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INTRODUCTION TO MIS

Management Information System plays a very important role in an organization. There is

hardly a business magazine that does not contain article about information system.

MIS can be defined as –

“A system which collects, processes, stores and distributes information to help in decision

making for managerial functions.”

(Planning, staffing, directing, controlling, organizing and budgeting)

It may also be defined as Integrated user/ Machine system for providing information to support

the decision making process.

MIS is a computer based system, which presents both external and internal information of

business. This system utilizes computer hardware and software, manual procedure for analys is,

planning, control and decision making.

These system do not take decisions but they assist in providing a necessary information as an

input to the decision making process.

MIS should provide information which is consistent, accurate, timely, economically flexib le

and relevant.

MIS can be computerized or manual. MIS provides information in report format on regular

basis to assist managers with decision which occur frequently and can be anticipated.

MANAGEMENT

Management has been defined in a variety of ways, but for our purpose it compromises the

processes or activities that describes what managers do in the operation of their organizat ion;

plan, organize, initiative and control operations.

INFORMATION

Data must be distinguished from information. Data are facts and figures that are not currently

being used in decision process.

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Information consist of data that have been retrieved, processed or otherwise used for

informative or inference purposes, arguments, or as a basis for forecasting or decision making.

SYSTEMS

A system can be described simply as a set of elements joined together for a common objective.

The system concept of MIS is therefore one of the optimizing the output of the organization by

connecting the operating sub-system through the medium of information exchange

PYRAMIDICAL STRUCTURE OF MIS

Lower level:-The bottom layer consists of information required for transaction processing and

inquiry processing.

Operational level: - This layer has the information which is required for day to day

performance of activities and their control.

Middle level: - This layer has the information which is useful for tactical planning and decision

making to implement the policy of top management.

Top level: - This layer has information which is useful for strategies and policy planning.

CHARACTERISTICS OF MIS

The MIS plays a vital role in management, administrations and operations of an organiza t ion

as it helps in information generation, communication, and problem identification in the process

of decision making.

The main features of MIS are:-

I) Management oriented: - The development of MIS starts after deciding the

management needs and keeping in view overall objective of management.

II) Management directed: - A good MIS removes the lack of knowledge, enriches

experience and improves analytical abilities leading to better business judgment.

III) Integrated system: - MIS binds together database of business system and through

information interchange, integrates the organization. It also provides adequate

development resources and removes the human and organizational barriers to progress.

IV) Avoid redundancy: - Since MIS is an integrated system, it avoids unnecessary

inconsistency and redundancy in data gathering and storage.

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V) Common data flow:-MIS provides common data flows, which try to utilize minimum

data processing efforts and minimize the number of output document.

VI) Heavy planning element: - Designing and implementation of MIS require detailed and

meticulous planning of activities like acquisition and utilization of resources.

VII) Common database: - MIS acts as a master that holds the functional sub-system

together. It achieves this aim by allowing access to different master files of data to

several functional sub-systems.

VIII) Flexibility: - MIS design should be flexible so as to provide alternate ways of

processing data and system should be easy to operate so that not much of computers

skills are required.

IX) Computerization: - MIS can be computerized because of its nature. This provide

speed, accuracy and consistency in creating and access of files.

X) Relevance: - MIS should deal only with operation and control of relevant information.

XI) Support to top management: - MIS cannot be effective unless they receive the full

support of top management. For this, top management should be educated about cost

and benefits of MIS.

XII) Periodic evaluation: - The last feature of MIS is that the system should be evaluated

at periodic intervals to ensure that MIS is achieving the objective of which this has been

installed.

COMPONENTS OF MIS

Management information system refers to the data, equipment and computers program that are

used to develop information for managerial use. The MIS consists of following components

which are as follows-

I) People: - People is only living component of MIS which operates and controls the

other components of MIS. They enter, analyze and diagnose data, so that useful

information is produced and provided to top executives for decision making.

II) Data process: - Data process uses different procedures, so that data can be properly

analyzed and effective information is generated. Procedures explain people how to

operate the computer hardware, what program to run, what data to use and what to

do with the results.

III) Data communication: - There are different ways for communication of data. It

may be informed orally or in the form of written report. Written forms are more

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appropriate than oral ones as it is permanent and systematic way of organizing

information.

IV) Information: - Data are facts and figures that are not currently being used in

decision process. Data is process by applying different procedures to obtain

information. It may be recorded into computer, storage media or manual files and

is retrieved whenever required.

V) System planning: - We have achieved a very high degree of automation and

combination sub-system in scientific, mechanical and factory manufactur ing

operation. The system concept of MIS is therefore of optimizing the output of the

organization by connecting the operation sub-system, through the medium of

information exchange.

VI) Hardware and Software: - The hardware generally consists of computer

equipment, on the other hand software consists of programs or instructions given to

the computer such as pay roll processing, invoices etc.

FUNCTIONS OF MIS

A MIS is used to collect data, store and process data and present information to managers.

I) Collect data: - Data can be obtained from source within and outside the

organization. Internal sources such as records, reports and external sources such

as publications, customers and consultancy.

II) Store and process data: - After creation of data, a database must be stored and

processed in a form useful to managers. The data can be loaded into computers

for easy access by user.

III) Present information to users: - After collection of data, storing and processing

of data, the next step is to present the information to managers for their use.

USES/BENEFITS/ROLE OF MIS

I) MIS ensures that appropriate and relevant data is collected from various

sources, processed and is sent further to needy destination.

II) It fulfills the needs of individual, group, management.

III) MIS helps in strategic planning, management control, operational control and

transaction processing system.

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IV) MIS plays an important role in information generation, communicat ion,

problem identification and decision making administration.

V) With good MIS support marketing, finance, production and personnel functions

increases efficiency.

VI) MIS creates structured database and therefore saves time.

VII) MIS brings clarity in communication and understanding, thus helps in bringing

degree of professionalism.

INFORMATION

We breathe information, eat information, drink information, wake up with information, sleep

with information etc. So information is as life blood of any organization, without information

survival of any organization is not possible.

Information means “processing of data or analyses of data in a specific context to get required

information”. It is a basis of decision making. The decision taken on basis of complete and

accurate information is less risky.

The value of perfect information is calculated by finding out the difference between the opt imal

policy with and without perfect information.

Characteristics of an information

i) Accuracy: - Accuracy means that information is free from mistakes and error and

it accurately and clearly reflects the meaning of data from which it is derived. It

conveys the accurate picture to receiver and is free from biasness.

ii) Timeliness: - Information must be delivered at the right time and the right place to

the right person otherwise information would be of little value to the organizat ion,

hence, making information available to the receiver within time is very crucial for

every organization.

iii) Relevance: - Information should be to the point and meaningful to the decision

maker. Relevance of information for different users will be different.

iv) Correct information format: - Information should be given to the user in such a

form that it could be easily understood by user.

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v) Completeness:-Information is said to be complete if decision maker can

satisfactory solve the problem at hand using that information. Incomplete

information has no meaning for user.

vi) Subjectivity: - It is the value and usefulness of the information.

vii) Accessibility: - Information should be readily accessible in desired format when

needed. Technological advancement has made data accessibility easy.

Types of Information System

I) TPS (Transaction Processing System):- Most fundamental computer system

which is concerned with processing of business is called TPS. The objective of TPS

is to improve routine business activities on which functions of organiza t ion

depends. The main work of TPS is to record and process the data resulting from

business transactions. A transaction is an event or entity which affects the

organization. Transaction processing could also be considered as a set of procedures

for handling transactions and it includes activities like calculation, classificat ion,

storage and retrieval, sorting, validation, verification, summarization etc. These

activities occur at operational level in nay organization. TPS produces a variety of

information system for internal and external cause.

II) OAS (Office Automation System):- OAS collects, processes, stores and transmits

data and information in the form of electronic office communication. These

automatic systems rely on text processing, telecommunication and offer

information system technologies. Example- word processing, electronic mail,

desktop publishing, telecommunication and document image processing. It

enhances the abilities of users to communicate with their colleagues within their

work groups and organization and with external contact such as customers and

suppliers.

Advantages-

They provide more time to managers to concentrate on their basic jobs.

They improve the quality of work in terms of content, thoroughness, timeliness and

accuracy.

They speed up specific functions and thereby increases the quantity of clerical output.

They reduce the time spent on input capture and creation.

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They co-ordinate and integrate office tasks.

They enable more cost- effective and time- effective communications.

They increase the productivity of office workers at all levels.

Disadvantages –

Cost of automated office hardware is very high.

OAS can disrupt traditional office work roles and environment.

OAS may lead to security problems.

III) EIS (Executive Information System):- The decision made by executives are

mostly unstructured for which informational requirements are generally for

processed and summarized data from variety of sources. Initially tip executive

information system relies on non-computer source. Top level executives get

information whenever they require from many sources like letters, memos,

periodicals and report produced manually as well as by computer system. Thus,

with computer based EIS provides top management with immediate and easy access

to selective information, which reduces the information overload on executives and

help to achieve firm’s strategic objective.

IV) ES (Expert System):- Expert system aims at formalizing expertise and makes it

available for repetitive types of business decisions. They use artificial intelligence

tools to generate knowledge out of information. It helps human experts perform

their jobs effectively and is important where expertise is scarce and is therefore

expensive. The expert system has been developed for the purpose of expertise from

those with the knowledge in a convenient and easily accessed manner. Expert

systems are designed to replace the function formed by human experts. Expert

system provide information to managers as expert advice.

An expert system supports the intellectual work of professionals engaged in design,

diagnosis or evaluation of complex situation requiring expert knowledge in a well-

defined area.

Advantages:-

Planning: - ES can make a valuable contribution to planning. It can use

information from earlier project which can be used to improve subsequent

plans.

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Decision making: - ES can support decision making by storing information

in its knowledge base from several experts rather than a single expert.

Monitoring: - ES can be used to monitor the process, activities of

employees and cash management etc.

Diagnosis: - ES can be used in diagnosing different conditions. Ex- in

diagnosing the reasons for manufacturing equipment, human diseases in

medicine etc.

Training: - when an ES is being used as a regular nature in the course of

work, users learn the way the system reaches destination.

Timely response: - ES are available on call at all the time and, can be used

to provide immediate support and to perform task immediately.

Reliability: - they are reliable in the sense that they do not become tired or

bored. They pay attention to all details and do not overlook any relevant

information.

Disadvantages:-

Expert system are not problem solver.

It may take longer time to solve problem than an expertise.

Expert system take long development time and are expensive.

SYSTEM VIEW OF BUSINESS

We should be able to visualize any business organization as a system. Thus business is a

system which is a set of interrelated components that are working together to achieve

organization’s objective in a controlled manner. In the past, managers had to solve the problem,

independently and in isolation. Suppose organization face the problem of decline in sales and

it is traced that problem is due to poor performance of sales man. But practically there are no.

Of reasons responsible for that such as poor management, poor understanding, poor quality of

product, poor marketing policy etc.

This type of activity could be related to a system. A business must maintain appropriate

relationships with other political, economic and social systems in the environment. This group

includes its stakeholders such as customers, suppliers, stockholders etc. Information system

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can help a business to shape its relationships with each of these stakeholders. In the same way,

MIS is also a system which consists of group of people, a set of manual and data processing

equipment which aims to provide information to reduce the uncertainty in decision making.

SYSTEM APPROACH

The system approach in business was born in decade of 1960’s. It is a systematic process of

problem solving based on scientific methods which defines problems and opportunity in a

system context.

Information describing the problem or opportunity is gathered. Alternative solutions are

identified, evaluated so that, best solution is selected, implemented and then its success is

evaluated.

Purpose of system approach is to utilize scientific analysis in complex organization for-

Developing and managing operating system i.e. money flow, personnel system.

Designing information system for decision making.

System approach of MIS is optimizing the output of the organization by connecting to operative

sub system through the medium of information exchange. The basic notation of system

approach in MIS is to provide information on decision making on planning, organizing,

controlling the operations of sub-system of the firm.

The system approach in business for MIS is implemented by “SYNERGY”. The concept of

synergy tells us that the sum of part is greater than the whole i.e. the output of total organiza t ion

can be enhanced if the components part can be integrated.

Thus, in an organization synergy is simultaneous action of separate but inter-related parts that

together produce a total effect greater than sum of individual parts.

SYSTEM APPROACH IN PLANNING

The Most Basic and Important Function of Management Is Planning. We know that Planning

is needed at all levels of management and success of all other management function depend

upon Planning.

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Planning means deciding in advance what has to be done, who has to do it, when it has to be

done and how it has to be done. It bridges the gap between where we are and where we want

to go.

This system approach to planning starts with strategic plan as a framework. The strategic plan

is specific but not detailed. The long term goal provides the constraints for setting intermed ia te

and short term goals.

Therefore strategic plans ties together the development plan also.

The strategic planning process consists of two steps-

Developing the strategy

Formulating the steps, timing, and cost required to achieve the strategy.

SYSTEM APPROACH IN ORGANIZING

Organizing is important to managers because it helps in effective group action. It also helps in

maintaining the people to work together and accomplish objectives i.e. organizing. It involves

the grouping of tasks necessary to accomplish plans and assign activity to department.

It consists of following components-

The formal organization system as describes in chart policies and procedures.

The informal organization

The individual as a system

The organizational communication system

The power system

The functional system

The management process system

The material logistic system

We know that system approach say that, output is greater if all part work with integration. This

is same concept of organizing.

Phases of organizing are-

Developing a technical organization based on traditional methods of

departmentalization.

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Start with overall company’s objectives and develop a hierarchy of network of system

required.

Involve key manager and specialist in order to select group of people so that planned

activities are done in order to achieve objective.

SYSTEM APPROACH IN CONTROLLING

Controlling Is Important Because It Is Needed To Achieve The Desired Results. The Most

Common Process Consists Of Three Steps-

Setting standards of performance- it involves what level of performance we need.

Hence, standards are criteria against which result can be measured. These criteria can be

quantitative or qualitative.

Measuring performance- once standards have been established it is necessary to

measure performance against standards. The statement of measurement and of any

difference is usually in form of personal observation type of report in oral or written

form.

Deviation control- we know that measuring deviation first comparison of standards

with actual performance is made. If deviation is found then correction is made by taking

some course of action to achieve the targeted objectives.

Methods and techniques for correcting deviation can be described in terms of functions

of management-

a) Plan- recycle the management process, review the plan, modify the goal or

change standards.

b) Organize- examine the organization in standard and make sure duties are well

understood.

c) Staffing- improve selection of sub-ordinate, improve training, reassign duties.

d) Directing- provide better leadership, motivate the people, explain the job better.

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DATA PROCESSING

Data processing is basically concerned with converting raw data into well-ordered information,

which serves the purpose of result processing. It essentially consist of facts relating to events

and entities. In a business situation, a sale or purchase is an event. While person, place, things

etc. are entities. Data processing consists of data input, data manipulation and outputting results

of data manipulation. For the purpose of data processing data contained in source documents

are fed into computer. Data manipulations consists of such operations as classification, sorting,

calculations and summarizations, while output operations contains management of storage,

retrieval, communications and reproduction of the result.

FLOW CHART

A flow chart is a diagrammatic or pictorial representation of the algorithm. It indicates solution

of a problem. They are constructed by using special geometrical symbols. Each symbol

represents an activity. The activity could be input/output of data, computation/processing of

data, taking a decision, termination of solution etc. the symbols are joined by flow lines to

obtain a complete flow chart.

1. Terminal symbol: - The terminal symbol is used to indicate the point at which a flow

chart begins and ends. It is accepted procedure to insert the word START and STOP

with the terminal symbols.

2. Input/output symbol: - In a program i/p and o/p symbols identify the logica l

positioning of input and output operations. I/O symbol indicates to take input from user

and o/p symbol is used to generate solution to the problem.

3. Processing symbol: - In this, data are automatically processed. We can define

computations and after that data moves to storage area or output area.

4. Decision symbol: - It is also called logical symbol to solve many business problems,

many comparisons of data are made before selecting the best alternative. The two

principal components of decision symbol are-

A question that defines the logical operation.

The result of the decision (i.e. yes/no)

5. Connector: - A flow chart becomes very long, the flow lines start crossing many places

that causes confusions. In that case, it is useful to utilize the connector symbol as a

substitute for flow lines. It is indicated by a circle and a letter or digit is placed within

the circle.

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6. Flow lines: - flow lines are used to indicate the flow of operation i.e. exact sequence in

which the instructions are to be executed. The normal flow of flow-chart is from top to

bottom and left to right.

Advantages-

Flow- chart is good aid for communicating the logic of a system.

It helps to identify a relationship that exists among problem element.

It helps us in effective analysis by breaking down into detailed part of a study.

Flow –chart act as a guide or blue print during the system analysis program preparation

phase.

The flow chart helps in debugging process i.e. it helps in detecting, locating and

removing mistakes.

Disadvantages-

When the program logic is complex the flowchart becomes complex.

If alterations are required, the flow chart may require re-drawing completely.

No uniform practice is followed for drawing flow-chart.

Sometimes it becomes difficult to establish the linkage between various conditions and

actions.

CONVERSION OF MANUAL SYSTEM INTO COMPUTERISED SYSTEM

Today is the world of information technology. In business lots of complexity and competition

are there. In order to reduce this, we are using information technology in business. So, we are

converting manual system to computerized system. The steps involved in conversion are:-

1. System description: - It is usually prepared after preliminary investigation and

definition of the problem. The description is essentially a statement of major input,

output, processing operation and files needed.

2. Input document: - After the system description is completed. It is necessary to specify

how the information will be put into the form that is acceptable to the computer.

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Volume of information, frequency, accuracy and verification requirement and the

handling of the information are considered in the selection of input format.

3. Output document: - Outputs are subject to much the same considerations as input

document but the output format should be treated with additional care because it

represents the objective and purpose of entire operation. It is the output document with

which the management is almost exclusively concerned and because of its critical

nature care should be taken in its design.

4. File design: - The logic required to control the flow of data through the system is a part

of system design and the flow is in turn dependent upon the design of data files. In this

we consider the type of equipment, storage capacity, input and output media and format.

5. Program logic and computer program: - Although there are numerous means of

thinking through and document programming logic, we will use flow-chart because

they are easy to depict and understand. The program flow-chart is the program logic of

step-by-step representation of how the computer program will accomplish the job. It’s

the blue print of the program.

6. System verification: - After the program has been written and run through the

compilation process. It’s placed memory in binary form and is ready to process the file

on disk and print the required report. The verifications means to check the work is done

according to the specifications or not. If not, what steps are to be taken to meet

specifications?

7. Documentation: - The documentation is a complete written format of whole activit ies.

It is manual. It helps in understanding the system easily. When a person is new to the

system and does not know how to use the system but by reading the documentation he

can easily understand and use the system.

SOFTWARE

Software is a set of computer program instructions that directs the operation of the hardware

called software. A set of instruction for a specific task is termed a routine. A complete set of

instruction to execute a related set of task is a program.

Software is a language of computer science or technology which deals with the codes or coded

instructions according to which computer is to operate the procedures with the help of the

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computer and the programs for various routine applications and utilities are collectively called

“software” and in order to match the word “hardware”.

Computer software is classified into two major types of programs

I. SYSTEM SOFTWARE: - A computer is highly complex machine and the role of the

computer software is to make it run. We know that system software refers to all the

programs which make the computer work easy and are commonly supplied by the

manufacturers or computer vendor along with the hardware. It consists of number of

specialized programs that help the computer to co-ordinate and control all activit ies

relating to computer operations. System software can be grouped into three major

functional categories-

System Management Programs- it manages the hardware, software and data

resources of the computer system during its extension of the various information

processing jobs of users. Major system management programs are operating

system, database management system and telecommunication monitors.

System Support Programs: - programs that support the operations

management and the user of a computer system by providing a variety of system

services. Major support programs are system utilities, performance monitors

and security monitors.

System Development Programs: - Programs that help user to develop

information system programs and procedures and prepare user programs for

computer processing. Major development programs are language translators,

programming tools and case packages.

II. APPLICATION SOFTWARE: -

It refers to the program which helps the computer to work effectively for specific applications.

Application software, thus, refers to the program of instructions, tailored to cause the hardware

to function in a desired way for processing an application, unique to the user. Applicat ion

software, therefore is also often called user software.

General Purpose Program: - General applications programs are programs that

perform common information processing job for end users.

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E.g.: - Word processing, spreadsheet, data base management programs, integrated

packages and graph programs are popular with micro-computer uses for education,

business, scientific and many other purposes.

Application Specific Program- Thousands of application software packages are

available to support specific application of end users, major categories of such

application specific program are as follow-

Business application program: - it is related to the business function or industry’s

requirements, examples of such business function and this corresponding application

are accounting, marketing, finance, manufacturing, operation management.

Scientific application program: - Programs that perform information processing task

for natural, physical, social and behavioral science and for mathematics, enginee r ing

and all areas involved in scientific research, experiment and development.

Other application programs: - There are so many application area of computer such

as computer application in education, entertainment, music, art, law enforcement,

medicines and so on.

MODEM

Modem are most common types of communication processor. They convert the digital signals

into analog signals or transmission terminals at one end of the communication link into analog

frequencies, which can be transmitted over ordinary telephone lines. A modem at another end

of the communication converts the transmitted data back into digital form at receiving termina l.

This process is known as modulation and demodulation and the word “MODEM” is a

combined abbreviation of those two words. It comes in several forms, including small stand-

alone unit, plug in circuit boards and microelectronic modem chip.

Modem is necessary because ordinary telephone lines were primarily designed to handle

continuous analog signal. We know that data transmission from computers are in digital form,

devices are necessary to convert digital signals into appropriate analog transmiss ion

frequencies and vise-versa.

TELECOMMUNICATON

Telecommunication is sending of information in any form (i.e. voice data, text and images)

from one place to another using electronic or light emitting media.

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There are different types of communication network. However, from one end user point of

view there are three basic types-

Wide Area Network: - WAN is a very large network, which are used to transmit or

receive information inter-countries, inter-continents etc. data is transmitted through

satellite. It is a kind of internet. They are connected through public or private network.

Metropolitan Area Network: - Network that covers a large city or metropolitan area

can also be included in this category. Such large networks are becoming a necessity for

carrying out the day to day activities of many business and government organiza t ion

and their end users. They are used by manufacturing firms, banks, retailers, distributo rs,

transportation companies, government agencies and many other organizations to

transmit and receive information across cities.

Local Area Network: - It connects information processing devices within a limited

physical area, such as an office building, manufacturing plant or other workstations.

They have become a major type of telecommunication network, since micro computers

were introduced into offices, departments and other work groups. LAN uses a variety

of telecommunication media and communication processors to interconnect computer

terminals, personal computer work station other computer system and other types of

computer peripherals devices.

A telecommunication network consists of five categories of components-

o Terminals

o Telecommunication Processors

o Telecommunication channels and Media

o Computers

o Telecommunication Control Software

WIRED TELECOMMUNICATION

We know that, telecommunication is sending of information in any form (i.e. text, voice, data,

images etc.) from one place to another using electronic or light or through physical wired.

The wired telecommunication is a type of communication in which informat ion is sending or

receiving from one place to another through physical medium. This medium may be coaxial

cable, twisted wires, fiber optics etc.

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The disadvantages of wired telecommunication devices is that, it can’t be moved anywhere as

mobile phones and for long distances longer length cable is required.

WIRELESS TELECOMMUNICATION

For the mobile users, twisted pairs, coaxial cable and fiber optics are of no use. They need to

get their bits of data for their laptop, notebooks, palmtop or wrist watch computer without being

bothered to the terrestrial communication infrastructure, for these users, wireless

communication is the answer.

It appears that future holds only two types of communication fiber and wireless. All fixed

computers, telephones, faxes and so on will be by fiber and all mobile ones will be using

wireless. The advantage is that, it is converting large distance and also communication is

possible in plane, train, bus and car or even walking.

DECISION SUPPORT SYSTEM (DSS)

The DSS is an interactive computer based system, which decision makers to utilize data and

models to solve unstructured problems. The DSS is designed to facilitate the solutions of

problem of structured than that of MIS and TPS which are less structured. The nature of

decision taken by DSS is of non-routine and less structured. The DSS is a collection of data

and data processing tools used to creatively manipulate data to answers unknown and often

unexpected questions.

DSS aims at supporting the decision maker by providing the information with the aid of

quantitative techniques.

Components of DSS-

Hardware Resources- Executives work stations, are connected by telecommunica t ion

network, to other computers and devices in the organization, and provided the primary

hardware resources for a DSS.

Software Resources- DSS software packages are called DSS generators. They contain

modules for database, model and dialogue management. A database management

module provides for creation, interrogation and maintenance of DSS.

Data Resources- a DSS database contains data and information extracted from the

databases of organization, external databases and a managers personnel databases.

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Model Resources- The model base includes a library of mathematical models and

analytical techniques stored in a variety of program modules and files.

People Resources- DSS can be used by managers or their staff specialist to explore

decision alternatives. However the development of large or complex decision support

system and DSS software packages is typically assigned to information system

specialists.

APPLICATIONS OF DSS

DSS are used for a variety of applications in both business and government. When DSS are

developed to solve large and complex problem that are continually faced by an organiza t ion

they are called institutional DSS.

An Airline DSS- An analytical information management system is a decision support

system used in airlines industry, it was developed by AMERICAN AIRLINES bit is

used by other airlines, aircraft manufacturers and airlines financial analysis consultants

and associations. It supports a variety of airlines decisions by studying factors such as

aircraft utilization, seating capacity and utilization traffic and profitability result.

A Marketing DSS- BRAND AID is used for marketing planning, especially in the

packaged goods industries. It helps brand managers to make pricing, sales efforts,

promotion, advertising and budgeting decisions for products, product lines and brand

of products

Government DSS- GADS (GEODATA ANALYSIS AND DISPLAY SYSTEM) was

developed by IBM. It constructs and display maps and other graphics display that

supports decisions affecting the geographic distribution people and other resources.

A Banking DSS- MAPP (Managerial Analysis for profit Planning) is a DSS developed

by CITI-BANK. It was designed to support decisions involved in the financial planning,

budgeting costing and pricing of bank products.

CHARACTERISTICS OF DSS

Ability to support the solution of complex problems.

Fast response to unexpected situations.

DSS is particularly designed for an individual or group of decision makers.

A DSS is best conceptualized as a process instead of product.

Cost saving

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Improving managerial effectiveness.

Improve the effectiveness of decisions.

Flexible and adaptable to change in the external environment.

BUDGETING

A plan and implementation are crucial for the success of any marketing activity. For a

marketing strategy to be successful, the company should set goals, create a strategy and come

up with tactics and prepare a budget. “When coming up with a budget it is important to consider

the size and allocation of total promotion expenses when formulating the promotion strategy.

Unless this is done, the integration of the components is likely to be fragmented” (Cravens &

Piercy, 2003)

Budgets are plans. They are spending plans, activity plans, sales plans, marketing plans, all

linked to the disciplines of careful projection and resource allocation.

Companies use different amount of money when implementing their strategy. Coming up with

a budget is a very crucial marketing tactic since it will help a company use the resources it has

to achieve its objectives.

Benefits of creating and using a marketing budget

- It presents a clear picture of the financial implications of the plan

- Assists in the coordination of marketing activities within the organization.

- Helps a company be able to be accountable and achieve the company’s objectives.

- A budget helps an organization to be on track and enable the marketer be able to make

modifications in the budget if something goes wrong or right.

- Helps a company be able to control its expenses and project their revenues.

Factors to consider when coming up with a marketing budget

Some companies are spending too much money in their marketing strategies which can have a

financial impact on the company if they overspent. They lose accountability of how the money

was allocated and it becomes frustrating if the company does not meet its objectives.

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When coming up with a budget and allocating marketing money spent, the following are

criteria that must be considered first hand;

- Company objectives; the objectives should be smart, measurable, attainable, realist ic

and time bound. The person allocating the money must consider the promotional tools

that will be used to help the company achieve the objectives.

- Regulations and legislation; political and legal factors affect the way a company will

carry out its marketing activities especially if the company is expanding internationa l.

In-house policies will also affect the allocation of money.

- Company’s financial reports; these lay a foundation on the resources the company has

and how it has been fairing. This will help in determining the amount of money to be

set aside for the marketing implementation. The importance of the budget is to spend

less than what the company has and the profits made.

- A company should put into consideration the resources it has. It should use what is

available and avoid spending too much objectives and the available time scale.

- The promotion components in the marketing strategy and their effectiveness in meeting

the marketing objectives together with their contribution.

- Put the budget in paper and modify the budget if need be.

Budgeting approaches

Coming up with an optimal budget is difficult because there are factors that come in place.

However, coming up with a budget emphasizes in improving promotion effectiveness

compared to past results.

Several budget techniques are used when coming up with a budget;

1. Objective and task

It’s the common used budget technique. Here, the management sets objectives and determines

the tasks needed to achieve the objectives and add up the cost. The management must evaluate

how the objectives are to be achieved and choose the most cost effective promotion

components.

2. Percent of64 sales

The budget is usually calculated as a percent of sales and the percentage figure is usually based

on past expenditure patterns. However, this method fails to recognize that promotion efforts

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and results are related. For instance a budget of 15% sales may be too much or not enough to

achieve forecasted sales. Using this method can lead to too much spending on promotion when

sales are high and too little when sales are low.

3. Competitive parity

This method is guided by how much your competitor spent. The short coming of this method

is the differences in marketing strategies between competing firms which may require different

promotion strategies e.g. Safaricom and Airtel. Their budget is likely to differ because of the

target audience, promotion objectives and different promotion components.

4. All you can afford

Some companies have budget limits and top management can specify on how much to spent

on promotion. For instance a company’s objective may be to increase the budget to 110% of

last year’s actual promotion expenditures. The task priorities are set and budget allocated to

the high priority tasks because of the budget limitation due to financial constraints within the

organization.

5. Historical

Methods of budgeting – bottoms up (compiles a budget from the lowest to the highest level in

the department

Example of a Budget:

BUDGET OF WEZESHA RECRUITMENT FIRM

Budget Cost

Quantity

Cost in

Kenya Shs.

Total

in

Kenya

Shs.

Material cost

a. Renting space 1 30,000 30,000

Goodwill 300,000 300,000

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Chairs

10

1000 10000

Tables

2

5,000 10000

Stationary(pens)

10

25 250

Cabinet 1 96000 96000

Curtains 2 500 1000

Files 10 20 200

Computer 2 35,400 70800

b. Publicity materials

T-shirts 50 450 22,500

Caps 50 100 5000

Banners 2 4,800 9600

Wrist bands 50 50 2500

Posters 4 50 200

Brochures , Leaflets, Flyers 100 70 7000

c. Concert equipment(sound,

lighting)

1 70,000 70,000

2.Operation costs

a. Concert 1 100,000 100,000

b. News release 1 150,000 150,000

c. Launch 1 300,000 30000

d. Cocktail party 2 10000 200000

3.Human cost

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a. Hiring professional

Dr. Akama ( Solace PR Firm) 30mins 25000 25000

Kanze Dena(Media, Citizen

TV , News

anchor )

30mins 25000 25000

Caro Mandi (Print Media;

True Love Editor)

30mins 25000 25000

Solomon Fadhili (Flower

Advertising)

30mins 25000 25000

b. Entertainers

Dj Tactics 6TIMES 10000 per

event

60000

DK Kwenye Beat 1 30000 30000

Gloria Muliro 1 30000 30000

Size 8 1 30000 30000

Sauti Sol 1 30000 30000

TOTAL 1,725,050

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REFFERENCES

Chaffey, D. & Wood, S. (2005), Business Information Management; Pearson Education.

Wattles, E & Frederick, J. (2009), Managing Organization’s Information Systems; Holloway

Press.

Cravens, W. D., & Piercy, F. N. (2003). Strategic Marketing. New York: McGraw Hill.

www.booksites.net/ManagementInformationSystems

www.slideshare.com/MISNotes