Question 1
Management information system [MIS] is an integrated system that helps the management with relevant information to plan and make decisions in order to run the business more effectively and efficiently (Becerra-Fernandez and Leidner, 2014 p.42). The core aim is to make raw data into useful information that helps in managerial decision-making. That being said, the functions of MIS are data capturing, data storage, data processing, data and information distribution, prediction or forecasting, planning, and control (Leon, 2008 p.328). Data processing is the process of gathering data from various sources; this may include customer touchpoints like stores and e-commerce sites, mobile shopping, self-check-out, etc.; and digital and social media sites (Buttle and Maklan, 2015 p.250). All data thus collected is stored in database or in data files. This data may also be stored in various storage media like hard drives, DVD, etc. Cloud-based applications store data on virtual servers.
Converting raw data into meaningful information is what experts call data processing (Singh, 2007 p.55). This is an important function of MIS as information is the core necessity for achieving competitive advantage. Distribution of the right information to the right person at the right time is an effective information distribution process. The information could be in the form of a report, image, message, file, form, video, or audio. To facilitate comparison, information can be presented in the form of charts, tables, or graphs; with the help of modern arithmetic, statistics, or simulation, MIS can predict business using historical data as a base (Brocke and Rosemann, 2010 p.335). Reports are generated based on the enterprise’s needs and these reports help management to plan in advance. This enables each functional department to work efficiently as MIS helps in monitoring and tracking operations against organisational plans. The deviation between operations and the organisational plan should be analysed for exercising control. As discussed above, MIS has different functions that enable the management to function effectively and efficiently.
Question 2
Organisational planning from the perspective of a business is actually a multi-level process. In the traditional management hierarchy, there are three levels of management. From top to bottom, we have top managers at the corporate level, middle managers at the functional level, and first line managers who oversee operations on-site (Lewis, Goodman and Fandt, 2006 p.9). Each level of management possesses different responsibilities and also plays a different role in the planning process. Top managers at the corporate level are responsible for creating what are known as strategic plans; these strategic plans are long-term, commonly covering the next two to five years (Steiner, 2010). It communicates the organisation’s goals as well the actions needed to achieve those goals. The starting point to any strategic plan should be the Vision and Mission Statement. These two statements are very important and are designed to shape all decision-making processes in the organisation.
An organisation’s Vision Statement serves to convey what it would like to achieve or accomplish and serves a guide to current and future decision-making. Although Vision Statements can be any length, it is usually a good idea to keep them short to avoid diluting organisational efforts. Amazon’s Vision Statement is “to be the earth’s most customer-centric company; to build a place where people can come to find and discover anything they want to buy online” (Taulli, 2012 p.5). Despite only a few sentences, Amazon’s Vision Statement clearly communicates what it wants to achieve and thus serves as an excellent guide to decision-making at all levels of the company.
After a Vision Statement is crafted, top managers at the corporate level then create a Mission Statement for the organisation. A Mission Statement is an actual declaration of the organisation’s purpose or reason for existence. While a Vision Statement communicates what an organisation wishes to accomplish, a Mission Statement communicates what an organisation actually does. For example, Google’s mission is “to organise the world’s information and make it universally accessible and useful” (McGee and Johnston, 2010 p.3). The mission of Starbucks is “to inspire and nurture the human spirit, one person, one cup, and one neighbourhood at a time” (King and Lawley, 2016 p.237). Both of these statements are short and simple but actually communicate why each of these organisations exists. An organisation’s Mission Statement serves to assist top managers at the corporate level in evaluating potential courses of action. This helps an organisation ignore those actions that are not consistent with their established mission. One way to look at Vision and Mission is to think of Cause and Effect. An organisation that effectively executes its established mission is more likely to accomplish its established vision.
Now that a Vision and Mission Statement have been established, top managers at the corporate level are then responsible for setting strategic objectives. A strategic objective should be a specific goal that will serve to unify all the efforts of the organisation. Like all goals, strategic objectives should be time-bound, meaning that there should be a specific date that they are to be achieved. For example, top managers may decide on a strategic objective that entails establishing 25 percent market share in a certain market by the end of 2018. This objective will then have a trickle-down effect as managers at lower levels of the organisation develop separate goals that, achieved together, will increase the chances of the organisation accomplishing its strategic objective.
Now that top managers have engaged in strategic planning, it is the responsibility of middle managers to engage in planning of their own, and this planning is referred to as tactical planning; it typically ranges from six months to two years in length (Griffin, 2016 p.69). By creating tactical plans, middle managers outline how the organisation tends to use its resources to achieve its strategic objectives. These resources commonly include labour, technology, infrastructure, and financial capital (Kaplan and Anderson, 2013 p.210). Middle managers may develop a tactical plan that includes increasing advertising expenditures in under-represented markets and developing partnerships with key retailers as actions to accomplish organisational objectives.
After tactical plans have been developed, first line supervisors have the responsibility of applying those plans to their areas of responsibility. This type of planning is referred to as operational planning and it involves creating short-term goals pertaining to the production or delivery of products commonly ranging from thirty days to six months, or even a year (Lasher, 2016 p.128). Operational plans should be designed to help an organisation accomplish goals established in its tactical plan. A possible operational plan could be to increase production in anticipation of increased demand or even optimising product distribution to decrease delivery time.
Despite the involvement of different sets of managers at the corporate, functional, and individual levels, it is important to recognise that each stage of the planning process should be consistent with the others. The reason that planning begins at the top of the organisation and not at the bottom is so that subsequent goals and objectives can be set with the primary objective in mind. Otherwise, one can only imagine the inconsistencies that would develop as each business unit pursued its own goals and objectives. Organisations should not simply strive to be busy but strive to utilise their resources in an effective, efficient, and focused manner to accomplish their established goals.
Question 3
In order to understand how and why organisations plan for contingencies, it is first necessary to identify the factors that potentially lead towards the need for devising a contingency plan. The reason why contingency planning is important is because of the concepts of risk and uncertainty. In business, as in life, the key to success is to expect the unexpected; things do not always happen in the way that they are expected to happen. Therefore, contingency planning should be part of a broader series of processes that businesses should undertake. In regard to this, it is necessary to identify the risks that threaten the business, plan for them, and, if things really go wrong, manage the business out of a crisis.
As will be exemplified later about actual experiences of companies with regards to the development of their contingency plans, organisations understand that a contingency plan should focus on mitigating a risk that could cause the business to lose money or incur significant additional cost (Cline, 2015 p.27). Perhaps it could be reputational damage to the business brand, customer relationships, goodwill, etc. It could also be possible that factors may threaten the achievement of key business objectives, or the possibility that a hoped-for outcome for a project will not occur, or the business in general will not be as successful as it is hoped to be. Businesses deal with risk in a variety of ways. An irresponsible course of action would be to ignore it and wait and see what actually happens. Rather than ignoring risk, it is advisable to try and minimise the impact of risk [i.e., getting insurance]. Contingency plans are therefore part of the process of managing risks. One does not have to look far in business to see examples, particularly within the functional areas of how businesses handle risks on a day-to-day basis. Spare capacity is one good example: one reason why a business may not operate at 100 percent capacity is because it may need spare capacity to handle perhaps an increase in demand (Barnes, 2008 p.144).
There are many examples of how organisations have learned to develop good contingency plans out of the bad experiences that have befallen them. Two famous examples of these are from the automotive industry. Today, the contingency plans of Toyota are designed to meet and address the impact of reputational damage (Griffin, 2016 p.88). Toyota is a company that has had a significant history of major product recalls. One problem in particular was related to accelerator pedals on cars sold in the United States that has led to substantial costs in fines and damages, both financial and reputational (Halbert and Ingulli, 2014 p.304). The company learned from these painful experiences and accordingly formulated better contingency plans in this aspect. Similarly, Volkswagen designed better contingency plans against reputational damage from bitter experience. The issue with Volkswagen in 2015 pertained to the deliberate manipulation of software that enabled VW engines to pass emissions test when, in fact, they were emitting gases that would not have passed tests under normal circumstances (Griffin, 2016 p.90). The horsemeat scandal is another well-known issue that has led UK companies to develop good contingency plans in the event of a similar scenario. It was discovered that a large proportion of processed meat products sold in UK supermarkets contained a lot of horse meat (Surridge and Gillespie, 2015).
One industry where contingency planning is absolutely vital is the travel industry. In today’s world, the external environment for the travel and tour industries poses significant risks. In particular, the geo-political implications of the increasing incidents of terror for businesses like Thomson and Thomas Cook give rise to the need to develop efficient and effective contingency plans to mitigate losses. The plan has to deal with the crises that emerge when terrorist incidents impact on their holiday tours. Excellent contingency planning is similarly employed on the issue of Brexit, or an exit of Britain from the EU. The initial question is whether the UK should leave the European or not, and it is reported that very few companies in the UK have completed their contingency plans as of last year although many are now ready for what may happen to them in the event of the so-called Brexit (McShane, 2015 p.8). On data security and the impact of increasingly significant breaches of personal data, it should be evident that people entrust businesses to look after their personal data. As such, it goes without saying that organisations now give a lot of emphasis on contingency plans which ensure that their company name is not damaged in case of such breaches.
An organisation therefore has to have a contingency plan to deal with risks if they happen; contingency planning is about preparation. In this manner, the supposedly unexpected problem becomes predictable and quantifiable. However, it should be recognised by business owners that they cannot possibly be prepared to handle all forms of unexpected eventualities. It is important to identify the risks that are likely to cause the greatest harm to the business, and to assess the probabilities and the likely impact in terms of damage or cost. Businesses simply cannot ignore major risks and it should be recognised that as a company gets larger, the importance for preparation through contingency planning also rises.
Question 4
Decision-making and planning are very important functions of management. These processes should be done with the intention of putting everything in order as far as the future of the company is concerned. It is understandable that every company has the objective of using limited resources to get maximum output in terms of profitability. However, until and unless a company does not plan effectively, it should not use resources to reach the goal or objective. Planning involves mental and paper-related activities for making the future course of action. For an organisation, a plan should be like a blueprint that is prepared before work is actually done. In layman’s terms, if someone wants to purchase a car, a lot of planning needs to be prepared. Information must be gathered from the showrooms of Nissan, Toyota, Ford, etc., and the prices and features of the cars have to be compared. The buyer has to look into his or her bank capacity and needs and after completing all these, a decision can then be made. All of these include planning.
Planning bridges the gap between where a company is and where it wants to go (O’Connor, 2010 p.84). One important thing to consider is that the world is changing rapidly while most companies may be quite late in picking up the signal that this is in fact happening. There have been many big companies that have been blindsided by important developments in technology, economics, social issues, and the political realm. For example, the whole development and business success of the LED [Light Emitting Diode] was evidently overlooked by the light bulb manufacturers; it was never part of their decision-making and planning. In the United States, some of the largest companies like General Electric, Phillips, and Osram Sylvania obviously lost a big part of the traffic light business to LED companies that could replace the traditional lighting fixtures with LED components (Jolly, 2003 p.151). Even a company like Microsoft was undoubtedly blindsided by Open software, Netscape, and Google. It is therefore important for organisations to pick up developments outside of their area of focus that may have a significant impact on the business.
In this manner, more appropriate plans can be made towards the achievement of worthwhile decisions. In this aspect, the field of decision sciences, which is quite broad, is now widely recognised as a valuable source of information for organisational decision-making and planning (Ramachandra, 2006). Behavioural Decision Theory has given rise to behavioural finance and behavioural economics; this field focuses on why human beings often miss opportunities due to bias (Sulphey, 2014 p.30). The field of decision sciences consists of a quantitative technique called decision analysis, and nowadays, it is taught in economics and business schools, in statistics departments, and even in psychology (Brown, 2005). Companies would do well to apply these concepts in the making of organisational decisions and in planning for future courses of action.
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