ITS-510

MIDTERM EXAM

SUMMER 2020

Maliha Farzana

ID:20164092

Question no:2
Considering the management dimension of an organization, describe three different
management information systems along with the sources of information for each individual
system which constitutes each management dimension.
Answer no: 2
Organizations have a framework made up of various tiers and specialties. Their structures reveal
a clear-cut division of labor. Authority and responsibility in a corporate organization is defined
as a hierarchy or pyramid structure.  The upper levels of the hierarchy are managerial,
professional, and the administrative personnel, while the lowest group comprises of the operating
workers.
The level consists of:
 Senior management / Strategic management Executives
 Middle Management / Tactical Management
 Operational management / Operational Management

That of these tiers has specific information requirements for decision support and different
Constitutes or communities that the information systems intend to represent. The three main
decision-making structures in the company are as follows:
 Information requirements of key decision-making groups
Various levels of management in the firm have differing information requirements for decision
support because of their different job responsibilities and the nature of the decisions made at
each level.

There are various kinds of systems as there are specific preferences, specialties, and stages in an
organization. No one program will have all the knowledge and organization needs. In the
illustration, the organization is categorized into strategic, managerial, and organizational tiers
and further categorized into functional fields such as advertising and promotion, engineering and
development, finance and accounting, and human resources. Systems are structured to reflect
many specific organizational needs (Anthony, 1965).

As we have mentioned, the characteristics of decisions faced by managers at different levels are
quite different. Decisions may be structured, semi-structured and unstructured. Unstructured
decisions are those in which the decision-maker must provide judgment, evaluation, and
perspective into the nature of the problem. Each of these decisions is unique, vital, and non -
repetitive, and there is no well-understood or concurred process of making them.
Structured decisions, on the other hand, are repetitive as well as routine, and decision-makers
can follow a specific course of treatment to be effective in handling them. Many decisions
contain both components and are called semi-structured decisions, in which only part of the
question has a straightforward solution given by the agreed protocol.

SENIOR MANAGEMENT:
Senior managers are concerned with general yet relevant data on changes in business sector and
society in general that may influence the company's long-term and near-term future, strategic
goals, immediate and future productivity, specific slowdowns and difficulties affecting its
operational capabilities, and the ultimate ability of the company to accomplish its goals.

Senior executives continue to be exposed to many non - structured decision-making situations

that are open-ended and analytic, requiring insight based on a wide range of information sources
and direct knowledge. Responding to these queries would require access to media, government
documents, and industry views, as well as high-level firm ’s performance synopses. However,
the answer would also demand senior managers to use their own professional judgement.
EXECUTIVE SUPPORT SYSTEM (ESS)
Senior managers are using Executive Support Systems (ESS) to help them make decisions. The
ESS operates at the functional stage of the company. They cover non-routine actions involving
judgement, observation, and perspective as there is no approved standard for finding a solution.
The ESS is incorporated data on external events, such as new tax legislation or competitors, but
also to gather summed up data from existing MIS and DSS. They extract, store, and monitor vital
data, showing the most relevant data to senior managers. For instance, the CEO of Incepta
Pharmaceutics, one of the largest pharmaceutical and supplement manufacturers in Bangladesh,
has an ESS on his desktop that offers a minute-to - minute view of the company's financial
results as calculated by working capital, accounts receivable, accounts payable, cash flow, and
inventory. Unlike other types of information systems, the ESS is not specifically developed to
solve problems. Instead, the ESS offers a generic computation and communication capability that
can be extended to a changing variety of issues. The concerns ESS help in addressing involve the
following: what business will we be doing? What are the competitors doing there? What new
acquisitions would protect us from seasonal business shifts? What units are we expected to sell
to collect cash for acquisitions?

This figure provides examples of TPS, DSS, MIS, and ESS, showing the level of the
organization and business function that each support.

MIDDLE MANAGEMENT: Middle management is associated with accurate, timely reports on

company results, including sales and cost reduction targets, and with the implementation of
strategies and expenditures to fulfill the strategic priorities established by senior management.
This group must make crucial decisions about the deployment of resources, the creation of short-
term strategies and the analysis of the success of departments, task forces, teams, and different
project groups. The role of middle managers is mostly carried out by teams or limited groups of
managers operating on a job.
Middle management and corporate management seem to experience more organized decision-
making situations, but their judgments can involve unstructured elements. A standard middle-
level management decision could be "Why is the order fulfillment report showing a decrease in
the last six months at a delivery center in Dhaka? The middle manager will receive a report from
the company's organizational department or inventory management program on purchasing and
operational performance at the Dhaka Distribution Centre. This is the formal aspect of the
judgment. Yet before a response can be sought, this middle manager would have to question staff
and collect more unstructured knowledge from other outlets regarding local economic dynamics
or market patterns.
MANAGEMENT INFORMATION SYSTEM(MIS):
We define management information systems as the study of business and management
information systems. The word Information Management Systems (MIS) often applies to a broad
group of information structures performing administrative functions. Management Information
Systems (MIS) support the executive level of the enterprise, providing executives with
documentation and also online exposure to the company's actual results and past documents.
Usually, MIS is almost entirely targeted to internal, not environmental, or external, cases. MIS is
largely responsible for preparing, monitoring and decision-making at the management stage.
They usually rely on the underlying transaction processing systems for their results. MIS
summarizes and comments on the essential activities of the organization. The simple transaction
details from TPS are compact and are typically delivered in lengthy reports provided daily.
OPERATIONAL MANAGEMENT: Operational management tracks the efficiency of each
sub-unit of the company and oversees specific staff. Operational administrators monitor
individual tasks and assign resources throughout the project budget, establish deadlines, and
make staffing decisions. Operational tasks should also be carried out by teams.
 Rank-and - file employees tend to take more structured decisions. For example, a sales account
manager sometimes needs to make choices on expanding credit to consumers through checking
the firm's consumer records containing credit details. In this scenario, the response is highly
organized, a regular decision has been made thousands of times a day in most companies, and the
reaction has been pre-programmed into a corporate risk control or credit monitoring framework.

 The kinds of challenges made by project managers cannot be classified easily by the level of the
organization. The teams are small units of middle and organizational managers, and sometimes
the workers are allocated unique roles that can last a few months or a few years. Their roles that
include unstructured or semi-structured decisions, such as the introduction of new goods, the
creation of new ways of accessing the market or the reorganization of sales regions and
compensation structures.
TRANSACTION PROCESSING SYSTEM (TPS):
Transaction Processing Systems (TPS) are the basic business systems at the operational level of
the organization. A transaction processing system is a computerized system that performs and
records the day-to-day transactions necessary to conduct a business. For example, sales order
processing, hotel reservation processes, accounting, staff record keeping, and delivery. At the
operational level, tasks, resources, and objectives are predefined and highly structured. The
decision to grant credit to a customer, for example, is made by a lower-level supervisor based on
predefined criteria. All that needs to be decided is that the client fits the requirements.
Transaction processing systems are also so vital to a company that the breakdown of TPS for a
few hours will contribute to the collapse of a firm and, potentially, of other businesses connected
to it. Wonder what would happen to UPS if the shipment monitoring device did not work! How
will airlines do without their computer-based reservation systems? Managers need TPS to
monitor the status of internal operations and the relationship of the firm to the external
environment. TPS is also a significant source of knowledge for certain forms of programs.
Managers need TPS to monitor the status of internal operations and the relationship of the firm to
the external environment. TPS is also a significant source of knowledge for certain forms of
programs.

Question no: 7
Describe role of IS with examples in this globalized and highly competitive business
environment.
Answer no:7

THE ROLE OF INFORMATION SYSTEM (IS):

The task of IS is to help the main elements of operating an organization, such as communication,
record-keeping, decision-making, review and preservation of evidence, decision-making, data
processing and more. Companies use this knowledge to optimize their business activities, make
strategic choices and implement competitive transactions, make more informed decisions, and
achieve a competitive advantage. The role of IS in business can be seen in how it can benefit the
organization.
Become more competitive, maximize efficiency, save resources, enhance Customer experience,
streamline communications, and enhance management decision-making.

First IS role being to automate all the business process so that minimum intervention of human
being is required. Thus, our process will be faster product will be enriched and service will be
delivered quicker than earlier. We will get better service in a less cost.

1. Creating globalization opportunities: Going Global, Internet reduced E-mail, online instant
messaging, and mobile phones have become essential tools for the conduct of business.
Information systems are the basis of fast-paced supply chains. The Internet allows many
businesses to buy, sell, advertise, and request feedback from their customers online.
Organizations are trying to find the best and efficient by digital format enabling their core
business processes and making them more competitive. The Web has accelerated globalization
by significantly raising the expense of manufacturing, purchasing, and distributing products on a
global scale. New information system trends involve emerging digital mobile platforms, online
software as a service, and cloud computing.
For example: Amazon has started their business at the US very first as they are a online based
company they have easily shifted to different countries with little to no time. They did not to set
up offices across the world rather they have created extremely well thought website with
payment gate away and now they are delivering all over the world.
It all happened because of the IS. If it was traditional business without proper IT system, it
would have taken Amazon decades to reach where they are right now.

2. Helps the emerging digital firm: “The first rule of any technology used in a business is that
automation applied to an efficient operation will magnify the efficiency. The second is that
automation applied to an inefficient operation will magnify the inefficiency.”-Bill Gates
(http://www.saidwhat.co.uk/topicquote/technology)

With the development of technology and the internet, business organizations have embraced
information and communication technology (ICT) and a number of e-business applications that
have offered many benefits across a wide range of intra-and inter-company business execution of
transactions. Through the usage of ICT technologies, information and knowledge processing
within the organization has greatly increased, growing transaction costs and increasing the
quality and efficiency of transactions with both B2B (business-to - business) and B2C (business-
to - consumer) transactions. These have also proven to be effective resources for strengthening
public relations and the efficiency of services rendered for established and new customers.
Sharing of knowledge across shared electronic files and networked computers greatly increases
the performance of corporate activities such as reporting, data collection and other tasks such as
arranging incoming orders and planning invoices.

For example: Bank like BRAC bank, EBL has highly invested on IS. They have introduced
Online banking which helps customer to do banking transactions, download their banking history
and many more within no time. For this, Many customer are performing these activities by their
own and do not even need to go the bank. Thus, bank has reduced their own work, giving better
service and earning profit more.

Furthermore, the need for new organizational models to evolve often derives from the reality that
technology is no longer simply a component in the chain of business processes, but instead a
guiding force behind this chain, both in the internal and external market environments.
Question no:3
Some organizations are becoming leader in their respective industry by setting smart
business strategies and adapting best suitable business models. Describe with examples how
Porter’s competitive forces model helps companies develop competitive strategies using
information systems and becoming leader in the industry.
Answer no: 3

If we take a look around, we can see always there's an excellent company. Throughout the car
market Industry, Toyota is a superior performer. Pure online retail, Amazon is the leader;
Walmart, the world's biggest supermarket, is the out-of-line seller is the leader. Firms that "do
better" than others are have competitive advantages. over others: they either have access to
special resource base that others do not have, or they are able to make more efficient use of
commonly available resources — usually for the benefit of superior intelligence and information
power.
In every case, they 're having good growth in sales, competitiveness or productivity (efficiency)
All of which ultimately translates into a higher stock market over time above their competitors.

Porter’s Competitive Forces Model:

Michael Porter 's competitive strengths model is probably the most widely used concept for
describing competitive advantage. The Model provides a general view of the company, its
competitors, and the environment of the industry.

In Porter’s competitive forces model, the strategic position of the firm and its strategies are
determined
not only by competition with its traditional direct competitors but also by four other forces in the
industry’s environment: new market entrants, substitute products, customers, and suppliers.

Traditional Competitors
All companies share market space with other competitors who are on an ongoing basis.
Developing modern, more effective methods of manufacturing consumer goods and services and
the try to attract customers by developing their brands and imposing switching costs to their
customers.
New market entrants: New companies have certain benefits, including not being locked in
outdated technology and better motivation, as well as disadvantages, like less expertise and little
brand awareness. Many sectors have smaller barriers to entry, i.e. reduced prices for a new
business to join the market. For starters, it’s pretty quick to launch a pizza company, or just about
every small retail business, Yet it's a lot more costly and complicated to reach a machine device.
Business, which has very high capital costs and requires considerable expertise. New companies
have a number of possible advantages: they are not stuck in outdated plants and machinery, they
also employ younger workers, who are cheaper and perhaps more innovative,
They 're not burdened with old worn-out brand names, and they're "more hungry"(more highly
motivated) than traditional industrial occupants and the information that is hard to acquire.
Such benefits are also their weakness: they rely on foreign funding for new plants and machinery
that may be expensive; they have a smaller skilled workforce; and they have no market
awareness.
.
Substitute products and services: These are replacements that may be utilized for the
consumers because the costs are too high. For example, a conventional telephone service may be
substituted with an Internet telecommunications service. The more alternative goods and services
in your business, the less you can regulate costs and increasing the profit margins.

Customers: The influence of customers increases if they can quickly turn to a competitor's
goods and services, or if they can compel a business and its rivals to negotiate on demand alone
in a competitive environment where there is no product competition and both costs are
understood immediately (such as on the Internet). For example, in the college textbook sector
available on the Web, Students (customers) may consider several suppliers to just about any
current college textbook. In this case, online customers have extraordinary power over used book
companies.

Suppliers: The more different suppliers a company has, the more control it can exercise over
suppliers in terms of prices, quality, and delivery schedules. Of starters, producers of notebook
PCs nearly always have several competitive suppliers of key parts, such as keyboards, hard
drives and display screens.

Knowing Porter's Five Forces and how they contribute to the market will help a organization to
adapt its corporate plan and allow greater use of its capital and produce higher returns for its
investors.
QUESTION NO:4.
Please describe FOUR Generic strategies for dealing with competitive forces, enabled by
using IT and how organization is benefiting itself putting these strategies in action.

Answer no: 4

Four competitive strategies using information systems:

There are few generic strategies by which an organization can gain competitive advantages
without Porter’s Competitive advantage Model. These generals’ strategies has been discussed
below with example.

Low-Cost Leadership
Use information systems to achieve the lowest operating costs and lowest prices. Manufacture
goods and services at a lower price than competitors, while at the same time enhancing quality
and level of service. When a business produces almost similar product to their competitor with
some limitations or changes, they can serve the customer with lower price and gain leadership.
For example in the telecommunication industry in Bangladesh, a few years back Airtel was
leading between young generation as the call rate was much lower than Grameen phone or
ROBI, the only limitation they have was there was almost no network outside Dhaka.

Product Differentiation
Using information technology to allow new products and services or to dramatically improve
consumer experience by utilizing the current products and services.
When a Business have right IT installed, they will be able to produce products with variations
and features that will defernite them from the rest of their competitors, leaving them with a
competitive advantage. The product will serve the same purpose as their competitor but with an
extra benefit alongside with it.
For example: Keya, Lux these soaps producing company were very popular in Bangladesh at the
late 90s. There was a little bit of differentiation here and there between these competitors with
packaging, design, perfume etc. but at that time Aromatic beauty soap with the same feature
same purpose but with a different slogan that it is a halal soap. They claimed that the animal fat
used in their soap comes from vegetable oil which was safe for both Hindu and Muslim religious
people to use. The other products also had animal fat in their soap there was no difference but the
slogan or the word added “halal” which made a big change in their market share for the next few
years.

Focus on Market Niche

Utilize information systems to facilitate a specific market focus and better serve this restricted
target market than competitors. Information systems support this tactic by producing and
analyzing data on fine-tuned sales and marketing techniques. Information systems enable firms
to closely assess customer purchase patterns, tastes and preferences in order to effectively launch
marketing campaigns on smaller and smaller target markets.
For example, Grameen phone enterprise product, they create various packages and sell bundles
to different organization at a certain price. Grameen phone also serves regular customer s but that
is the different part of the wing. in their enterprise product they may include that if employees
from higher position travels from Dhaka to Cox’s bazar and they are the user of Grameenphone
Enterprise product they can sit at that airlines lounge and get many other benefits.

Strengthen Customer and Supplier Intimacy:

Use information systems to tighten linkages with suppliers and develop intimacy with customers.
Marketing strategy where a service provider or a product retailer is getting closer to their
business. Customers. The benefits of greater customer intimacy for a business could include
Enhanced strongly targeted problem-solving skills and enhanced adaptation. Services matching
the client's desires as well as greater degrees of consumer satisfaction. Consumer and supplier
relationship approaches leverage knowledge technologies to establish close links and
commitment between consumers and suppliers. Consumers and Suppliers are essential to the
firm.
Serving clients well contributes to the retention of consumers, which generates revenues and
profits E.g.   High end hotels that use computers to screen customers Preferences and use for
monitoring and customizing the environment
Intimacy with vendors allows them to make a valuable difference Inputs, which lower costs E.g.:
Walton Information System, which links sales records to sales records Manufacturer of the
contract
By following these generic strategies, a business can easily gain competitive advantage against
its competitors.

QUESTION NO:1
What are the business benefits of analyzing customer purchase data and constructing
behavioral profiles? Please describe along with example the role of IS in this customer
profiling. Are these practices by credit card companies ethical? Briefly describe your
arguments to support your opinion.

Answer no: 1
Now a day’s people are getting more comfortable using credit card/ debit card while making a
purchase. Different banks are also encouraging consumers to get debit or credit card by giving
attractive promotional offers and discounts in various sectors. We are also getting the 45-day
benefits of paying later. With these lucrative offers in sight, we do not see the trap we are falling
into. We are getting into the trap of habit of buying products even when we do not have enough
money to buy. In Addition, if we cannot make the full payment after the given time there is a
very high percentage of interest rate.
Analyzing customer purchase data and building behavioral profiles:
Each time we make a payment with a credit card, a record of that sale is entered into a database
managed by the card issuer. So, the credit card company knows about all of our transactions and
where we are spending our money.
That transaction is given a four-digit category code that defines the form of transaction that has
been made. Such codes help credit card firms to know a lot about each of their clients at a glance
and to consider the behavioral buying of consumers.
The Credit card company having accusation of the other retail shops, clothing shops etc. where
they are putting their offer for us to go and purchase product exchange our information for
money or profit. They are also signing NDA with these companies but not with their customers.
They are taking the customers information, which was supposed to be private information, they
are selling it to other companies.
Business advantages of evaluating consumer purchasing data and creating behavior
profiles:
 Credit Card Companies use them more precisely to target future promotions for
additional products.
 Data help card issuers prevent credit card fraud by recognizing purchases that seem
unusual compared to normal past purchases of the card holder.
 Used for law enforcement officers to hunt down criminals.
 Credit card firms are also focused on analyzing credit card data to identify high-risk
cardholders.
 The data provide new perspectives on the relationship between certain types of purchases
and the potential of the customer to pay off credit card balances and other debts.
 Use personality patterns to build intimate connections with customers that owe them
money and to persuade them to pay off their balances.

Are these practices by credit card companies ethical:

When a credit card company sells the data to a big organization for example Aarang. Aarang can
easily analyze suppose the last six months purchase pattern and send their target customer SMS
or email about their product promotion according to the spending pattern of that customer. If you
have roaming phone when you go to Singapore, just when you landed, they will send you an
SMS. How do they know they are always keeping track? You are a consumer of Banglalink, and
you just entered Bashundhara city, a SMS pops up on your phone coming from Banglalink
saying there is a discount going on MUSTAFA MART. You go there to purchase with your
credit card giving 2.5% extra money. That money gets divided between the telecom and the
organization they are associated with.
Credit card companies are collecting these data to create individual and group data profile. Then
they map out who falls under which category and they make promotion via that data.
In this pandemic not much promotion is going on as they know that people are not going outside
of the house or will not spend money here and there. So, promoting on the SMS will be a loss.
Even though there are benefits of analyzing the credit card purchase details of customers we
cannot ignore that these practices are convenient for companies to manage their customers. It is
not ethical, however, since it is relative to privacy of the consumers. These are a breach of
privacy as the firms must maintain records of people using this payment card. It affects the daily
lives of customers. As the credit card company has not taken permission from the consumers to
sell or use their data, thus this is not ethical. They are violating the consumer privacy. Not only
that as they are collecting and mapping the data, they are also taking control of my budget and
money spending in their hands. This can never be ethically correct.