Oxford Advanced Engineering College

Kathmandu
Management Information System (MIS)

System:
• Group of component
• Related with each other
• Working together to meet common goal
• Simply system tells what hardware do
Data:
Facts or observations about physical phenomena or business transactions. More specifically, data
are objective measurements of the attributes (characteristics) of entities, such as people, places,
things, and events.
Simply define as raw material of information

Eg. Phone number of unknown person

984193XXXXXXX

Information:
Data that have been shaped into a form that is meaningful and useful to human beings. Information
means data that has been processed (sorted, summarised, manipulated, filtered) so that it is
meaningful to people.
Eg.
Name: Hari Prasad Baskota
Address: Balaju,Baisdhara
Kathmandu,Nepal
Tel: 984193XXXXXXX

Management:
Management is the effective utilization of human and material resources to achieve the
enterprise objective. Types of management:
Upper level
• Middle level
• Lower level
 Fig: Function of an Information System
An information system contains information about an organization and its surrounding
environment. Three basic activities – input, processing, and output produce the information
organization needs. Feedback is output returned to appropriate people or activities in the
organization to evaluate and refine the input environment factors such as customers, suppliers,
competitors, stock holders and regulatory agencies interact with the organization and its
information.

Defination of MIS:
MIS is a system, where data input and process that data to provide output in the form of information.
These information are utilized by manager for decision making and planning.
In another word, A Management Information System is an information system that evaluates,
analyzes, and processes an organization's data to produce meaningful and useful information
based on which the management can take right decisions to ensure future growth of the
organization

Component of MIS:
Data
• Hardware
• Software
• Network
• Manpower(IT Expert, Managers, Workers)
• Graphical User interface(GUI)

Role of MIS
The following are some of the justifications for having an MIS system

• Decision makers need information to make effective decisions. Management Information

Systems (MIS) make this possible.
• MIS systems facilitate communication within and outside the organization – employees
within the organization are able to easily access the required information for the day to day
operations. Facilitates such as Short Message Service (SMS) & Email make it possible to
communicate with customers and suppliers from within the MIS system that an organization
is using.
• Record keeping – management information systems record all business transactions of an
organization and provide a reference point for the transactions.

Advantages and Disadvantages of a computerized information system (MIS)

The following are some of the disadvantages of a computerized information system.

Advantages:

The following are the advantages of computerized information systems

• Fast data processing and information retrieval – this is one of the biggest advantages of a
computerized information system. It processes data and retrieves information at a faster rate.
This leads to improved client/customer service
• Improved data accuracy – easy to implement data validation and verification checks in a
computerized system compared to a manual system.
• Improved security – in addition to restricting access to the database server, the
computerized information system can implement other security controls such as user’s
authentication, biometric authentication systems, access rights control, etc.
• Reduced data duplication – database systems are designed in such a way that minimized
duplication of data. This means updating data in one department automatically makes it
available to the other departments
• Improved backup systems – with modern day technology, backups can be stored in the
cloud which makes it easy to recover the data if something happened to the hardware and
software used to store the data
• Easy access to information – most business executives need to travel and still be able to
make a decision based on the information. The web and Mobile technologies make
accessing data from anywhere possible.

Disadvantages:

• It is expensive to set up and configure – the organization has to buy hardware and the
required software to run the information system. In addition to that, business procedures will
need to be revised, and the staff will need to be trained on how to use the computerized
information system.
• Heavy reliance on technology – if something happens to the hardware or software that
makes it stop functioning, then the information cannot be accessed until the required
hardware or software has been replaced.
 • Risk of fraud – if proper controls and checks are not in place, an intruder can post
unauthorized transactions such as an invoice for goods that were never delivered, etc.

Impact of MIS
Management as a Control System

Planning, organizing, staffing, coordinating, directing and controlling are the various steps in a
management process. All the steps prior to a control are necessary but are not necessarily self-
assuring the results unless it is followed by strong control mechanism. The management experts
have viewed these steps as `Management Control System'. They postulate the hypothesis that
unless a control is exercised on the process, the goals will not be achieved. They advocate a
system of effective control to ensure the achievement of the business objectives.

Definition

A definition of control is the process through which managers assure that actual activities conform
to the planned activities, leading to the achievement of the stated common goals. The control
process measures a progress towards those goals, and enables the manager to detect the deviations
from the original plan in time to take corrective actions before it is too late. Rober J Mockler
defines and points out the essential elements of the control process.

The management is a systematic effort to set the performance standards in line with the
performance objectives, to design the information feedback systems, to compare the actual
performance with these predetermined standards, to identify the deviations from the standards, to
measure its significance and to take corrective actions in case of significant deviations. This
systematic effort is undertaken through the management control system.

The control system is essential to meet the environmental changes discussed earlier, to meet the
complexity of today's business, to correct this mistakes made by the people, and to effectively
monitor the delegation process. A reliable and effective control system has the following features.
Early Warning Mechanism

This is a mechanism of predicting the possibility of achieving the goals and the standards before
it is too late and allowing the manager to take corrective actions.

Performance Standard

The performance standard must be measurable and acceptable to all the organization. The system
should have meaningful standards relating to the work areas, responsibility, and managerial
functions and so on. For example, the top management would have standards relating to the
business performance, such as production, sales, inventory, quality, etc. The operational
management would have standard relating to the shift production, rejection, down time, utilization
of resources, and sale in typical market segment and so on. The chain of standards, when
achieved, will ensure an achievement of the goals of the organization.

Strategic Controls

In every business there are strategic areas of control known as the critical success factors. The
system should recognize them and have controls instituted on them.

Feedback

The control system would be effective, if it continuously monitors the performance and send the
information to the control centre for action. It should not only highlight the progress but also the
deviations.

Accurate and Timely

The feedback should be accurate in terms of results and should be communicated on time for
corrective action.

Realistic

The system should be realistic so that the cost of control is far less than the benefits. The standards
are realistic and are believed as achievable. Sufficient incentive and rewards are to be provided to
motivate the people.

The Information Flow

The system should have the information flow aligned with the organization structure and the
decision makers should ensure that the right people get the right information for action and
decision making.
Exception Principle

The system should selectively approve some significant deviations form the performance standards
on the principle of management by exception.

Organization as a System
An organization is a stable, formal social structure that takes resources from the environment and
processes them to produce outputs. This technical definition focuses on three elements of an
organization. Capital and labor are primary production factors provided by the environment. The
organization (the firm) transforms these inputs into products and services in a production function.
The products and services are consumed by environments in return for supply inputs.

Management Effectiveness:
Managerial skills require efficiency and effectiveness both. But the distinction between efficiency
and effectiveness is very important to explain why some managers are effective but highly
inefficient, or highly efficient but ineffective.

Effectiveness is not the same thing as efficiency. Efficiency means ‘doing things right’ and
effectiveness means ‘doing right things’. Efficiency is the ability to get things done correctly. It is
an engineering concept implying an input-output relationship. It concentrates on the technical side
of performance.

Managers who are able to minimize the cost of output are treated efficient. On the other hand,
effectiveness is the ability to choose appropriate objectives. An effective manager is one who
choose the right things to get done. For example, a manager who selects to produce only large
cars while the demand for small car is increasing. Such manager would be ineffective even if the
large cars are produced with maximum efficiency and low cost.

If the customers are not willing to buy the product, all efforts would become meaningless. Modern
management should focus on doing effective (resultoriented) activities in an efficient (cost-saving)
manner.
Effectiveness is a broad concept, which centers more on human side. Efficiency is a limited
concept and centers more on technological side. Effectiveness focuses on internal and external
both factors of the organization, where efficiency takes into account only the internal factors. For
example, two workers, using the same amount of resource, produce ten and twelve units in one
day.

Obviously the second worker is more efficient. But if the second worker breaks a tool in the
production process, the first worker may be treated more effective. Manager should be both
effective and efficient, but effectiveness is more important Drucker opines that effectiveness is
the key to the success of an organization. Effectiveness rather than efficiency is essential to
business management. The pertinent question is not how to do things right, but how to find the
right things to do, and to concentrate resources and efforts on them. Types of Information
System

Four Major Types of Systems

The specific types of information systems that correspond to each organizational level. The
organization has executive support systems (ESS) at the strategic level; management information
systems (MIS) and decision-support systems (DSS) at the management level; and transaction
processing systems (TPS) at the operational level. Systems at each level in turn are specialized to
serve each of the major functional areas. Thus, the typical systems found in organizations are
designed to assist workers or managers at each level and in the functions of sales and marketing,
manufacturing and production, finance and accounting, and human resources.
FIGURE 2-2 The four major types of information systems
This figure provides examples of TPS, DSS, MIS, and ESS, showing the level of the organization
and business function that each supports.
Table 2-1 summarizes the features of the four types of information systems. It should be
noted that each of the different systems may have components that are used by organizational levels
and groups other than its main constituencies. A secretary may find information on an MIS, or a
middle manager may need to extract data from a TPS.

TABLE 2-1 Characteristics of Information Processing Systems

TRANSACTION PROCESSING SYSTEMS

Transaction processing systems (TPS) are the basic business systems that serve the operational
level of the organization. A transaction processing system is a computerized system that performs
and records the daily routine transactions necessary to conduct business. Examples are sales order
entry, hotel reservation systems, payroll, employee record keeping, and shipping.

At the operational level, tasks, resources, and goals are predefined and highly structured. The
decision to grant credit to a customer, for instance, is made by a lower-level supervisor according to
predefined criteria. All that must be determined is whether the customer meets the criteria.

Figure 2-3 depicts a payroll TPS, which is a typical accounting transaction processing
system found in most firms. A payroll system keeps track of the money paid to employees. The
master file is composed of discrete pieces of information (such as a name, address, or employee
number) called data elements. Data are keyed into the system, updating the data elements. The
elements on the master file are combined in different ways to make up reports of interest to
management and government agencies and to send paychecks to employees. These TPS can
generate other report combinations of existing data elements.
FIGURE 2-3 A symbolic representation for a payroll TPS
A payroll system is a typical accounting TPS that processes transactions such as employee time
cards and changes in employee salaries and deductions. It keeps track of money paid to employees,
withholding tax, and paychecks.

Other typical TPS applications are identified in Figure 2-4. The figure shows that there are
five functional categories of TPS: sales/marketing, manufacturing/production, finance/accounting,
human resources, and other types of TPS that are unique to a particular industry. The United Parcel
Service (UPS) package tracking system described in Chapter 1 is an example of a manufacturing
TPS. UPS sells package delivery services; the TPS system keeps track of all of its package shipment
transactions.
FIGURE 2-4 Typical applications of TPS

Transaction processing systems are often so central to a business that TPS failure for a few
hours can lead to a firm’s demise and perhaps that of other firms linked to it. Imagine what would
happen to UPS if its package tracking system were not working! What would the airlines do without
their computerized reservation systems?

Managers need TPS to monitor the status of internal operations and the firm’s relations with
the external environment. TPS are also major producers of information for the other types of
systems. (For example, the payroll system illustrated here, along with other accounting TPS,
supplies data to the company’s general ledger system, which is responsible for maintaining records
of the firm’s income and expenses and for producing reports such as income statements and balance
sheets.)

MANAGEMENT INFORMATION SYSTEMS

In Chapter 1, we define management information systems as the study of information systems in

business and management. The term management information systems (MIS) also designates a
specific category of information systems serving management-level functions. Management
information systems (MIS) serve the management level of the organization, providing managers
with reports and often online access to the organization’s current performance and historical
records. Typically, MIS are oriented almost exclusively to internal, not environmental or external,
events. MIS primarily serve the functions of planning, controlling, and decision making at the
management level. Generally, they depend on underlying transaction processing systems for their
data.

MIS summarize and report on the company’s basic operations. The basic transaction data
from TPS are compressed and are usually presented in long reports that are produced on a regular
schedule. Figure 2-5 shows how a typical MIS transforms transaction level data from inventory,
production, and accounting into MIS files that are used to provide managers with reports. Figure
2-6 shows a sample report from this system.

FIGURE 2-5 How management information systems obtain their data from the organization’s
TPS
In the system illustrated by this diagram, three TPS supply summarized transaction data to the MIS
reporting system at the end of the time period. Managers gain access to the organizational data
through the MIS, which provides them with the appropriate reports.
FIGURE 2-6 A sample MIS report
This report showing summarized annual sales data was produced by the MIS in Figure 2-5.

MIS usually serve managers primarily interested in weekly, monthly, and yearly results,
although some MIS enable managers to drill down to see daily or hourly data if required. MIS
generally provide answers to routine questions that have been specified in advance and have a
predefined procedure for answering them. For instance, MIS reports might list the total pounds of
lettuce used this quarter by a fastfood chain or, as illustrated in Figure 2-6, compare total annual
sales figures for specific products to planned targets. These systems are generally not flexible and
have little analytical capability. Most MIS use simple routines such as summaries and comparisons,
as opposed to sophisticated mathematical models or statistical techniques.

DECISION-SUPPORT SYSTEMS

Decision-support systems (DSS) also serve the management level of the organization. DSS help
managers make decisions that are unique, rapidly changing, and not easily specified in advance.
They address problems where the procedure for arriving at a solution may not be fully predefined
in advance. Although DSS use internal information from TPS and MIS, they often bring in
information from external sources, such as current stock prices or product prices of competitors.

Clearly, by design, DSS have more analytical power than other systems. They use a variety
of models to analyze data, or they condense large amounts of data into a form in which they can be
analyzed by decision makers. DSS are designed so that users can work with them directly; these
systems explicitly include user-friendly software. DSS are interactive; the user can change
assumptions, ask new questions, and include new data.
An interesting, small, but powerful DSS is the voyage-estimating system of a subsidiary of
a large American metals company that exists primarily to carry bulk cargoes of coal, oil, ores,
and finished products for its parent company. The firm owns some vessels, charters others, and
bids for shipping contracts in the open market to carry general cargo. A voyage-estimating
system calculates financial and technical voyage details. Financial calculations include ship/time
costs (fuel, labor, capital), freight rates for various types of cargo, and port expenses. Technical
details include a myriad of factors, such as ship cargo capacity, speed, port distances, fuel and
water consumption, and loading patterns (location of cargo for different ports).

The system can answer questions such as the following: Given a customer delivery schedule
and an offered freight rate, which vessel should be assigned at what rate to maximize profits? What
is the optimal speed at which a particular vessel can optimize its profit and still meet its delivery
schedule? What is the optimal loading pattern for a ship bound for the U.S. West Coast from
Malaysia? Figure 2-7 illustrates the DSS built for this company. The system operates on a powerful
desktop personal computer, providing a system of menus that makes it easy for users to enter data
or obtain information.

FIGURE 2-7 Voyage-estimating decision-support system

This DSS operates o n a powerful PC. It is used daily by managers who must develop bids on
shipping contracts.
This voyage-estimating DSS draws heavily on analytical models. Other types of DSS are
less model-driven, focusing instead on extracting useful information to support decision making
from massive quantities of data. For example, Intrawest—the largest ski operator in North
America—collects and stores vast amounts of customer data from its Web site, call center,
lodging reservations, ski schools, and ski equipment rental stores. It uses special software to
analyze these data to determine the value, revenue potential, and loyalty of each customer so
managers can make better decisions on how to target their marketing programs. The system
segments customers into seven categories based on needs, attitudes, and behaviors, ranging from
“passionate experts” to “value-minded family vacationers.” The company then e-mails video
clips that would appeal to each segment to encourage more visits to its resorts.

Sometimes you’ll hear DSS systems referred to as business intelligence systems because
they focus on helping users make better business decisions. You’ll learn more about them in
Chapter 13.

Executive Support Systems

Senior managers use executive support systems (ESS) to help them make decisions. ESS serve the
strategic level of the organization. They address nonroutine decisions requiring judgment,
evaluation, and insight because there is no agreed-on procedure for arriving at a solution.

ESS are designed to incorporate data about external events, such as new tax laws or
competitors, but they also draw summarized information from internal MIS and DSS. They filter,
compress, and track critical data, displaying the data of greatest importance to senior managers. For
example, the CEO of Leiner Health Products, the largest manufacturer of private-label vitamins
and supplements in the United States, has an ESS that provides on his desktop a minute-to-minute
view of the firm’s financial performance as measured by working capital, accounts receivable,
accounts payable, cash flow, and inventory.

ESS employ the most advanced graphics software and can present graphs and data from many
sources. Often the information is delivered to senior executives through a portal, which uses a Web
interface to present integrated personalized business content from a variety of sources. You will
learn more about other applications of portals in Chapters 4, 11, and 12.

Unlike the other types of information systems, ESS are not designed primarily to solve
specific problems. Instead, ESS provide a generalized computing and communications capacity
that can be applied to a changing array of problems. Although many DSS are designed to be
highly analytical, ESS tend to make less use of analytical models.

Questions ESS assist in answering include the following: In what business should we be?
What are the competitors doing? What new acquisitions would protect us from cyclical business
swings? Which units should we sell to raise cash for acquisitions? Figure 2-8 illustrates a model of
an ESS. It consists of workstations with menus, interactive graphics, and communications
capabilities that can be used to access historical and competitive data from internal corporate
systems and external databases such as Dow Jones News/Retrieval or Standard & Poor’s. Because
ESS are designed to be used by senior managers who often have little, if any, direct contact or
experience with computer-based information systems, they incorporate easy-to-use graphic
interfaces. More details on leading-edge applications of DSS and ESS can be found in Chapter 13.
The Challenge of Information Systems: Key Management Issues

Although information technology is advancing at a blinding pace, there is nothing easy or

mechanical about building and using information systems. There are five major challenges
confronting managers:

1. The information systems investment challenge: How can organizations obtain business
value from their information systems? Earlier in this chapter we described the importance
of information systems as investments that produce value for the firm. We showed that not
all companies realize good returns from information systems investments. It is obvious
that one of the greatest challenges facing managers today is ensuring that their companies
do indeed obtain meaningful returns on the money they spend on information systems. It’s
one thing to use information technology to design, produce, deliver, and maintain new
products. It’s another thing to make money doing it. How can organizations obtain a
sizable payoff from their investment in information systems? How can management ensure
that information systems contribute to corporate value?

Senior management can be expected to ask these questions: How can we evaluate our
information systems investments as we do other investments? Are we receiving the return
on investment from our systems that we should? Do our competitors get more? Far too
many firms still cannot answer these questions. Their executives are likely to have trouble
 determining how much they actually spend on technology or how to measure the returns
on their technology investments. Most companies lack a clear-cut decision-making
process for deciding which technology investments to pursue and for managing those
investments (Hartman, 2002).

2. The strategic business challenge: What complementary assets are needed to use
information technology effectively? Despite heavy information technology investments,
many organizations are not realizing significant business value from their systems, because
they lack—or fail to appreciate—the complementary assets required to make their
technology assets work. The power of computer hardware and software has grown much
more rapidly than the ability of organizations to apply and use this technology. To benefit
fully from information technology, realize genuine productivity, and become competitive
and effective, many organizations actually need to be redesigned. They will have to make
fundamental changes in employee and management behavior, develop new business
models, retire obsolete work rules, and eliminate the inefficiencies of outmoded business
processes and organizational structures. New technology alone will not produce
meaningful business benefits.

3. The globalization challenge: How can firms understand the business and system
requirements of a global economic environment? The rapid growth in international trade
and the emergence of a global economy call for information systems that can support both
producing and selling goods in many different countries. In the past, each regional office
of a multinational corporation focused on solving its own unique information problems.
Given language, cultural, and political differences among countries, this focus frequently
resulted in chaos and the failure of central management controls. To develop integrated,
multinational, information systems, businesses must develop global hardware, software,
and communications standards; create cross-cultural accounting and reporting structures;
and design transnational business processes.

4. The information technology infrastructure challenge: How can organizations develop

an information technology infrastructure that can support their goals when business
conditions and technologies are changing so rapidly? Many companies are saddled with
expensive and unwieldy information technology platforms that cannot adapt to innovation
and change. Their information systems are so complex and brittle that they act as
constraints on business strategy and execution. Meeting new business and technology
challenges may require redesigning the organization and building a new information
technology (IT) infrastructure.

Creating the IT infrastructure for a digital firm is an especially formidable task. Most
companies are crippled by fragmented and incompatible computer hardware, software,
telecommunications networks, and information systems that prevent information from
flowing freely between different parts of the organization. Although Internet standards are
solving some of these connectivity problems, creating data and computing platforms that
span the enterprise—and, increasingly, link the enterprise to external business partners—
is rarely as seamless as promised. Many organizations are still struggling to integrate their
islands of information and technology. Chapters 6 through 10 provide more detail on IT
infrastructure issues.
 5. Ethics and security: The responsibility and control challenge: How can organizations
ensure that their information systems are used in an ethically and socially responsible
manner? How can we design information systems that people can control and understand?
Although information systems have provided enormous benefits and efficiencies, they
have also created new ethical and social problems and challenges. Chapter 5 is devoted
entirely to ethical and social issues raised by information systems, such as threats to
individual privacy and intellectual property rights, computerrelated health problems,
computer crimes, and elimination of jobs. A major management challenge is to make
informed decisions that are sensitive to the negative consequences of information systems
as well to the positive ones.

Strategic Management of Business

Strategic management

Strategic management is the ongoing planning, monitoring, analysis and assessment of all that is
necessary for an organization to meet its goals and objectives. Changes in the business
environment require organizations to constantly assess their strategies for success. The strategic
management process helps organizations take stock of their present situation, chalk out strategies,
deploy them and analyze the effectiveness of the implemented management strategies.

Strategic management concepts

Strategic management is predicated on an organization's clear understanding of its mission, or

purpose for existing; its vision for where it wants to be in the future; and the values that will
guide its actions. It requires a commitment to strategic planning, the subset of business
management that involves an organization's ability to set both short- and long-term goals and
plan the strategic decisions, activities and resource allocation needed to achieve those goals.

A process for managing an institution's strategies helps organizations make logical decisions and
develop new goals quickly in order to keep pace with evolving technology, market and business
conditions. Strategic management can, thus, help an organization gain competitive advantage,
improve market share and plan for its future.

Strategic planning
Strategic planning is a process in which organizational leaders determine their vision for the
future as well as identify their goals and objectives for the organization. The process also
 includes establishing the sequence in which those goals should fall so that the organization is
enabled to reach its stated vision.

Strategic planning process

Organizations generally look three to five years ahead when engaged in strategic planning.

The strategic planning process results in a strategic plan, a document that articulates both the
decisions made about the organization's goals and the ways in which the organization will achieve
those goals. The strategic plan is intended to guide the organization's leaders in their decision-
making moving forward.

Types of Strategies

There are a number of different growth strategies, but the most common are:

• Horizontal integration – The merger or acquisition of new business operations. An

example of horizontal integration would be Apple entering the search-engine market or a
new industry related to laptops and smartphones.
• Vertical integration – Integrating successive stages in the production and marketing
process under the ownership or control of a single management organization. An example
might include a gas-station company acquiring an oil refinery.
• Diversification – A corporate strategy in which a company acquires or establishes a
business other than that of its current product. Diversification can occur either at the
business-unit level or at the corporate level. At the businessunit level, diversification is
most likely to involve expansion into a new segment of an industry in which the business
already competes. At the corporate level, it generally means entrance into a promising
business outside the scope of the existing business unit.
 Levels of Strategy

Corporate-level Strategy

• At this level, strategic decisions relate to organization-wide policies and are taken care by
top-level management (BOD) with a vision of determining
‘Where the company wants to be?’
• It has two main aspects- Formulation of Strategy (strategic planning) and Strategy
Implementation
• The nature of strategy at this level tend to be value-oriented, conceptual and then other
levels.
• There is also greater risk, cost and profit potential as well as greater need of flexibility
associated with this level.
• Major financial policy decisions involving acquisition, diversification and structural
redesigning belong to this level.

Business-Level Strategy

• Business-level strategy is more likely related to a unit within the whole. It is concerned
with competition in a market.
• The concerns are about what products or services should be developed and offered to
which markets in order to meet customer needs and organizational objectives.
 • At this level, multifunctional strategies developed at corporate level are formulated and
implemented for specific product market in which the business operates. Thus, managers
at this level translate general directions and intent into concrete functional objectives.
• Decisions at this level include policies involving new product development, marketing
mix, research & development, personnel, etc.

Functional/Operational-Level Strategy

• Functional strategy involves decision-making with respect to specific functional areas-

production, marketing, personnel, finance etc.
• While corporate and business level strategies are concerned with
“Doing the right things”, functional strategies stress on “Doing things right”. • Operating level
strategy is concerned with strategic approaches for managing frontline operating units (like
plants, sales, etc) and for handling day to day tasks of strategic significance (like advertising
campaign, purchasing materials, inventory control, maintenance, etc.). Thus, it focuses on how
the different functions of the enterprise contribute to the other levels of strategy.
• Thus, functional level strategic management is the management of relatively narrow areas
of activity, which are of vital, pervasive or continuing importance to the total organization.

Specific Types of Plans

 Following the generation of a vision and mission statement, and the subsequent operations that
will allow these to be achieved, smaller facets of the planning process begin to come into play.
These include five general planning frames, which can be applied to different aspects of the
operational process:

• Short-range plans: Short-range plans generally apply to a specific time frame in which a
specific series of operations will be carried out, assessed, and measured. The standard
short-range plan will represent annual or semiannual operations with a short-term
deliverable. These short-term plans cover the specifics of each dayto-day operation.

• Long-range plans:Long-range plans are arguably the most crucial to the continued
success of a business, ultimately highlighting the way in which operations interact to
achieve long-term profitability and returns on investment. As corporations grow in size
and complexity, so do the long-range plans that constitute the interaction of individual
processes. Long-range plans are those most closely related to the overall strategic-planning
process.

• Operational plans: Operational plans are the most specific subset of strategic planning,
describing the specific objectives and milestones a business should consider in executing
each particular operation. Operational plans establish
both the budgetary resources necessary for execution and the tangible and easily assessed
objectives that can define the success of any given project.

• Standing plans: Standing plans are based on the operations that must be repeated
indefinitely within a business or corporation. Standing plans govern the processes that
occur regularly, providing an overview for consistent activities.

• Single-use plans: As opposed to standing plans, single-use plans cover a specific

operation or process that is an outlier to normal operations. In all likelihood, a single-use
plan will never need to be repeated and will simply cover the content involved in one
circumstance.

Tools for Planning

Often discussed in tools for planning are models that measure the internal and external
environments (e.g. Porter’s Five Forces, SWOT, Value Chain, etc.). These models create
forward-looking projections based on past and present data; therefore, they are useful only
once enough data have been collected. Because of this, tools for planning largely focus on
generating enough data to construct valid recommendations. These tools can include:
• Industry experts: Whether internal employees or external consultants, a few individuals
with extensive experience in a given industry are valuable resources in the planning
process. These industry experts can move beyond the PESTEL and Porter’s Five Forces
frameworks, making intuitive leaps as to the trajectory of the industry.

• Consultants: Consultants are commonly brought in during strategy formulation and for a
variety of other reasons. Most important of these would be providing an objective lens for
internal affairs. It is difficult to see the whole house from inside the house, and upper
management can utilize an external opinion to ensure they are seeing operations clearly
and objectively.
• Inclusion of stakeholders: Upper management will want as much information as possible
from everyone involved. Some examples include consumer surveys on satisfaction,
supplier projections for costs over a given time frame, consumer inputs on needs still
unfilled, and shareholder views. The inclusion of
stakeholders offers a variety of tools, each of which may or may not be a useful input
depending on the context of the plan.
What is Strategic Analysis?
Strategic analysis is a process that involves researching an organization’s business environment
within which it operates. Strategic analysis is essential to formulate strategic planning for
decision making and smooth working of that organization. With the help of strategic planning,
the objective or goals that are set by the organization can be fulfilled.

In a constant strive to improve, organizations must periodically conduct a strategic analysis which
will, in turn, help them determine what areas need improvement and areas that are already doing
well. For an organization to function efficiently, it is important to think about how positive
changes need to be implemented.

Types of Strategic Analysis

1. Internal strategic analysis:

As the name suggests, through this analysis organizations look inwards or within the
organization and identify the positive and negative points, and establish the set of resources
that can be used to improve the company’s image within the market. Internal analysis starts
from evaluating the performance of the organization. This includes evaluating the potential
of an organization and its capacity to grow.

The analysis of the strengths of the company should be oriented to the market, focusing on
the client. The strengths only make sense when they help the company to fulfill client’s
needs. When doing an internal strategic analysis one should also know the weaknesses and
limitations that a company faces existentially or in the future.

2. External strategic analysis:

Once the organization has successfully completed its internal analysis, the organization
needs to know about external factors that can be a hindrance in their growth. To do so, they
need to know how the market functions and how consumers react or behave to certain
products or services. Measuring customer satisfaction is a common external analysis
method. PESTLE analysis is one of the most widely used external analysis techniques. The
 process one is most likely to adopt when using a PESTLE technique is relatively a simple
one.

PESTLE analysis (Political, Economic, Social, Legal and Environmental) describes a

framework of macro-environmental factors used in the environmental scanning component of
external strategic analysis. The model has been extended by adding Ethics and Demographic
factors. It is a part of the external analysis when conducting a strategic analysis or doing market
research and gives an overview of the different macroenvironmental factors that the
organization has to take into consideration. By using PESTLE analysis one can:

a. Find out the key issues beyond the organization’s control, like changes in political scenario
changing rules that can be implemented at any point in time.
b. Identify the impact of each issue.
c. See how important these issues are to the organization.
d. Rate the likelihood of its occurrence.
e. Briefly consider the implications if the issue did occur.

MIS for Strategic Business Planning:

In simple terms, strategic business planning is a series of logical and creative steps to identify
the long-term business objectives ranked by importance. It is a complex process of collecting
information, analyzing input data and conducting internal and external assessments of
available business resources. Often SWOT analysis (a kind of environmental analysis) is used
as the major assessment tool to investigate the business environment and identify Strengths,
Weaknesses, Opportunities and Threats of the chosen business model. The process plays a
central role in ensuring a company’s financial and social development.

Strategic Business Planning is a high-level management process undertaken to identify and

approve the framework, vision, long-term goals, directions, and objectives of a business
company in order to ensure that this company is appropriately positioned considering its
marketing capabilities, technological advantages and available resources. It serves as a
foundation for the development of tactical plans and solutions to achieve desired
entrepreneurial intentions and commercial benefits.
MIS for strategic business planning is intended to accomplish the following key objectives:

 Provide a framework of tactical business decisions and approvals.

 Explain the business to people involved in business implementation order to inform and
motivate.
 Stimulate change management and become a building block for further business planning and
development.
 Assist business benchmarking & performance monitoring.