastery in the costs of dysfunctions cause distances from accounts, evaluation and accounting that are presented in the evaluation and qualitative reports.
- All successful companies have one (or two) business functions that they do better than the competition. These are called core competencies. If a company’s core competency gives it a long term advantage in the marketplace, it is referred to as a sustainable competitive advantage. For a core competency to become a sustainable competitive advantage it must be difficult to mimic, unique, sustainable, superior to the competition, and applicable to multiple situations. Examples of company characteristics that could constitute a sustainable competitive advantage include: superior product quality, extensive distribution contracts, accumulated brand equity and positive company reputation, low cost production techniques, patents and copyrights, government protected monopoly, and superior employees and management team. The list of potential sustainable competitive advantage characteristics is very long. However, there are some commentators' claims that in a fast changing and competitive world, none of these advantages can be sustained in the long run. They argue that the only truly sustainable competitive advantage is to build an organization that is so alert and so agile that it will always be able to find an advantage, no matter what changes occur.
- Information systems often support and occasionally constitute these competitive advantages. The rapid change has made access to timely and current information critical in a competitive environment. Information systems, like business environmental scanning systems, support almost all sustainable competitive advantages. Occasionally, the information system itself is the competitive advantage. One example is Wal-Mart. They used an extranet to integrate their whole supply chain. This use of information systems gave Sam Walton a competitive advantage for two decades. Another example is Dell Computer. They used the internet to market custom assembled PC’s. Michael Dell is still benefiting from this low-cost promotion and distribution technique. Other examples are eBay, Amazon.com, Federal Express, and Business Workflow Analysis Oberon-bwa.
The performance monitoring role of MIS:
Management Information System is not just statistics and data analysis. They have to be used as a MBO / Management by Objectives tool. They help:
- To establish relevant and measurable objectives.
- To monitor results and performances (reach ratios).
- To send alerts, in some cases daily, to managers at each level of the organization, on all deviations between results and pre-established objectives and budgets.
MIS as an elastic anomoly:
There are numerous ways that a company, that has invested in information technology, can leverage this investment to create, grow, or maintain elasticity of the anomoly.
- Leverage IT investment that supports their core competency. Successful firms tend to have one or two core competencies that they can do better than their competitors. It may be anything from new product development to customer service. Information technology is often an important input into this core competency. This IT investment in a company’s core competency can be a significant barrier to entry for other companies.
- Leverage IT investment in supply chain networks. Firms that are a part of an integrated supply chain system have established relationships of trust with suppliers. This usually ensures quicker deliver times, problem-free delivery and an assured supply. It can also entail price discounts and other preferential treatment. The inability of new entrants to get onto a supply chain/inventory management system can be major barrier to entry.
- Leverage IT investment in distribution channel management. As with supplier networks, investment in distribution channel management systems can ensure quicker delivery times, problem free delivery, and preferential treatments. The investment in this technology, and the experience gained in learning how to use it, can be an important barrier to entry. When the distribution channel management system is exclusive, it may give you some control over access to the retailers involved.
- Leverage IT investment in brand equity. Often firms have invested large sums of money in brand advertising. This is facilitated by investment in marketing information systems and customer relationship management system. An indomitable brand name is a formidable barrier to entry.
- Leverage IT investment in production processes. Information systems have become a necessity in managing large production runs. Automated systems are the most cost efficient way of organizing large scale production processes. These firms can obtain economies of scale in promotion, purchasing, and production; economies of scope in distribution and promotion; reduced overhead allocation per unit; and shorter break-even times more easily. This absolute cost advantage can be an important barrier to entry.
- Leverage IT investment in production processes. Investment in IT allows a company flexibility in their overall output level. Michael Porter claims that economies of scale are a barrier to entry, aside from the absolute cost advantages they provide. This is because, a company producing at a point on the long-run average cost curve where economies of scale exist has the potential to obtain cost savings in the future, and this potential is a barrier to entry.
- Leverage learning curve advantages from experience with IT. As a company gains experience using IT systems, they become familiar with a set of best practices that are more or less known to other firms in the industry. Firms outside the industry are generally not familiar with the industry specific aspects of using these systems. New entrants will be at a disadvantage unless they can redefine the industries best practices and leap-frog existing firms.
- Leverage IT investment in mass customization production processes. IT controlled production technology can facilitate collaborative, adaptive, transparent, or cosmetic customization. This flexibility can increase margins, increase customer satisfaction, and be a significant barrier to entry.
- Leverage IT investment in computer aided design (1). CAD systems facilitate the speedy development and introduction of new products. This can create proprietary product differences. Product differentiation can be a barrier to entry.
- Leverage IT investment in computer aided design (2). CAD systems facilitate the speedy development and introduction of new products. Proprietary product differences can be used to create incompatibilities between competing products (as every computer user knows). These incompatibilities increase consumers’ switching costs. High customer switching costs is a very valuable barrier to entry (Just ask Bill Gates).
- Leverage IT investment in E-commerce. Company web sites can be personalized to each customer's interests, expectations, and commercial needs. They can also be used to create a sense of community. Both of these tend to increase customer loyalty. Customer loyalty is an important barrier to entry.
- Leverage IT investment in stability. Technologically sophisticated firms with multiple electronic points of contact with customers, suppliers, and others appear to be more stable. This monumental appearance of stability can be a barrier to entry. This is particularly true in financial services.
- The simple fact that IT investment requires funds makes it a barrier to entry. Anything that increases capital requirements is a barrier to entry.
In conclusion, management information system is a part of the information system. A management information system, or MIS, is a computer-based system that optimizes the collection, transfer, and presentation of information throughout an organization by using an integrated structure of databases and information flow. A business would be more effective with management information system. It covers almost many parts of a business. It plans, organizes, coordinates, decision makes, and controls a business.
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