Unit 3

Concepts of planning & control

Q1) Explain the concept of system and what are its different components?

A1) Concept of System

A system is an orderly grouping of interdependent components linked together according to a plan to achieve a specific objective.

There are three basic implications to a system:

Features:

Components of a System

Components of System

To effectively deliver the information needed to decision makers, Management Information Systems need to have the necessary components to collect, process, store and retrieve the information whenever it is needed.

To achieve this, these systems use the following four components:

Q2) What is the concept of Control? 

A2)

Q3) What is the concept of organizational planning?

A3) A plan is a predetermined course of action to be taken in the future. It is a document retaining the details of how the action will be executed and it is made against a time scale. The goals and the objective that a plan is supposed to achieve are the prerequisites of a plan. The setting of the goals and the objective is the primary task Management without which planning cannot begin. Planning means taking a deep look into the future and assess the total business environment and taking a suitable action to meet any eventual requirements which further means generating the courses of action to meet the most desired result.

Planning is a dynamic process. As the future becomes the present reality, the action decided earlier may require a change. Planning, therefore, calls for a continuous assessment of the predetermined course of action versus the current requirements of the environment. The essence of planning is to see the opportunities and the threats in the future and predetermine the course of action to convert the opportunity into a business gain, and to meet the threat to avoid any business loss. Planning involves challenging decisions, one dependent on the other, since it deals with a long term period. successful implementation of a plan means the execution of 'these decisions in proper manner one after another. Planning, in terms of future, can be long-range or short-range. Long-range plan: is for a period of five years or more, while short-range planning is for one year at the most. The long-range planning is more concerned about the business as a whole, deals with subject like the growth and the rate of growth, the direction of business, establishing some position in the business world by way of corporate image, business share and so on.

On the other hand, short-range planning is' more concerned with attainment of the business results of the year. It could also be in terms of action certain business tasks, such as lunching of a new product, starting a manufacturing:- facility, completing the project, achieving intermediate milestones on the way to attainment of goals. The goals relate to long-term planning and the objective relate to short-term planning. There is a hierarchy of objectives which together take the company to the attainment of goals. The plans, therefore, relate to the objectives when they are short-range and to goals when they are the long-range. Long-range planning deals with}- resource selection, its acquisition and allocation. It deals with the technology and no with the methods or the procedures. It talks about the strategy of achieving the goals. The right strategy improves the chance of success tremendously.

At the same time, a wrong strategy means a failure in achieving the goals. Corporate business planning deals with the corporate business goals and objectives. The business may be a manufacturing or a service, it may deal with the industry or trade may operate in a public or a private sector; may be a national or an international business. Corporate business planning is a necessity in all cases .Though the corporate business planning deals with a company, its universe is beyond the company .Business plan considers the world trends in the business, the industry, the e - 2.--logy, the international markets, the national priorities, the competitors, the e- - -s plans, the corporate strengths and the weaknesses for preparing a corporate Imo. Planning therefore, is a complex exercise of steering the company through, the difficulties, the inhibitions and the uncertainties towards the goals and objective.

Q4) What is the concept of planning?

A4) Planning helps management understand the current situation. This in turn allows management to plan for the future. In a world of rapid change, it is becoming imperative management to think strategically (plan for the future). And since the rate of change seems to be escalating, the importance of strategic planning continues to grow. In 1 the best managed companies tend to engage in continuous strategic planning. Sc organizations have intuitive thinkers who almost seem to see into the future. Therefore strategic planning is a way of preparing for the future by attempting to simulate future. Planning has a tendency to force people to think about the future. This is extremely important since many organizations are inward thinking, focusing too much on short-term. Planning looks at the long-term which is how organizations survive a thrive. It has been proven that organizations that focus on the long-term throb strategic planning outperform organizations that lack long-term planning. Consequent one of the benefits of planning is long-term performance and growth. Another benefit planning is communication. Plans communicate the intentions of management employees, shareholders, and others. A simplified view of the planning process is shown by the following diagram:

Q5) What is Computational Support for Planning?

A5) There are four types of computational support needed for the analysis of planning, the preparation of the plans and the output of the results:

1. An analysis of historical data to obtain relationship useful for projection.

2. Various projection and forecasting techniques to estimate future value.

3. Computations internal to the plan and computation required for outputs.

4. Output of the results in a meaningful planning format.

This computational support can range from sophisticated techniques to a simple spread sheet computational procedure.

Historical Data Analysis Technique

Historical data is analysed to discover patterns or relations that will be useful for projecting the future values of significant variables. When quantitative relations are not sufficiently stable to use, forecasting data analysis is useful for input into judgmental forecast.

Historical extrapolation techniques

Historical data describes the past planning that involve the future estimating generally based on analysis of past history combined with various technique to genera/ data for planning purposes.

Financial planning computation

Models that involve financial plan need to provide for various computation and analysis commonly required for measuring or evaluating profitability. For eg.: depreciation computation rate of return analysis and break-even analysis.

Depreciation: It is a significant computation in most financial planning. It affects profit computations because it is an expense, and it affects cash flow because of its impact or' taxes. There are several methods for computing depreciation, all of which should be available to the planner. These methods are straight line, double declining-balance, sum of the years’ digits and production.

Rate of return analysis: It is a method for computing the profitability of an investment. It takes into account the timing of the investment and the cash flows stemming from it. There are several methods for computing the rate of return which should be checked at the start of the planning model.

Break-even analysis: It is a fairly simple but very useful computation for determining the volume of activity at which there is no loss or profit.

Q6) What are the characteristics of control process?

A6) Control consists of procedures to determine deviations from plans and indicates corrective action. Every major organizational function has a set of controls associated with it.

 Control in Systems

 For Control purposes, there is basic model in which outputs from the system are compared with the desired output(standard), and any difference causes an input to be sent to the process to adjust the operations so that output will be closer to the standard. Feedback which seeks to dampen and reduce fluctuations around the standard is termed negative feedback. It is used in feedback control loops. Positive feedback reinforces the direction in which the system is moving. .In other words, positive feedback causes the system to repeat or amplify an adjustment or action. For example, a programming supervisor may have learned about the use of modular program structure. After trying on a small project with good results (positive feedback), the supervisor tries it on a larger project, again with good results. The supervisor may continue this until all programming is done in that way (a steady state) or until projects are found for which it does not work. 

Feedback in which the system changes its operation is not the only adjustment an organizational system may make. In response to feedback, the organization may change its standards (objectives, goals, purposes, etc.). In the example above, the positive results use of modular program structure may result in an adjustment of the standard for programmer performance. Since organizations are goal-directed and self-organizing, a change in goals may often lead to changes in the system to achieve the new goals.

Q7) What is the nature of control in the organisation

A7) Management control is a systematic effort to set performance standards with planning objectives, to design information feedback systems, to compare actual performance with these predetermined standards, to determine whether there are any legal actions and to measure their significance, and to take any action required to assure that all corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives.

1. Establish the Standards

Within an organization's overall strategic plan, managers define goals for organizational departments in specific, precise, operational terms that include standards of performance to compare with organizational activities. However, for some of the activities the standards cannot be specific and precise.

Standards, against which actual performance will be compared, may be derived from the last experience, statistical methods and benchmarking (based upon the best industry practices). As far as possible, the standards are developed bilaterally rather than top management deciding unilaterally, keeping in view the organization's goals.

Standards may be tangible (clear, concrete, specific, and generally measurable) - numerical standards, monetary, physical, and time standards; and intangible (relating to human characteristics) - desirable attitudes, high morale, ethics, and cooperation.

2. Measure Actual Performance

Most organizations prepare formal reports of performance measurements which are both quantitative and qualitative (where quantification is not possible) which the managers review regularly. These measurements should be related to the standards set in the first step of the control process. For example, if sales growth is the target, the organization should have a means of gathering and reporting sales data. Data can be collected through personal observation through management by walking around the place where things are happening, statistical reports (made possible by computers), oral reporting (through conferencing, one-to-one meeting, or telephone calls), written reporting (comprehensive and concise, accounting information - normally a combination of all. To be of use, the information flow should be regular and timely.

3. Compare Performance with the Standards

This step compares actual activities to performance standards. When managers read computer reports or walk through their plants, they identify whether actual performance meets, exceeds, or falls short of standards. Typically, performance reports simplify such comparison by placing the performance standards for the same reporting period alongside the actual performance for the same period and by computing the variance—that is, the difference between each actual amount and the associated standard. The manager must know of the standard permitted variation (both positive and negative). Management by exception is most appropriate and practical to keep insignificant deviations away. Timetable for the comparison depends upon many including importance and complexity attached with importance and complexity.

4. Take Corrective Action and Reinforcement of Successes

When performance deviates from standards, managers must determine changes, if any, are necessary and how to apply them. In the productivity and centered environment, workers and managers are often empowered to evaluate own work. After the evaluator determines the cause or causes of deviation, he or she take the fourth step— corrective action. The corrective action may be to maintain status quo (reinforcing succ correcting the deviation, or changing standards. The most effective course may prescribed by policies or may be best left up to employees' judgment and initiative. corrective action may be immediate or basic (modifying the standards themselves)

Q8) Explain about information system resources.

A8): A typical information system involves five major resources which can be listed as follows,

1. People resources

2. Hardware resources

3. Software resources

4. Data resources

5. Network resources.

1. People Resources

People are nothing but humans involved in the information system to carry out or handle various operations. There are two categories of people involved in information systems. They are,

(i) IS Specialists The people who - Are responsible for creating, implementing, handling and operating the information system are referred to as IS specialist. Some of such specialist are programmers, operators, analysts etc. Each of these specialists carryout different set operations. For examples, a programmer is responsible for developing computer programs, analysts are responsible for creating/ designing the system and operators are responsible for operating computer systems.

(ii) End-Users The individuals or people who are buyers or users of the product (or) information system generated by IS specialists are referred to as end-users. They act as clients. Examples include customers, accountants, engineers etc.

2. Hardware Resources -

The devices, components or raw material involved in developing or processing of information system are referred to as hardware resources. They refers to only the physical entities but not the logical entities (like software, program). Examples of hardware include machines, devices, computers etc. The two major example of hardware resources are computer systems and computer peripherals.

(i) Computer Systems

Computer system is referred to an interconnection of a group of computing units such a processor, input devices and output devices. An example of a computer system in PC (Personal Computer).

(ii) Peripherals

Peripherals are nothing but different devices which are connected to the CPU and perform different operations. For example, keyboard is a peripheral which is responsible for entering the data into the computer.

3. Software Resources

The instructions given to the information system or computer to carry out a specific task or to process the data are referred to as software resources. The software include two types of instructions.

(i) Programs are the controlling or operating instructions which are used to operate computer hardware.

(ii) Procedures The set of instructions that are required for the people to process information are called as procedures. Both the types of instructions are involved in information systems irrespective of involvement of computers.

4. Data Resources

In information system, data is considered as important resource because it is more than raw material. Data resources need to be handled efficiently to provide the maximum benefit to its users. Data can carry any type of text, numbers, special characters, images, graphics, audio, video etc. It is arranged in the form of databases and stored in the data storage.

5. Network Resources

Network is referred to the interconnection of various devices. In information systems, telecommunication networks have .now become a need for the organizations to efficiently manage their operations. These type of networks include Internet intranets, extranets etc. In IS, network resources is included as an important component. They include communication media and network support.

(i) Communication Media The medium used to provide communication among different devices is referred to as communication media. Examples include twisted pair cable, coaxial cable, infrared etc.

(ii) Network Support The network used for communication needs to be supported by a set of individuals, hardware, software and data resources.

Q9) Discuss how the system approach can be used in problem solving

A9) Systems approach to problem solving has the following steps:

Problem Definition

In problem definition, managers define the problem. This is important because, if they identify a wrong problem, the entire effort and time gets wasted. Moreover, if they come to know that the problem is entirely a new problem or simply a symptom of a real problem, they can gather more information about it so that they can differentiate between the problem and symptom.

Example

Consider the owner of microcomputer dealership. The owner encounters that the sales people are not able to meet their call quotas. Thus, the owner decides to do a detailed study of the system.

Data Collection

The managers gather data that describes the problem by i:114 performing a detailed study of the environment, current standards, management, input resources and internal procedures. The environment of the microcomputer dealership includes vendors, competitors, local community and customers with the study of environment. With this, the owner learns that the local competitors are selling microcomputers 20% to 25% cheaper. Next, the owner analyses the standards of the firm and comes to know that the goal of increasing gross sales by 5% is not possible as the local competitors are selling at lower prices.

The owner also analyses, the management of the firm: For example, the owner may check whether the sales managers are fulfilling their duties or not. This is important because, if the sales manager is unable to give training and feedback effectively to the salespeople, then the salespeople may get frustrated and fail to meet their quotas.

Next, the owner analyses the input resources of the firm. This may include the way new employees are recruited and trained along with keeping existing employees upto-date about new technologies. For example, the owner may come to know that the technical representatives are not appropriate to provide technical features of an equipment. This may cause a great loss to the firm. Finally, the owner analyses the work methods and procedures of the firm. By this analysis, the owner can learn that whether the sales manager has trained the salespeople to follow-up on new prospects or not. Moreover, he may also determine technical analyst is troubleshooting customer's problems or not which might results in unsatisfied customers and in turn unsatisfied returns.

3. Identification of Alternatives

Once the manager has gathered data, analyzed the system thoroughly and identified the problem, he must find alternative solutions to the problem. Having identified that the local competitors have reduced their selling costs, the owner may come up with the following alternative solutions.

(i) Find other manufacturers of microcomputers who sales product at a lower price.

(ii) Reduce selling price by allowing customers to place small orders through mails and by asking the telemarketing department to handle these orders. This reduces the effort of salespeople which in turn compensates the reduction in selling price.

(iii) Differentiate the products offered by the firm by introducing 24 hours on-line diagnostic support services, promising a response within 5 hours and checking the products on an yearly basis.

4. Evaluation of Alternatives

After finding the alternative solutions to a problem, manager must evaluate each solution to find the best solution that helps the firm to accomplish its objectives.

It may happen that the owner analyses that the first alternative reduces cost price, but does not ensure. reliability. This increases the hurdles in the way of salespeople.

The second alternative of introducing mail order system definitely reduces the effort made by salespeople, however it needs that a database of customer data to be created and specialized promotional materials are developed. By this solution, the owner may enable salespeople to focus only on large accounts and use a cost-effective sales strategy for small accounts.

The third and last alternative might be offering .add-on on-line services to customers. This alternative might work, however this is useful only to big organizations as it needs a specialized support staff who are technically good in handling all products.

5. Selection and Implementation of Best Alternative

The managers must select and implement the best alternative. If the owner of microcomputer dealing selects the second alternative i.e., mail-order system, the owner must either recruit new customer service representatives or train the existing employees in telemarketing. Moreover, the owner must also include databases and systems for billing and shipping merchandise and validating transactions made through credit cards.

6. Verification of Implemented Solution

Manager must determine whether the solution implemented in step 5 is helping the organization in meeting its goals or not. If not, he must change the standards, input resources, procedures and management so that the objectives can be achieved. In case of microcomputer dealing, the owner must also follow-up to determine, if there is improvement in sales using the approach

Q10) Explain the framework of information systems.

A10): The conceptual framework of information systems involves five major areas. They are,

1. Foundation concepts

2. Information technologies

3. Business applications

4. Development processes

5. Management challenges.

1. Foundation Concepts

These concepts include all the roles and components associated with the information systems which can be related to behavioural, technical, business and managerial concepts. For example, general system theory can be used to derive the concepts of a simple information system.

2. Information Technologies

It involves the concerns related to the management, development etc., of various technologies associated with the hardware, software, networks etc.

3. Business Application

Business applications here refers to the application of information systems in various areas of business such as operations, management etc., to gain competitive advantage. Some of the functional areas on which the information systems can be applied are manufacturing, accounting, marketing, decision making etc. E-commerce is a major example of such an application.

4. Development Processes

A development process typically involves planning, designing, developing and implementing of information systems. All these phases focus on meeting the business objectives. There exist many of such development processes such as SDLC (Software Development Life Cycle), prototyping etc.

5. Management Challenges

The challenges that arise during the management of information technology at different phases of the business are referred to as management challenges. The solutions to these challenges make the management of organization efficient. The challenges could be related security of information or management or they can be related to the managers in managing the functions of information systems.