Business Information Systems
What is a Business Information System? A program involving a business information system would prepare the person who is studying the intricacies of the process to be able to oversee the efficient and proper manner in which to use computer hardware and software systems. The individual who has completed the training process in a business information system would be able to work as a computer programmer, or a computer operator, or a peripheral equipment operator, or a data processing analyst, or a systems analyst, or a software engineer, and also various other positions related to the course of study. (Business Information Systems)
The fact is that a business information system is today changing the internal operations and the management of procedures within an organization. Therefore, a business professional must be proficient in the fundamentals of the business information systems that are in use today, and also be well versed in the impact that the technology is capable of exerting on other businesses. A good business information system would be able to not only improve the efficiency and the very effectiveness of all the existing business processes, but also be able to create and enlarge or improve on certain opportunities that were not in existence before the system was inculcated into the organization.
One example that would explain this would be that of ‘internetworking’ the several different business systems within the organization, whereby the entire information generated as a result of the networking process could be used for the betterment and the improvement of the business. Today, the manager and the executives of an organization must be well versed and educated about the various business systems that are used in the various businesses all over the world, and this would help them to cope and understand the various business processes within their own organization in a much better manner, and as a result, make full use of the advantages and the solutions that occur as a natural process of improvement takes place in the organization because of the implementation of the business information systems within the firm. (The Fundamentals of Information Technology and E-commerce)
In a modern day business organization, an information system is a very important process. The inter-relationship between the changing business processes of today and the onset of more and more modern information systems into the organization is a changing one. The changes are often multi-dimensional and also multi-faceted. The revolution that the information systems are causing within the organization deserves special attention because of the fact that the workings of the entire organization has changed dramatically and drastically, and this can be related to the changes that happen at two important points: one at the point of location of the information systems, and the other at the point of the decision making process within the organization. Therefore, it is seen that in an organization, either the ‘MIS’ method of transferring of information from one point to another can be used, or the ‘organizational re-design’ method wherein the various decision rights are transferred or moved can be used.
However, as all this involves large costs, it must be remembered that any changes made to the costs of information processing and of the location of the decision-making rights within the organization would involve extra expenditure for the organization, and any changes that would have to be made would have to be implemented after a careful consideration of the costs involved. When the decision is finally made to implement the changes in the information systems as well as in the management systems of the organization, the essential collocation of information and of decision rights would be achieved with relative ease. Here it must be stated that when the information system within the organization changes in any manner, then it will definitely impact the very structure of the organization. This means that the constant interplay and the inter-relationship between the information systems, the incentives, and the decision rights of the organization, if it occurs in a unified and integrated manner, will lead to new and better insights and also to a better and more efficient organizational planning method being implemented.
However, it must also be stated that despite all the improvements and the significant progress that has been achieved within the organization on account of the changes in the business information systems that have been inculcated therein, the basic understanding and comprehension of this process is still not quite up to the mark; that is, the important economic role that the information systems play in the organization of the business system in the company is not understood as being an important part of the organization of today. Therefore, if the business design in the organization is to be met with steady and continued success, then it is important that immense gap between the research in information systems and the research in the economics of the business would have to be narrowed down to a considerable extent if one were to hope to achieve success because of the implementation of information systems within the organization.
The organization and the delineation of work within the organization are at present in a state of change and transformation. For example, in the industrial sector, it is noticed that the age-old manner of mass production using the method of huge and vast vertically integrated and hierarchically organized method of working within the organization is gradually being replaced by the more flexible and lenient method of internal organization within the firm, and also the very industrial structure of the firm. All work that is carried out within the organization of today is being accomplished through several smaller and infinitely more and better-focused networks, the result being that of several of working within the organization, and the blurring and even, in some cases, the disappearance of the boundaries that encompass the firm and the industry and separate the two.
One very good example that would illustrate this point is that of the computer industry. Up until yesterday, large vertically integrated firms like IBM and Digital Equipment dominated the computer industry. These firms, which used the traditional vertical and hierarchical system to produce products and services, like a simple microprocessor up to the provision of solutions to other firms, is now changing this system of working to a much simpler and easier method, that of working in layers. This is nothing but a series of layers, each layer consisting of an individual and separate industry. The value that is generated as a result of this arrangement is in fact generated by a combination of a series of coalitions that change constantly and all the time, and where the coalition is composed of a group of members, each of who is in charge of one coalition, which is one separate industry. The member sees to it that the coalition that he is overseeing is a part of his area of core competency, and this helps him in his efforts to leverage and manipulate it through the use of either tactical or strategic partnerships.
The very structure of the team that was a hierarchical one in the days gone by is now being replaced with an entirely different team structure and one good example that demonstrates the benefits as well as the efficiency achieved through the change in the method is that demonstrated by the Silicon Valley method of internal re-organization. When the team or the individual performs better today, incentives are given to them based on their good performances, and this means that the basic differences that used to exist between inter and intra-firm contract is now gradually diminishing and becoming increasingly blurred, therefore illustrating the point that almost all organizations of today are leaning towards major re-structuring and re-organizing efforts in order to improve the performances of the employees within the organization and therefore generate more profits.
What are the symptoms and the causes of the restructuring and the re-organizing efforts that are now going on in all major firms and organizations today? When Frederick Taylor, at the beginning of the twentieth century, attempted to find a scientific basis for the emerging trend of successfully organized businesses being able to generate more profits than the other firms who were not very well structured or organized, he stated that the basis of business organization must be scientifically based. This theory came to be known as the ‘Taylorist’ approach to business and business organization and management, and when Henry Ford utilized this theory to his own advantage in his automobile manufacturing organization, he met immense and incredible success. He was able to literally dominate the automobile market, and also led to the shutting down of many a small automobile manufacturer who was conducting business at the time.
Henry Ford was able to successfully enmesh his firm with the emerging technology of the time, and with the market conditions and the labor and also the general working environment of the time. However, these principles of management that were so very successfully utilized by Henry Ford in his development of the Ford Company, became for the most part outdated, as is the natural order of things, and by the time of the 1990’s the system was no longer in use. For example, the advice that was followed at that time was this: it is essential to possess certain knowledge of the things to be done, and how to go about doing these things, and thereafter to prepare the various instructions that the laborer is to follow. In other words, the laborer or the employee need not use his brain power and mental faculties in any manner; he does not have to stop to think or to consider; all he is expected to do is to follow the instructions that have been given to him by his higher ups or ‘superiors’. The emphasis that is at present being laid on ’empowerment’ and learning’ and so on, is in sharp and direct contrast to this principle.
Similarly, the advice that was given to the management of various organizations was to maintain an economy of scale, and this is today, in sharp contrast to the workings of the organizations of the modern world, wherein downsizing is becoming more and more important. In the same way, many more examples are seen in the traditional vs. The modern, like the situation where focus takes precedence over the system of conglomerates, where the principle of ‘total quality’ becomes more important than ‘cost leadership’, and ‘project teams’ that head a project within the firm gain more importance over the functional departments of the old times. Milgrom and Roberts, a team of researchers, offered the opinion that the different traits and characteristics of the modern day manufacturing units are extremely complementary to one another, and this shows the emerging trend of the changing method of organization within the firm. They also state that it is this tendency to complement each other, and also the tendency to re-organize the attributes of the firm one at a time that makes the transition from one method of organization to another method extremely difficult and time and energy consuming.
Therefore, if there is a strong complementarity in the firm, then the changes that are to be implemented must be extremely gradual and slow-paced and simultaneously along several different dimensions so that it would be successful. What must be remembered is that those organizations that adopt only a few of the complementary paradigms that have been recommended will eventually fail because of the fact that there is in existence within the firm a very strong complimentarity. In a study conducted by Jaikumar about certain U.S. And Japanese companies, it was discovered by the researcher that a large number, in fact, the majority of the companies of the United States of America had failed miserably to achieve increased productivity because of the fact that they had, despite having made the change over from several traditional methods of working to the more flexible technology of manufacture, still retained quite a few of the old and obsolete methods of working, like for example, the manufacturing process of long production runs, and also high levels of , both methods though serving the purpose of complementing the older technology, still keeping the new technology from making its presence felt and fulfilling the most that it could, thereby not being able to achieve its full and maximum potential. Therefore, the writer stated, the change from the older methods to the newer ones is a very highly complex one, and things would definitely be much easier if design that is guided by theory were to be applied instead of the system of piecemeal evolution.
Why should it be so? There are in fact many explanations for this process. One reason is that a call for any type of radical change is generally related to a change and a heightening of competition and the pressure that are related to this competition. The organizations that were extremely successful in their times had applied some of the principles that are actually considered to have become outdated today. This inevitably means that the nature of the competition may have changed over the period of time. Some individuals offer the opinion that maybe consumer tastes have changed over the years, and this means that customized articles hold more appeal today than at any other time. However, historians may find this difficult to digest, as they say that the very taste of the consumer for mass-produced and mass-marketed items in itself had to be developed at one point of time, that is, at the time when the concept of mass production came into being.
Today, this concept no longer holds any sort of appeal for the individuals of the modern world, since there is increased wealth as well as social stratification among the people today, and this phenomenon makes mass production and mass marketing hardly appealing. Some others say that it may be true that some of the principles that are being adopted by organizations today may have actually been applicable in the bygone days, had they been discovered at that time. In a comparative study of other forms of organizational transformation and improvements, it is a fact that the maximum amount of improvement has been noticed in the IT or Information Technology Sector. What is the reason for this? There are three primary reasons for the stupendous changes in the IT sector.
One of them is the fact that the various advances in this sector lay claim to being both novel as well as exogenous. This is because a number of the changes that have occurred and have been implemented in the IT world had actually taken place less than one single generation ago. The changes that occurred were also created due to the changes and the developments in the progress in science, especially in physics and engineering, rather than in business principles and in business demand. Another reason for the maximum number of changes occurring in the IT sector is that it is generally considered that an investment in the growth and development of the Information Technology segment is a wise and economically sound investment, and this has resulted in what is also known as the ‘information explosion’. The third reason is that it was considered wise to expect an association between the costs of the various technologies that are connected to the management of the information being generated today, and the economic activities that are organized in a proper and simple manner within the organization of today, especially in the IT sector. It is to be noted at this point that the firm or organization, and the market have both been seen as the most important information processing institutions in existence today.
Some people state that the main features of this new method of re-organization and the changes that have occurred in the management because of this re-organization are nothing but the very natural consequences and the outcome of the information age of today. The latest technologies that have come into existence will serve to help the managers of the organizations concerned to be able to handle more number of functions than they had been handling previously. This means that the span of control would be considerable widened, and this in turn naturally meant that there would not be a need for more levels of hierarchy; the work within the organization could continue with fewer levels. Therefore, the organizations of today were able to flatten out and straighten the pyramid type of structure within the firm that had been in use till recently. The de-centralization of the decision making process would also be achieved, and this could be achieved without the loss of the awareness and knowledge of the management.
All the employees within the organization could be encouraged to use their own creativity and other skills for the betterment of the company, and also to be more intrapreneurial in spirit. This type of organization and re-structuring is completely intertwined with the basic structuring of a company’s new information systems. The old and rigid type of functioning of the organization is now being replaced by the distinct and clear-cut separation of the various organizational functions into well-defined units. This system offers numerous advantages, one of them being that this type of separation would economize on the various information and the communication requirements and needs of the firm across the different functional units that have been delineated, and this helps to reduce and cut down on costs as well as reduce the innate complexity of the various functions within an efficiently functioning unit of the organization.
Therefore, the growing use of IT in an organization and the result of increasing networking and are deemed to be both the cause for the advancement in the changes within the organizations, as well as the effect of the advancements. As far as the supply side of an organization is concerned, there are several areas in which the transition is being gradually accomplished. One of them is the accomplishment of lowering the costs of horizontal communications within the organization; another area is that of teamwork. Now, teamwork is given more importance and therefore more precedence over other issues. Flexible manufacturing has now become a very real possibility, and the fact that all information is readily available at one’s fingertips is very helpful in establishing the twin factors of effective and efficient time management and also quality control.
Newer information systems has now gained paramount importance in the new system of organization within a firm, and this is because there must necessarily be a free flow of information from all points within the framework of the team, and this is the reason that the old traditional systems of information that are more rigid and inflexible than necessary must be eliminated as soon as possible to ensure that the free flow of information is not disrupted in any manner. When the structure of an information system becomes an important element in the re-structuring and the organizational transformation of the working of the organization, then the information system must become an important part of that structure. This is because the various changes in the Information Technology are capable of bringing about vast changes in the nature of the firm, in the same way as the various significant changes in the structuring of the organization would serve to cast an influence on the creation and the development of newer technologies. (Information Systems and the Organization of Modern Enterprise)
If the various business strategies for the purpose of renewal and improvement of the business were to be condensed into a nutshell, these would be the strategies that a discerning manager would use to put the business back on the track to success. One is that of ‘retrenchment’, and the other is that of ‘turnaround’. The idea of retrenchment is this: it is a short-term renewal strategy or plan that would pinpoint those specific areas of trouble due to which the business is encountering a loss of some kind, and then go about changing and re-vitalizing the resources that are within the organization so that it can be put back on the right track once again. Retrenchment has at times been likened to a minor surgery that a doctor would perform on a patient that would put him back into the mainstream of life immediately. A manager, in the same way, would use the system of retrenchment to initialize a type of minimal treatment at the outset, like for example, cutting costs, or implementing a small but significant layoff.
Cutting costs is not as simple as it may sound; it involves a complicated process of analysis and thinking, and the amount of costs to be cut would have to be carefully considered, since it is common knowledge that any organization needs all its various components in order to function at its optimum best. A layoff also has to be analyzed carefully before being implemented. Once this is done, it would be a fierce hope of every manager that it would be enough to turn the firm around without having to resort to anything firmer or stronger. But when it is discovered that this is not sufficient or powerful enough, then infinitely more drastic measures would have to be taken in order to bring about a change in the organization. This process is referred to as the ‘turnaround’. This involves plenty of restructuring measures, without which it would not be possible for the firm to see profits again. Restructuring is the process by which the organization attempts to bring the focus back on to its primary goal of conducting profitable business.
One example where restructuring saved the life of many a business is that of the proliferation of several small businesses in the 1970’s. The general opinion of the businessmen of the time was that it would be better to diversify so that the risks involved in running a business would be evenly spread out. This resulted in an unforeseen phenomenon, wherein the businessman would dabble in something that he had no prior experience in, and thought that if the fortunes of one business happened to decline, then the profits from the other businesses that were owned by the same person would serve to make up for it. However, this never did happen, and for the most part, the management teams of these businesses were constantly struggling to generate profits or even basically run the businesses that they had no idea about.
When the expected profits did not come their way, many of these businesses were merged with others, and this was the phenomenon of ‘mergers’ in the 1980’s, wherein the firms tried to sell off these small businesses that did not bring them profits to other companies so that they could finally refocus on their original business lines successfully. This was what is referred to as the process of ‘restructuring’. Restructuring can happen in several different ways. One method is that of ‘divestment’, wherein the original organization divests or sells the business to another firm that will continue to run it. One example of divestment is that of Chrysler that sold its U.S. Army Tank Division business to General Dynamics, and its Air Temp Air-conditioning Unit to Fedders, and so on, the purpose behind such sales being that of concentrating fully on the main business that it had already established itself in, that of the automobile industry.
The system of ‘spin-off’ is another method that is used by an organization to set up a different business unit through either the method of distribution of stock, or through the method of initiating a cash deal. When this method is used, the result is that the new management team would be able to bring about significant improvement in the profits of that business unit that has been faring badly over a period of time. One example of this system is that of 3M which put its data storage and imaging business into a separate company that was named Imation. In some serious cases, liquidation may be necessary. This occurs when a particular organization finds it virtually impossible to turn around and to generate profits again. When this happens, it also becomes extremely difficult to find an interested buyer of the company. However, it is better if the company is sold for little or no profit so that more money will not be wasted unnecessarily in trying to correct the failures that had happened earlier.
Another method of reorganization is that of ‘reengineering’ wherein all the old ideas and assumptions on how to go about the conduct of a business are cast out, and an entirely different plan takes its place. More efficient and better processes are implemented, and the business can be turned around successfully, with a minimum of expenditure and fuss. This method would work best in a manufacturing company of any kind, wherein each and every step of the entire manufacturing process is reanalyzed and thereafter restructured. Some processes may be improved, while some may be eliminated altogether during this process of restructuring, thus attempting to bring about profits for the firm. ‘Downsizing’ is a process that is similar to the process of ‘layoff’, and this process involves the best method by which costs may be cut off in a quick and safe manner.
However, this method is an infinitely tricky one, as it means that when certain staff are laid off while the work and the amount of work that is to be done is not changed, this inevitably means that the remaining staff must work harder and extra for the same pay that they were working for earlier. This may cause resentment among the staff, and one must be careful when choosing this method to bring about more quick profits and finance saving measures to the firm. The last and the very final strategy is that of declaring ‘bankruptcy’. This is to be adapted as a last resort, as it means that the company has failed miserably, and it is declaring this to the entire world. The Court will liquidate all the company’s assets, and by this method, the company would be able to reorganize all its assets while at the same time getting adequate protection from all its creditors. If and when the firm is able to emerge out of its bankruptcy, then it would be able to pay off its creditors successfully. (Organization Decline/Renewal strategies)
The fact is that ‘productivity’ needs to be improved in the workplace so that the business would be able to improve. The economic forecasters of today have stated that the rate of growth of businesses will not be more than two percentages per annum, and this means that there will be a significant increase in unemployment everywhere. Some other forecasters are more pessimistic, and state that there may be a dire shortage and unavailability of non-renewable resources over a period of time, like for example, the availability of fossilized fuels and metals, which are fast depleting all over the world. These resources are actually needed for the purpose of sustaining growth, and this brings doubts on the issue of whether this is to be the real objective for the long-term. The recession that the United States of America is suffering from at present is virtually being cushioned by the trend of the consumer to keep spending. This means that the property prices, that should not, by all rights be high at present, is actually at an all time high.
However, a plateau has been reached, and eventually, the prices will have to start to decline. What caused this phenomenon? It is generally believed that the series or the spate of losses that were suffered by large corporations in the United States of America of late has been caused by a series of financial and economic malaises or malfeasances, especially in the Telecommunications and the Information Technology sectors, and the general feeling of distrust and disrepute that it has caused as a result. There has also been a feeling of distrust that has been generated in the corporate reporting standards, because of quite a few misdemeanors that have committed by them in the public. There have also been numerous mergers, most of which have been by and large completely unsuccessful, and also a number of unsuccessful takeovers and several reports of gaps in the pension funds of these large corporates, all of which have left an unpalatable taste of deceit and mistrust, and this does not bode well for the future unless these things are changed immediately.
In addition to all these problems there is also the problem of several jobs in the service sector being lost in the large tableau of the ‘Western economies’. This is because of the fact that many employers in the service sector are contemplating the relocation of either their entire business or a small part of it in the Eastern part of the world or in the Indian Subcontinent. This leaves the Western part of the world with limited options wherein they are forced to rely, because of the existing circumstances, on either the manufacturing industry or on exports in order to conduct a successful business and as a result be able to improve national prosperity. It is now thought that it is time for the West to start and lead the Second Industrial Revolution so that things would improve, just as Britain was responsible for the First Industrial Revolution.
However, what cannot be ignored is the fact that Britain has sat back and allowed her industrial base to be eroded very quickly, much quicker than that of other nations, like for example, that of Germany and of France and of Japan. In Britain, there are a fewer number of people employed in the manufacturing sector than elsewhere, and this has led to the erosion in the wealth and prosperity of the nation, since it is a well-known fact that it is the industrial sector of a nation that contributes to the heightened prosperity and wealth of the nation. In addition, the investment in industry has also gone down considerably, at the national as well as at the firm level. What actually is at fault in this issue, and how can it be corrected? It is the general consensus that it is the individual’s attitude to work and to management that are at stake here. Inefficiency, disregard, lack of good industrial relations, overstaffing, and so on are some of the problems, and these very problems have led to an employee being paid too much for too little work.
During the 1990’s which was considered to be a time of ‘plenty’, this fact may have been overlooked or at the very least, ignored, because it was not creating any huge impact soon the business, but in the present time of recession, this is just not possible. The need of the hour is the creation and the development of total and specific productivity and it is believed that once this is achieved, then it would be possible for a company to fight the recession successfully. Therefore, one has to use the newest and the latest technologies that are now in the market to full advantage, and put up with more changes, as the progress becomes faster and steadier through the years. The several different management professionals will not be able to handle all these changes on their own, though they will have to make sure that they perform to the bets of their abilities in the effort to ensure that the industrial sector becomes as profitable and successful and also retains its competitive edge as far as possible in the quest for success. (The need to improve productivity)
How can users utilize the to improve productivity in the workplace? The fact is that all the organizations of today are engaged in accumulating information, comprising of both data and content, at a rate that has never been encountered before. It is said that some companies feel that things are spinning out of control because of this surfeit of information. This brings into sharp focus the need for ‘content management’; content comprising documents, presentations, e-mails, audio and video files, and images. The organization has to manage this content in a proper manner, while at the same time not wasting too much time over it. While customers seem to spend about 20 to 30% of their time engaged in trying to find out information, if this was made easier for them then there would be more than adequate productivity gains for the organization. Content management offers the appropriate solution to this problem and this science has been gradually evolving over the years, in much the same way as data management evolved in previous years. This is one of the ways in which users find the solution to their various end-user problems to improve productivity in their organization. (IBM Content management and Server managed clients spell productivity, opportunity)
Another method is that of attempting to integrate data and applications successfully in a manner that would improve productivity. An application that would consolidate all the information that is generated on a daily basis by the several applications in an organization of today where the user is generally confounded by the sheer amount of information at their workplaces is the Windows NT Workstation. This application not only consolidates and strengthens all these activities into a single system but also integrates all the data and the applications into a comprehensive whole. (Windows NT Workstation in Engineering and Science)
What is E-Commerce? E-Commerce is the system of conducting business on various networks and on the computer. The business can either be in the nature of transactions or simple business communications. E-Commerce generally includes the buying and the selling of various goods and services over a network, and the transfer of funds through what is known as digital communications. The transfer of funds can be through the Internet, or through the system of electronic fund transfers, or smart cards, digital money, and so on. It generally includes all the monetary transactions that are accomplished by an individual or a business over a digital network, which includes the Internet. (Define E-Commerce on the Web)
According to a survey conducted by Jennifer Leclaire of ‘E-Commerce Times’ on the 12 of January 2005, it was revealed that E-Commerce is indeed an extremely successful business for the entrepreneur. One example of a successful E-Commerce site quoted by the author is the PealrParadise.com that did roaring business over the Holiday Season that has just finished. In fact, the holiday season is a veritable turning point for quite a few E-Commerce ventures all over the world. The PealParadise.com’s sales figures show that from the year 2003, December, when the reported sales were U.S.$250,000, to over $U.S. 1 million in December of the year 2004. The president of PealParadise.com, Jeremy Shepherd, stated that today, more and more customers are willing to spend more and more money online than ever before, and on luxury goods.
One reason for this phenomenon is that the basic trust of the customer that his transaction is safe with PealParadise.com may have led to this increase in spending online. Customers are also increasingly willing today to purchase a product that they have only seen advertised on the website. Some people may find this method of shopping difficult to accomplish, but the trend is indeed picking up, and more people are willing to make this a part of their lives, maybe primarily for the complete convenience that it offers. Goldman, Sachs and Co., a Jeweler store, had this to report: jewelry sales over the holiday season in PealParadise.com showed an astonishing increase of 113% from $U.S. 888 Million in 2003 to U.S.$1.9 billion in the year 2004. This product is one of the three products that showed such dramatic increase in sales through E-Commerce, the other two being flowers, and the various paraphernalia of computer hardware and the peripherals associated with a computer.
These figures put to the lie the dire predictions of the imminent death of E-Commerce, as the figures show an increase of a huge 24% in sales conducted over the Internet over the Holiday season alone. Many analysts are today trying to decipher the meaning and the reason for this sudden turning point in E-Commerce ratings. They state that this success is not juts a temporary occurrence but the real and actual turning point of E-Commerce. Now , and maybe one of the reasons for this is the fact that this time, quite a wide selection of products was offered to the E-Shopper to choose from, and also comprehensive product information and also an easy gift delivery scheme that took the pressure out of choosing the right gift and then picking it up and delivering it to the concerned person.
All the customer had to do was sit back and choose his gift after educating himself on all the intricacies of the product, and choose it, pay for it by utilizing any one of the numerous systems available for making payments over the Internet, and enjoy the rest of his holidays with joy. Thomas Obrey, the Chief Operating Officer for Pixel Media, said that he felt that the holiday season was an event that surpassed all expectations, and also proved to be a turning point for E-Commerce. However, one must remember that this must continue throughout the year for all seasons and festivals and occasions for there to be a good profit all the time. This means that the various and numerous E-Commerce sites that sell anything to the discerning consumer, must strive to make continuous improvements in order to maintain the present good standards that have been created over the holiday season, otherwise, it will again die out gradually. (Holiday Sales show E-Commerce alive and well)
What are the ways and means in which Information can be used for the purpose of better decision-making so that there may be competitive advantage for the organizations involved in the process? It is the general opinion of management personnel that the failure to anticipate the changes that are rapidly taking place everywhere can actually be fatal for the business. When an individual anticipates, then he gains a competitive edge over the others. He can thus use the information that is being generated to his own advantage, which involves being able to make better decisions within the organization. The problem here is how to gain anticipatory powers, and how to gain the competitive edge that is needed in order to succeed.
An organization would definitely need sophisticated intelligence gathering and assimilating techniques that would bring into the picture newer models of decision-making processes and new means with which to be able to judge the results. Any new opportunity that may arise needs to be identified at first to take full advantage of it, and any potential threat also needs to be encountered with a modicum of courage to turn it instead into an opportunity. The failure to anticipate may in fact be deadly for the business; for example, a competitor may anticipate customer needs and start to supply them before the other organization has even started to recognize the opportunity for what it is. This may lead to the competitor being able to gain the lion’s share of the market right under the other person’s nose. GM or General Motors failed, during the 1960’s to anticipate a potential energy crisis, and this led to the loss of about 30% of its entire market share to the Japanese.
In a similar manner, Sears continued to deal with the outdated systems of self-branded merchandise, and catalogue delivery systems when at that very point of time the customers were demanding name brand merchandise and better quality products as well as services from Sears. When these demands were not met at the right and appropriate time, Sears lost out a heavy share of the market to others who were able to provide this very same thing at no extra expenditure. Therefore, it can be clearly seen that change happens all the time and if the organization hopes to cope with the change and prosper, then certain skills would have to be learnt, that is the management of the organization would have to learn how to relate the external happenings in the world today to internal happenings within the organization. The ‘Anticipatory Management Decision Process Model’ would be of great help to the management in their decision-making processes within the organization.
The flow-chart above demonstrates the method in which the management can understand external processes and use that understanding to make better decisions and plans so that his organization would taste success. One example of the success of utilizing this type of flow chart is demonstrated by the United Airlines, which used it in its decision making process, and by Royal Dutch Shell, and also by McDonald’s. McDonalds had launched a new toy into the market during the year 1983. However, since the toy was found to possess small parts that could fatal to small children who could choke on it, was, when discovered to be harmful to the general public, especially to small children, was recalled from the market completely. This episode went almost completely unnoticed by the public, who had no idea that this was happening.
In this manner, McDonalds not only managed to salvage it irrefutable good reputation, but also managed to save itself from a public lashing out in case the toy had proved to be harmful to a child. This incident not only educated McDonalds on how to manufacture its toys in the future, but also demonstrated its innate ability to anticipate a problem even before it arose. Therein lay its success. Therefore, the first step to be taken in an anticipatory process by the management of an organization is to identify an issue successfully even before it can strike. This is because of the fact that many significant issues may arise form totally unexpected places, and this makes it important for the management to scan the macro environment for all sorts of political as well as social and technological and environmental and economic developments everywhere. This is because any single incident may be able to completely change the future of the organization; even of the world, like for example, an oil embargo, a new zoning law, and so on.
It is an indisputable fact that an event and a trend can combine to create what is known as an ‘issue’ and the issue has to be dealt with as and wherever applicable or necessary. An issue here can be a ‘product liability’, an ‘energy availability’ or ‘environmental protection’. A ‘signal’ is usually the indicator of these issues, and the signal may either be demographic, like for example, a ‘baby bust’ where there is a death or paucity of entry-level workers at some time in the future, or it may be ‘environmental’, which indicates, for example, the rising levels of greenhouse gases which may end up causing a warming of the earth. The discerning manager will have to keep his ear to the ground in order to receive these signals so that he can anticipate the issues that these signals are capable of generating, which in turn may cause a severe loss in business or, on the other hand, generate more profits for the company. The quicker the management is in its identification of the issues, the lesser is the liability of the company, and as a result, the lesser is the loss.
The second stage in the anticipatory decision making process is that of analyzing the data about the various issues that have been brought to the management’s attention. This is sometimes referred to as an ‘issue brief’, and it generally contains the following material: the focus of the issue, the background, the trends that have caused the issue, the other people or individuals who have been demonstrating an interest in it, and a forecast that describes the future of the issue, its prospects, and the way in which it would prove to be useful to the organization. In the third stage, these issues must be addressed in the light of certain important considerations like: will the issue become crucial will it and how will it affect the organization, must the organization try to play a role in the issue or not, and so on. In this manner the issue can be prioritized, and the next stage of evaluating the performance after dealing with the issue in the manner that was considered appropriate will be easier and simpler.
Once all the steps outlined have been followed, it will be easy for the management of the organization to comprehend the method in which strategic information flows from the outside to the inside of the firm. This would enable the management to start to make better decisions based on this information, and therein lay the success of the organization. The organization would be able to gain an innate competitive edge over its competitors, and enjoy this edge and also use it to generate immense profits for the company. (Anticipatory management, tools for better Decision Making)
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