System for Managing and Processing Information - Case Study Example

Running Head: INFORMATION SYSTEM Information Systems Can Help Companies to Achieve a Competitive Advantage s Information Systems Can Help Companies to Achieve a Competitive Advantage Introduction The technical definition of information system is that it’s a set of interrelated components that collect process and Store and distribute information. It supports to take various decisions and controlling of an organization. It is a system for managing and processing information, usually computer-based. Also, it’s a functional group within a business that manages the development and operations of the business’s information. Various kinds of people use information systems in their businesses. Different kind of information systems apply to various kinds of people for the satisfaction of their specific needs. These days information system has become integral part of today’s business. today businesses can’t run without them. IS plays a critical role in increasing production and helps in increasing revenue. it has now become more of a necessity then a luxury. It helps in inventions of new products and provides best services to customers. (Kenneth, 2003) That’s a boom for business. It has become largest component of investment of any business around globe and for many industrialized societies. It helps organization to deal with changes in global economies. Information Systems in Business Information system is a critical resource for today’s businesses in supporting business goal and organizational systems. It represents the fundamental elements of a business – its people, work, processes, structure and the plan that enables them to work efficiently to achieve business goals. Operational Management A Branch Manager would mostly be concerned with current operating performance status information, says at monthly intervals. Branch Manager would like to know the results of his day-to-day operation in terms of revenue earned, interest and costs incurred margins as also overheads for the Branch or Region as a whole. However, he would required a more detailed report and internal data to find out how he has done during the month as compared to his budget and also what is the cumulative position from the beginning of the budget year. (Kenneth, 2003) The emphasis is to use the information for exercising the necessary operational control required and for attaining pre-determined operational results and therefore, such information has a strong operational control connotation. Tactical Management As distinct from this, the executive management level managers are concerned about a somewhat broader time span. Their concerns would most probably relate to issues such as the average cost of funds received, average earnings rate from fund lent, liquidity and etc, which will determine the effectiveness and efficiency of the bank’s operations over a period of time, say, one year. It is not that the executive management is not concerned with operating results, but the presentation of such results have to be much more concise and summarized because to them it is current operational performance status information rather than management control information. (Ronald, 2003) They are more concerned about trends in operations – particularly cumulative indicators of such trends compared to the norms assumed at the budget-making time, so that they can initiate the necessary tactical and managerial action for correction of any adverse results, e.g. larger deployment of people in selected areas requiring management support, recovery or some of the things which are highlighted in the analysis of management information received by them. It can be seen that the focus at the executive management level in relation to management information relates to the use of such information for purposes of management control. Strategic Management However, when we come to the top management, we find that the traditional performance reporting system becomes quite inadequate and often of doubtful value and relevance. If we assume that the role of the top management is substantially different from the roles of those managers who are at the executive management and operating management levels, it is clear that the traditional performance reporting systems hardly serves their purpose. The top management has the following responsibilities: • To define the long term direction of the organization, consistent with its resources and the opportunities that the “market-place” offers and the demands of external environment – particularly social, political and regulatory environments – makes, such direction has to be spelt out in a manner which has specificity in terms of what the executive management and the operating management should strive to achieve. • To define the long-term goals, say, at least for the next five years, in board quantitative and qualitative terms, so that they can serve as reference points for operations. • To solve unstructured problem and deal with uncertainty and to ensure that remedial action plans are implemented. • To continuously interact with the external systems including the Government, other banks and financial institutions, etc. (Robert, 1999) The pressure to improve management decision-making, results from both competitive push and technological pull. In the competitive environment, executive needs to make critical decision and this would be support by various information systems like Decision making systems (DSS), Executive information systems (EIS) and Expert systems (ES). Information Systems and Competitive Advantages On a large global scale information system provide many firms with telecommunication and various analytical tools conducting trade. Organization is trying to armed them with IS to get ready to face the various challenges. The internet is bringing about change in business and transforming industries and business models. It Add value to the products and it improves their quality and enhances quantity and improves production. It is for the better safety, better services; it has various comparative advantages to other systems. Competitive advantage, it proves to be successful in any business as this system has very few or nil errors. This system provides maximum profit to any business where it is installed. various other special benefits of this system are, Maximum accuracy , Improvement in health care , Imp in communication , Higher efficiency , Advanced opportunities , Less labor , costs , Less material wastage , Low maintenance costs, Excellent financial decision making , Excellent control over operations , . (Grant, 2002) The best benefit of this system is to the people who are operating it as it enhances their decision taking power and is Excellent at management level decisions. A competitive action can be categorized as either tactical or strategic in nature. Whereas tactics are employed for the purpose of short-term gain, strategic actions are primarily concerned with the generation of sustainable competitive advantage. The resource-based theory of the firm holds that sustainable competitive advantage results from: (1) The use of rare and valuable resources, (2) Actions that cannot be easily imitated or rendered valueless through substitution. As compared to tactical actions, strategic actions may involve more valuable firm resources or a more significant commitment of a firm’s overall resources. Consequently, strategic actions are complex in nature, and are not easily reversed. A strategic action may be decomposed into a set of strategic decisions. Comprehensiveness is often cited as a critical component of the strategic decision-making process. Mojisola (2007) defined comprehensiveness as, the extent to which organizations attempt to be exhaustive or inclusive in making and integrating strategic decisions. Citing Grant, (2002) further characterized decision-making comprehensiveness as the thorough canvassing of a wide range of alternatives, surveying a full range of objectives, carefully weighing the risks of various consequences, intensely searching for information to evaluate alternative actions, objectively evaluating information or expert judgment regarding alternative actions, reexamining the positive and negative consequences of all known alternatives, and making detailed plans. An information system may enhance the extensiveness of the environmental search process, facilitating exhaustive analysis within the context of the situation diagnosis, alternative generation, alternative evaluation, and decision integration phases of the strategic decision-making process (Mojisola 2007). In terms of competitive behavior, prior research has shown that characteristics of competitive action influence the likelihood of response. Specifically, Gautam (2007) found the competitive actions characterized by a high level of visibility were met with a larger number of retaliatory responses as compared to attacks covert in nature. The same study also noted that attacks on markets especially important to potential responders were more likely to provoke response. As such, firms initiating competitive actions are well advised to covertly attack rivals markets of minimal importance in order to avoid retaliation. An information system that supports the decision-making process may improve the likelihood that a strategic action will be successful. By improving the level of comprehensiveness of the decision-making process that underlies a strategic action, an information system may act to improve the effectiveness of the resulting strategic action. Specifically, an IS can provide access to accurate and timely competitive information, focus the user on the most relevant competitive information such that cognitive overhead is minimized, and aid in the evaluation of alternative actions through the use of computer simulations and other heuristic-based programs such that the likelihood of a rival’s response might be anticipated. In particular, IS decision support may facilitate the formulation of complex competitive actions that inhibit retaliatory responses from rivals. As such, this research asserts that decision support satisfaction is positively related to the effective execution of strategic action. In order to fashion a response to tactical competitive action, the initial attack must first be detected. Hence, the detection of a competitive move is paramount to the speed and quality of a retaliatory response (Smith et al., 1991). In a firm stratification schema, Zhang (2001) described prospectors as firms having a strong orientation toward environmental openness and change. Firms with an external orientation are more likely to sense a rival’s actions as compared to those with an internal orientation. In addition, firms with an external orientation are better positioned to interpret competitive information (Roy, 2004). Because externally oriented firms have a greater exposure to a richer array of competitive information, these firms are more capable of developing, analyzing, and evaluating response options. Gautam (2007) posited that an external orientation is positively related to a firm’s ability to quickly respond to a competitive attack. To facilitate an effective competitive response, competitive information must be transferred from the external environment to those that can craft and implement a competitive response (Byrd, 2001). Especially in large, complex organizations, information systems may speed the transfer and analysis of competitive information (Roy, 2004). In the SISS model, the ability of an IS to aid a user in the efficient execution of current tasks is manifested within the task support satisfaction construct. Information systems that provide high levels of task support facilitate the flow of competitive information to the relevant decision-makers and response implementers such that a tactical response can be rapidly executed. There have been noted a positive relationship between task support satisfaction and effective tactical response. Conclusion Information system has become streamline of every business. Since last decade it has changed the working environment of every business. It has turned lot of impossible things to possible. It has changed relative cost of capital and information. Information technology is a great substitute for lower4 and middle level managers and save lots of resources on labor costs paid to them. This system is a substitute to all these managers. The cost of information technology has been lowered and has proved to be a substitute for land, buildings and machinery. Which are relatively expensive? Hence the top level managers should think about increasing investing in information system to increase its efficiency. Information technology obviously helps firm contract in size as it saves their transaction costs. It means when firm make purchases from market when it is unable to produce that commodity itself. By using system of hiring more employees firms have traditionally reduced transaction costs thru vertical integration. IS also saves cost of acquiring and analyzing information. It permits companies to shift down their agency costs as it becomes easier to managers to hire more employees. Now IS has elaborated the power and scope of starting from small enterprise to big organization by empowering them with various activities such as processing orders or keeping track of inventory with few managers. Computers and IS are one of the important organizational resources for the firms. Companies should spend a huge amount of money for buying, development and enhance of such systems. A great number of enterprises could not operate properly and successfully without the implementation of IS in the new changing environment. The modern IS will become the main force determining the pattern of the 21st century and giving great opportunities in all aspects of our life. References Kenneth C. Laudon & Jane P. Laudon (2003), Management Information Systems, Prentice-Hall, London: 128-136 Ronald Thompson, William Cats-Baril (2003) Information Technology And Management (2nd edition) The McGraw-Hill Companies, Inc.: 77-83 Grant, R. M. (2002) Contemporary Strategy Analysis: Concepts, Techniques, Applications Blackwell Publishers Ltd., Malden, MA: 551-557 Gautam Bansal, Sandhir Sharma and K.N.S. Kang. (2007) Strategic Business Management: Creating Competitive Advantage in Global Economy. New Delhi, Deep and Deep: 320-341 Roy Johnson of Elizabeth Ornas, (2004) Information Strategy in Practice, London: Gower, 158-163 Byrd, T. A. (2001). Information technology: Core competencies and sustained competitive advantage. Information Resources Management Journal, 14(2), 27-36. Zhang M.J.1; Lado A.A. (2001) Information systems and competitive advantage: a competency-based view. Technovation, Volume 21, Number 3, pp. 147-156 Mojisola Olugbode, Rhodri Richards, Tom Biss. (2007) The role of information technology in achieving the organisations strategic development goals: A case study. Information Systems, Volume 32 Issue 5: 54-66 Robert W. Service, Henry S. Maddux, (1999) Building competitive advantage through information systems: the organizational information quotient. Journal of Information Science, Vol. 25, No. 1, 51-65 Read More