(YEAR-2022)

SUBJECT - MANAGEMENT INFORMATION

SYSTEMS

COURSE - M.B.A.

SEMESTER- 2nd

FACUTLY NAME - Mr. ANIL KUMAR YADAV

 Attributes of Information
Quality of information refers to its fitness for use or its reliability. Some of the attributes
of information which influence the quality of information are as follows:
1) Timeliness
Timeliness means that information must reach the recipients within the prescribed time frame. Timely
information can ensure correct executive action at an early stage. The characteristic of timeliness, to be
effective, should also include current information.
2) Accuracy
Accuracy is another key-attribute of management information. It means that information is free from
mistakes and errors, is clear and accurately reflects the meaning of data on which it is based. It conveys an
accurate picture to the recipient, who may require a presentation in graphical form rather than tabular form.
3) Relevance
Relevance is yet another key attribute of management information. Information is said to be relevant if it
answers specifically for the recipient what, why, where, who and why? In other words, the MIS should
serve reports to managers, which are useful, and the information helps them make decisions.
4) Adequacy
Adequacy means information must be sufficient in quantity. MIS must provide reports containing
information, which is required in deciding processes of decision-making.
5) Completeness
The information, which is provided to a manager, must be complete and should meet all his needs.
Incomplete information may result in wrong decisions and thus may prove costly to the organization.
6) Explicitness
A report is said to be of good quality if it does not require further analysis by the recipient for decision-
making. Thus the reports should be such that a manager does not waste any time on the processing of the
report, rather he should be able to extract the required information directly.
7) Exception based.
Top managers need only exception reports regarding the performance of the organization. Exception
reporting principle states that only those items of information, which will be of particular interest to a
manager, are reported. This approach results in saving precious time of the top management and enables the
managers to devote more time in pursuit of alternatives for the growth of the organization.
Quality of information refers to its fitness for use or its reliability. Some of the attributes of information
which influence the quality of information are as follows:
Information Requirement in Management
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.

It is precisely due to these reasons 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.

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

Strategic information from within the

Unstructured problems.
organization and outside.
Top level Decisions are based on situations
not/rarely handled in the past. Information about likely scenarios.
Information that can be analyzed in
different ways.
Decision-making variable not clearly
defined.
Exception reports

Regular summarized reports.

Semi structured/structured problems.
Information that can be drilled deeper
Middle level for insight.
Decisions on regular issues.
Information to help find out exceptions
Decisions on tactical issues.
so that they can be reported to top
management
 Structured problems
Operational information
Structured decision-making
Operational Rule based information, guidelines,
level Decision-making on the basis of set handbook level information
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 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.

Relevance of Information in Decision Making

Information plays a vital role in decision-making. Even to take very simple decisions, we need information.
To understand the role played by information in decision-making, we have to understand how decisions are
taken. Decision-making is basically a process that includes the following stages :
1. Identification and structuring of problem/opportunity: One needs information to identify a problem
and put it in a structured manner. Without information about a problem or opportunity, the decision-making
process does not even start.
2. Putting the problem/ opportunity in context: Without information about the context in which the
problem has occurred, one cannot take any decision on it. In a way, the information about the context defines
the problem.
3. Generation of alternatives: Information is a key ingredient in the generation of alternatives for decision-
making. One has to have information about possible solutions to generate alternatives.
4. Choice of the alternatives: Based on the information about the suitability of the alternatives, a choice is
made to select the best alternative.
Decision-making is the most important task of managers in an organization. Therefore, to enable managers to
take good quality decisions, it is very important to provide them with the right kind of information.
Information management in organizations therefore assumes a special significance. In most organizations,
business or otherwise, a systematic systems based method is used for information management.
 Types of Information-

1. Classification by Characteristic

Based on Anthony’s classification of Management, information used in business for decision-making is

generally categorized into three types −
a. Strategic Information: Strategic information is concerned with long term policy decisions that defines the
objectives of a business and checks how well these objectives are met. For example, acquiring a new plant, a
new product, diversification of business etc, comes under strategic information.
b. Tactical Information: Tactical information is concerned with the information needed for exercising
control over business resources, like budgeting, quality control, service level, inventory level, productivity
level etc.
c. Operational Information: Operational information is concerned with plant/business level information
and is used to ensure proper conduction of specific operational tasks as planned/intended. Various operator
specific, machine specific and shift specific jobs for quality control checks comes under this category.
2. Classification by Application
In terms of applications, information can be categorized as −
a. Planning Information: These are the information needed for establishing standard norms and
specifications in an organization. This information is used in strategic, tactical, and operation planning of any
activity. Examples of such information are time standards, design standards.
b. Control Information: This information is needed for establishing control over all business activities
through feedback mechanism. This information is used for controlling attainment, nature and utilization of
important processes in a system. When such information reflects a deviation from the established standards,
the system should induce a decision or an action leading to control.
c. Knowledge Information: Knowledge is defined as “information about information”. Knowledge
information is acquired through experience and learning, and collected from archival data and research
studies.
d. Organizational Information: Organizational information deals with an organization’s environment,
culture in the light of its objectives. Karl Weick’s Organizational Information Theory emphasizes that an
organization reduces its equivocality or uncertainty by collecting, managing and using these information
prudently. This information is used by everybody in the organization; examples of such information are
employee and payroll information.
e. Functional/Operational Information: This is operation specific information. For example, daily
schedules in a manufacturing plant that refers to the detailed assignment of jobs to machines or machines to
operators. In a service oriented business, it would be the duty roster of various personnel. This information is
mostly internal to the organization.
f. Database Information: Database information construes large quantities of information that has multiple
usage and application. Such information is stored, retrieved and managed to create databases. For example,
material specification or supplier information is stored for multiple users.
Information is a vital resource for the success of any organization. Future of an organization lies in using and
disseminating information wisely. Good quality information placed in right context in right time tells us
about opportunities and problems well in advance.
Classical Model of decision-making

A classical decision model is a prescriptive approach that guides management on how it should make a
decision. It rests on the assumption that managers are logical and rational and that they make decisions that
are in the best interest of the organization.

The classical model views the decision-making process:

i) Decision-makers have complete information about the decision situation and possible alternatives,
ii) They can effectively eliminate uncertainty to achieve a decision condition of certainty,
iii) They evaluate all aspects of the decision situation logically and rationally.

However, these conditions rarely, if ever, actually exist. This model may be represented in the following
diagram:

Administrative Model of Decision-making

Herbert A. Simon was of the first few scholars to recognize that decisions are not always made with
rationality and logic. Simon, a winner of the Nobel Prize in Economics, instead of prescribing how decisions
should be made, describes how decisions often actually are made.
He Administrative model holds that managers:
(i) Have incomplete and imperfect information,
(ii) Are constrained by bounded rationality, and
(iii) Tend to satisfies when making decisions.
the administrative model can be used by managers to develop a better understanding of their inherent biases
and limitation.
Herbert Simon’s Models
The Simon Decision Making Theory is a framework that provides a more realistic view of the world, where
decisions affect prices and outputs. The theorist argued that making a decision is making a choice between
alternative courses of action. It can even mean choosing between action and non-action. In contrast to
classical theorists, Simon suggests that there is never one best course of action or decision. It’s because one
can’t have complete information about something, therefore, there will always be a better course of action or
decision.
The Decision Making Theory by Simon also considers psychological aspects that classical economists
overlooked or ignored. Internal factors such as stress and motivations, among others, limit an individual’s
capacity to solve complex problems. In short, decisions are based on bounded rationality—humans behave
differently when there are risks and uncertainty involved. At the core of the theory lies ‘satisfying’, which is
a combination of satisfying and sufficing. It suggests that one should pursue objectives or make decisions
that involve minimum risks and complications as opposed to focusing on maximizing profits.

There Are Three Stages Involved In The Decision Making Process:

Intelligence Activity Stage
At this stage, people identify the problems in an organization and the upper management analyzes the
organizational environment to work toward a solution.
2. Design Activity Stage
In order to identify possible solutions to problems, the upper management looks for suitable strategies.
They further analyze the merits and demerits to select a particular course of action.
3. Choice Activity Stage
After making a list of alternatives, the choice activity stage begins. It critically examines and evaluates
the various consequences of all alternatives and the most suitable course of action is selected. This
stage requires creativity, judgment and quantitative analysis skills.
Herbert Simon’s Decision Making Theory also emphasized the importance of rationality. He proposed the
concept of bounded rationality, where people make decisions within certain limitations. He further supported
the behavioral aspect of organization theory as personal biases and perspectives affect the way employees
make decisions.
Conclusion
The Herbert Simon Decision Making Theory opened new doors for an organization. By shifting focus to the
human mind, he helped administrations identify and resolve many unaddressed issues.

Effective decision making is a much-needed fundamental skill in your personal and professional life.
Harappa’s Making Decisions course will equip you with frameworks to process, reflect and include multiple
perspectives for informed decision making. Enrolling with Harappa is good decision making!
Decision Support Systems:
Decision support systems (DSS) are designed to support the decision making process of managers to improve
their effectiveness and thereby efficiency of the enterprise. They are based on the premise that managerial
judgment cannot be replaced by any computer based solution. However, by offering the support of data and
models, it is possible to improve the decision making process even in the case of semi-structured and
unstructured problems.

A decision support system (DSS) is a computer program application used to improve a company's decision-
making capabilities. It analyzes large amounts of data and presents an organization with the best possible
options available.

Decision support systems bring together data and knowledge from different areas and sources to provide
users with information beyond the usual reports and summaries. This is intended to help people make
informed decisions.
Typical information a decision support application might gather and present include the following:
• comparative sales figures between one week and the next;
• projected revenue figures based on new product sales assumptions; and
• the consequences of different decisions.
A decision support system is an informational application as opposed to an operational application.
Informational applications provide users with relevant information based on a variety of data sources to
support better-informed decision-making. Operational applications, by contrast, record the details of business
transactions, including the data required for the decision-support needs of a business.
Types of decision support systems
Decision support systems can be broken down into categories, each based on their primary sources of
information.
Data-driven DSS
A data-driven DSS is a computer program that makes decisions based on data from internal databases or
external databases. Typically, a data-driven DSS uses data mining techniques to discern trends and patterns,
enabling it to predict future events. Businesses often use data-driven DSSes to help make decisions about
inventory, sales and other business processes. Some are used to help make decisions in the public sector,
such as predicting the likelihood of future criminal behavior.
Model-driven DSS
Built on an underlying decision model, model-driven decision support systems are customized according to a
predefined set of user requirements to help analyze different scenarios that meet these requirements. For
example, a model-driven DSS may assist with scheduling or developing financial statements.
Communication-driven and group DSS
A communication-driven and group decision support system uses a variety of communication tools -- such as
email, instant messaging or voice chat -- to allow more than one person to work on the same task. The goal
behind this type of DSS is to increase collaboration between the users and the system and to improve the
overall efficiency and effectiveness of the system.
Knowledge-driven DSS
In this type of decision support system, the data that drives the system resides in a knowledge base that is
continuously updated and maintained by a knowledge management system. A knowledge-driven DSS
provides information to users that is consistent with a company's business processes and knowledge.
Document-driven DSS
A document-driven DSS is a type of information management system that uses documents to retrieve data.
Document-driven DSSes enable users to search webpages or databases, or find specific search terms.
Examples of documents accessed by a document-driven DSS include policies and procedures, meeting
minutes and corporate records.
Group Decision Support System
A group decision support system (GDSS) is an interactive computer-based system that facilitates a number of
decision-makers (working together in a group) in finding solutions to problems that are unstructured in
nature. They are designed in such a way that they take input from multiple users interacting simultaneously
with the systems to arrive at a decision as a group.
The tools and techniques provided by the group decision support system improve the quality and
effectiveness of the group meetings. Groupware and web-based tools for electronic meetings and
videoconferencing also support some of the group decision making processes, but their main function is to
make communication possible between the decision-makers.

Component of Group Decision support system

• Hardware: It includes electronic hardware like the computer, equipment used for networking,
electronic display boards and audiovisual equipment. It also includes the conference facility,
including the physical set up – the room, the tables, and the chairs – laid out in such a manner that
they can support group discussion and teamwork.
• Software Tools: It includes various tools and techniques, such as electronic questionnaires,
electronic brainstorming tools, idea organizers, tools for setting priority, policy formation tool, etc.
The use of these software tools in a group meeting helps the group decision-makers to plan, organize
ideas, gather information, establish priorities, take decisions and document the meeting proceedings.
As a result, meetings become more productive.
• People: It compromises the members participating in the meeting, a trained facilitator who helps with
the proceedings of the meeting, and an expert staff to support the hardware and software. The GDSS
components together provide a favorable environment for carrying out group meetings.

Executive Information System/Executive Support System

An information system designed to cater the specific needs of executives is known as Executive
Information System (EIS). It is also known Executive Support System (ESS).

EIS is commonly considered as a specific form of Decision Support Systems (DSS) as it helps in the
information gathering and decision-making process of senior executives in a company and meeting
the strategic goals of the organization. This is ensured by easy access of internal as well as external data.

Executive Information System is an association of many features of Management Information System

(MIS) and DSS. It was first developed to meet the requirement of the top management for strategic
information. This provided the management team with instant and easy access to information about a
company's Critical Success Factors (CSF) which are important for attaining a company's strategic goals.
 Advantages of Executive Information System (EIS)

Importance of executive support system are explained below:

1. Executive Support System or Executive Information System can be easily used by upper-level
executives for decision-making, as extensive computer knowledge is not required for this.
2. It has trends analysis capability.

3. Enhances the manager's leadership skills.

4. Helps in better personal thinking and decision making.

5. It involves strategic control flexibility.

6. Leads to healthy competition in the market place.

7. Existing information can be easily accessed.

8. Acts as an instrument of change.

9. An executive time horizon is increased.

10. Leads to a better reporting system.

11. Helps executives to get a better mental model of business.

12. Assists in consensus building and communication.

13. Adds to the efficiency, timeliness, and accuracy of office automation.

14. Considerably reduces time taken for finding and integrating information.

15. Organization’s performance can be recognized early.

16. Detailed scrutiny of critical success factors.

17. Provides better understanding of enterprise operations.

18. Increases productivity by helping time and team coordination.

19. Capacity and quality of communication is increased.