National Institute of Business Management

Chennai - 020

SECOND SEMESTER EMBA/MBA

Subject : Management information System

Attend any 4 questions. Each question carries 25 marks

(Each answer should be of minimum 2 pages / of 300 words)

1. Why MIS is an excellent tool to provide management information at all stages

of decision-making, thus, greatly helping an organisation to achieve its set of
goals and objectives? Explain.
2. Discuss the models used for MIS development.
3. Explain the role of MIS in an organisation for planning and decision making.
4. Describe the methods used in implementing MIS.
5. Explain the essential characteristics of decision Support System(DSS).

6. Explain the constituents of information needs in the context of marketing.

Exam 35950 – Management Information System

Why MIS is an excellent tool to provide management information at

all stages of decision-making, thus, greatly helping an orgnisation
to achive its set of goals and objectives?

Ans 1

Management Information System, commonly referred to as MIS is a phrase consisting

of three words: management, information and systems. Looking at these three words,
it’s easy to define Management Information Systems as systems that provide
information to management.

That is the simple definition of MIS that generally sums up what a Management
Information System is, and what it should do. However, its role and impact on the
smooth operation of a company can never be overemphasized. That is the reason why
every successful company makes use of these systems in one way or another.

The reason why Management Information Systems are very important in the day to day
operation of companies is because these systems work with people, organizations,
technology and relationships among the people and organizations affecting the
company.

This means that when properly implemented, Management Information Systems will
help achieve a high level of efficiency in a company’s management operations.

The main role of Management Information Systems is to report on business operations

with the purpose of supporting decision making. This is to ensure that the organization
is managed in a better and more efficient way so that it can be able to achieve full
potential thus gain competitive advantage.

Below are the ways the Management Information Systems helps in

decision making to the organization.
 It Provides information readily to company decision makers. Regardless of whether
it is a marketing, financial or operational issue, managers need quick access to
information so that they can make good decisions that will have a positive impact on the
company’s performance. Management Information Systems enhance this by
strategically storing vast amounts of information about the company in a central location
that can be easily accessed by managers over a network. This means that managers
from different departments have access to the same information hence they will be able
to make decisions that collectively help solve the company’s problems in the quickest
way.

 Management Information Systems also help in data collection. Data from everyday
operations in the company is collected and brought together with data from sources
outside the organization. This enables a healthy and functional relationship between
distributors, retail outlets and any other members of the supply chain. It also helps keep
good track of performance since production and sales numbers will be recorded and
stored in a central database that can be accessed by all members of the MIS. Access to
this information also helps ensure that problems are detected early and decisions are
made quickly using the latest information.

 To promote collaboration in the workplace. In any large company, there are many
situations that call for input from several individuals or departments before decisions
can be made. Without an efficient communication channel, these decisions can take a
very long time. Even with good communication channels, if the different
stakeholders don’t have access to all the available data, the process would hit a number
of snags before it’s complete. Management Information Systems ensure that all the
members of the decision-making group have access to all the data that’s required to
make the decision even if they are working from different physical locations.

 To run possible scenarios in different business environments. Before making a

decision that will affect the overall standing of the business, a lot of precaution must be
taken. There is a need to check and verify that the company will not suffer after making
a decision. Management Information Systems enable executives to run what-if
scenarios so that they can see how some of the important metrics in the business will
 be affected by a given decision. The data is presented in easy to understand reports
and graphs that make interpretation easy. For example, a human resource manager will
be able to tell what will happen to the revenue, production, sales and even profit after
reducing the number of workers in a manufacturing department. Another example would
be the effect of a price change on profitability. Once executives have been able to see
whether or not the decision will be beneficial to the company, it is easier to make good
decisions that will not leave the company in chaos.

 Management Information systems give accurate projections of the company’s

standing in the short and long term. Most of the decisions made by top executives in
companies have an effect on the company strategies. As a result, some of them may
need some modifications done on the company goals or strategies. Most Management
Information Systems come with trend analysis features that will enable you to project
the performance of a business with the current configuration and how they will be
affected once you have implemented any changes that you are considering. The
Management Information Systems that don’t have the trend analysis feature will still
provide you with enough information to accurately carry out the analysis using external
tools.

 Management Information Systems help track the implementation of particular

decisions in a company. Before making a decision, executives use these systems to
make projections of the expectations from the particular decision. If they decide to go
ahead with the changes, there will be a need to keep monitoring the performance to see
if you are on track to achieving the desired results. Management Information Systems
give detailed reports and recommendations so that the evaluation of the goals moves
smoothly and effectively. You get data that shows if your decisions have had the
desired effect. If not, you will be able to take the necessary corrective measures early
so that you can get back on track.

 To improve on the company’s reporting. One of the reasons why Management

Information Systems are favored by large companies is the effectiveness of the
reporting features. The decisions can be made quickly because the information is
presented in an easy to understand format. The fact that the system is accessible by
 people from different parts of the organization makes it an effective reporting and
communication tool. Findings can be shared among colleagues with all the necessary
supplementary data. It is also possible to create brief executive summaries that sum up
the whole situation for review by senior company executives in situations that need their
approval.

ADVANTAGES OF MANAGEMENT INFORMATION SYSTEMS WHICH

ORGNIZATION USES TO ACHIVE GOALS.

There are many benefits that come with applying Management Information Systems.
Some of these benefits help make work easier for management while the rest of them
help the organization as a whole.

Let’s take a closer look and see what you stand to gain from having a MIS.

 All stakeholders in the company have access to one single database that holds all the
data that will be needed in day to day operations.

 Employees and other stakeholders in the organization will be able to spend more time
doing productive tasks.

 Another benefit of Management Information Systems is that they bring the power of
data processing tools that help significantly improve the quality of decisions made in the
company. .

 Owing to the flexibility that is brought by the use of mobile devices such as tablet
computers and smartphones, Management Information Systems ensure that employees
have easier and closer interaction with information about the progress of any process
within the organization.

 Inputs and modifications in these systems are logged and the authors noted.

 Management Information Systems help reduce the amount of paperwork .

 Reports make it easy for companies to easily identify their strengths and weaknesses in
carrying out various tasks.
 From a top executive perspective, Management Information Systems help give an
overall impression of where the company stands financially.

 Most Management Information Systems provide a channel for customers to collect and
store vital data and feedback from customers.

 With management information systems, a company gains competitive advantage.

 MIS helps eliminate redundant roles.

Exam 35950 – Management Information System

Discuss the models used for MIS Development.

Ans 2

MIS development is construed as a process involving various phases. A clear

understanding of these approaches would be necessary to make a proper selection for
development of MIS and to ensure proper implementation and running of systems. The
following models are used for MIS development:

I. System development life cycle (SDLC)

II.Prototyping

SYSTEM DEVELOPMENT LIFE CYCLE (SDLC)

In general, an SDLC methodology follows these following steps:

1. Analysis: The existing system is evaluated. Deficiencies are identified. This can be
done by interviewing users of the system and consulting with support personnel.

2. Plan and requirements: The new system requirements are defined. In particular,
the deficiencies in the existing system must be addressed with specific proposals for
improvement. Other factors defined include needed features, functions and
capabilities.
3. Design: The proposed system is designed. Plans are laid out concerning the
physical construction, hardware, operating systems, programming, communications
and security issues.

4. Development: The new system is developed. The new components and programs
must be obtained and installed. Users of the system must be trained in its use.

5. Testing: All aspects of performance must be tested. If necessary, adjustments must

be made at this stage. Tests performed by quality assurance (QA) teams may
include systems integration and system testing.

6. Deployment: The system is incorporated in a production environment. The new

system can be phased in, according to application or location, and the old system
gradually replaced. In some cases, it may be more cost-effective to shut down the
old system and implement the new system all at once.

7. Upkeep and maintenance: This step involves changing and updating the system
once it is in place. Hardware or software may need to be upgraded, replaced or
changed in some way to better fit the needs of the end-users continuously. Users of
the system should be kept up-to-date concerning the latest modifications and
procedures.

Other steps which may appear include project initiation, functional specifications,
detailed specifications, evaluation, end-of-life and other steps that can be created by
splitting previous steps apart further.

Advantages of SDLC

Benefits of abiding by a clearly defined SDLC model include:

 Having a clear view of an entire project, workers involved, estimated costs and
timelines.

 Gives project managers a projected base cost of the project.

 Goals and standards are clearly defined.

 Developers can move back a step if something does not go as expected.

PROTOTYPING

Prototyping approach is easy and convenient compared to SDLC since it is

comprehensive and does not include all the requirements of the user. Prototyping is

the process of building a model of a system. In terms of an information system,

prototypes are employed to help system designers build an information system that

intuitive and easy to manipulate for end users. Prototyping is an iterative process that

is part of the analysis phase of the systems development life cycle.

During the requirements determination portion of the systems analysis phase, system

analysts gather information about the organization's current procedures and business

processes related the proposed information system. In addition, they study the current

information system, if there is one, and conduct user interviews and collect

documentation. This helps the analysts develop an initial set of system requirements.

Prototyping can augment this process because it converts these basic, yet sometimes

intangible, specifications into a tangible but limited working model of the desired

information system. The user feedback gained from developing a physical system that

the users can touch and see facilitates an evaluative response that the analyst can

employ to modify existing requirements as well as developing new ones.

he processes involved are described below:

The process of prototyping includes

1. Identifying the user’s basic information requirements

2. Developing the initial prototype system

3. Use of prototype system to refine the users requirement and

4. Revise and enhance the prototype system.

1. Identification of the user’s basic information requirements

In this case user identifies basic requirement in terms of output from the system. The

designer should establish realistic user expectations and calculate the costs for the

development of prototype.

2. Development of the initial prototype system

In this step functional interactive application system is developed that, is required by

the user. The prototype is developed using high level language. More emphasis is laid

in the speed rather than efficiency of operations.

3. Use of prototype system to refine the user’s requirements

This facilitates the user to get the experience with the system and to understand what it

does and does not perform. The user decides the changes necessary to have a control

on development time.

4. Revise and enhance the prototype system

In this step designer makes required changes using basic principle. The emphasis is

on speed to complete the modification and return to the user.

Prototyping approach is highly suitable for the large organizations with multiplicity and

complexity of the operations involved. Prototyping methodology has significant

advantages in development of applications having high uncertainty as to requirements:

1. Ability to ‘try out’ ideas without incurring huge costs.

2. Low cost for development where requirements change frequently.

3. The ability to get a functioning systems into the hands of the user quickly.

MIS in today’s world of ever increasing complexities of business and management

become essential to survive and grow. MIS supplies accurate, relevant and timely

information to the Management of the Organisation. If the MIS is poorly developed,

designed and implemented, becomes irrelevant or obsolete to improve an

Organisation.
Exam 35950 – Management Information System

Explain the role of MIS in an organization for planning and decision

making.

Ans 3

The role of the MIS in an organization can be compared to the role of heart in the body.
The information is the blood and MIS is the heart. In the body the heart plays the role of
supplying pure blood to all the elements of the body including the brain. The heart work
faster and supplies more blood when needed. It regulates and controls the incoming
impure blood, processed it and sends it to the destination in the quantity needed. It
fulfills the needs of blood supply to human body in normal course and also in crisis.

The importance of MIS in decision making can be seen throughout the typical
corporate decision-making process. MIS reports typically alert management about
problems by highlighting poor performance, lower than expected sales, problems in
efficiency and so forth.

These same reports allow managers to gather data related to the problem by looking
at trends over a certain period of time and seeing where improvements can be made.
This information empowers managers to brainstorm a wide variety of possible
solutions to the given problem so that they can consider the pros and cons of each
one. This makes it possible for management to choose and execute a plan to solve
the problem.

Future MIS reports should show improvement in the problem areas so that managers
can accurately evaluate the success of their given plan and make adjustments going
forward.

The MIS plays exactly the same role in the organization. The system ensures that an
appropriate data is collected from the various sources, processed and send further to all
the needy destinations. The system is expected to fulfill the information needs of an
individual, a group of individuals, the management functionaries: the managers and top
management.

Here are some of the important roles of the MIS:

i. The MIS satisfies the diverse needs through variety of systems such as query system,
analysis system, modeling system and decision support system.

ii. The MIS helps in strategic planning, management control, operational control and
transaction processing. The MIS helps in the clerical personal in the transaction
processing and answers the queries on the data pertaining to the transaction, the status
of a particular record and reference on a variety of documents.

iii. The MIS helps the junior management personnel by providing the operational data
for planning, scheduling and control , and helps them further in decision-making at the
operation level to correct an out of control situation.

iv. The MIS helps the middle management in short term planning, target setting and
controlling the business functions. It is supported by the use of the management tools of
planning and control.

v. The MIS helps the top level management in goal setting, strategic planning and
evolving the business plans and their implementation.

vi. The MIS plays the role of information generation, communication, problem
identification and helps in the process of decision-making. The MIS, therefore, plays a
vital role in the management, administration and operation of an organization.

Impact of the management information system

MIS plays a very important role in the organization; it creates an impact on the
organization’s functions, performance and productivity.
The impact of MIS on the functions is in its management with a good MIS supports the
management of marketing, finance, production and personnel becomes more efficient.
The tracking and monitoring of the functional targets becomes easy. The functional
managers are informed about the progress, achievements and shortfalls in the activity
and the targets. The manager is kept alert by providing certain information indicating
and probable trends in the various aspects of business. This helps in forecasting and
long-term perspective planning. The manager’s attention is bought to a situation which
is expected in nature, inducing him to take an action or a decision in the matter.
Disciplined information reporting system creates structure database and a knowledge
base for all the people in the organization. The information is available in such a form
that it can be used straight away by blending and analysis, saving the manager’s
valuable time.

The MIS creates another impact in the organization which relates to the understanding
of the business itself. The MIS begins with the definition of data, entity and its attributes.
It uses a dictionary of data, entity and attributes, respectively, designed for information
generation in the organization. Since all the information systems use the dictionary,
there is common understanding of terms and terminology in the organization bringing
clarity in the communication and a similar understanding of an event in the organization.

The MIS calls for a systematization of the business operations for an effective system
design. This leads to streaming of the operations which complicates the system design.
It improves the administration of the business by bringing a discipline in its operations
as everybody is required to follow and use systems and procedures. This process
brings a high degree of professionalism in the business operations.

The goals and objectives of the MIS are the products of business goals and objectives.
It helps indirectly to pull the entire organization in one direction towards the corporate
goals and objectives by providing the relevant information to the organization.

A well designed system with a focus on the manager makes an impact on the
managerial efficiency. The fund of information motivates an enlightened manager to use
a variety of tools of the management. It helps him to resort to such exercises as
experimentation and modeling. The use of computers enables him to use the tools and
techniques which are impossible to use manually. The ready-made packages make this
task simple. The impact is on the managerial ability to perform. It improves decision-
making ability considerably high.

Since, the MIS work on the basic system such as transaction processing and database,
the drudgery of the clerical work is transferred to the computerized system, relieving the
human mind for better work. It will be observed that lot of manpower is engaged in this
activity in the organization. 70% percent of the time is spent in recording, searching,
processing and communicating. This MIS has a direct impact on this overhead. It
creates information –based working culture in the organization.

Importance of MIS

It goes without saying that all managerial functions are performed through decision-
making; for taking rational decision, timely and reliable information is essential and is
procured through a logical and well structured method of information collecting,
processing and disseminating to decision makers. Such a method in the field of
management is widely known as MIS. In today’s world of ever increasing complexities
of business as well as business organization, in order to service and grow , must have a
properly planned, analyzed, designed and maintained MIS so that it provides timely,
reliable and useful information to enable the management to take speedy and rational
decisions.

MIS has assumed all the more important role in today’s environment because a
manager has to take decisions under two main challenges:

First, because of the liberalization and globalization, in which organizations are required
to compete not locally but globally, a manager has to take quick decisions, otherwise his
business will be taken away by his competitors. This has further enhanced the necessity
for such a system.
Second, in this information age wherein information is doubling up every two or three
years, a manager has to process a large voluminous data; failing which he may end up
taking a strong decision that may prove to be very costly to the company.

In such a situation managers must be equipped with some tools or a system, which can
assist them in their challenging role of decision-making. It is because of the above cited
reasons, that today MIS is considered to be of permanent importance, sometimes
regarded as the name centre of an organization. Such system assist decision makers in
organizations by providing information at various stages of decision making and thus
greatly help the organizations to achieve their predetermined goals and objectives. On
the other hand, the MIS which is not adequately planned for analyzed, designed,
implemented or is poorly maintained may provide developed inaccurate, irrelevant or
obsolete information which may prove fatal for the organization. In other words,
organizations today just cannot survive and grow without properly planned, designed,
implemented and maintained MIS. It has been well understood that MIS enables even
small organizations to more than offset the economies of scale enjoyed by their bigger
competitors and thus helps in providing a competitive edge over other organizations.
Exam 35950 – Management Information System

Explain the essential characteristics of decision Support System

(DSS).

Ans 5

A Decision Support System (DSS) is an information system that supports business or

organizational decision-making activities. DSS serve the management, operations and

planning levels of an organization (usually mid and higher management) and help

people make decisions about problems that may be rapidly changing and not easily

specified in advance—i.e. unstructured and semi-structured decision problems.

Decision support systems can be either fully computerized or human-powered, or a

combination of both. However, in contrast to MIS (that processes data), it processes

information to support the decision making process of managers. It provides middle

managers with the information that enables them to make intelligent decisions. A DSS

in bank, for example, can enable a manger to analyze the changing trends in deposits

and loans in order to ascertain the yearly targets.

DSS uses the summary information, exceptions, patterns, and trends using the analytical

models. A decision support system helps in decision-making but does not necessarily

give a decision itself. The decision makers compile useful information from raw data,

documents, personal knowledge, and/or business models to identify and solve problems

and make decisions.

Four Essential characteristics of decision support

These four characteristics of decision support, one can turn the data into decisions.

One: Data collection

The first of the four characteristics of decision support is that the system must collect

data. A familiar example of a decision support system is daily weather report. This is a

system that collects information about the temperature throughout the world. They use a

range of devices to collect measurements, such as the temperature. These gauges

become part of a massive decision support system that is useful for any person

interested in the heat of the day. If a decision support system is to be useful, it must first

collect data that is relevant to your decision.

Two: Data Management

Once you have the data, you have to manage it. First and foremost, that means

somewhere to store it. For example, all of the measures of a temperature gauge needs

to be stored so that it can be analysed. This usually means some kind of database or

data log. A system that provides decision support, also has a way to manage the data

that it collects.

Three: Data Analysis

The third of the characteristics of decision support system is when data becomes

insight. By itself, raw data is rarely useful. Rather, it must crunched to meet the needs of

the people who may benefit from it. However, with some high quality analysis, that data
may become essential for making big decisions. This can be the difference between

helping a farmer plan the next day’s harvest or a pilot flying an airliner at 38,000 feet.

Same source data, but very different types of analysis. Therefore, analysis makes a

world of difference when it comes to decision support.

Four: Data Presentation

Data presentation is all about how you deliver your information to people. It is the

interface and interaction between data and user. This is the user interface, look and

feel, column graph or pie chart.

How a system present information can make all the difference as to how useful a

decision support system is. As with temperate, you can represent today’s maximum

using a sun or snowflake icon. In this way, you immediately know what the day is going

to be like. This example, is decision support at it’s best because it is relevant, timely and

useful!

A decision support systems also consists of three main components, namely database,
software system and user interface.

1. DSS Database: It contains data from various sources, including internal data from
the organization, the data generated by different applications, and the external data
mined form the Internet, etc. The decision support systems database can be a small
database, a standalone system, or a huge data warehouse supporting the information
needs of an organization. To avoid the interference of decision support system with the
working of operational systems, the DSS database usually contains a copy of the
production database.
2. DSS Software System: It consists of various mathematical and analytical models
that are used to analyze the complex data, thereby producing the required information.
A model predicts the output in the basis of different inputs or different conditions, or
finds out the combination of conditions and input that is required to produce the desired
output.

A decision support system may compromise different models where each model
performs a specific function. The selection of models that must be included in a decision
support system family depends on user requirements and the purposes of DSS.

Some of the commonly used mathematical and statistical models are as follows:-

 Statistical Models: They contain a wide range of statistical functions, such as

mean, median, mode, deviations etc. These models are used to establish,
 relationships between the occurrences of an event and various factors related
to that event. It can, for example, relate sale of product to differences in area,
income, season, or other factors. In addition to statistical functions, they
contain software that can analyze series of data to project future outcomes.

 Sensitivity Analysis Models: These are used to provide answers to what-if

situations occurring frequently in an organization. During the analysis, the
value of one variable is changed repeatedly and resulting changes on other
variables are observed. The sale of product, for example, is affected by
different factors such as price, expenses on advertisements, number of sales
staff, productions etc. Using a sensitivity model, price of the product can be
changed (increased or decreased) repeatedly to ascertain the sensitivity of
different factors and their effect on sales volume.

 Optimization Analysis Models: They are used to find optimum value for a
target variable under given circumstances. They are widely used for making
decisions related to optimum utilization of resources in an organization. During
optimization analysis, the values for one or more variables are changed
repeatedly keeping in mind the specific constraints, until the best values for
target variable are found. They can, for example, determine the highest level
of production that can be achieved by varying job assignments to workers,
keeping in mind that some workers are skilled and their job assignment cannot
be changed.

 Forecasting Models: They use various forecasting tools and techniques,

including the regression models, time series analysis, and market research
methods etc., to make statements about the future or to predict something in
advance. They provide information that helps in analyzing the business
conditions and making future plans. These systems are widely used for
forecasting sales.

 Backward Analysis Sensitivity Models: Also known as goal seeking

analysis, the technique followed in these models is just opposite to the
technique applied in sensitivity analysis models. In place of changing the
 value of variable repeatedly to see how it affects other variables, goal seeking
analysis sets a target value for a variable and then repeatedly changes other
variables until the target value is achieved. To increase the production level by
40 percent using the backward sensitivity analysis, for example, first, the
target value for the production level can be set and then the required changes
to made in other factors, such as the amount of raw material, machinery and
tools, number of production staff, etc., to achieve the target production level.

3. DSS User Interface: It is an interactive graphical interface which makes the

interaction easier between the DSS and its users. It displays the results (output) of the
analysis in various forms, such as text, table, charts or graphics. The user can select
the appropriate option to view the output according to his requirement.

A manager, for example, would like to view comparative sales data in tabular form
whereas an architect creating a design plan would be more interested in viewing the
result of analysis in a graphical format. The present-day decision support system built
using the Web-based interface provides its users some special capabilities like better
interactivity, facility for customization and personalization, and more ease of use.