Chapter 8 Information technology and information system in business
1.) Information technology and information system in business
Data
-something which have been recorded but not yet processed into form that is suitable for making decision
-continuous, quantitative, discrete, primary, secondary, qualitative.
Information
-data that has been processed in such way that use it to improve the quality of decision making.
-provide record, both current and historical
-to analyse what is happening within the business
-to provide the basis of decision making in short term and long term
-to monitor the performance of business by comparing actual results with plans and forecasts
Data processing
-conversion of data into information.
-data may be transformed into information by bringing related pieces of data together,sumarising data, basic processing of data,tabulation and diagrammatic techniques, statistical analysis, financial analysis.
Information technology – any equipment concerned with the capture, storage, transmission or presentation of information.IT is supporting hardware that provides the infrastructure to run the information system.
Information system – refer to the provision and management of information to support the running of the organization.
1.1 Deploying information system in the organization
INFORMATION SYSTEM
Produce output for:-planning-recording and processing transactions-monitoring and measuring performance-controlling-decision making
PROCESS DATA
STORE DATA AND INFORMATION
COMMUNICATE INFORMATION
1.2 The advantages computerization will bring to a company
Speed
-computers are ideal for dealing with repetitive processes
Accuracy
-in general computers do not suffer from errors, or lapses of concentration but process data perfectly
Volume
-computers work fast and do not need to rest,they can work 24 hours days, therefore able to handle vast volumes of data
Complexity
-once subsystems are computerized they can generally function more reliably than human beings. This makes it easier to integrate various subsystems.
Cost
-computers have become highly cost-effective providers of information, the process of substituting computers for human beings has revolutionized information-oriented industries such as accountancy, banking and insurance and this process is continuing.
Presentation
-displaying information in as ‘user-friendly ‘ a way as possible.
Judgement
-although it is possible to program limited reasonableness tests into computer systems, it is still very difficult to program judgement. The computer remain highly trained idiot, which is particularly apparent when a programming error is made or it is subject to a computer virus
2 The qualities of information
Accurate
-information should be sufficiently accurate for its intended purpose and the decision maker should be able to rely on the information
Complete
-the more complete information is , the more reliable it will be
Cost
The information should not cost more to obtain than benefit derived from it
Understandable
-much more readily acted upon
Relevant
-the information provided should concentrate on the essentials and ignore trivia
Adaptable
-information should be tailored to the needs and level of understanding of its intended recipients
Timely
-information that is out of date is a waste of time, effort and money
Easy to use
-information should be clearly presented and sent using the right medium and communication channel.
3 Management structure and information requirements
Strategic level of management
-requires information from internal and external sources in order to plan the long term strategies of organization. Internal information – both quantitative and qualitative – is usually supplied in a summarized form , often on an ad-hoc basis
Tactical level of management
-requires information and instruction from the strategic level of management together with routine and regular quantitative information from the operational level of management. The information would be in a summarized form , but detailed enough to allow tactical planning of resources and manpower
Operational level of management
-requires information and instruction from tactical level management.
-is primarily concerned with the day to day performance of tasks and most of the information is obtained from internal sources. The information must be detailed and precise.
Strategic
-Long term
-Aggregated/summarized
-Mainly external
-Uncertain
-Infrequent
Operational
-Immediate
-Highly detailed
-Internal
-certain
-frequent
3.1 the type
Strategic
· Expected government policy
· Overall profitability
· Competitor analysis
· Profitability of divisions/segments of the business
· Future market prospect
· Availability and cost of capital
· Total cash needs
· Resource levels
· Capital equipment requirementsof information used at each level of the organization
Tactical
· Productivity measurements
· Budgetary control reports
· Variance analysis
· Stock turnover
· Cash flow forecasts
· Short term purchasing requirement
· Labour turnover statistics within a department/factory
Operational
· Employee hours worked
· Raw materials input to a production process
· Hours spent on each individual job
· Reject rate
· Stock levels
Sunday, August 2, 2009
Saturday, August 1, 2009
16: Governance and social responsibility
1. Seperation of ownership and control
-refers to the situation where the people who own the company may not be the same as the people who control the company. (limited company)
-directors likely to own all the shares in the company as in small company. so there is no seperation of ownership
-large company likely to have a large number of external shareholders who play no role in the day to day running of the company. therefore there is a potential for a conflict of interest.
Reasons for the seperation of ownership and control
-specialist management can run the business better than those who own the business
-the original shareholoders cannot personnally contribute all the capital needed, so they need to bring in external capital.
Win-win situation
-managers can get on with ful time management of the company
-shareholders interested in the return from their investment and do not have to concern of the day to day matters.
Theories
Stakeholder theory
-development of the notion of stewardship, stating that management has a duty of care to the owners of the company in terms of maximasing shareholder value but also wider of the community of interest or stakeholder.
Stewardship theory
-someone who manages property or other affairs of someone else
Agency theory
-the state of serving as an official and authorised delegate agent
Governance Principles
a) minimise risk
b) to ensure adherence and satisfaction of the strategic objective of the organisation
c) to fulfile responsibilities to all stakeholders and to minimise potential conflict of interest
d) to establish clear accountability of senior levels
e) to maintain the independance of those who scrutinise the behaviour of its organisation and its senior executive managers
f) to provide accurate and timely reporting of trustworthy data to both the management and owners of the organisation
g) to encourage more proactive involvement of owners in the organisation
h) to promote integrity
Driving force of governance development
- increasing internationalisation and globelisation
- the differential treatment of domestic and foreign investor
- issues conserning financial reporting
- characterlistic of individual countries may have a significant
- influence in a way coperate governance has developed
- increasing number of high profile proper scandals and collapse
2. The meaning of corporate governance
- set of processes and policies by which a company is directed, administered and controlled.
Features of poor corporate governance
-domination by a single individual
- lack of involvement of the Board
- lack of adequate control function
- lack of supervision
- lack of independance scrutiny
Key issues in the corporate governance debate include
- the membership of the Board
- the role of the Board
- the director's remuneration
- the role of internal and external audit
3. The meaning of corporate social reaponsibility (CSB)
refers to the idea that a company should be sensitive to the needs and wants of all the stakeholders and not only shareholders
companies should make decision not only on financial factors but also social and environmental consequences of their actions
4. The importance of CSR to an organisation
benefits:
- monitor changing social expectations
- manage operational risks
- identify new market opportunities
- retain key employees
8. Audit committees
major problems:
-external auditors become too close (familiar) to the executive directors (who run the company)
-external auditors are not comfortable reporting errors,frauds,etc to the very people who have done them!
-internal auditors are not comfortable reporting systems weaknesses to the very people who designed the systems!
-a board might choose to have internal auditors to give a good appearance to the outside world
Internal and external auditors do as following:-
-being available for internal and external auditors
-requiring executive directors to attend as necessary
-reviewing accounting policies and financial statements as a whole to ensure that they are appropriate and balanced
-reviewing systems of internal controls
-agreeing agenda of work for the internal audit department
-receiving results of internal audit work
-shortlisting firms of external auditors when a change is needed
-reviewing independence of external audit firm
-considering extent to which external auditors should be allowed to tender for 'other services'.
9 Public oversight of corporate governance
-The obvious means of public oversight of corporate governance is via the publication by companies of their Annual Report and Accounts.
- companies are required by law to send a copy to each shareholder,but most companies will post a copy on their website or will provide a paper-based copy free of charge to any member of the public who requests one.
10 Stakeholder needs analysis
-can be carried out to bring some structure to the implementation of a CSR programme. The analysis involves doing research to determine:
*Who are the key stakeholders in the business?
*What are their needs?
-refers to the situation where the people who own the company may not be the same as the people who control the company. (limited company)
-directors likely to own all the shares in the company as in small company. so there is no seperation of ownership
-large company likely to have a large number of external shareholders who play no role in the day to day running of the company. therefore there is a potential for a conflict of interest.
Reasons for the seperation of ownership and control
-specialist management can run the business better than those who own the business
-the original shareholoders cannot personnally contribute all the capital needed, so they need to bring in external capital.
Win-win situation
-managers can get on with ful time management of the company
-shareholders interested in the return from their investment and do not have to concern of the day to day matters.
Theories
Stakeholder theory
-development of the notion of stewardship, stating that management has a duty of care to the owners of the company in terms of maximasing shareholder value but also wider of the community of interest or stakeholder.
Stewardship theory
-someone who manages property or other affairs of someone else
Agency theory
-the state of serving as an official and authorised delegate agent
Governance Principles
a) minimise risk
b) to ensure adherence and satisfaction of the strategic objective of the organisation
c) to fulfile responsibilities to all stakeholders and to minimise potential conflict of interest
d) to establish clear accountability of senior levels
e) to maintain the independance of those who scrutinise the behaviour of its organisation and its senior executive managers
f) to provide accurate and timely reporting of trustworthy data to both the management and owners of the organisation
g) to encourage more proactive involvement of owners in the organisation
h) to promote integrity
Driving force of governance development
- increasing internationalisation and globelisation
- the differential treatment of domestic and foreign investor
- issues conserning financial reporting
- characterlistic of individual countries may have a significant
- influence in a way coperate governance has developed
- increasing number of high profile proper scandals and collapse
2. The meaning of corporate governance
- set of processes and policies by which a company is directed, administered and controlled.
Features of poor corporate governance
-domination by a single individual
- lack of involvement of the Board
- lack of adequate control function
- lack of supervision
- lack of independance scrutiny
Key issues in the corporate governance debate include
- the membership of the Board
- the role of the Board
- the director's remuneration
- the role of internal and external audit
3. The meaning of corporate social reaponsibility (CSB)
refers to the idea that a company should be sensitive to the needs and wants of all the stakeholders and not only shareholders
companies should make decision not only on financial factors but also social and environmental consequences of their actions
4. The importance of CSR to an organisation
benefits:
- monitor changing social expectations
- manage operational risks
- identify new market opportunities
- retain key employees
8. Audit committees
major problems:
-external auditors become too close (familiar) to the executive directors (who run the company)
-external auditors are not comfortable reporting errors,frauds,etc to the very people who have done them!
-internal auditors are not comfortable reporting systems weaknesses to the very people who designed the systems!
-a board might choose to have internal auditors to give a good appearance to the outside world
Internal and external auditors do as following:-
-being available for internal and external auditors
-requiring executive directors to attend as necessary
-reviewing accounting policies and financial statements as a whole to ensure that they are appropriate and balanced
-reviewing systems of internal controls
-agreeing agenda of work for the internal audit department
-receiving results of internal audit work
-shortlisting firms of external auditors when a change is needed
-reviewing independence of external audit firm
-considering extent to which external auditors should be allowed to tender for 'other services'.
9 Public oversight of corporate governance
-The obvious means of public oversight of corporate governance is via the publication by companies of their Annual Report and Accounts.
- companies are required by law to send a copy to each shareholder,but most companies will post a copy on their website or will provide a paper-based copy free of charge to any member of the public who requests one.
10 Stakeholder needs analysis
-can be carried out to bring some structure to the implementation of a CSR programme. The analysis involves doing research to determine:
*Who are the key stakeholders in the business?
*What are their needs?
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