Additional Knowledge Material

(Faculty E-notes)

 COURSE BCA 5th SEMESTER

 UNIVERSITY MAHARSHI DAYANAND UNIVERSITY
 SUBJECT MANAGEMENT INFORMATION SYSTEM
 SUBJECT CODE BCAN-301
 UNIT NO & NAME UNIT 2 (AN OVERVIEW OF MANAGEMENT INFORMATION SYSTEM)
 NAME OF FACULTY MS. PREETI DAGAR

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 INDEX
Unit 2
An overview of Management Information System

S.NO. TOPIC Page No.

1 An overview of Management Information System: 3

Definition & Characteristics
2 Components of MIS 12
3 Frame Work for Understanding MIS 13
4 Information requirements & Levels of 15
Management
5 Simon's Model of decision-Making 17

6 Structured Vs Un-structured decisions 19

7 Formal vs. Informal systems. 19

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 UNIT 2
An overview of Management Information System
INTRODUCTION
 Today the need for updated information has become inevitable to arrive at an effective
decision in all walks of life. Whether it is industry, commerce, defense, banking,
education, economics or politics, information is needed everywhere.
 Information is live as it is required to be updated all the time and is renewable.
 The exponential growth of information makes it necessary that information is
collected, stored and retrieved in various fields when needed.
 For example
(a) In setting of a new industry, information regarding the choice of technology, skill,
money and material becomes an important requirement for its growth and smooth
functioning.
(b) In a competitive market, before deciding about the price of an item, the producer
needs information about the pricing police of the competitors, especially of
competitive products, sales techniques etc.

MANAGEMENT INFORMATION SYSYEM

The MIS is an integrated man machine system that provides information to support
the planning and control functions of managers in an organization.

MIS

Managemen Information System

t

Management

 Management has been viewed as be function, a process, a profession and a class of

people. It refers to the kind of task and activities that are perform by managers. The
specific nature of the activities is determined by such managerial functions as
planning, organising, directing, leadership and controlling.
1. Planning: It is the process of deciding in advance the courses of action to be
followed and when and how to undertake these. Its objectives in the best possible
manner and for anticipating future opportunities and problems.

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 2. Organizing: It is formal grouping of people and activities to facilitate achievement of the
farm’s objectives. It is need for assigning responsibilities, jobs and hierarchy among
personnel.
3. Controlling: It is the checking the progress of plans and correcting any deviations that may
occur along the way.
4. Directing: It is the process of activating the plans, structure and group efforts desired
direction. It is needed for implementation of plans by providing desired leadership
motivation and proper communication.
 The management can be group into 3 hierarchical levels –
 Top or Strategic management
 Middle or Tactical management
 Junior or Operational management
Top Management: - It is establishes the policies, plans, objectives and budget framework under
which various departments will operate of the organisation.
Middle Management: - It has the responsibility of implementing the policies and overall plans
of the top management.
Junior Management:-It has the responsibility of implementing day to day operations and
decisions of the middle management to produce goods and services to meet the revenue, profit
and other goals.

Information
 Information is the result or product of processing data. Information can be defined as the data
which is organised and presented at a time and place so that the decision-maker may take
necessary act.

Data Process
Information Decision

Action

Fig: Conversion of Data into Decision

 Information consists of data that has been retrieved, processed or otherwise used, for
informative or inferential purposes, arguments or as a basis for forecasting.
 For example, some supporting documents, ledgers and so on, which comprise source material
for profit and loss statements may be used by the decision maker for profit planning and control.

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 System

 A system is a group of elements or components joined together to fulfil certain functions.

 A system is made up of sub-system. The systems are either natural or man-made.
 A sub-system which may be composed of further sub-systems. A subsystem itself is part of a
super system.
 The given example is that of an industrial (or factory) system. It has various subsystems such
as production subsystem, marketing sub-system, personnel sub-system and financial sub-
system.
 These sub systems in turn are composed of further subsystem.
 For example a production subsystem could consist of sub-sub-system of production control,
material control, quality control etc.
 The material sub-sub-system can be further broken down into ‘black boxes’ such as
purchasing, stores, transportation, inspection etc.
 This industrial system is a part of the large economic system of the country which may be
called as the super system.
 This relationship is shown in fig

Super system

The system Other

under system
consideration
Sub system-1 Sub system-2 Sub-system-N

Sub-sub system-1 Sub-Sub system-2 Sub-sub system-M

Black Box-1 Black Box-2 Black Box-J

Fig: System and its Components

DEFINITIONS OF MIS.
1. According to Schwartz, ‘MIS is a system of people, equipment, procedure, documents and
communication that collects, validates, operates on transformers, stores, retrieves and present
data for use in planning, budgeting, accounting, controlling and other management process’.
2. According to Jerome Kanter, ‘MIS is a system that aids management in making, carrying out
and controlling decisions’.

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 3. According to Davis and Olson, ’MIS is an integrated user machine system
designed for providing information to support operational control,
management control and decision making functions in an organisation. The
information systems make use of resources such as hardware, software, man,
procedures as well as suppliers’.

Characteristics of MIS
MIS plays a very important role in every aspect of an organization. These characteristics are
generic in nature.
Following are the characteristics of MIS:
1. System Approach
2. Management Oriented
3. Need-Based
4. Exception Based
5. Future Oriented
6. Integrated
7. Long Term Planning
8. Sub-System Concept
9. Central Database

System Approach
The information system follows a System’s approach. The system’s approach implies a
holistic approach to the study of system and its performance in the light for the objective for
which it has been constituted.

Management Oriented
The top-down approach must be followed while designing the MIS. The top-down approach
suggests that the system development starts from the determination of management needs and
overall business objectives.

The MIS development plan should be derived from the overall business plan. Management
oriented characteristic of MIS also implies that the management actively directs the system
development efforts.

Need-Based
MIS design and development should be as per the information needs of managers at different
levels, strategic planning level, management control level and operational control level. In
other words, MIS should cater to the specific needs of managers in an organization’s
hierarchy.

Exception Based
MIS should be developed on the exception-based reporting principle, which means an
abnormal situation, i.e. the maximum; minimum or expected values vary beyond tolerance
limits. In such situations, there should BE exception reporting to the decision-maker at the
required level.

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Future Oriented
Besides exception-based reporting, MIS should also look at the future. In other words, MIS
should not merely provide past or historical information; rather it should provide information,
on the basis of projections based on which actions may be initiated.

Integrated
Integration is a necessary characteristic of a management information system. Integration is
significant because of its ability to produce more meaningful information.

For example, in order to develop an effective production scheduling system, it is necessary to

balance such factors as setup costs, Workforce, Overtime rates, Production capacity,
Inventory level, Capital requirements and Customer services.

Long Term Planning

MIS is developed over relatively long periods. Such a system does not develop overnight. A
heavy element of planning is involved. The MIS designer must have the future objectives and
needs of the company in mind.

Sub-System Concept
The process of MIS development is quite complex and one is likely to lose insight frequently.
Thus, the system, though viewed as a single entity, must be broken down into digestible sub-
systems which are more meaningful at the planning stage.

Central Database
A central database is a mortar that holds the functional systems together. Each system
requires access to the master file of data covering inventory, personnel, vendors, customers,
etc. It seems logical to gather data once, validate it properly and place it on a central storage
medium, which can be accessed by any other subsystem.

Functions of MIS
The broad functions of MIS are as follows:
 To Improve Decision-Making
 To Improve Efficiency
 To Provide Connectivity
 Data Processing
 Prediction
 Planning
 Control
 Assistance

To Improve Decision-Making
The Management Information System (MIS) furnishes relevant information on diverse
matters, thereby enhancing the decision-making process of the management. By utilizing the
speedy and precise data provided by the MIS, managers can make prompt and informed
decisions, which ultimately enhances the quality of decision-making and contributes to the
company’s value.

To Improve Efficiency

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The Management Information System (MIS) facilitates managers in executing their duties
with enhanced ease and efficiency, resulting in improved productivity.

To Provide Connectivity
The MIS provides managers with better connectivity with the rest of the organization. The
Management Information System (MIS) is commonly utilized in decision-making processes
within a system. One such application of MIS is to identify issues that require prompt
attention, offer timely feedback, and inform senior management of the current progress and
areas for improvement. Therefore, the main functions of MIS may vary depending on the
specific tasks performed by an organization.

Data Processing
Data processing involves collecting, transmitting, storing, and processing data to generate an
output. Prediction involves analyzing data using modern mathematics, statistics, or
simulation to anticipate future scenarios.

Prediction
By utilizing methods of modern mathematics, statistics, or simulation, data analysis is
conducted to predict potential future scenarios.

Planning
The analysis of data of a regular nature may give many indications on likely future events or
situations and this can be utilized in planning or reviewing the plan already made earlier.

Control
By examining records of daily, monthly, quarterly, or annual activities, certain factors that
require management and control can be identified. If these factors are identified in a timely
manner, they can be managed relatively easily. However, some factors may require the
attention of senior management to remain under control. It is essential to note that ignoring
smaller factors at the beginning may have the potential to disrupt other factors as well.

Assistance
One of the principal functions of MIS is to support senior management by analyzing regular
records and drawing inferences about various factors related to the company’s operational
performance, such as human resources, financial resources, material resources, and more.

Advantage of MIS

 Generate Competitive Advantages

 Implementation of Management by Objectives Techniques
 Fast Reaction to Market Changes
 MIS as Strategic Resource
 Change in Industry Structure
 Functional Use
 External and Internal Change
 Availability of Customer Data

Generate Competitive Advantages

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Business houses succeed or fail based on how they face competitive challenges. MIS if
implemented properly, provides a wealth of information to allow management to construct
and develop effective plans to meet, and beat, their competition.

Implementation of Management by Objectives Techniques

MIS allow all participants, both management and staff, to view, analyse and interpret useful
data to set goals and objectives.

Fast Reaction to Market Changes

MIS can deliver facts, data and trends to business with lighting speed. Having this
information allows business houses to react quickly to market changes, regardless of the type
(positive or negative) or volatility.

MIS as Strategic Resource

 MIS helps in taking strategic, tactical and operational decisions. It is one of the critical and
important resource.
 It helps the management to understand cost, quality, price, technology, productivity and
product.
 It helps to smoothen the business process and thereby facilitate managing of business
operations.
 It helps to maintain the business standards like ISO, QS, CMMI, six sigma etc.
 It helps to be a head in the competition.
 It helps company in analysing their own SWOT.
 It also helps in maintaining its own profitability.
 It will help in taking new business decisions like new plans, new product, new business
line etc.
 It protects company from business cycles.
 It provides future direction to the organisations.
 It also provides the competitive edge.

Change in Industry Structure

MIS helps in changes in industry structure includes five forces:

 Customers’ bargaining power

 Suppliers’ bargaining power
 Threats of new entrant in market
 Pressure from substitute products and services and u Existing industry competitors
 Birth of new business/ New business initiatives. u New way of doing business.

Functional Use
Functional use of MIS includes:

 Lower the cost

 Information and information system facilitate value chain. e.g. product delivery quality. It
increases the speed, accuracy and timeliness of the organisation. It helps in simplifying the
business processes. It helps organisation in meeting the standards and benchmarks.
External and Internal Change

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MIS creating knowledge is an asset. It helps to achieve change in work life style for better
results. MIS has made the world smaller. Worldwide reorganisation environment and attempt
to control the calamity. Health conscious among the group lead to less sufferings.

MIS helps in Internal Change: MIS will change the business process, MIS will change the
old standards and set new standards. MIS is a key for continuous improvement process. MIS
will reduce the hierarchy and hence less operation cost. MIS focuses on “shared
information”. MIS also measures the result and performance.
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.

Role of MIS
A management information system (MIS) plays an important role in business organizations.
What is MIS role: There are many roles of MIS and some of the important MIS role are
discussed below:
1. Decision making
2. Coordination among the department
3. Finding out Problems
4. Comparison of Business Performance
5. Strategies for an Organization

Decision making
Management Information System (MIS) plays a significant role in the decision-making
process of any organization. In any organization, a decision is made on the basis of relevant
information which can be retrieved from the MIS.

Coordination among the department

Management Information System satisfy multiple need of an organization across the different
functional department.

Finding out Problems

As we know that MIS provides relevant information about every aspect of activities. Hence,
if any mistake is made by the management then MIS, information will help in finding out the
solution to that problem.

Comparison of Business Performance

MIS store all past data and information in its Database. That why the management
information system is very useful to compare business organization performance.

Strategies for an Organization

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 Today each business is running in a competitive market. An MIS supports the organization to
evolve appropriate strategies for the business to assent in a competitive environment.

Challenges of MIS
What is MIS Challenges: There are three major challenges of MIS: high cost, training of
employees and maintenance cost. These are briefly discussed below:
1. High Cost
2. Training of Employee
3. Maintenance Cost

High Cost
Development of new computerized based information system is a problem for the
organization due to the cost factor and it creates problems because with the change of time
there is need of up-to-date of the information system.

Training of Employee
Employees should have the capacity of learning of the information system with the
changing competitive and business environment; otherwise it will be difficult for the
organization to stay in the market.

Maintenance Cost
Sometimes a problem arises due to server crash and website crash. Sometimes it leads to the
loss of information. So, maintenance cost is needed to tackle the above problem.

Limitations of MIS
Even though MIS has many benefits but it also has its limitations. Limitations of MIS are
discussed below:
 While MIS may solve some critical problems but it is not a solution to all problems of an
organization.

 It cannot meet the special demands of each person.

 MIS if designed in an improper manner does not serve the management and hence is of
little relevance.

 The MIS is not good if the basic data is obsolete and outdated.

 Mostly information provided by the MIS is in quantitive form. Hence, it ignores the
qualitative information like the attitude of an employee.

Components of MIS and their relationship

A management information system is made up of five major components namely people,
business processes, data, hardware, and software. All of these components must work
together to achieve business objects.

People – these are the users who use the information system to record the day to day business
transactions. The users are usually qualified professionals such as accountants, human

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resource managers, etc. The ICT department usually has the support staff who ensure that the
system is running properly.

Business Procedures – these are agreed upon best practices that guide the users and all other
components on how to work efficiently. Business procedures are developed by the people i.e.
users, consultants, etc.

Data – the recorded day to day business transactions. For a bank, data is collected from
activities such as deposits, withdrawals, etc.

Hardware – hardware is made up of the computers, printers, networking devices, etc. The
hardware provides the computing power for processing data. It also provides networking and
printing capabilities. The hardware speeds up the processing of data into information.

Software – these are programs that run on the hardware. The software is broken down into
two major categories namely system software and applications software. System software
refers to the operating system i.e. Windows, Mac OS, and Ubuntu, etc. Applications software
refers to specialized software for accomplishing business tasks such as a Payroll program,
banking system, point of sale system, etc.

Framework for MIS Organization and Management

Robert Anthony from the University of Chicago; in the year 1965 proposed a framework for
the MIS system which mainly consists of three components. These components are Strategic
Planning, Operational Control, and Management Control. The following figure is describing
its basic structure and the connectivity of its key components –

Strategic Planning

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Strategic planning is a method of focusing on improvements in the goals of the organization,
the methods that are to be used to achieve these objectives; policies that are frame by
management experts to control, organize, and use organizational resources to reduce the cost
and maximize profit. Overall, strategic planning helps in designing the strategies of the
company, and is used in formulating policies to control the acquisition, handling of the
business activities, and gets involved in reframe strategy whenever required. From a
philosophical perspective, strategic planning must be design in such a way so that an
organization may achieve its aim and objectives as well as can keep itself up to date on new
developments through changes to the objectives, the financial aspects of the resources
needed, and the guiding principles and policies to be followed in obtaining, using the
organizational resources.

Operational Control

Operational control is a process of managing operational activities of an organization that are

carried out to achieve optimal utilization of the resources and successful implementation of
the operational activities in an organization like production, production, stock management,
financial process, HRM, etc. To run it smoothly, matrices allow for pre-established processes
and decision rules to be used, the constant assurance of effective acquisition and use of
resources in the areas in which the results can be reasonably well understood, and operations
are optimally organized and managed. For an instance – the directives set by our superiors are
followed as per our ability and that the tasks we perform effectively and efficiently. These
decisions at lower levels of the company have very little effect on the organization. There is a
fixed timeline for decisions being taken, and there are certain "routines" that immediately
proceed to complete the process.

Management Control

Management control is a process of assuring that resources are collected and used effectively
and efficiently, resulting in the accomplishment of the organizational key objectives. In this
process, an executive or superiors, or managers will use to assess the productivity of his/her
department, identify the issues, formulate some new and innovative strategies, make some
rules of control, set protocol, and evaluate the risk allocation of resources. This job is mainly
taking care of the middle-level management of the company. At this level, managers must be
taking advice from the strategic planning hierarchy and must be monitoring the organization's
activities so that the strategic priorities can be set and accomplished efficiently and
successfully.

Relationship between Operations, Planning and Control

The details given by an MIS helps the managers to make decisions that are not involved. An
organization must conduct certain activities to prevent itself from running into serious causes.
For example “in a production of any product, a common process has to perform certain
production activities" like a wholesaler has to obtain and dispatch goods, a municipal
corporation has to provide water supply to its area of jurisdiction. In addition to its day-to-day
activities, a company must also prepare for its potential closing operations. To predict trends,
the company has to make a prompt decision about how much production of a particular
product needs to make for the upcoming time.

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In an organization, the planning process and goals set out at the time of the planning process
decides the scope of the organization’s operations. During the production process, it has to
know whether a decision has to be taken to make corrections or revise on pre plans based on
the tests. Interestingly, all that the wholesaler would do is correct the deviation or update the
plans. It might be important to control organizational activities with effects to ensure
companies' existence in the market. The following figure is illustrating the same -

MIS is one that is concerned with planning and control. When running, we can benefit from
having several systems for obtaining information. For example, the carmaker would have
sensors installed in the car, programming a system on the shop floor for giving the workers
their information about the task that is required on a specific batch of material. Along with
the rate materials being pushed along route sheets, other materials are moving at different
rates at any given moment. This system by itself contains only the necessary information to
support operations. It does not have any high-level decision-making meaning. It is not part of
his/her medical record. If, however, the system does include information on efficiency,
computer utilization, or rejection rates (anything which is relevant to business or
productivity), then we can conclude that the system is a part of an MIS.

Levels of Management and Their Information Requirements

The common thread of activity in all the management functions is information management.
Every manager today has to manage loads of information some for the purpose of reporting
and some for taking actionable decisions. A marketing manager trying to fine-tune a sales
strategy would be doing it only after analyzing a lot of relevant information about the market,
the customer profile, the product profile and competitor’s pricing strategy.
Similarly, a human resource manager trying to recruit someone for the organization would do
a lot of information analysis regarding the job profile, suitability of the candidate for the job,
the job market dynamics, etc. The competitive environment that exists in today’s time makes
this task of management even more challenging. Decisions have to be taken very fast and after
analyzing a lot of data.

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It is precisely due to these reasons8 that more and more information technology (IT)
intervention is being used in modern management functions. However, Information
management using technology has itself transformed dramatically over the years. From being
just a support function it has become a key resource for gaining competitive advantage.
Information Needs for the Different Levels of Management

Even though the broad objectives of management as an entity may be same, like increasing
shareholder value, it is by no means a monolithic entity. As has already been discussed, there
are different levels of management and each performs its specific purpose. The top level deals
with strategy, the middle level with tactical issues and the bottom level with operational issues.
The top level that deals with strategy will be taking strategic decisions, middle level will take
tactical decisions and entry level will take operational decisions. Now in order to take such
decisions, contextual information will need to be provided.

Information Needs of Different Levels of Management

Levels of Problems handled/ decisions Type of information required
Management made

Top level Unstructured problems. Strategic information from within

the organization and outside.

Information about likely

Middle level Decisions are based on
scenarios. Information that can be
situations not/rarely handled in
analysed in different ways.
the past.
Exception reports
Decision-making variable not
clearly defined. Regular summarized reports.
Semi structured/structured Information that can be drilled
problems. deeper for insight.
Decisions on regular issues. Information to help find out
exceptions so that they can be
Decisions on tactical issues.
reported to top management

Operational information
Structured problems
Operational level Rule based information,
Structured decision-making guidelines, handbook level
information
Decision-making on the basis of
set rules

A manager at the top level who is deciding on the location of a new factory of the organization
has strategic consideration like the labor costs of the location, proximity of the location to the
market and long-term growth prospects in mind. He/she is not bothered about the shop floor

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level operational details like the reason for absence of a worker. He/she will have a strategic
view and would need only such information that helps him to take correct decisions.
Information is only a resource to him if it can help him to improve the quality of his strategic
decision-making. Similarly for other tiers, information is only a resource if one can derive
value from it.
Information Management

The business of information which is today a multibillion dollar industry first started when a
firm called Bloomberg started compiling important information about US companies and their
balance sheets and selling them to stock brokers. This was the first open trade in information
as a resource in modern times. From then on, information (external) has been regarded as a
resource that is traded10 sometimes freely and openly as in published literature and sometimes
clandestinely in the form of corporate intelligence reports. Also, internal information is seen
as equally valuable and every effort is made to derive more value from it and to ensure that
this internal information does not find its way outside the organization.
The idea of information management is based on the fundamental premise that information is
a resource that is valuable for an organization. The entire subject of information management
is about how to derive more and more value from this precious resource. However, unlike
most other resources that have to be procured from the outside environment, most information
resource is available within the organization if an effort has been made for its safekeeping.
Detailed logs of transactions of an organization with its external and internal customers over
a period mostly form the basic ingredient of a good quality information resource. This basic
information repository is then drilled and analysed for actionable information, this is one
aspect of information management in which strategies are used to derive greater value from
the internal repository of data and information. The other aspect of information management
is to ensure that this internal information is not ‘leaked’ to the outside world of competitors.
Simon’s Model of Decision-Making
Herbert Simon made key contributions to enhance our understanding of the decision-making
process. In fact, he pioneered the field of decision support systems. According to (Simon
1960) and his later work with (Newell 1972), decision-making is a process with distinct stages.
He suggested for the first time the decision-making model of human beings. His model of
decision-making has three stages:
• Intelligence which deals with the problem identification and the data collection on the
problem.
• Design which deals with the generation of alternative solutions to the problem at hand.
• Choice which is selecting the ‘best’ solution from amongst the alternative solutions using
some criterion.

The figure given below depicts Simon’s decision-making model clearly.

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 Intelligence Phase

This is the first step towards the decision-making process. In this step the decision-maker
identifies/detects the problem or opportunity. A problem in the managerial context is detecting
anything that is not according to the plan, rule or standard. An example of problem is the
detection of sudden very high attrition for the present month by a HR manager among workers.
Opportunity seeking on the other hand is the identification of a promising circumstance that
might lead to better results. An example of identification of opportunity is-a marketing
manager gets to know that two of his competitors will shut down operations (demand being
constant) for some reason in the next three months, this means that he will be able to sell more
in the market.
Thus, we see that either in the case of a problem or for the purpose of opportunity seeking the
decision-making process is initiated and the first stage is the clear understanding of the
stimulus that triggers this process. So if a problem/opportunity triggers this process then the
first stage deals with the complete understanding of the problem/opportunity. Intelligence
phase of decision-making process involves:
Problem Searching: For searching the problem, the reality or actual is compared to some
standards. Differences are measured & the differences are evaluated to determine whether
there is any problem or not.
Problem Formulation: When the problem is identified, there is always a risk of solving the
wrong problem. In problem formulation, establishing relations with some problem solved
earlier or an analogy proves quite useful.
Design Phase

Design is the process of designing solution outlines for the problem. Alternative solutions are
designed to solve the same problem. Each alternative solution is evaluated after gathering data
about the solution. The evaluation is done on the basic of criteria to identify the positive and
negative aspects of each solution. Quantitative tools and models are used to arrive at these
solutions. At this stage the solutions are only outlines of actual solutions and are meant for
analysis of their suitability alone. A lot of creativity and innovation is required to design
solutions.
Choice Phase

It is the stage in which the possible solutions are compared against one another to find out the
most suitable solution. The ‘best’ solution may be identified using quantitative tools like
decision tree analysis or qualitative tools like the six thinking hats technique, force field
analysis, etc.

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This is not as easy as it sounds because each solution presents a scenario and the problem
itself may have multiple objectives making the choice process a very difficult one. Also
uncertainty about the outcomes and scenarios make the choice of a single solution difficult.

Structured and Unstructured Decisions

SNo. Structured Unstructured
Goals are defined in structured Output are uncertain in unstructured
1.
decision. decision.
Information is obtainable and The required information and resource are
2.
manageable. hard to assess.
Appear in a well define context and Appear in a unique context in
3.
procedures are known. unstructured decision.
Unstructured decision cannot be
4. Structured decision can be delegated.
delegated.
The cost of taking such decision is not The cost of taking such decisions is quite
5.
as high as that of unstructured one. high, compare to structured decisions.
They are essentially repetitive, routine There are no predefined procedures
6.
and involve a defined. available to solve.
Structured decision are simple Unstructured decision are not as simple as
7.
compare to unstructured decisions. structured decisions.

Formal vs. Informal systems

Formal Information System

This system defines very clearly the work-flow system, communication flow- down and the
authority. The information flows in terms of policies, goals, strategies, rules and regulations
from the top level management to the bottom level of management.. The information also
flows from the bottom level management to the top level in terms of feedback, results of
work done etc. There are three categories of information related to the Formal Information
Systems:
1. Strategic Information - relates to long-range planning policies. This information is
achieved using the Decision Support System
2. Managerial Information - helps the middle level management in policy implementation and
control. This information is achieved using the Management Information System
3. Operational Information -is the daily information needed to operate the business. This
information is achieved using the Data Processing System.

Informal Information System

The informal information system should be employee based and cater to their development
and solve their work related problem. Employee co-operation and the knowledge of the
informal communication should help one to get a good Informal Information Systems in
place.

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