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Chapter 14

Understanding
Information
and e-Business
Learning Objectives

1. Examine how information can reduce risk when


making a decision.
2. Discuss management’s information requirements.
3. Outline the five functions of an information system.
4. Describe how the Internet helps in decision making,
communications, sales, and recruiting and training.
5. Analyze how computers and technology change the
way information is acquired, organized, and used.
6. Explain the meaning of e-business.
7. Describe the fundamental models of e-business.
8. Explore the factors that will affect the future of e-business.

Chapter 14 | Slide 2
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Information and Risk

 Accurate/complete information = no risk


 Decision without information = gamble
 Information  = better decisions
Information Rule: When research confirms the
same results each time it studies the same
circumstances

Chapter 14 | Slide 3
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Figure 14.1: The Relationship Between
Information and Risk

When the amount of available information is high,


managers tend to make better decisions. When the
amount of information is low, managers have a higher
risk of making a poor decision.

Chapter 14 | Slide 4
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Data

…numerical or verbal descriptions


that usually result from some sort
of measurement.

Chapter 14 | Slide 5
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Information

…data presented in a form that is useful


for a specific purpose.

Chapter 14 | Slide 6
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Data Versus Information

Chapter 14 | Slide 7
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Data Versus Information (cont’d.)

Chapter 14 | Slide 8
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Knowledge Management

…a firm’s procedures for generating, using,


and sharing the data and information
contained in the firm’s databases.

Chapter 14 | Slide 9
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Database

…a single collection of data stored in one


place that can be used by people throughout
an organization to make decisions.

Chapter 14 | Slide 10
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Management Information System

…a system that provides managers and


employees with the information they need to
perform their jobs as effectively as possible.

Chapter 14 | Slide 11
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Figure 14.2: Management
Information System (MIS)

After an MIS is installed, a user can get information directly from it


without having to go through other people in the organization.

Chapter 14 | Slide 12
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Purpose of MIS/IT

 Distribute timely &


useful information
 From internal &
external sources
 To managers &
employees who
need it

Chapter 14 | Slide 13
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Information Technology Officer

…a manager at the executive level who is


responsible for ensuring that a firm has the
equipment necessary to provide the information
the firm’s employees and managers need to
make effective decisions.

Chapter 14 | Slide 14
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Manager’s Information Requirements

 Managers
• Plan for future
• Implement in present
• Evaluate the past

 Areas of management needing information


• Finance
• Operations
• Marketing
• Human resources
• Administration

Chapter 14 | Slide 15
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Administrative Managers Make Sure...

 Information used in
consistent manner
 Managers/employees
receive skills training
for using MIS
 Money available to
update MIS when
needed

Chapter 14 | Slide 16
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Size/Complexity of System Mistakes

 Save on initial costs = system too small


or overly simple
 Too large/complex = unused capacity and
complexity
• Increased cost of owning & operating
• Probably difficult to use

Chapter 14 | Slide 17
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Figure 14.3: Five Management
Information System Functions

Every MIS must be tailored to the


organization it serves and must
perform five functions.

Chapter 14 | Slide 18
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Data Bank
Should Include...

 Past/current data  External Sources


 Relevant data • Customers
 Accurate data • Suppliers
• Bankers
• Trade/financial publications
 Internal sources
• Industry conferences
• Managers
• Online computer services
• Employees
• Government sources
• Company records
• Data-gathering
& reports
organizations
• Minutes of meetings

Chapter 14 | Slide 19
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Data Cautions

 Cost of obtaining data from external


sources can be high
 Outdated/incomplete data usually yield
inaccurate information
 Computers generally do not make mistakes
but people who use them can

Chapter 14 | Slide 20
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Storing Data

 Method depends on size of organization


 Small: enter information directly to hard drive
 Medium to large: larger system through network

Chapter 14 | Slide 21
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Updating Data

 Ensure information is accurate, complete,


and up to date
 Frequency of update depends on speed
of change and how often used
 May be updated according to
predetermined schedule

Chapter 14 | Slide 22
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Data Processing

…the transformation of data into a form that


is useful for a specific purpose.

Chapter 14 | Slide 23
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Statistic

…a measure that summarizes a particular


character of an entire group of numbers.

Chapter 14 | Slide 24
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Business Report

 Introduction
• Sets the stage
• Describes problem
• Identifies research techniques
• Previews material
 Body
• Objectively describes facts
• Is basis for conclusions/recommendations
 Conclusions
• Statements of fact on findings
• Specific, practical, based on evidence
 Recommendations
• How problem might be solved
• Specific, practical, based on evidence

Chapter 14 | Slide 25
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Visual Display

…a diagram that represents several items of


information in a manner that makes
comparison easier.

Chapter 14 | Slide 26
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Figure 14.4: Statistics

Chapter 14 | Slide 27
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Figure 14.5: Typical Visual Displays Used in
Business Presentations

Chapter 14 | Slide 28
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Making Smart Decisions

 Decision-Support System
Provides relevant data/information to help firm’s
employees make decisions
 Executive Information System
Facilitates/supports decision-making needs of top
managers by providing easy access to internal and
external information
 Expert System
Uses artificial intelligence to imitate human’s ability
to think

Chapter 14 | Slide 29
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Helping Employees Communicate

 Groupware
Facilitates management of large projects among
dispersed employees + group activities: problem solving,
brainstorming
 Collaborative learning system
Work environment that allows problem-solving
participation by all team members

Chapter 14 | Slide 30
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Customer- Relationship Management

…programs focus on the special


informational needs of sales personnel.

Chapter 14 | Slide 31
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Recruiting and Training Employees

 Post employee needs


on website
 Reach potential
candidates around
the globe
 Organize data in way
most useful to the firm
 Internet education
delivery

Chapter 14 | Slide 32
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Table 14.2: Current Business
Application Software

Chapter 14 | Slide 33
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Information Society

…a society in which large groups of


employees generate or depend on
information to perform their jobs.

Chapter 14 | Slide 34
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Internet, Intranet, and Networks

 Internet: worldwide network of linked computers


 World Wide Web: Internet’s environment
of audio, visual, and text data
• Internet Service Providers (ISPs)
• Broadband technology
 Intranet: small version of Internet used inside
firm
 Computer network: 2+ computers linked,
sharing data/information

Chapter 14 | Slide 35
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Top Ten Countries
in Percentage of Internet Users

Italy
South Korea
France
UK
Brazil
Germany
India
Japan
USA
China

0.0% 5.0% 10.0% 15.0% 20.0%


Source: “Top 20 Countries with the Highest Number of Internet Users,” Internet World Stats—Usage
and Population Statistics, 6/30/08, www.internetworldstats.com/top20.htm.

Chapter 14 | Slide 36
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Computer Networks

 Wide-Area Network (WAN): connects


computers over a large geographic area
 Local-Area Network (LAN): connects
computers in close proximity to each other

Chapter 14 | Slide 37
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Internet Terms

 Uniform Resource Locator (URL)


 Web Browser
 Hypertext Transfer Protocol: words or phrases
highlighted or underlined on web page; link to
other websites
 Search Engine

Chapter 14 | Slide 38
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Table 14.3: Tips for Website Development

Chapter 14 | Slide 39
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e-Business

…the organized effort of individuals


to produce and sell, for a profit, the
products and services that satisfy society’s
needs through the facilities available
on the Internet.

Chapter 14 | Slide 40
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Outsourcing

…the process of finding outside vendors and


suppliers that provide professional help,
parts, or materials at a lower cost.

Chapter 14 | Slide 41
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Assumptions for
Satisfying Needs Online

 Internet has created new customer needs


 E-business can satisfy those needs and more
traditional ones

Chapter 14 | Slide 42
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Figure 14.6: Combining
e-Business Resources

Chapter 14 | Slide 43
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Revenue Stream

…a source of revenue flowing into a firm.

Chapter 14 | Slide 44
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Online Revenue Streams

 Reaching new customers


 Intelligent information systems
 Information for comparative shopping
 Advertising & subscription fees
 Sponsors

Chapter 14 | Slide 45
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Figure 14.7: Planning a New Internet Business or
Online Presence for Existing Business

Chapter 14 | Slide 46
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Business Model

…represents a group of common characteristics


and methods of doing business to generate
sales revenues and reduce expenses.

Chapter 14 | Slide 47
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Primary e-Business Models

 Business-to-Business (B2B): firms conduct


business with other businesses
• Sales transactions between businesses
• Bidding on products and services

 Business-to-Consumer (B2C): firms conduct


business with individual buyers

Chapter 14 | Slide 48
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Table 14.4: Other Business Models that
Perform Specialized e-Business Activities

Chapter 14 | Slide 49
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Figure 14.8: Internal and External Forces
That Affect an eBusiness

Chapter 14 | Slide 50
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The Future of e-Business: Growth,
Opportunities, and Challenges

 Internet, related technologies will continue to expand


 Opportunity: only 1.2 billion people of world’s nearly
7 billion are online
 U.S. = 17 percent of all users = largest group online
 Of 300 million U.S. population, 210 million use Internet;
140 million actively
 70% of Americans using Internet; growth potential limited
 Projections: worldwide users to exceed 2 billion by 2012

Chapter 14 | Slide 51
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Using the Internet

• What do e-business players read to keep up


to date on people, ideas, and trends in this
fast-paced world?
Wired: www.wired.com
Fast Company: www.fastcompany.com
The Industry Standard: www.thestandard.com
CNET News: www.news.com
ZDNet: www.zdnet.com

Chapter 14 | Slide 52
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Chapter Quiz

1. Data presented in a form useful for a specific


purpose is
a) factual data.
b) information.
c) statistical data.
d) a computer information base.
e) a computer network.

Chapter 14 | Slide 53
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Chapter Quiz

2. A type of software that facilitates the management of large


projects among geographically dispersed employees is called
a) database management.
b) a spreadsheet.
c) CIM.
d) groupware.
e) networking.

Chapter 14 | Slide 54
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Chapter Quiz

3. A(n)____________ is a smaller version of the


Internet for use within a firm.
a) WAN
b) LAN
c) Intranet
d) Broadband
e) ISP

Chapter 14 | Slide 55
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Chapter Quiz

4. The term that refers to buying and selling


online is
a) Internet business.
b) e-business.
c) online sales.
d) e-marketing.
e) e-sales.

Chapter 14 | Slide 56
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Chapter Quiz

5. Business firms that conduct business with other


business firms are using a(n)
a) B2B approach.
b) B2C approach.
c) profit revenue stream.
d) marketing revenue stream.
e) economic benefit revenue stream.

Chapter 14 | Slide 57
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