C1: Overview

Systems, Data, & Information

• System: a set of 2 or more interrelated components that interact for a goal

• Subsystems: almost always exist

  • Each performing a specific function (important to & supportive of the larger)
  • Goal Conflict: a decision or action of a subsystem is inconsistent to others or whole
  • Goal Congruence: a subsystem achieves its goals while contributing to the overall goal

• Integration of system concepts: eliminating duplications (encouraged)

• Data: facts that are collected, recorded, stores, and processed by an IS (Information System)

• Information: data that have been organized and processed to provide meaning to a user

• Information Overload: Passing of limits to the amount of information the human mind can effectively absorb and process

• Value of information: the benefit it produced - cost of producing it

  • Benefit: reduce the uncertainty
  • Cost: time and resources spent collecting
  • Expected value should be calculated as effectively as possible, to avoid valueless information produced

• Information Users

  • External: mandatory / essential (minimize costs to the minimum standards of reliability, usefulness & regulatory requirements)
  • Internal: discretionary (benefits exceed the cost; more difficult to make)

• Characteristics of Useful Information:

  1. Relevant: reduces uncertainty, improves predictions / corfirms or corrects prior expectations
  2. Reliable: free of error or bias; accurately represents the fact
  3. Complete: not omitting important aspects
  4. Timely:in time
  5. Understandable: in a useful and intelligible format
  6. Verifiable: two acting independently would each produce the same
  7. Accessible: available when needed, in a format can be used

AIS (Accounting Information System)

• Definition: a system which collects, records, stores & processes data to produce information for decision makers
• Components: People (Operator), Procedures and instructions, Data, Software, IT infrastructure, Internal controls and security measures

Role of AIS in Value Chain

• Value chain:
• Primary activities: Inbound logistics, Operations, Outbound logistics, Marketing & Sales, Service
• Support activities: Firm infrastructure, Human resources, Technology, Purchasing
• Supply Chain, in which value chain is included

Providing Information for Decision Making

• Decision Structure:

• Structured decisions: repetitive, routine, understood well enough to be delegated to lower level employees

• Semistructured decisions: characterized by incomplete decision making rules, need for subjective assessments and judgments to supplement formal data analysis

• Unstructured decisions: nonrecurring and non-routine

• Decision Scope:

• Operational control: for the effective & efficient performance of specific tasks (Structured)

• Management control: for the effective & efficient use of resources, for accomplishing organizational objectives (Semistructured)

• Strategic planning: for the establishing organizational objectives, and policies for accomplishing those (Unstructured)

AIS & Corporate Strategy

• Basic business strategies: Product differentiation strategy & Low-cost Strategy (Only to choose one)
• Strategic position: Variety-based, Needs-based & Access-based