Royal University of Phnom Penh

Department of International Business Management

Advantages and Disadvantages of

Management Information System
(MIS)

Group Members: Instructed by: Lecturer Sam Chamreun

1. Nith Chansreyneath (23) Class: IBM (M3)
2. Ty Socheata (13)
3. Thouern Sreynath (20)
4. Neang Chakriya (21)

Academic Year: 2020-2021

Table of Contents
I. Introduction

II. What is Management Information System?

III. Categories of MIS

IV. Advantages of MIS

4.1. Delivered data on time

4.2. Improve the quality of decision
4.3. External and internal change
4.4. Avoidance of crisis
4.5. Analyze trend
4.6. Easy to control with specific plan
4.7. Availability of customer data
4.8. High activities where competitive strategies can be applied
4.9. Collect data from different firm functions and store data in single central data
repository
4.10. Business information value chain

V. Disadvantages of MIS

5.1. Lack of flexibility to update

5.2. Expensive
5.3. Heavy reliance on technology
5.4. Lack of security
5.5. Increase unemployment
5.6. Risk of fraud
5.7. Dominant culture
5.8. Maintenance
5.9. Ineffective
VI. Conclusion
VII. Example
References
 I. Introduction

Nowadays, leading companies and organizations are embracing information technology as

a competitive tool for creating new goods and services, establish new partnerships with suppliers,

outperform rivals, and drastically alter their internal processes and structures. For example, using

MIS strategically can assist a company in becoming a market innovator. By offering a unique

product or service to satisfy the demands of clients, a company can raise the cost of market entrance

for potential competitors, gaining a competitive advantage.

II. What is Management Information System?

Management Information System (MIS) is an organizational technique for delivering past,

current, and projected information about internal operations and external intelligence, depending

on the sort of requirement it fulfills. It helps decision-makers by providing standardized

information in a timely manner to support an organization's planning, control, and operation

functions. MIS can also be defined as an academic study of information systems and the associated
network of hardware and software that people and organizations use to gather, filter, process,

generate, and distribute data.

III. Categories of MIS

The phrase "management information system" encompasses a wide range of specialized

systems. The following are some of the most common types of systems:

• Executive Information System (EIS): An EIS is used by senior management to make

decisions that affect the whole company. Executives want high-level information that can

be drilled down down as needed.

• Marketing Information System (MkIS): Marketing teams use MkIS to report on the

success of previous and current campaigns, as well as to plan future initiatives based on

the lessons gained.

• Business Intelligence System (BIS): Operations use a BIS to make business decisions

based on data and information acquired, integrated, and analyzed. This system is similar

to EIS, except it is used by lower-level managers as well as executives.

• Customer Relationship Management System (CRM): A CRM system keeps track of

important information about customers, such as past sales, contact information, and sales

prospects. CRM is commonly used by marketing, customer care, sales, and business

development teams.

• SFA (Sales Force Automation System): A specialized component of a CRM system

that automates many of the operations performed by a sales team. Contact management,

lead tracking and creation, and order management are all examples.

• TPS (Transaction Processing System): A management information system (MIS) that

completes a sale and handles the associated details. A TPS can be a point of sale (POS)
 system or a system that allows a traveller to search for a hotel and include room options

such as price range, type and number of beds, or a swimming pool, before selecting and

booking it. Employees may report on use trends and track sales over time using the data

they've gathered.

• Knowledge Management System (KMS): Customer service can use a KM system to

answer questions and troubleshoot problems.

• Financial Accounting System (FAS): This MIS is designed for finance and accounting

departments, such as accounts payable (AP) and accounts receivable (AR) (AR).

• HRMS (Human Resource Management System): This system keeps track of employee

performance and payroll information.

• Supply Chain Management System (SCM): Manufacturing businesses use SCM to

track the movement of resources, materials, and services from the point of purchase to the

point of shipment of final goods.

IV. Advantages of Management Information System

MIS may provide a competitive advantage since the faster the decision-making cycle, the

better your operational cycle, and the more competitive your business will be. The effectiveness

of your company's business decisions determines its competitiveness. Due to growing competition

in the business market, decisions must be made faster and the operational flow must not be

disrupted. MIS serves as a catalyst, accelerating the overall flow of work by helping decisions with

data and information. The following are some of the key advantages of MIS that may help a

company get a competitive edge in terms of strategy and operations:

4.1. Delivered data on time

 One important advantage of MIS is that it quickly delivers precise information that may be

used to make wise decisions. Timeliness is essential since having the accurate data at the right

moment may be a huge advantage. A delay, on the other hand, might render the exact piece of

information outdated and worthless. You receive the correct information too late, you lose a vital

customer or another valued partner, and so you lose a critical edge. Speed is important, as is the

timeliness of data and information.

4.2. Improve the quality of decision

Enhanced data availability decreases uncertainty and allows managers to make more

rational decisions based on trustworthy information. Decisions based on facts are more effective,

and business managers must base their decisions on facts in today's hyper-competitive market. A

small but critical piece of information might alter the outcome of a crucial decision and result in

increased turnover. Strategic choices must be founded on data and facts, and MIS fulfills this

demand effectively. Business leaders must make critical decisions, and they are unable to do it by

sifting through large amounts of data. They need to be able to access reports on which to base their

decisions.

4.3. External and internal change

Information gathered by MIS is a valuable asset. It helps in achieving a transformation in

work life style in order to attain better results. MIS has made the world a smaller place. An attempt

to control the disaster in a global reorganization context. Health-consciousness among the group

leads to fewer sufferings.

MIS also helps in internal change. MIS will change the business process, as well as update and

establish new standards. The use of management information systems (MIS) is essential for the
process of continuous improvement. As a result of MIS, the hierarchy will be reduced, resulting

in lower operational costs. MIS is focused on "shared information." MIS also evaluates outcomes

and performance.

4.4. Avoidance of crisis

The best way to analyze a stock (stock market) is to look at its history. Money control and

other top websites rely on MIS. MIS, on the other hand, helps in the tracking of margins and

profits. With a great information system in place, you'll be able to see where your company is

headed and maybe avoid a problem before it occurs. Ignoring warnings from MIS reports is a

terrible idea.

4.5. Analyze trend

Forecasts and future goals must be determined by management for strategic planning. As

a result, having reliable information on current industry trends is critical for developing such a

plan. MIS can also be used to improve control throughout the company and more efficiently

manage resources. It could be used for more accurate forecasting of a company's future. Managers

can utilize reports created on a regular basis to analyze patterns and make predictions regarding

future events. MIS utilizes a variety of statistical methods to analyze current market patterns and

forecast future trends based on that data. As a result, a company may chart a strategic route that

will guide it securely to the desired outcomes.

4.6. Easy to control with specific plan

Now, we will see, what is planning and control. Every organization in order to function

must perform, certain operations. For Example, a car manufacturer has to perform certain

manufacturing activities, a wholesaler has to provide water to its area of jurisdiction. Also, an

organization must control the operations in the light of the plans and targets developed in the
planning process. The car manufacturer must know if manufacturing operations are in line

with the targets and if not, he must make decisions to correct the deviation or revise his plans.

Information systems may be created to assist upper management in planning the company's

strategic direction or to assist manufacturing in controlling plant operations. Other types of

information systems include transaction processing systems, which merely record normal

company operations like payroll, shipping, or sales orders, and office automation systems, which

include word processing, electronic mail, and digital filing. Ideally, an organization's different

types of information systems are interconnected to enable for information exchange. It facilitates

control: Management information systems (MIS) act as a connection between managerial planning

and control. It increases management's capacity to assess and improve performance. Computers

have improved data processing and storage while lowering costs.

4.7. Availability of customer data

MIS giving an overall picture of the company and acting as a communication and planning

tool. The availability of the customer data and feedback can help the business houses to align their

business process according to the need of the customers. The effective management of customer

data can help the company to perform direct marketing and promotion activities. Therefore,

information is considered to be an important asset for any company in the modern competitive

world.

4.8. High activities where competitive strategies can be applied

Another strategic use of MIS involves forging electronic linkages to customers and

suppliers. This can help companies to lock in business and increase switching costs. Finally, it is

possible to use MIS to change the overall basis of competition in an industry. For example, in an
industry characterized by price wars, a business with a new means of processing customer data

may be able to create unique product features that change the basis of competition to

differentiation.

The basic process of systems development involves defining the project, creating a model

of the current system, deriving a model for the new system, measuring the costs and benefits of all

alternatives, selecting the best option, designing the new system, completing the specific

programming functions, installing and testing the new system, and completing a post

implementation audit.

4.9. Collect data from different firm functions and store data in single central data

repository

In Minimizes information overload: MIS change the larger amount of data in to

summarized form and there by avoids the confusion which may arise when managers are flooded

with detailed facts. The system provides information on the past, present and project future and on

relevant events inside and outside the organization. It may be defined as a planned and integrated

system for gathering relevant data, converting it in to right information and supplying the same to

the concerned executives.

 Figure3.9. How MIS converts data

The fundamental goal of management information systems is to get the correct information

to the right people at the right time. An MIS's output is information that is used to support

management functions. When a system offers data to people who aren't managers, it isn't regarded

to be part of a MIS. An organization, for example, may process a large amount of data that it is

obligated by law to provide to multiple government regulatory authorities.

4.10. Business information value chain

To understand how to conduct a value chain analysis, a business must first know what

its value chain is. A value chain is the full range of activities including design, production,

marketing and distribution businesses go through to bring a product or service from

conception to delivery, from manager to another department in companies. The process of

actually organizing all of these activities so they can be properly analyzed is called value chain

management. The goal of value chain management is to ensure that those in charge of each

stage of the value chain are communicating with one another, to help make sure the product
is getting in the hands of customers as seamlessly and as quickly as possible.

Figure3.10. The Business Information Value Chain

V. Disadvantages of MIS

The management information system is critical at all levels and in all companies. However,

when a company uses a Management Information System, there are certain potential pitfalls.

Below are some of the disadvantages of the MIS:

5.1. Lack of flexibility to update

In order to be operational, an information system needs to be flexible, that is, it must be

able to accommodate a certain amount of variation regarding the requirements of the supported

business process. Difficult to deliver ad hoc reports or respond to unanticipated information

requirements in a timely fashion.

5.2. Expensive
 Installing a management information system can be expensive for a company. Information

technology while cheaper today than previous years-can represent a significant expense, especially

for larger organizations. These systems may also require ongoing support or upgrade fees, which

can represent future fixed cash outflows. Companies must create a budget to pay for these items

to ensure the information system stays current with business technology. Attempting to integrate

these systems with technology currently in use can also increase expenses. 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.

5.3. Heavy reliance on technology

While there is evidence that reliance on technology is reduced as experience and

confidence in one's own decisions increases. 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. The tendency to favor or give greater credence to information

supplied by technology.

5.4. Lack of security

Information system security refers to the way the system is defended against unauthorized

access, use, disclosure, disruption, modification, perusal, inspection, recording or destruction. The

security of manual systems is implemented by restricting access to the file room. Experience shows

unauthorized people can easily gain access to the filing room. It’s doesn’t have ensuring the

computing system, the security controls used to protect it and the communication channels used to

access it, functioning correctly all the time, thus making information available in all situation.
 5.5. Increase Unemployment

The unemployment is one of the primary economic indicators used to measure the health

of an economy. It tends to fluctuate with the business cycle, increasing during recessions and

decreasing during expansions. So, when a Companies or Organization used an information system,

they also have to reduce the number of employees and they will have more work on technology

system.

5.6. Risk of fraud

Impact of fraud on information system, Coz they used technology that it’s can be the cause

to fraud and the solution to fraud. Additionally, cybercrime is of particular concern to companies

that use the internet for any part of their operations. Many cybercriminals are able to combine their

computer skills with social engineering in order to access critical company information and

personal customer data. Hacking techniques, such as phishing, are becoming more of a problem.

Hackers are keeping up with cyber security, and organizations must ensure that they are aware of

what is going on in regards to their computer systems. In a business environment that increasingly

relies more on information technology to assist operations, it is becoming more important for

management and auditors to be aware of any technological changes made to systems in order to

keep track of any issues that could result in fraudulent financial reporting [6]. 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.

5.7. Dominant culture

Culture is recognized as an important factor influencing the development, deployment, and

use of information systems in households and organizations as well as in the public sector. ...
Accordingly, the cultural diversity of the system's users and a variety of other stakeholders needs

to be taken into account.

While information technology may have made the world a global village, it has also

contributed to one culture dominating another weaker one. For example, it is now argued that US

influences how most young teenagers all over the world now act, dress and behave Language too

have become overshadowed, with English becoming the primary made of communication for

business and everything else.

5.8. Maintenance

Companies may need to hire maintenance individuals to help keep an electronic

information system running smoothly. These individuals often need experience in computer

science function and other business topic. Not only does this increase labor costs, but it also

requires additional training and ongoing education for these individuals. Business technology can

change frequently, creating an environment where companies must have trained individuals who

can properly maintain computer, websites, servers and other equipment in use by the management

information system.

5.9. Ineffective

Management information systems have the potential to become ineffective in a company’s

operations. As with all computer systems, the management information system is only as good as

the programmer. Gathering unimportant or non-essential information can delay business decisions

because managers must request additional input. Spending too much time reprogramming or

correcting issues can also increase the time spent in the decision-making process. Business owners
and managers may also need extensive training on new systems, creating a learning curve that will

hopefully diminish over time.

VI. Conclusion

To summarize, all business organizations require effective management information

systems due to the increased complexity and velocity of change in today's business environment.

Marketing managers, for example, want data on sales performance and trends, finance managers

demand data on returns, production managers require data on available resources and worker

productivity, and personnel managers require data on employee compensation and professional

development. Therefore, effective management information systems should be designed to

provide modern managers with the specialized marketing, financial, production, and people

information products needed to support their decision-making responsibilities.

VII. Example

To demonstrate how MIS works in reality, we will introduce you to one of the companies

that uses MIS to run its operations. FoodPanda is a company that offers online food delivery

services. It was established in March of 2012. FoodPanda is highly enthusiastic about its own

future since the company frequently dreams big. As a result of their optimistic mentality and the

fact that they are a well-known brand, the public believes they will be successful. Ralf Wenzel

founded the company, and Eduardo Goes is the current CEO. The company sold the business to

Mail.ru in 2016, but it was purchased by one of the German competitors, Delivery Hero, in

December 2016. Foodpanda's headquarters are in Germany, and the firm has collaborated with

36,000 eateries in 193 locations worldwide, including fast-food behemoths like KFC and

McDonald's. Foodpanda's operation is mostly conducted online, with consumers able to order
meals and have it delivered via an electronic device. Without MIS, it would be hard for the

company to manage it since it has many branches all around the world.

Moreover, Foodpanda is also a functionally structured company with an executive

management team, a content and product team, a sales and marketing team, an operations team,

accounting, and human resources, all of which report to the CEO. The company focuses on

employee incentives, such as offering free food and a gas allowance, and it provides a welcoming

atmosphere for employees to grow and learn. Foodpanda puts a focus on open communication,

and the company's flat structure allows employees to gain greater exposure and learn from one

another. Apart from this, Foodpanda also use MIS as the food ordering system. It is a piece of

software that their company use to manage and fulfill customer orders. It allows customers to place

orders immediately through the applications and website. The goal is to provide a delectable meal

to customers with minimal effort. They want to make meal delivery a simple and convenient

alternative for everyone who enjoys eating. The food ordering system combines the complete

menu offered by various restaurants or cafés. In addition, the client order is confirmed in real time,

and the system will complete the order at the specified time. The system was created to meet a

client's customization needs, and to allow some clients to define their preferences.
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Pratap, A. (2018, May 19th). Management Information System: Role, Characteristics and
Advantages. Notesmatic. Retrieved from https://notesmatic.com/management-
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